UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
___ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,
1995 Commission file number 1-9645
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1787539
(State of Incorporation) (I.R.S. Employer Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (210) 822-2828
_____________________________________
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of Exchange on which registered
Common Stock $.10 par value New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
___________________________________
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. Yes __X___ No _____
_____________________________________
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. Yes ____ No
__________________________________________
As of March 1, 1995, 34,592,019 shares of Clear Channel
Communications, Inc. Common Stock were outstanding including
13,439 held in treasury, and the aggregate market value (based
upon the last reported sale price on the New York Stock Exchange
on February 29, 1996) of the shares of Common Stock held by non-
affiliates was approximately $1,042,190,000. (For purposes of
calculating the preceding amount only, all directors and
officers of the registrant are assumed to be affiliates.)
_____________________________________
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
in the Parts of this report indicated below:
Items 5, 6, 7 and 8 of Part II -- Clear Channel Communications,
Inc.'s 1995 Annual Report to Shareholders ("Annual Report")
Portions of Items 10, 11, 12 and 13 of Part III --
Definitive Proxy Statement of Clear Channel Communications, Inc.
relating to its 1996 Annual Meeting of Shareholders to be held on
April 25, 1996.
Part I
Item 1. Business
Clear Channel Communications, Inc. ("the Company") was
incorporated under the laws of the State of Texas in 1974 as the successor to
a radio broadcasting company which began operations in 1972. The Company
is a diversified broadcasting company which at December 31, 1995
owned and operated 36 radio and ten television stations for which
it is the owner of the Federal Communications Commission (FCC) license.
In addition, the Company operates seven radio and six television stations
under time sales, time brokerage or local marketing agreements.
All of these properties are located in 22 different markets in 16 states.
At December 31, 1995, the Company owned the FCC licenses to 16
AM and 20 FM radio stations located principally in the South, Southwest
and in the Northeast. These radio stations employ a wide variety
of programming formats, such as News/Talk/Sports, Country, Adult
Contemporary, Urban and Album Rock. The Company's ten licensed
television stations are located in the South, Southwest, New
York, Pennsylvania and Minnesota. Six of these television stations are
affiliated with the Fox television network; one is affiliated
with the ABC television network; one is affiliated with the NBC
television network; one is affiliated with the CBS television
network and one is affiliated with the UPN television network.
Additionally, the Company operates five radio networks; one of
which provides news coverage in Oklahoma; one of which provides
sports coverage in Oklahoma, Texas and Iowa; one of which
provides news, sports and information to radio stations throughout
Kentucky; one of which provides news, sports and information to
radio stations throughout Virginia and one of which provides
news and agricultural information to radio stations in Texas 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 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 and its existing stations through effective programming,
reduction of costs and aggressive promotion, marketing and sales. From
1989 to 1991, growth was generated primarily from the acquisition of
television stations, as well as operating improvements at existing broadcasting
properties. From 1992 through 1995, growth was generated
primarily from the acquisition of radio stations and WFTC-TV in
Minneapolis, MN as well as operating improvements at existing
broadcasting properties. The Company continues to seek
opportunities for expansion through the acquisition of attractive
broadcasting and other media-related properties.
The Company believes that one of its most important assets is its
experienced management team. General managers are responsible
for the day-to-day operations 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 been granted options to
purchase shares of the Company's Common Stock. As an additional
incentive, a portion of each manager's compensation is based on
the performance of the station or stations for which he or she is
responsible.
The Company made its first international investment in 1995,
when it purchased a 50% equity interest in (and, therefore, does not
consolidate the assets or operations of) the Australian Radio
Network Pty Ltd (ARN), which owns and operates a narrowcast
radio broadcasting service, a radio representation company and
eight radio stations, including stations in Australia's three largest
markets -- Sydney, Melbourne and Brisbane. The Company believes
that the risk associated with its foreign currency exposure inherent in
its investment in ARN is low due to Australia's relative political and
economic stability, which historically have helped Australia to
maintain a stable currency relative to the U.S. dollar.
The major costs associated with radio and television
broadcasting are related to personnel and programming. In an effort to
monitor these costs, corporate management routinely reviews staffing
levels and programming costs. Combined with the centralized
accounting functions, this monitoring enables the Company to
effectively control expenses. 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.
RECENT DEVELOPMENTS
Effective February 15, 1996, the Company acquired the
broadcasting assets, with the exception of the FCC license, of
WOOD-AM/FM and WBCT-FM in Grand Rapids, MI for approximately $42
million. Transfer of the FCC licenses for these stations is
pending FCC approval, therefore, the Company operates these
stations under local marketing agreements with the previous
owner, until such time when the license transfers are approved by the FCC.
In March 1996, the Company entered into a definitive
agreement to purchase 100% of the common stock of US Radio, Inc. of
Philadelphia, PA for approximately $140 million. US Radio, Inc.
owns and/or operates 13 FM and five AM stations in seven U.S.
markets: Memphis, TN, Norfolk, VA, Raleigh, NC, El Paso, TX,
Milwaukee, WI, Little Rock, AR and Reading, PA. The Company
expects to close this transaction on or about June 1, 1996.
Also in March 1996, the Company signed a letter of intent to purchase
all of the assets of radio station WTVR-AM/FM in Richmond, VA
for approximately $18 million, subject to the signing of a
definitive asset purchase agreement. All of these transactions are subject
to FCC approval.
EMPLOYEES
At January 1, 1996, the Company had approximately 1,779
employees: 1,163 in radio operations, 594 in television
operations and 22 in corporate activities.
INDUSTRY SEGMENTS
Information relating to the industry segments of the
Company's operations for 1995, 1994 and 1993 is included in
"Note L: Segment Data" to the Company's consolidated financial
statements on page 32 of the Company's Annual Report and
hereby is incorporated by reference.
RADIO BROADCASTING
The following tables set forth certain selected information with
regard to each of Clear Channel Communications, Inc.'s 16 AM and
20 FM radio stations for which it owns the FCC license at December 31,
1995.
Expiration
Date of (2) Date of FCC Power
Station/Location Acquisition Network License Frequency (Watts)
WOAI-AM
San Antonio, TX Jun. 1975 ABC,CBS,TSN 8/1/97 1200 KHZ 50,000
KAJA-FM
San Antonio, TX Mar. 1972 8/1/97 97.3 MHZ 100,000
KAKC-AM
Tulsa, OK Oct. 1973 SMN,ONN 6/1/97 1300 KHZ 5,000(1)
KMOD-FM
Tulsa, OK Oct. 1973 ONN 6/1/97 97.5 MHZ 100,000
KPEZ-FM
Austin, TX Jul. 1982 8/1/97 102.3 MHZ 50,000
KTOK-AM
Oklahoma City, OK Oct. 1984 ABC,ONN 6/1/97 1000 KHZ 5,000
KJYO-FM
Oklahoma City, OK Oct. 1984 ABC 6/1/97 102.7 MHZ 100,000
WODT-AM
New Orleans, LA Oct. 1984 ABC,SEN 6/1/96 (7) 1280 KHZ 5,000
WQUE-FM
New Orleans, LA Oct. 1984 6/1/96 (7) 93.3 MHZ 100,000
WELI-AM
New Haven, CT Oct. 1984 ABC 4/1/98 960 KHZ 5,000
WHAS-AM
Louisville, KY Sep. 1986 ABC 8/1/96 840 KHZ 50,000
WAMZ-FM
Louisville, KY Sep. 1986 ABC 8/1/96 97.5 MHZ 100,000
WKCI-FM
New Haven, CT May 1992 4/1/98 101.3 MHZ 50,000
WRVA-AM
Richmond, VA Jul. 1992 CBS 10/1/95 (7) 1140 KHZ 50,000
WRVQ-FM
Richmond, VA Jul. 1992 10/1/95 94.5 MHZ 100,000
WRBQ-AM
Tampa, FL Jul. 1992 ABC,SMN 2/1/96 1380 KHZ 5,000
WRBQ-FM
Tampa, FL Jul. 1992 ABC 2/1/96 104.7 MHZ 100,000
WAVZ-AM
New Haven, CT Dec. 1992 ABC,USRN 4/1/98 1300 KHZ 1,000
KQXT-FM
San Antonio, TX Jan. 1993 8/1/97 101.9 MHZ 100,000
KHFI-FM
Austin, TX Feb. 1993 8/1/97 96.7 MHZ 100,000
KTKR-AM
San Antonio, TX Jul. 1993 ABC,NBC,W1/M 8/1/97 760 KHZ 5,000
WRVH-AM
Richmond, VA Sep. 1993 W1/M 10/1/95 (7) 910 KHZ 5,000
WRXL-FM
Richmond, VA Sep. 1993 10/1/95 102.1 MHZ 100,000
KEBC-FM
Oklahoma City, OK Jan. 1994 6/1/97 94.7 MHZ 100,000
WBGG-FM
Miami, FL Mar. 1994 2/1/96 105.9 MHZ 100,000
KBXX-FM
Houston, TX Aug. 1994 W1/U 8/1/97 97.9 MHZ 100,000
WHYI-FM
Miami, FL Oct. 1994 2/1/96(7) 100.7 MHZ 100,000
WMTX-AM (3)
Tampa, FL Oct. 1994 2/1/96(7) 1040 KHZ 3,600
WMTX-FM
Tampa, FL Oct. 1994 2/1/96(7) 95.7 MHZ 100,000
WERE-AM
Cleveland, OH Oct. 1994 CNN,W1/M 10/1/96 1300 KHZ 5,000
WNCX-FM
Cleveland, OH Oct. 1994 ABC 10/1/96 98.5 MHZ 100,000
WYLD-AM (6)
New Orleans, LA Jan. 1995 ABC 6/1/96 (7) 940 KHZ 10,000
WYLD-FM
New Orleans, LA Jan. 1995 ABC 6/1/96(7) 98.5 MHZ 100,000
KMJQ-FM
Houston, TX Jan. 1995 8/1/97 102.1 MHZ 100,000
KPRC-AM(4)
Houston, TX Jan. 1995 CNN, ABC 8/1/97 950 KHZ 5,000
KSEV-AM (4)(5)
Houston, TX Jan. 1995 W1/U, ABC 8/1/97 700 KHZ 15,000
(1) 5,000 watts during the day and 1,000 watts at night.
(2) TSN- Texas State Network, ONN-Oklahoma News Network, USRN
U.S. Radio Network, SMN-Satellite Music Network, SBN-
Sheridan Broadcast Network W1/U-Westwood One/Unistar, W1/M-
Westwood One/Mutual, SEN-Sports Entertainment Network
(3) 3,600 watts during the day and 420 at night.
(4) The Company acquired an 80% percent interest in this station.
(5) 15,000 watts during the day and 1,000 watts at night.
(6) 10,000 watts during the day and 500 watts at night.
(7) The company and its licensee subsidiaries have applications for renewal
of licenses pending for the following stations:
WQUE-FM, New Orleans, Louisiana (filed 2/1/96)
WYLD-FM, New Orleans, Louisiana (filed 2/1/96)
WYLD-AM, New Orleans, Louisiana (filed 2/1/96)
WODT-AM, New Orleans, Louisiana (filed 2/1/96)
WBGG-FM, Fort Lauderdale, Florida (FCC File No. BRH-951002UY)
WHYI-FM, Fort Lauderdale, Florida (FCC File No. BRH-951002ZV)
WMTX-AM, Pinellas Park, Florida (FCC File No. BR-951002ZQ)
WMTX-FM, Clearwater, Florida (FCC File No. BRH-951002WC)
WRVA-AM, Richmond, Virginia (FCC File No. BR-950601B4)
WRVH-AM, Richmond, Virginia (FCC File No. BR-950601B5)
(2) (1)
Station, 1995 Primary
Format,and Station Demographic
Market Rank Audience
In Market Range
WHAS-AM/WAMZ-FM 2/1 25-54/25-54
News Adult Contemporary/Country
(Louisville, KY)
WOAI-AM/KAJA-FM 7/6 25-54/25-54
News Talk Sports/Country
KQXT-FM/KTKR-AM 4/NR 25-54/25-54
Adult Contemporary/News Talk Sports
(San Antonio, TX)
WODT-AM/WQUE-FM NR/1 25-54/18-49
News Talk Sports/Urban Contemporary
WYLD-AM/FM 14/2 25-54/25-54
(New Orleans, LA)
KTOK-AM/KJYO-FM/KEBC-FM 5/2/8 35+/18-34/18-34
News Talk Sports/Contemporary Hits/Country
(Oklahoma City, OK)
KAKC-AM/KMOD-FM NR/5 25-54/25-54
News Talk Sports/Album Oriented Rock
(Tulsa, OK)
KMJQ-FM/KBXX-FM 4/1 18-49/18-49
Urban Contemporary/Urban Contemporary
(Houston, TX)
KPRC-AM/KSEV-AM 11/22 25-54/25-54
News Talk
(Houston, TX)
KPEZ-FM/KHFI-FM 8/2 18-34/18-49
Classic Rock/Contemporary Hits
(Austin, TX)
WELI-AM/WKCI-FM/WAVZ-AM 5/4/NR 35+/18-49/25-54
News Adult Contemporary/Contemporary Hits/News Talk Sports
(New Haven, CT)
WHYI-FM/WBGG-FM 8/20 18-34/18-49
Contemporary Hits/Rock Oldies
(Miami/Ft. Lauderdale, FL)
WNCX-FM/WERE-AM 5/NR 25-54/25-54
Classic Rock/News Talk
(Cleveland, OH)
WRVA-AM/WRVQ-FM 4/5 35+/18-49
News Talk Sports/Contemporary Hits
WRVH-AM/WRXL-FM NR/6 25-54/18-49
News Talk Sports/Album Oriented Rock
(Richmond, VA)
WRBQ-AM/FM, WMTX-AM/FM 19/5/4 25-54/18-49/25-54
Country/Adult Contemporary
(Tampa, FL)
NR -- Not rated in applicable demographic
(1) Company estimates
(2) Based on 12+ audience shares reported in Duncan's American
Radio Summer 1995 Supplement for all markets except New
Haven, which is based on 12+ audience shares as reported in the
Fall 1995 Arbitron Metro Report.
Pending license applications before the FCC
The Company has before the FCC applications seeking consent to the
transfer of control of 16 radio station licenses and their license holding
companies to Clear Channel Communications of Memphis, Inc., a subsidiary of
the Company. The stations include:
WSVY-AM, Portsmouth, VA
WOWI-FM, Norfolk, VA
WJCD-FM, Norfolk, VA
WQOK-FM, South Boston, VA
WHRK-FM, Memphis, TN
WDIA-AM, Memphis, TN
KHEY-AM, El Paso, TX
KHEY-FM, El Paso, TX
KPRR-FM, El Paso, TX
KJOJ-FM, Freeport, TX
WRAW-AM, Reading, PA
WRFY-FM, Reading, PA
WKKV-FM, Racine, WI
KDDK-FM, Jacksonville, AR
KMJX-FM, Conway, AR
WNND-FM, Fuquay-Varina, NC
The Company also has before the FCC applications seeking consent to the
assignment of 4 other radio station licenses to subsidiaries of the Company.
The stations include:
WBCT-FM, Grand Rapids, MI
WOOD-AM, Grand Rapids, MI
WOOD-FM, Grand Rapids, MI
WENZ-FM, Cleveland, OH
The Company currently has applications pending before the FCC requesting
waivers of the one-to-a-market rule in order to enable the company to
complete the purchase of control of WHRK-FM and WDIA-AM, Memphis,
Tennessee, KDDK-FM and KMJX-FM, Conway, Arizona, and WNND-FM,
Fuquay-Varina, North Carolina. The Company cannot predict whether these
waiver applications will be approved. (See section on Federal Regulation of
Television & Radio Broadcasting for a discussion of the one-to-a-market
rule.)
In addition, at December 31, 1995, the Company had joint sales or
time brokerage agreements with KSJL-FM San Antonio, TX;
KEYI-FM and KFON-AM Austin, TX; WKJK-FM and WKY-AM in
Louisville, KY; KHYS-FM Houston, TX and WENZ-FM Cleveland, OH
to market and sell the advertising time of these stations.
The Company's radio stations employ various formats for
their programming. A station's format is important in
determining the size and characteristics of its listening
audience. Advertising rates charged by a radio station are based
primarily on the station's ability to attract audiences having
certain demographic characteristics in the market area which
advertisers want to reach, as well as the number of stations
competing in the market. Advertisers often tailor their
advertisements to appeal to selected population or demographic
segments. The Company pays the cost of producing the programming
for each station. Generally, the Company designs formats for its
own stations, but has also used outside consultants and program
syndicators for program material. Most of the Company's radio
revenue is generated from the sale of local advertising. Additional
revenue is generated from the sale of national advertising, network
compensation payments and barter and other miscellaneous transactions. The
Company has focused its sales effort on selling directly to local
advertisers, while seeking to minimize sales through outside
representatives, including advertising agencies. Direct contact
with its customers has aided the Company's sales personnel in
developing long-standing customer relationships, which the
Company believes are a competitive advantage. The Company's
sales personnel are paid on a commission basis, which emphasizes
this direct local focus. The Company believes that this focus has
enabled some of its stations to achieve market revenue shares
exceeding their audience shares in a given year. Each of the
Company's radio stations also engages independent sales
representatives to assist it in obtaining national advertising.
The representatives obtain advertising through national
advertising agencies and receive a commission from the Company
based on the Company's net revenue from the advertising
obtained. In February 1996, the Company formed an alliance
with one of the nations largest national advertising representation firms,
whereby the firm will dedicate certain personnel to work exclusively
for the Company's radio stations. The Company believe this arrangement
will help its stations to achieve higher shares of national advertising revenue.
TELEVISION BROADCASTING
The following table sets forth certain selected information
with regard to each of the Company's ten television stations for
which it owns the FCC licenses at December 31, 1995.
Expiration
Date of Date of FCC Power
Station/Location Acquisition Network License Channel (Watts)
WPMI-TV
Mobile, AL Dec. 1988 NBC 4/1/97 15 5,000,000
KOKI-TV
Tulsa, OK Dec. 1989 FOX 6/1/98 23 3,260,000
WAWS-TV
Jacksonville, FL Sep. 1989 FOX 2/1/97 30 2,789,000
KTTU-TV
Tucson, AZ Feb. 1989 UPN 10/1/98 18 2,500,000
KSAS-TV
Wichita, KS Aug. 1990 FOX 6/1/98 24 3,310,000
WPTY-TV
Memphis, TN Apr. 1992 ABC 8/1/97 24 3,003,000
WFTC-TV
Minneapolis, MN Oct. 1993 FOX 4/1/97 29 5,000,000
KLRT-TV
Little Rock, AR Feb. 1994 FOX 6/1/96 16 5,000,000
WXXA-TV
Albany, NY Dec. 1994 FOX 6/1/98 23 3,020,000
WHP-TV
Harrisburg, PA Oct. 1995 CBS 8/1/99 21 1,200,000
(1) 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 a local marketing agreement, and,
therefore, does not operate the station.
In addition, at December 31, 1995, the Company had local marketing
agreements with WJTC-TV Mobile, AL; KTFO-TV Tulsa, OK; WLMT-TV
Memphis, TN; WNFT-TV Jacksonville, FL; KASN-TV Little Rock, AR
and WLYH-TV Lebanon/Lancaster/York, PA.
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. These programming costs have
declined in the past five years and are expected to continue to
decline in the foreseeable future due to the decrease in the
number of stations in the Company's markets competing for the
same programming. Moreover, the affiliation changes to NBC in Mobile, AL/
Pensacola,FL and to ABC in Memphis, TN have reduced the Company's'
need to obtain outside programming.
The second source of programming for the Company's Fox
affiliates is the Fox, ABC, NBC and CBS 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. For 1995, Fox, ABC and
NBC primary programming was intended to appeal primarily to a target
audience of 18 to 49 year old adults, while the CBS network's primary
programming was intended to appeal primarily to a target audience of 25-54
adults.
Each Fox contract currently runs for a five year term
expiring in 1998 except for the Fox contract for WXXA-TV Albany, NY, 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, TN, effective December
1, 1995), CBS (for WHP-TV in Harrisburg, PA, renewed and effective
December 18, 1995), NBC (for WPMI-TV in Mobile, AL, effective January
1, 1996) and UPN (for KTTU-TV in Tucson, AZ, entered into in
________, 1995) run for ten-year terms.
The third source of programming is the production of local news
programming on the Fox, CBS, ABC and NBC affiliate stations in
Jacksonville, FL, Harrisburg, PA, Memphis, TN and Mobile, AL/ Pensacola,
FL, 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 radio, 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.
COMPETITION
Clear Channel's radio and television stations compete for
audience share and advertising revenue directly with other radio and
television stations within their broadcast areas. Competition
among radio and television stations is based primarily on program
content, which is significantly affected by network affiliation
and by local programming activities. Other factors that affect a
station's competitive position include its authorized power,
terrain, assigned frequency, audience characteristics, local
program acceptance and the number and characteristics of other
stations in the market area. The Company's radio and television
stations are located in highly competitive markets. In the radio
broadcasting industry, moreover, it is not uncommon for radio stations
outside of a market area to broadcast at sufficient strength to gain a share
of the audience in adjacent areas. Many of the stations with which
the Company competes are owned or operated by national or regional
companies with substantially greater financial and other resources than the
Company. Other media, including network television, cable
television, newspapers, magazines, direct mail coupons,
billboard advertising, and direct broadcast satellite, also compete with
the Company for advertising revenue. The Company believes it
competes favorably against other stations because of its management skill and
experience and the ability of the Company's stations to generate
revenue that is at least equal to their market share in their
respective markets.
The following tables show the number of competitors and the
relative market size and population of each market served by the
Company's radio and television stations for which it owns the FCC
license at December 31, 1995:
Radio
Station 1995 # of
and Market Stations Population
Market Rank in Market (in thousands)
WHAS-AM/WAMZ-FM 48 22 840
(Louisville, KY)
WOAI-AM/KAJA-FM 34 27 1,167
KQXT-FM/KTKR-AM
(San Antonio, TX)
WODT-AM/WQUE-FM/WYLD-AM/FM 38 24 1,030
(New Orleans, LA)
KTOK-AM/KJYO-FM/KEBC-FM 51 20 823
(Oklahoma City, OK)
KAKC-AM/KMOD-FM 60 21 642
(Tulsa, OK)
KHYS-FM/KBXX-FM/KMJQ-FM 9 32 3,294
KPRC-AM/KSEV-AM
(Houston, TX)
KPEZ-FM/KHFI-FM 54 27 785
(Austin, TX)
WELI-AM/WKCI-FM/WAVZ-AM 93 27 388
(New Haven, CT)
WHYI-FM/WBGG-FM 11 37 2,843
(Miami/Ft. Lauderdale, FL)
WNCX-FM/WERE-AM 22 27 1,766
(Cleveland, OH)
WRVA-AM/WRVQ-FM 56 22 766
WRVH-AM/WRXL-FM
(Richmond, VA)
WRBQ-AM/FM, WMTX-AM/FM 21 27 1,864
(Tampa, FL)
Source: Based on 12+ audience shares reported in Duncan's
American Radio Summer 1995 Supplement for all markets except
New Haven, which is based on 12+ audience shares as reported in
the Fall 1995 Arbitron Metro Report.
Television
(1)
Station 1995 # of 1995
and Market Stations Households
Market Rank in Market (in thousands)
KOKI-TV 59 6 459
(Tulsa, OK)
WAWS-TV 55 5 486
(Jacksonville, FL)
WPMI-TV 61 5 436
(Mobile, AL/Pensacola, FL)
WPTY-TV 42 6 605
(Memphis, TN)
KSAS-TV 63 4 425
(Wichita, KS)
KTTU-TV 80 6 344
(Tucson, AZ)
WFTC-TV 14 6 1,412
(Minneapolis, MN)
KLRT-TV 58 5 473
(Little Rock, AR)
WXXA-TV 52 5 507
(Albany, NY)
WHP-TV 44 6 579
(Harrisburg, PA)
Source: 1995 ADI Market Rankings based on A.C. Nielsen estimates
of U.S Television Households.
(1) Company estimate
FEDERAL REGULATION OF TELEVISION & RADIO BROADCASTING
Existing Regulation and 1996 Legislation. Television and radio
broadcasting are subject to the jurisdiction of the Federal Communications
Commission ("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 Telecommunications Act of 1996 ("the 1996 Act")
represents the most comprehensive overhaul of the country's
telecommunications laws in more than 60 years. The first Communications Act
originated at a time when telephone and broadcasting technologies were quite
distinct and addressed different consumer needs. As a consequence, both the
statute and its implementing regulatory scheme were designed to
compartmentalize the various sectors of the telecommunications industry.
The 1996 Act removes or relaxes the statutory barriers to telephone company
("telco") entry into the video programming delivery business, to cable
company provision of telephone service, and to common ownership of broadcast
television and cable properties.
The 1996 Act also significantly changes both the process for renewal of
broadcast station licenses and the broadcast ownership rules. First, 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. The 1996 Act also substantially liberalizes the
national broadcast ownership rules, eliminating the national radio limits
and easing the national restrictions of TV ownership. The 1996 Act also
relaxes local radio ownership restrictions, but leaves local TV restrictions
in place pending further FCC review. The FCC has already implemented some
of these changes through Commission Orders.
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.
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.
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.
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 Telecommunications Act completely revised the television and
radio ownership rules, changes the FCC implemented in two 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 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 so-called "TV
duopoly rule"). At the time of the passage of the Act, the FCC had already
initiated a rulemaking to consider whether the television duopoly rule
should be retained, modified or eliminated.
With respect to radio licensees, the Act and the FCC's subsequently
issued rule changes eliminated the national ownership restriction, allowing
any one entity to own nationally any number of AM or FM broadcast stations.
The 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 local marketing agreements
("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 an 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.
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 1996 Act does not alter the FCC's newspaper/broadcast cross-ownership
restrictions. Finally, the 1996 Act directs the FCC 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).
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 "cross-interest" 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.
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-
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 ("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.
Distribution of Video Services by Telephone Companies. Recent actions
by Congress, the FCC and the courts all presage significant future
involvement in the provision of video services by telephone companies. The
Company cannot predict either the timing or the extent of such involvement.
These developments all relate to a former provision of the Communications
Act that prohibited a local telco from providing video programming directly
to subscribers within the company's telephone service areas. That provision
has now been superseded by the 1996 Act, which provides for telco entry into
the distribution of video services either under the laws and rules
applicable to cable systems or under new rules currently being devised by
the FCC for "open video systems" subject to certain common carrier
requirements.
As applied by government regulators historically, the former provision
prevented telcos from providing cable service over either the telephone
network or a separate cable system located within the telephone service
area. However, beginning in 1994, several telcos won court rulings
invalidating that historic interpretation, including decisions from United
States Courts of Appeal in the Fourth and Ninth Circuits. The United States
Supreme Court heard oral arguments in the Fourth Circuit case in December
1995, but following passage of the 1996 Act, the Supreme Court remanded the
case without issuing an opinion. The Fourth Circuit is now expected to
dismiss the case as moot.
Even before the court challenges, the FCC had reinterpreted the
statutory ban in a manner that authorized a broader role for telcos in
transporting video programming to subscribers. As originally envisioned in
the FCC's 1992 "video dialtone" ("VDT") decision, telcos offering VDT
service would provide a transport "platform" to multiple video programmers
(including, potentially, competing program packages) on a non-discriminatory,
common carrier basis; the telco itself, however, was barred
from owning or providing programming to subscribers via a VDT platform. The
FCC already has approved several telco applications to construct and operate
VDT systems and processed tariffs filed to govern the rates and terms of VDT
offerings. In the wake of the first court decisions, the FCC began
reviewing its VDT rules to determine whether a telco's direct provision of
video programming should be regulated under the VDT rules, under cable
rules, or under some hybrid.
Further FCC action on VDT has been terminated by the 1996 Act. (The
legislation does not affect any VDT systems approved prior to enactment of
the 1996 Act). Congress instead has determined that telcos may offer video
programming either as a traditional cable operator or through operation of
an "open video system." The Act requires that the FCC promulgate
implementing regulations for such systems within six months of enactment of
the legislation. Although Congress specifically preempted the FCC's VDT
rulemaking proceeding, the legislation's directives for open video systems
resemble the rules adopted or proposed for VDT systems in certain respects.
These include the requirements that (1) the operator of an open video system
offer carriage capacity to various video programming providers under
nondiscriminatory rates, terms, and conditions; and (2) if demand for
carriage exceeds the channel capacity of the open video system, the operator
is barred from devoting more than one-third of the system's capacity to
programming provided by itself or an affiliate.
The 1992 Cable Act. On October 5, 1992, Congress enacted the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"). The FCC began implementing the requirements of the 1992 Cable Act in
1993, and final implementation proceedings remain pending regarding certain
of the rules and regulations previously adopted. Certain statutory
provisions, such as signal carriage, retransmission consent, and equal
employment opportunity requirements, have a direct effect on television
broadcasting. Other provisions are focused exclusively on the regulation of
cable television but can still be expected to have an indirect effect on the
Company because of the competition between over-the-air television stations
and cable systems.
The signal carriage, or "must carry," provisions of the 1992 Cable Act
require cable operators to carry the signals of local commercial and
non-commercial television stations and certain low power television stations.
Systems with 12 or fewer usable activated channels and more than 300
subscribers must carry the signals of at least three local commercial
television stations. A cable system with more than 12 usable activated
channels, regardless of the number of subscribers, must carry the signals of
all local commercial television stations, up to one-third of the aggregate
number of usable activated channels of such a system. The 1992 Cable Act
also includes a retransmission consent provision that prohibits cable
operators and other multi-channel video programming distributors from
carrying broadcast signals without obtaining the station's consent in
certain circumstances. The "must carry" and retransmission consent
provisions are related in that a local television broadcaster, on a cable
system-by-cable system basis, must make a choice once every three years
whether to proceed under the "must carry" rules or to waive the right to
mandatory but uncompensated carriage and negotiate a grant of retransmission
consent to permit the cable system to carry the station's signal, in most
cases in exchange for some form of consideration from the cable operator.
Cable systems must obtain retransmission consent to carry all distant
commercial stations other than "super stations" delivered via satellite.
On April 8, 1993, a special three-judge panel of the U.S. District
Court for the District of Columbia upheld the constitutionality of the must
carry provisions of the 1992 Cable Act. Cable interests appealed that
ruling directly to the Supreme Court. On June 27, 1994, in a 5-4 decision,
the justices determined that must carry "in the abstract" did not constitute
a clear violation of the First Amendment. Nevertheless, the Court remanded
the case to the District Court and ordered it to determine the factual
validity of Congress' premise for enacting the law -- that "the economic
health of local broadcasting" would be "in genuine jeopardy" without cable
carriage. On remand, the District Court panel held, by a vote of 2-1, that
Congress had sufficient evidence about the state of broadcasting and cable
competition to determine that mandatory carriage laws were necessary. Cable
interests have filed another appeal with the Supreme Court, but despite a
request that the case be expedited, the Supreme Court has placed the appeal
on its regular briefing schedule, pushing back a decision possibly until the
Spring of 1997. The Company cannot predict the ultimate outcome of this
appeal. In the meantime, the must carry regulations implemented by the FCC
pursuant to the 1992 Cable Act remain in effect.
The 1992 Cable Act also codified the FCC's basic equal employment
opportunity ("EEO") rules and the use of certain EEO reporting forms
currently filed by radio and television broadcast stations. In addition,
pursuant to the 1992 Cable Act's requirements, the FCC has adopted new rules
providing for a review of the EEO performance of each broadcast station at
the mid-point of its license term (in addition to renewal time). Such a
review will give the FCC an opportunity to evaluate whether the licensee is
in compliance with the FCC's processing criteria and notify the licensee of
any deficiency in its employment profile. Among the other rulemaking
proceedings conducted by the FCC to implement provisions of the 1992 Cable
Act have been those concerning cable rate regulation, cable technical
standards, cable multiple ownership limits and competitive access to
programming.
The 1992 Cable Act was amended in several important respects by the
1996 Act. Most notably, as discussed above, the 1996 Act repeals the cross-
ownership ban between cable and telephone entities and the FCC's current
video dialtone rules. These provisions, among others, foreshadow
significant future involvement in the provision of video services by
telephone companies. The Company cannot predict the impact that telco entry
into video programming will have upon the broadcasting industry.
The 1996 Act also repeals or curtails several cable-related ownership
and cross-ownership restrictions. For example, as noted above, the 1996 Act
eliminates the broadcast network/cable cross-ownership limitations and the
statutory prohibition on TV/cable cross-ownership.
Advanced Television Service. The FCC has proposed the adoption of
rules for implementing advanced television ("ATV") service in the United
States. Implementation of digital ATV will improve the technical quality of
television signals receivable by viewers and will provide broadcasters the
flexibility to offer new services, including high-definition television
("HDTV"), simultaneous multiple programs of standard definition television
("SDTV"), and data broadcasting.
The FCC must adopt ATV service rules and a table of ATV allotments
before broadcasters can provide these services made possible by the new
technology. In 1995, the FCC issued a notice of proposed rulemaking
("NPRM") inviting comment on a broad range of issues related to the
implementation of ATV, particularly the transition to digital broadcasting.
The FCC announced that the anticipated role of digital broadcasting will
cause it to revisit certain decisions made in earlier orders. As required
in the then-pending telecommunications legislation, the FCC also announced
that broadcasters will be allowed the flexibility to transmit a mix of HDTV,
SDTV and perhaps other services. The FCC also stated that the NPRM would be
followed by two additional proceedings that will address, respectively, the
ATV broadcast technical standards and an ATV channel allotment and
assignment plan. A final report and order which would launch the ATV system
is anticipated in mid to late 1996.
Absent further legislation requiring the auctioning of ATV channels, it
is expected that the FCC will assign all existing television licensees and
permitees a second channel on which to provide ATV simultaneously with their
current "NTSC" service. After a period of years (the 1992 proposal was for
15 years, although that period of time is under review in the pending FCC
proceeding) broadcasters would be required to cease NTSC operations and
broadcast only with the newer digital ATV technology. It is also possible
that the NTSC channel, once returned to the FCC, will be auctioned for other
use. Under certain circumstances, conversion to ATV operations could reduce
a station's geographical coverage area; the majority of stations, however,
will obtain service areas that match or exceed the limits of existing
operations. Recent debates in Congress call into question whether the
transition to ATV will proceed as planned. Indeed, several senators favor
authorizing the FCC to auction the second channels. Such authority could be
contained in budget legislation or a stand-alone spectrum law. In any case,
the FCC was asked and, subsequently, agreed to delay licensing ATV stations
until the auction issue has been resolved by legislation or until early
1997.
Due to additional equipment costs, implementation of ATV will impose
near-term financial burdens on television stations providing the service.
If ATV stations are licensed by auction, this additional expense will apply
to broadcasters who choose to implement ATV. At the same time, there is a
potential for increased revenues to be derived from ATV. Although the
Company believes the FCC will authorize ATV in the United States, the
Company cannot predict precisely when or under what conditions such
authorization might be given, when NTSC operations will be required to
cease, or the overall effect the transition to ATV might have on the
Company's business.
Digital Audio Radio Service. The FCC is also considering alternative
systems for the delivery of digital audio radio service ("DARS"). DARS
systems could permit delivery of audio signals with fidelity comparable to
compact discs. The FCC has allocated spectrum for satellite DARS use and is
considering several applications for satellite DARS licenses. The FCC has
also undertaken an inquiry into the terrestrial broadcast of DARS signals
which addresses, among other things, the need for spectrum outside the
existing FM band. The Company cannot predict the outcome of these
proceedings or the impact thereof upon its business.
Direct Broadcast Satellite Systems. The FCC has authorized DBS, a
service which provides video programming via satellite directly to home
subscribers. Local broadcast stations are not carried on DBS systems. In
June 1994, DIRECTV, Inc. ("DIRECTV"), an affiliate of the General Motors
Company, and United States Satellite Broadcasting Company ("USSB") initiated
DBS service. DBS service is also provided by Primestar Partners, an entity
owned by a number of large cable interests. In January 1996, AT&T
Corporation announced it had invested $138 million in DIRECTV. In December
1995, EchoStar Satellite Corporation ("EchoStar") launched its first
satellite; EchoStar reportedly intends to begin service in early 1996.
Directsat Corporation, an affiliate of EchoStar, expects to launch its first
satellite in 1996, with service to begin a few months later.
In October 1995, the FCC upheld a decision of its International Bureau
revoking the DBS permit of Advanced Communications Corporation ("ACC"). The
FCC's decision has been appealed to federal court. ACC's primary orbital
slot, which is capable of providing service to the entire United States, was
acquired at auction in January 1996 by a partnership of MCI
Telecommunications Corporation and The News Corporation Limited. ACC's
second orbital slot, which can serve the western half of the United States,
was acquired at auction in January 1996 by EchoStar. The auction results
are subject to the outcome of the appeal for the FCC's order revoking ACC's
permit. Other parties hold authorizations to provide DBS service, but have
not launched their proposed satellites. It is uncertain if or when
additional service by MCI, EchoStar, or other parties may commence.
As part of the 1996 Act, Congress recently required the FCC to
promulgate regulations to prohibit restrictions that impair a viewer's
ability to receive video programming services through over-the-air reception
devices, multipoint distribution service, or direct broadcast satellite
services. The legislation also awards the FCC exclusive jurisdiction to
regulate the provision of direct-to-home satellite services, and limits the
authority of local jurisdictions to tax direct-to-home satellite service
providers.
The foregoing does not purport to be a complete summary of all the
provisions of the Communications Act, the 1996 Act, or the 1992 Cable Act,
nor of the regulations and policies of the FCC thereunder. 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.
ITEM 2. Properties
The following table sets forth certain information describing the
general character of the Company's properties:
Owned or Approximate
Metropolitan Area Leased Size
San Antonio, Texas
Corporate headquarters L 7,500'
WOAI, KSJL, KQXT & KAJA
studios and offices L 15,000'
Site for WOAI tower and transmitter O 13 acres
Site for WOAI microwave relay L -
Site for KSJL tower and transmitter
Site for KAJA tower L -
Site for KAJA transmitter L 300'
Site for KQXT tower & transmitter L -
Site of former WOAI tower O 23 acres
Tulsa, Oklahoma
KMOD & KAKC studios and offices L 5,000'
Site for KAKC tower and transmitter L 24 acres
Site for KMOD tower and transmitter L -
KOKI and KTFO studios and offices L 14,000'
Site for KOKI tower and transmitter O 45 acres
Houston, Texas
KBXX studios and offices L 5,500'
Site for KBXX tower and transmitter L -
KMJQ studios and offices L 6,500'
Site for KMJQ tower and transmitter L -
KPRC/KSEV studios and offices L 7,000'
Site for KPRC tower and transmitter O 25 acres
Site for KSEV tower and transmitter L -
Austin, Texas
KHFI & KPEZ studios and offices L 9,500'
Site for KHFI tower and transmitter L -
Site for KPEZ tower and transmitter L -
Oklahoma City, Oklahoma
KTOK, KJYO, KEBC & ONN studios and offices L 13,000'
Site for KTOK tower and transmitter O 100 acres
Site for KJYO tower and transmitter L -
Site for KEBC tower and transmitter L -
New Orleans, Louisiana
WYLD, WODT & WQUE studios and offices 0 15,000'
Site for WODT tower and transmitter L 22 acres
Site for WQUE tower and transmitter L -
Site for WYLD-FM tower and transmitter L -
Site for WYLD-AM tower and transmitter L -
Site for standby WODT tower and transmitter O 30 acres
New Haven, Connecticut
WELI, WAVZ & WKCI studios and office O 9,600'
Site for WELI tower and transmitter O 30 acres
WKCI & WAVZ former studios and offices O 4,200'
Site for WKCI tower and transmitter L -
Site for WAVZ tower and transmitter O 4,200'
Louisville, Kentucky
WHAS, WAMZ and KSN studios and offices L 12,500'
Site for WHAS tower and transmitter O 104 acres
Site for WAMZ tower and transmitter O 14 acres
Richmond, Virginia
WRVA, WRVH & VNN studios and offices O 18,000'
Site for WRVQ & WRVA towers and transmitters O 126 acres
WRVQ & WRXL studios and offices O 8,750'
Site for WRXL & WRVH towers O 15 acres
Site for WRXL & WRVH transmitters O 2,500'
Tampa, Florida
WRBQ-AM/FM studios and offices L 11,000'
Site for WRBQ-AM tower and transmitter O 5 acres
Site for WRBQ-FM tower and transmitter L -
WMTX-AM/FM studios and offices L 9,000'
Site for WMTX-AM tower and transmitter L -
Site for WMTX-FM tower and transmitter L -
Miami/Ft. Lauderdale, Florida
WHYI & WBGG studios and offices L 12,500'
Site for WHYI tower and transmitter L -
Site for WBGG tower and transmitter L -
Cleveland, Ohio
WNCX and WERE studios and offices L 10,500'
Site for WERE & WNCX tower and transmitters O 38 acres
Mobile, Alabama
WPMI & WJTC studios and offices 0 18,800'
Site for WPMI tower and transmitter O 10 acres
WPMI sales office (Pensacola, Florida) L 2,900'
Jacksonville, Florida
WAWS studios and offices O 10,000'
Site for WAWS tower and transmitter L 1.6 acres
colocated Tucson, Arizona
KTTU General offices L 300'
Wichita, Kansas
KSAS studio and offices L 10,000'
Site for KSAS tower and transmitter (Cold.) O 2,000'
Site for KSAS tower and transmitter (Salina L -
Memphis, Tennessee
WPTY studio and offices O 15,000'
WLMT studio and offices L 7,000'
Site for WPTY tower and transmitter L -
Site for WLMT tower and transmitter O 33 acres
Minneapolis, Minnesota
WFTC studio and offices L 19,200'
Site for WFTC tower and transmitter L -
Albany, New York
WXXA studio and offices L 15,000'
Site for WXXA tower and transmitter L -
Little Rock, Arkansas
KLRT & KASN studio and offices O 19,000'
Site for KLRT tower and transmitter L -
Harrisburg, Pennsylvania
WHP-TV studios and offices O 35,000'
Site for WHP tower and transmitter O 27 acres
ITEM 3. Legal Proceedings
The Company from time to time becomes involved in various
claims and lawsuits incidental to its business, including
defamation actions. In the opinion of management, after consultation with
counsel, any ultimate liability arising out of currently pending
claims and lawsuits will not have a material effect on the
financial condition or operations of the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders in
the fourth quarter of fiscal year 1995.
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The information required by Item 5 is incorporated by
reference to the information set forth in "Note M: Quarterly Results
of Operations" to the Company's consolidated financial statements
on page 33 of the Company's Annual Report. There were approximately
4,400 shareholders of record as of March 1, 1996. Presently, the
Company expects to retain its earnings for the development and
expansion of its business and does not anticipate paying any dividends
in 1996.
However, any future decision by the Board of Directors to
pay cash dividends will depend, among other factors, the Company's
earnings, financial position, capital requirements and loan
covenant restrictions. The Company's current bank credit
agreement allows for the payment of dividends subject to certain
loan covenant restrictions. There are no restrictions on
dividends payable wholly in capital stock of the Company. At
March 15, 1996, the market price of the Company's Common Stock
was $56.125 per share.
ITEM 6. Selected Financial Data
The information required by Item 6 is incorporated by
reference to the information set forth under the caption
"Selected Financial Data" on page 34 of the Company's Annual
Report.
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by Item 7 is incorporated by
reference to the information set forth under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 14 through 17 of the Company's
Annual Report.
ITEM 8. Financial Statements and Supplementary Data
The information required by Item 8 and the Report of Independent
Auditors is incorporated by reference to the "1995 Financial Report"
on pages 18 through 33 of the Company's Annual Report.
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not Applicable
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The information required by Item 10 with respect to the directors
and nominees for election to the Board of Directors of the
Company is incorporated by reference to the information set forth under
the caption "Election of Directors" and "Compliance With Section 16(A)
of the Exchange Act," on pages 3 and 10, respectively, of the
Company's Definitive Proxy Statement dated March 19, 1996.
The following information is submitted with respect to the
executive officers of the Company as of December 31, 1995.
Age on
December 31, Officer
Name 1995 Position Since
L. Lowry Mays 60 President/Chief Executive Officer 1972
Herbert W. Hill, Jr. 36 Vice President/Controller 1989
Mark P. Mays 32 Senior-Vice President/Operations 1989
Randall T. Mays 30 Vice President/Treasurer 1993
Kenneth E. Wyker 34 Vice President/Legal Affairs 1993
Dave Ross 45 Vice President GM WHYI-FM, WBGG-FM 1994
William R. Riordan 38 Exec. Vice President/COO Clear
Channel Television 1990
Josh McGraw 45 Vice President GM WAWS-TV 1991
Jack Peck 39 Vice President GM WPTY-TV 1992
The officers named above serve until the next Board of Directors
meeting immediately following the Annual Meeting of Shareholders.
Mr. L. Mays is the founder of the Company and has been the
President and Chief Executive Officer of the Company and its
predecessor since 1972. He has been a director of the Company since its
inception.
Mr. H. Hill has been the Vice President/Controller of the
Company since January, 1989. He has been the Principal Financial Officer
of the Company since June 1991.
Mr. M. Mays has been Senior Vice President of Operations
since 1993. Prior thereto he was Vice President and Treasurer of the
Company for the remainder of the relevant five year period.
Mr. R. Mays, prior to his election as an officer in 1993,
was an associate for Goldman Sachs. Prior thereto he was a graduate
student at Harvard University for the remainder of the relevant
five year period.
Mr. K. Wyker, prior to his election as an
officer in 1993, was Corporate Counsel at Greater Media for the
remainder of the relevant five year period.
Mr. D. Ross, prior to his election as an officer of the
Company in 1994, was Executive Vice President and General Manager of
WHYI-FM under Metroplex Communications, Inc. for the remainder of
the relevant five year period.
Mr. W. Riordan, has been an officer of the Company for the
relevant five-year period. Mr. Riordan served as General Manager
of KSAS-TV from 1990 to 1993, as General Manager of WFTC-TV from
1993 to 1995, and is currently Executive Vice President and Chief
Operating Officer of Clear Channel Television, Inc.
Mr. J. McGraw, prior to his election as an officer of the
Company in 1991, was employed as the Vice President and General
Manager of WPXC-TV in Portland, Maine for the remainder of the
relevant five year period.
Mr. J. Peck, prior to his election as an officer of the
Company in 1992, was employed as General Sales Manager for WPTY-TV
for the remainder of the relevant five year period.
There is no family relationship between any of the executive
officers of the Company except that Mark P. Mays, Senior Vice
President Operations, and Randall T. Mays, Vice President and
Treasurer, are the sons of the President and Chief Executive
Officer, L. Lowry Mays.
ITEM 11. Executive Compensation
The information required by Item 11 is incorporated by
reference to the information set forth under the caption
"Executive Compensation" on page six of the Company's Definitive Proxy
Statement dated March 19, 1996. Cash Compensation excludes
personal benefits and other forms of non-cash compensation, the
aggregate value of which did not exceed the lesser of $25,000 or
10% of the cash compensation shown for each officer. Directors
who are not also officers of the Company receive $5,000 for each
meeting of the Board of Directors they attend and are reimbursed
for travel expenses. Those Board members on the Compensation
Committee receive $500 for each meeting they attend.
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by Item 12 is incorporated
by reference to the Company's Definitive Proxy Statement dated
March 19, 1996 under the headings "Security Ownership" and
"Election Of Directors And Director Compensation" on pages 2 and
3, respectively. Except as described therein, no other individual or
group owns 5% or more of the outstanding Common Stock.
ITEM 13. Certain Relationships and Related Transactions
The information required by Item 13 is incorporated by reference
to the Company's Definitive Proxy Statement dated March 19, 1996
on page ten under the heading "Certain Transactions."
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a)1 Financial Statements. The following consolidated financial
statements and report of independent auditors are incorporated
by reference to the Registrant's Annual Report on pages 19 through 33.
Report of Independent Auditors
Consolidated Balance Sheets as of December 31, 1995 and
1994. Consolidated Statements of Earnings for the Years
Ended December 31, 1995, 1994 and 1993.
Consolidated Statements of Changes in Shareholders'
Equity for the Years Ended December 31, 1995, 1994 and
1993.
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993.
Notes to Consolidated Financial Statements
(a)2 Financial Statement Schedules. The following financial
statement schedules for the years ended December 31, 1995, 1994
and 1993 are filed as part of this report and should be read in
conjunction with the financial statements.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Allowance for doubtful accounts
Charges
Balance at to Costs, Write-off Balance
Beginning Expenses of Accounts at end of
Description of period and other Receivable Period
- --------------------- ---------- --------- ------------- ---------
$1,639,545(1)
1,224,460
Year ended ----------
December 31, 1993 $1,779,312 $2,864,005 $1,616,532 $3,026,785
========= ========== ========= =========
$ 442,490(1)
1,394,535
Year ended ----------
December 31, 1994 $3,026,785 $1,837,025 $1,746,314 $3,117,496
========= ========== ========== =========
$1,003,995(1)
2,352,300
Year ended ----------
December 31, 1995 $3,117,496 $3,356,295 $2,664,262 $3,809,529
======== ========== ========== =========
(1) Allowance on accounts receivable acquired in acquisitions net of
deletion related to dispositions.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Accumulated Amortization of Intangibles
Charges
Balance at to Costs, Balance
Beginning Expenses at end of
Description of period and other Deletions (1) Period
- --------------------- ---------- --------- ------------ --------
Year ended
December 31, 1993 $15,798,019 $ 8,230,280 -- $24,028,299
========== ========== ========== ===========
Year ended
December 31, 1994 $24,028,299 $12,029,436 $ 2,195,935 $33,861,800
========== ========== ========== ==========
Year ended
December 31, 1995 $33,861,800 $18,389,056 $ 58,529 $52,192,327
========== ========== ========== ==========
(1) Related to disposition of stations and fully amortized intangible assets.
All other schedules for which provision is made in
the applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.
(a)3 Exhibits. Refer to (c) below.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
last quarter of the year ended December 31, 1995.
(c) Exhibits
(a) 3.1 -- Articles of Incorporation, as amended, of Registrant
(v) 3.11 -- Articles of Amendment to the Articles of Incorporation
of Clear Channel Communications, Inc.
(a) 3.2 -- Amended and Restated Bylaws of Registrant
(a) 4 -- Buy-Sell Agreement among Clear Channel
Communications, Inc.,
L. Lowry Mays, B. J. McCombs, John M. Schaefer and
John W. Barger dated May 31, 1977.
(a)10.1 -- Incentive Stock Option Plan of Clear Channel
Communications, Inc. dated as of January 1, 1984.
(b)10.2 -- Television Asset Purchase Agreement dated January
27, 1992, by and between Chase Broadcasting of
Memphis, Inc. and Clear Channel Television, Inc.
(b)10.3 -- Radio Asset Purchase Agreement dated January 31,
1992, by and between Noble Broadcasting of
Connecticut, Inc. and Clear Channel Radio, Inc.
(b)10.4 -- Radio Asset Purchase Agreement dated April 19, 1992,
by and between Edens Broadcasting, Inc. and Clear Channel
Radio, Inc. (k)10.33 -- Radio Asset Purchase Agreement dated
January 31, 1993, by and between KHFI Venture, LTD. and
Clear Channel Radio, Inc. (l)10.34 Radio Asset Purchase
Agreement dated December 28, 1992, by
and between Westinghouse Broadcasting Company,
Inc. and Clear Channel Radio, Inc.
(c)10.5 -- Radio Asset Purchase Agreement dated December 23,
1992, by and between Inter-Urban Broadcasting of New Orleans
Partnership and Snowden Broadcasting, Inc.
(d)10.6 -- Television Asset Purchase Agreement dated August
19, 1993, by and between Television Marketing Group of
Memphis, Inc. and Clear Channel Television, Inc.
(e)10.7 -- Radio Asset Purchase Agreement April 1, 1993, by
and Capital Broadcasting of Virginia, Inc. and
Clear Channel Radio, Inc.
(f)10.8 -- Television Asset Purchase Agreement dated August
31, 1993, by and between Nationwide
Communications, Inc. and Clear Channel Television,
Inc.
(g)10.9 -- Radio Asset Merger Agreement dated March 22, 1994,
by and between Metroplex Communications, Inc. and
Clear Channel Radio, Inc.
(h)10.10 -- Radio Partnership Interest Purchase Agreement dated
April 5, 1994, by and between Cook Inlet Communications, Inc.
and WCC Associates and Clear Channel Radio, Inc.
(i)10.11 -- Television Asset Purchase Agreement September 12,
1994, by and between Heritage Broadcasting Company
of New York, Inc. and Clear Channel Television, Inc.
and Clear Channel Television Licenses, Inc.
(j)10.12 -- Radio Asset Purchase Agreement dated November 17,
1994, by and between Noble Broadcast of Houston,
Inc. and Clear Channel Radio, Inc.
(k) 10.13 -- Australian Radio Network Shareholders Agreement dated
February, 1995, by and between APN Broadcasting
Investments Pty Ltd, Australian Provincial Newspapers Holdings
Limited, APN Broadcasting Pty Ltd and Clear Channel
Radio, Inc. and Clear Channel Communications, Inc.
(l) 10.14 -- $600,000,000 Amended and Restated Credit Agreement
Among Clear Channel Communications, Inc., Certain Lenders,
and Nationsbank of Texas, N.A., as Administrative Lender,
dated October 19, 1995.
(m) 10.15 -- Clear Channel Communications, Inc. 1994 Incentive Stock
Option Plan.
(m) 10.16 -- Clear Channel Communications, Inc. 1994 Nonqualified Stock
Option Plan.
(m) 10.17 -- Clear Channel Communications, Inc. Directors' Nonqualified Stock
Option Plan.
(m) 10.18 -- Option Agreement for Officer
10.19 -- Employment Agreement between Clear Channel Communications,
Inc. and L. Lowry Mays
13.1 -- Annual Report to Shareholders for Fiscal Year Ended
December 31, 1995.
22 -- Subsidiaries of the Registrant.
24.1 -- Consent of Independent Auditors - Ernst & Young LLP
24.2 -- Consent of Independent Auditors - KPMG
99.1 -- Report of Independent Auditors - KPMG
(a) -- Incorporated by reference to the
exhibits of the Company's Registration Statement on Form S-1
(Reg. No. 289161) dated April 19, 1984.
(b) -- Incorporated by reference to the Registrant's Form 8-K dated
July 14, 1992.
(c) -- Incorporated by reference to the Registrant's Form 10-Q dated
May 12, 1993.
(d) -- Incorporated by reference to the Registrant's Form 8-K dated
September 2, 1993.
(e) -- Incorporated by reference to the Registrant's Form 10-Q dated
November 1, 1993.
(f) -- Incorporated by reference to the Registrant's Form 8-K dated
October 27, 1993.
(g) -- Incorporated by reference to the Registrant's Form 8-K dated
October 26, 1994.
(h) -- Incorporated by reference to the Registrant's Form 10-Q dated
November 14 1994.
(i) -- Incorporated by reference to the Registrant's Form 8-K
dated December 14, 1994.
(j) -- Incorporated by reference to the Registrant's Form 8-K
dated January 13, 1995.
(k) -- Incorporated by reference to the Registrant's Form 8-K
dated May 26, 1995.
(l) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 14, 1995.
(m) -- Incorporated by reference to the Registrant's Form S-8
dated November 20, 1995.
EXHIBIT 10.19 - EMPLOYMENT AGREEMENT BETWEEN
CLEAR CHANNEL COMMUNICATIONS, INC. AND L. LOWRY MAYS
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of February 1, 1994, between
CLEAR CHANNEL COMMUNICATIONS, INC., a Texas corporation
(the "Company"), and L. LOWRY MAYS, a resident of San Antonio,
Texas (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to employ Employee as its President
and Chief Executive Officer, and Employee desires to accept such
employment, on the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained below, and other good and valuable considerations,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. Employment. The Company hereby agrees to employ Employee
as its President and Chief Executive Officer, and Employee hereby
agrees to accept such employment and to perform the services specified
herein upon the terms and conditions herein set forth.
2. Term. The term of employment hereunder shall commence upon
the date hereof and continue for a period of three (3) years. On each
anniversary date of this Agreement, the term of employment shall be
automatically renewed and extended for a successive one (1) year period.
3. Compensation.
(a) Employee shall receive as compensation for his services
hereunder a salary of Six Hundred Thousand Dollars ($600,000) per year,
which sum shall be payable in equal semi-monthly installments. Employee shall
also be entitled to receive such bonuses or other compensation as the Board of
Directors, or the Compensation Committee thereof, may from time to time
authorize.
(b) Such compensation shall be in addition to any health, life and
disability insurance benefits which are extended from time to time to
the Employee pursuant to health, life and disability insurance plans or
policies of the Company then in effect.
(c) Employee shall also be entitled at the expense of the Company to
the use of an automobile appropriate to his position and shall be entitled
to an annual vacation in accordance with the Company's policies.
4. Expenses. Employee is hereby authorized, in accordance with
the policies and practices of the Company then in effect, to incur reasonable
expenses in conducting the business of the Company, including travel,
entertainment and similar expenses, and to receive prompt reimbursement
by the Company upon presentation of invoices and receipts therefor.
5. Duties. Employee shall faithfully and diligently perform the duties
of President and Chief Executive Officer of the Company in accordance
with the Bylaws of the Company then in effect, as well as such other duties
as the Board of Directors may from time to time prescribe.
6. Extent of Service. Employee shall devote a substantial portion of
his business time, attention and energy to the Company. Nothing herein
is intended to prevent Employee from making personal passive investments
in other business activities not competitive with the Company.
7. Termination. The employment of Employee hereunder shall
terminate upon the occurrence of any of the following: (i) the death of
Employee; (ii) the physical or mental incapacity of Employee to perform
the services required hereunder, in the determination of the Board of
Directors, for a period in excess of ninety (90) days; (iii) conduct by
Employee constituting gross neglect of his duties, willful misconduct,
fraud or dishonesty; or (iv) the material breach by Employee of any of
his duties or obligations hereunder. Upon the termination of the
employment of Employee hereunder, the Company shall have no further
obligation to Employee or his personal representatives, except for
compensation accrued hereunder and unpaid at the date of such termination.
Notwithstanding the foregoing, compensation as provided in Section 3
hereof shall continue to be paid to Employee in the event of his termination
pursuant to clause (ii) above.
8. Disclosure of Information. The Employee hereby acknowledges
that he will have access to certain trade secrets and confidential
information of the Company, and that such information constitutes valuable,
special and unique property of the Company. The Employee shall not,
during or after the term of his employment hereunder, disclose any such
trade secrets or confidential information to any person or entity for any
reason or purpose whatsoever, except as may be required by law.
9. Agreement Not to Compete. Employee agrees that for a period of
one (1) year following the termination of his employment with the Company,
neither he nor any affiliate shall, either in his own behalf or as a partner,
officer, director, employee, agent or shareholder (other than as the holder
of less than 5% of the outstanding capital stock of any corporation with a
class of equity security registered under the Securities Act of 1933,
as amended) engage in, invest in or render services to any person or
entity conducting business in competition with the Company in any
metropolitan area in which the Company is then conducting business
("Competitive Business").
10. Agreement Not to Solicit Clients and Employees. Employee agrees
that for a period of one (1) year following the termination of his
employment with the Company, neither he nor any affiliate shall, either
alone or on behalf of any business engaged in a Competitive Business,
(i) solicit or induce, or in any manner attempt to solicit or induce any
person employed by, or an agent of, the Company to terminate his
employment or agency, as the case may be, with the Company, or (ii)
divert, or attempt to divert, any person or entity which purchases
advertising from the Company's stations or otherwise from doing business
with the Company, nor will he attempt to induce any person or entity to
cease being or becoming an advertiser of the Company's stations or
cease doing business with the Company.
11. Death Benefit. In the event of the death of Employee, his
widow or designated beneficiary (or if none of the above, his estate),
shall receive Nine Hundred Thousand Dollars ($900,000) as a death
benefit, payable in equal semi-monthly installments as provided in Section
(a) hereof, in consideration of Employee's entering into this Agreement.
The Company may provide for the payment of such amounts through
insurance.
12. Change of Control. In the event of a change of control of the
Company opposed by its management, Employee shall receive in a lump
sum upon such Occurrence a payment equal to his base annual
compensation for three (3) years ($1,800,000). For purposes hereof,
the term "change of control" shall mean any merger, consolidation or
reorganization of the Company with or into another person or entity,
any sale of the assets of the Company or any acquisition of the
Company's voting securities, with the result, in each instance, that
less than 51% of the combined voting power of the then-outstanding
voting securities of the Company or the surviving entity immediately
after such transactions are held in the aggregate by persons or entities who
were holders of voting securities of the Company immediately prior to any
such transaction.
13. Independent Covenants. The covenants contained herein are
independent and separate, and in the event that any provision contained
herein is declared invalid or illegal, the other provisions hereof shall not
be affected or impaired thereby and shall remain valid and enforceable.
14. Injunctive Relief. In the event of a breach or threatened breach by
Employee of the provisions of this Agreement, the Company shall be
entitled to an injunction to prevent irreparable injury to the Company.
Nothing herein shall be construed as prohibiting the Company from pursuing
any other remedies available to the Company for such breach or threatened
breach, including the recovery of damages from the Employee.
15. Notice. Any notice required or permitted hereunder shall be
deemed sufficiently given if in writing and either personally delivered or
sent by certified mail, postage prepaid, addressed to the party at the
address set forth below, or at such other address as the party may
subsequently designate:
(a) L. Lowry Mays
400 Geneseo Road
San Antonio, Texas 78209
(b) Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216-6940
16. Integration. This Agreement represents the entire understanding
and agreement between the parties hereto with respect to the subject
matter hereof, and all prior understandings and agreements between
the parties hereto relating to the subject matter hereof are hereby superseded.
17. Amendment; Waiver. No modification or amendment hereof shall
be valid and binding, unless it be in writing and signed by the parties hereto.
The waiver of any provision hereof shall be effective only if in writing and
signed by the parties hereto, and then only in the specific instance and for
the particular purpose for which it was given. No failure to exercise, and
no delay in exercising, any right or power hereunder shall operate as a
waiver thereof.
18. Benefit. This Agreement shall inure to the benefit of and shall be
binding upon Employee, his heirs and personal representatives, and the
Company, its successors and assigns. Neither this Agreement nor the rights
and obligations created hereunder, may be assigned by Employee without
the prior written consent of the Company.
19. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY,
THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties have duly executed this Agreement,
as of the date and year first above written.
COMPANY:
CLEAR CHANNEL COMMUNICATIONS, INC.
By: L. Lowry Mays
__________________________________
L. Lowry Mays, its President
EMPLOYEE:
L. Lowry Mays
_______________________________________
L. Lowry Mays
EXHIBIT 13.1 - ANNUAL REPORT TO SHAREHOLDERS
Clear Channel Communications, Inc.
Annual Report 1995
1995 Accomplishments
Record Sales
Achieved record sales of $283 million, an increase
of 41 percent over 1994.
Record Operating Profits at the Station Level
Earned $113 million in station operating income
before depreciation and amortization, an increase
of 55 percent over 1994.
Record After Tax Cash Flow
Generated more than $71 million in after tax cash
flow, an increase of 52 percent over 1994.
Record After Tax Cash Flow Per Share
Reported after tax cash flow per share of $2.03,
adjusted for a two-for-one stock split on November
30, 1995, an increase of 50 percent over 1994.
Long-Term Stock Price Performance
In a recently released survey in the Wall Street
Journal for the year ended 1995, Clear Channel
Communications was the eighth best performing
stock over the last 10 years, the 11th best
performing stock over the last five years and the
17th best performing stock over the last three
years.
Increased Access to Capital
Improved financial availability and flexibility by
completing a new $600 million revolving credit
facility.
Domestic Radio Acquisitions
Acquired KPRC-AM, KSEV-AM, and KMJQ-FM in Houston,
TX. Acquired a 21.4 percent interest in Heftel
Broadcasting Corporation, the largest domestic
Spanish-language broadcaster.
Domestic Television Acquisitions
Acquired WHP-TV, the CBS affiliate in Harrisburg,
PA and entered into Local Marketing Agreements
with WLYH-TV and WNFT-TV, the UPN affiliates
serving Harrisburg, PA and Jacksonville, FL,
respectively.
International Acquisitions
Acquired a 50 percent interest in the second
largest radio group in Australia, the Australian
Radio Network Pty Ltd.
Television Affiliation Changes and Local News Expansion
WPTY-TV became the ABC affiliate in Memphis, TN on
December 1, 1995. WPMI-TV became the NBC
affiliate in the Mobile, AL / Pensacola, FL
market on January 1, 1996. Both stations have
launched extensive local news operations.
Strengthened Management
Strengthened management at all levels and updated
the Company's strategic plan.
W. Ripperton Riordan was promoted to the position
of Executive Vice President and
Chief Operating Officer of Clear Channel Television.
Financial Highlights
In Thousands Except Per Share Amounts 1995 1994 % Change
Gross broadcasting revenue $283,357 $200,695 +41
Station operating income before
depreciation and amortization 112,555 72,673 +55
Operating income 71,372 42,904 +66
Net income 32,014 22,009 +45
Net income per share(1) .91 .63 +44
After tax cash flow(2) 71,140 46,866 +52
After tax cash flow per share(1)(2) 2.03 1.35 +50
(1) Adjusted for two-for-one stock split effective November 30, 1995.
(2) Defined as net income plus depreciation,
intangible amortization (including nonconsolidated
affiliates) and deferred taxes.
Note: Following this table in the glossy annual report are four bar
graphs depicting the increase in gross revenue, station operating
income, after-tax cash flow, and after-tax cash flow per share from
fiscal year 1991 to fiscal year 1995.
Letter to the Shareholders
Dear Fellow Shareholders,
Nineteen ninety-five was the most successful year
in your company's history. I am pleased to report
that the share price of the Company's common stock
increased 74 percent during 1995. Financial
results again achieved record levels in our core
businesses of radio and television broadcasting.
After tax cash flow per share, the most important
measure of your company's financial performance,
increased 50 percent from $1.35 to $2.03. Gross
revenues reached $283.4 million, up 41 percent
compared to 1994. After tax cash flow increased 52
percent from $46.9 million to $71.1 million.
Station operating income before depreciation and
amortization rose 55 percent from $72.7 million to
$112.6 million. Net income increased 45 percent
from $22.0 million, or $.63 per share, to $32.0
million, or $.91 per share. All per share amounts
have been adjusted to reflect a two-for-one stock
split effective November 30, 1995.
Radio Your company made significant
investments in each of its radio markets to
maintain its marketing and strategic presence.
These investments will help the radio division
maintain strong growth in 1996. Management has
significantly improved the performance of recent
acquisitions and continues to look for new
opportunities to increase shareholder value.
Subsequent to the Company's January 1995
acquisition of KPRC, KSEV and KMJQ in Houston,
Texas, the Company is now the leader in both
revenue share and audience share in Houston, the
ninth largest radio market in the United States.
This strategic combination is indicative of how
the Company continues to expand and dominate its
markets.
In May of 1995, your company made its first
foray into international broadcasting by acquiring
50 percent of the second largest radio broadcaster
in Australia through the formation of a new
venture, the Australian Radio Network Pty Ltd,
which owns half of the commercial FM stations in Australia's
two largest cities, Sydney and Melbourne, as well
as stations in Brisbane, Canberra and
Albury/Wodonga. Based upon the initial success of
our Australian investment, the Company will
continue to look for international opportunities
that meet our stringent investment criteria.
In May of 1995, your company also acquired a
21.4 percent interest in Heftel Broadcasting
Corporation, the largest Spanish-language radio
broadcaster in the United States. This investment
gives the Company the ability to participate in a
rapidly growing niche within our industry.
In February of 1996, the Company purchased
the broadcasting assets of WOOD-AM/FM and WBCT-FM
in Grand Rapids, MI for approximately $42 million
and entered into a Local Marketing Agreement (LMA)
with an option to purchase the FCC licenses. These
stations will give the Company a significant
presence in Grand Rapids.
In March of 1996, the Company entered into a
definitive agreement to acquire US Radio, Inc. for
$140 million. US Radio owns or operates 13 FM and
5 AM stations in eight markets. We expect to close
this transaction during the Summer of 1996.
Television At the end of 1995, your company
owned and/or operated television stations which
are affiliated with five different networks: one
each with CBS, ABC and NBC, six with Fox and seven
with UPN.
In Memphis, WPTY-TV switched from Fox to ABC on
December 1, 1995; while in Mobile/Pensacola, WPMI-
TV switched from Fox to NBC on January 1, 1996. In
each of these markets, the Company has made
considerable investments to start up local news
franchises. While these investments are
significant and dilutive to earnings in the short-
term, we believe that they are important to our
long-term strategic presence in these markets. An
alternative news product will also be broadcast in
different time slots on our LMA stations in each
of these markets.
In November, the Company acquired WHP-TV, the CBS
affiliate in the Harrisburg/Lancaster/Lebanon/York
market of Pennsylvania. This market had two CBS
affiliates serving the same market, which made it
difficult for either station to attract sufficient
audience or advertisers to compete effectively.
Therefore, the company entered into an LMA with
WLYH-TV, the other CBS affiliate. WLYH-TV
subsequently switched from CBS to UPN. It is our
hope that the CBS audience can be consolidated
with WHP-TV and a new audience can be reached
through the new UPN affiliation on WLYH-TV.
Additionally, the Company intends to increase
greatly its presence in local news and make both
stations significant news outlets.
Deregulation The Telecommunications Act of
1996 (the Act) has significantly relaxed ownership
regulations with regard to both radio and
television stations. The Act has eliminated
restrictions on the total number of radio stations
the Company can own nationally and allows the
Company to own up to 8 radio stations per market
in most of its existing markets. The Company
believes that this potential for consolidation
will improve the operating characteristics of the
entire radio industry. The Act has also eliminated
restrictions on the number of television stations
the Company can own, subject to a national
ownership limit of stations that control no more
than 35 percent of the total United States viewing
audience. The Company is optimistic about the new
opportunities the Act creates to increase
shareholder value.
Strategic Direction Your company continues
to be committed to its proven corporate strategy:
Decentralized, flexible, entrepreneurial
business units that place emphasis on simplifying
structures and procedures,
Sound centralized financial management,
Growth through internal expansion of existing
broadcast properties, supplemented by strategic
acquisitions,
Internal capital investment to improve
quality and market leadership,
Insistence on adherence to the highest
standard of integrity and business conduct, and
Significant attention to long-term strategic planning.
The future of our core businesses of radio and
television is bright, and the markets we serve
continue to improve. Our position in each of those
markets remains one of leadership. To the over
1,800 members of our team who made 1995 possible,
I personally thank you. And to our shareholders,
you may continue to expect that our team is
committed to enhancing the long-term value of your
investment.
Sincerely,
Lowry Mays
President and Chief Executive Officer
March 4, 1996
Acquisitions
We believe the ultimate measure of our success is
to provide a superior value to our shareholders, balancing near-term and
long-term objectives. To that end, Clear Channel
continues to improve existing operations while
maximizing opportunities for expansion.
Historically, Clear Channel has capitalized on
expanded ownership of radio and television
stations to enhance its competitive position in
virtually every market in which it operates.
Nineteen ninety-five provided the Company with
opportunities for international expansion in radio
and diversification into every major television
network.
International Expansion
The Company recognized two significant factors
that made expansion into the Australian market
attractive. First, beginning in 1992, the
Australian government relaxed broadcasting laws,
allowing for 100 percent foreign ownership of
radio properties, subject to approval by the Foreign
Investment Review Board. Second, this same legislation
allowed for duopoly (ownership of two stations in
the same market of the same service -- AM or FM) in
radio, changing the economics of the industry for
the better. However, it was not until the Summer
of 1994, that a significant opportunity became
available that warranted our management's time and
energy.
In the Spring of 1995, the Company entered into a
transaction that combined the radio operations of
three Australian entities to create the Australian
Radio Network Pty Ltd (ARN). ARN combined Wesgo
Limited, a publicly-traded company recently
acquired by Australian Provincial Newspapers, with
the Australian Radio Network, which had been owned
by the Albert Family. Gold 104FM in Melbourne was
purchased by ARN as a stand-alone station. Those
three entities were combined and renamed the
Australian Radio Network Pty Ltd, of which the
Company owns 50 percent, while Australian
Provincial Newspapers owns the other 50 percent.
In addition to the opportunity for 100 percent
foreign ownership within a rapidly consolidating
industry, the Australian broadcasting industry has
a number of other factors which are compelling for
the Company. Australia has a stable government
with a defined licensing process which eliminates
the risk of losing any licenses or having new
licenses that are not regulated coming into the
market. It also has a stable currency which is
monitored by a federal reserve board that is
attuned to the monetary policy of the United
States Federal Reserve. Another advantage is that
English is the primary language in Australia, in
contrast to other foreign markets where language
differences pose significant barriers to entry.
All of these factors combined to make ARN an
attractive investment.
Having seen the positive effects of duopoly in the
U.S., the Company is optimistic about the
possibilities of duopoly in Australia. ARN and
Austereo, the largest radio broadcaster in
Australia, control approximately 62 percent of
radio revenues in the two major cities of
Melbourne and Sydney.
ARN, along with other Australian broadcasters,
hopes to expand the usage of radio by advertisers
in Australia. The long-term goal for the
Australian radio industry is to provide a more
cost-effective advertising medium. The dynamics of
increased radio advertising and increased capital
committed to radio advertising should have a
significantly positive impact on ARN.
Clear Channel will continue to employ its
decentralized management philosophy with regard to
ARN. ARN has hired Nigel Milan, the former CEO of
Radio New Zealand. He successfully turned around
Radio New Zealand which owns and operates over 40
radio stations in New Zealand. We believe Mr.
Milan brings a level of intensity and enthusiasm
to ARN which will provide strong leadership and
prosperity for ARN.
Though globalization has become quite popular for
publicly traded companies, Clear Channel has not
felt compelled to have an international presence.
Our mandate is simply to try to create as much
value for our shareholders as possible. When
Australia changed its laws in 1992, allowing for
duopoly and 100 percent foreign ownership, the
Company recognized that it might provide
attractive returns on investments. To that end,
your company continues to be opportunistic, rather
than expansionary, when evaluating acquisitions in
global markets.
The pro forma results for 100% of ARN, after
station divestitures, for the year ended December
31, 1995 are detailed below. At February 29, 1996,
the foreign currency exchange rate was US $1 = A
$1.31.
Revenues A$ 83,242,000
Operating expenses A$ 55,948,000
Station operating income before
depreciation and amortization A$ 27,294,000
Corporate/other A$ 2,765,000
EBITDA A$ 24,529,000
Expansion within the United States
Heftel Broadcasting Corporation
In May of 1995, the opportunity to acquire a
significant interest in the largest Spanish-
language broadcasting company in the United
States, Heftel Broadcasting Corporation, became
available and the Company took a 21.4 percent
equity position in Heftel's publicly-traded Class
A common stock. Heftel's stock is traded on the
NASDAQ under the symbol HBCCA.
Strategically, this acquisition positions the
company in the attractive and rapidly growing
Spanish-language broadcasting niche. Because the
Hispanic population is the fastest growing
population segment in the United States and
because fewer stations per capita target the
Spanish-language market, the Company believes that
Spanish-language broadcasting is an attractive,
long-term growth industry. Due to the fact that
well-established market positions held by existing
radio stations make it difficult to start new
Spanish-language stations, the Company opted to
invest in an established Spanish-language
broadcaster. Consistent with the Company's own
long-term strategy to dominate its markets,
Heftel's strategy is to become the dominant
Spanish-language broadcaster in the U.S. Heftel
should benefit from the increased consolidation
of the Spanish-language niche made possible by
the Telecommunications Act of 1996. The Company's
initial investment in Heftel in May of 1995 has
more than doubled in value and we look forward to
increased growth in this investment.
US Radio, Inc.
In March of 1996, the Company entered into a
definitive agreement to acquire US Radio, Inc. for
$140 million. US Radio owns and/or operates 13 FM
and 5 AM stations in eight markets in the U.S.
This transaction will expand our broadcasting
presence in some of our existing markets and give
the Company an excellent foundation in other
markets from which it can continue to grow.
Oklahoma City
We believe we have an obligation to the well-being
of the communities in which we work. We further
believe the future of the Company's core
businesses is closely tied to public service and
that the standards we set will be measured closely
by the communities we serve and the regulators who
license us.
Clear Channel's involvement in an event that
challenged the entire nation's belief in the good
of humanity, the April 19, 1995 bombing of the
Alfred P. Murrah federal building in Oklahoma
City, is an example of Clear Channel's commitment
to responsive and responsible broadcasting in all
of the communities it serves. In this particular
incident, Clear Channel's own KTOK, itself, became
part of the story. As the city's most prominent
news talk station, the media found the voice of
Oklahoma City to be KTOK.
April 19, 1995 was anything but exceptional for
KTOK until 9:02 that morning. A gas explosion, an
airplane crash, a tanker truck involved in an
accident, an earthquake, and even a bomb, were
initial descriptions of the reverberations felt by
personnel inside Clear Channel Communications'
Oklahoma City offices. The view to the southeast
did not immediately answer any questions. It did,
however, confirm that something tragic had
happened in downtown Oklahoma City.
At 9:02 a.m., KTOK reporter Carrie Hulsey was en
route to an assignment at the federal courthouse.
She was stopped at a light about a block south of
the Alfred P. Murrah federal building when the
blast occurred. Gathering up her wits, as well as
the car's two-way radio, Carrie made her way to
the building. By 9:03 a.m., KTOK reporter Craig
Logsdon was on the air, describing the view from
the Clear Channel studios at 50 Penn Place. Within
one minute and thirty seconds after the explosion,
Carrie Hulsey was on the air, via her car's two-
way radio, describing the destruction and
confusion that had only begun to rain down on the
city. Moments later, KTOK News Director Jerry
Bohnen began nine hours of anchoring the stations'
initial coverage.
As the news of the tragedy spread throughout the
country, the calls for news feeds came from every
major network and station in the world. The
incredible speed with which information was
disseminated across the nation and the world was
no accident. Due to Clear Channel's expertise in
feeding other news organizations daily through the
Oklahoma News Network (ONN), the implementation of
a crisis management plan to ensure information
integrity and the rapid relay of wire feeds was
basically standard operating procedure. KTOK and
the Oklahoma News Network served as the link to the tragedy in
Oklahoma City. A significant amount of the
continuous coverage aired by the ABC radio
networks consisted of KTOK programming. Also, ONN
and KTOK provided feeds to hundreds of radio
stations and news services throughout the world.
While major networks and news stations dealt with
the logistics of getting their people to the scene
in Oklahoma, KTOK became the world's link to this
Midwest tragedy. Abandoning their usual
entertainment formats, Clear Channel's two FM
stations, KJ103 and KEBC, began to air the
complete KTOK news feed, giving KTOK unprecedented
exposure to the Oklahoma City market.
Fifty Penn Place, in the collage at left, is home
not only to the Oklahoma City contingent of Clear
Channel, but to the Oklahoma city branch of the
FBI as well. Almost every building housing federal
authorities in Oklahoma City was to be evacuated
and swept for bombs. Keeping the station on the
forefront of the coverage was going to be a
challenge if personnel were not allowed to remain
inside, or if it was a dangerous situation. The
cooperation and teamwork among all the stations
and employees made the evacuation of just about
everybody but news personnel and a few technicians
a relatively simple matter.
It was hardly just a few people, though, that gave
KTOK its prowess during this crisis. It was a
classic case of the whole being greater than the
sum of its parts. Everyone from every department
of all three Clear Channel stations, as well as
ONN, contributed. A production director fed
reports from the fire department headquarters, FM
announcers did reports from blood donation sites,
sales people helped gather information from across
the nation and receptionists fielded the countless
telephone calls.
While there were hundreds of stories to report as
a result of the bombing, KTOK's principal
assignments included two reporters at the
command/media center next to the federal building
24 hours a day and another reporter covering the
blast site from a different local site
approximately 12 hours a day.
When the station was not broadcasting news
reports, KTOK focused on the other thing it does
so well-talk. The station simply opened the phones
and let the city talk-about its feelings, its
theories, its fears, its hopes. In a continuing
effort to serve the community, the station
provided 12 hours of psychological discussion
during the first week following the blast. On the
Sunday after the blast, nationally-syndicated
counselor Dr. Laura Schlessinger provided two
hours of discussion and grief counseling
specifically for Oklahoma City.
Not only did every Clear Channel employee in
Oklahoma City go beyond the call of duty, but the
company as a whole did much more than broadcast
some of the most timely and thorough information
available. For example, the three Clear Channel
radio stations and the Oklahoma News network, in
conjunction with the Bank of Oklahoma, initiated a
relief fund which raised more than $200,000 to
help families of the victims of the bombing. The
Clear Channel Oklahoma City stations' key fund-
raising event was the "Healing in the Heartland"
concert in the Summer of 1995, which featured
various country and contemporary recording
artists, including headliner Tony Bennett.
From being the first to broadcast from the blast
scene, to the memorial services, to the demolition
of the building, and even through to the end of
the Nichols and McVeigh trials, KTOK has been, and
will continue to be, a primary source of breaking
news regarding the bombing-thanks, in no small
part, to the teamwork of everyone associated with
the operation. Our corporate stewardship is
possible only through Clear Channel personnel's
commitment to our communities, which proves once
again that your company upholds its creed: Clear
Channel people are our most important asset,
making the critical difference in how we perform.
They are what separates us from our competitors.
Investment Highlights
Five-year Cumulative Return - bar graph showing the relative values of
a $1,000 investment in Clear Channel Communications, Inc. Common
Stock, compared to the same relative values of the S&P 500
Index and the Paul Kagan Associates Broadcast Index at December
31 of each of the past five years:
Year-end value of $1,000 invested at December 31,
1990 over the last five years. This represents a
compound annual growth rate of approximately 75%
1990: $ 1,000
1991: $ 1,329
1992: $ 2,397
1993: $ 6,765
1994: $ 9,329
1995: $ 16,222
% Revenue by Market - Pie chart showing the
following percentages:
San Antonio: 5.9%
Louisville: 6.2%
Albany: 3.6%
Harrisburg: 0.7%
Tulsa: 6.0%
Tucson: 0.2%
Memphis: 7.7%
Minneapolis: 9.8%
Mobile/
Pensacola: 3.9%
Cleveland: 3.6%
Miami/Ft.
Lauderdale: 5.2%
Houston: 11.1%
New Haven: 2.4%
Little Rock: 3.9%
Austin: 3.2%
Wichita: 2.9%
New Orleans: 3.3%
Tampa: 6.0%
Jacksonville: 5.2%
Oklahoma City: 4.1%
Richmond: 5.1%
Family Tree
RADIO
San Antonio, TX
WOAI-AM
News/Talk/Sports
1200 AM
KQXT-FM
Adult Contemporary
101.9 FM
KTKR-AM
News/Talk/Sports
760 AM
KAJA-FM
Country
97.3 FM
KSJL-FM*
Adult Urban
96.1 FM
New Haven, CT
WKCI-FM
Contemporary Hits
101.3 FM
WAVZ-AM
Nostalgia
1300 AM
WELI-AM
News/Talk
960 AM
Austin, TX
KPEZ-FM
Classic Rock
102.3 FM
KHFI-FM
Contemporary Hits
96.7 FM
KEYI-FM*
Oldies
103.5 FM
KFON-AM*
News/Talk
1490 AM
Houston, TX
KPRC-AM &
News/Talk/Sports
950 AM
KSEV-AM &
News/Talk/Sports
700 AM
KMJQ-FM
Adult Urban
102.1 FM
KBXX-FM
Urban Contemporary
97.9 FM
KHYS-FM*
Jazz
98.5 FM
KJOJ-AM;
Religious
880 AM
KJOJ-FM;
Religious
103.3 FM
Louisville, KY
WHAS-AM
News/Adult Contemporary
840 AM
WAMZ-FM
Country
97.5 FM
WKJK-FM*
Traditional Country
98.9 FM
Tulsa, OK
KAKC-AM
News/Sports/Oldies
1300 AM
KMOD-FM
Album Oriented Rock
97.5 FM
Oklahoma City, OK
KTOK-AM
News/Talk/Sports
1000 AM
KEBC-FM
Country
94.7 FM
KJYO-FM
Contemporary Hits
102.7 FM
WKY-AM*
News/Talk
930 AM
Tampa, FL
WMTX-AM
Adult Contemporary
1040 AM
WMTX-FM
Adult Contemporary
95.7 FM
WRBQ-AM
Adult Urban
1380 AM
WRBQ-FM
Country
104.7 FM
New Orleans, LA
WODT-AM
News/Talk/Sports
1280 AM
WQUE-FM
Urban Contemporary
93.3 FM
WYLD-AM
Gospel
940 AM
WYLD-FM
Adult Urban
98.5 FM
Miami, FL
WHYI-FM
Contemporary Hits
100.7 FM
WBGG-FM
Classic Hits
105.9 FM
Richmond, VA
WRVA-AM
News/Talk/Sports
1140 AM
WRVH-AM
News/Talk/Sports
910 AM
WRVQ-FM
Contemporary Hits
94.5 FM
WRXL-FM
Album Oriented Rock
102.1 FM
Cleveland, OH
WNCX-FM
Classic Rock
98.5 FM
WERE-AM
News/Talk
1300 AM
WENZ-FM*
Modern Rock
107.9 FM
Grand Rapids, MI
WOOD-AM % )(
News/Talk/Sports
1300 AM
WOOD-FM % )(
Adult Contemporary
105.7 FM
WBCT-FM % )(
Country
93.7 FM
Memphis, TN
WHRK-FM)(
Urban Contemporary
97.1 FM
WDIA-AM)(
Adult Urban
1070 AM
Norfolk, VA
WOWI-FM)(
Urban Contemporary
102.9 FM
WJCD-FM)(
Jazz
105. 3 FM
WSVY-AM)(
Adult Urban
1350 AM
WSVY-FM)(
Adult Urban
107.7 FM
Raleigh, NC
WQOK-FM)(
Urban Contemporary
97.5 FM
WNND-FM)(
Jazz
103.9 FM
El Paso, TX
KPRR-FM)(
Contemporary Hits
102.1 FM
KHEY-FM)(
Country
96.3 FM
KHEY-AM)(
Oldies
690 AM
Milwaukee, WI
WKKV-FM)(
Urban Contemporary
100.7 FM
Little Rock, AR
KDDK-FM)(
Country
100.3 FM
KMJX-FM)(
Classic Rock
105.1 FM
Reading, PA
WRAW-AM)(
Nostalgia
1340 AM
WRFY-AM)(
Contemporary Hits
102.5 FM
TELEVISION
Mobile, AL; Pensacola, FL
WPMI-TV
NBC TV-15
WJTC-TV %
UPN TV-44
Jacksonville, FL
WAWS-TV
FOX TV-30
WNFT-TV %
UPN TV-47
Tulsa, OK
KOKI-TV
FOX TV-23
KTFO-TV %
UPN TV-41
Tucson, AZ
KTTU-TV
UPN TV-18
Wichita, KS
KSAS-TV
FOX TV-24
Memphis, TN
WPTY-TV
ABC TV-24
WLMT-TV %
UPN TV-30
Little Rock, AR
KLRT-TV
FOX TV-16
KASN-TV %
UPN TV-38
Albany, NY
WXXA-TV
FOX TV-23
Harrisburg, PA
WHP-TV
CBS TV-21
Lebanon/
Lancaster, PA
WLYH-TV %
UPN TV-15
Minneapolis, MN
WFTC-TV
FOX TV-29
NETWORKS
Louisville, KY
Kentucky news Network
News/Agriculture Network
Richmond, VA
Virginia News Network
News/Agriculture Network
Oklahoma City, OK
Oklahoma News Network
News/Agriculture Network
San Angelo, TX
Voice of Southwest agriculture
News/Agriculture Network
College Station, TX
Des Moines, IA
Clear Channel Sports
College Sports Networks
* Joint Sales Agreement (FCC license not owned
or station not programmed by the Company)
& 80% owned by the Company
% Local Marketing or Time Brokerage Agreement
(FCC license not owned by the Company)
)( Pending acquisition
Diversification
On pages 12 and 13 of the glossy annual report are graphical maps
of the U.S. and Australia, showing the states and markets in
which Clear Channel Communications, Inc. has the following
profit centers and headquarters:
Legend
Corporate Headquarters
Networks
Joint Sales Agreements/Local Marketing Agreements
Television Stations
Radio Stations
Pending Acquisitions
Australian Radio Network Pty Ltd
RADIO
2WS
Sydney, NSW
Adult Contemporary
101.7 FM
MIX 106
Sydney, NSW
Hot Adult Contemporary
106.5 FM
GOLD 104
Melbourne, Victoria
Adult Contemporary
104.3 FM
TTFM
Melbourne, Victoria
Hot Adult Contemporary
101.1 FM
4KQ
Brisbane, Queensland
Adult Contemporary
693 AM
2AY
Albury, NSW
Oldies
1494 AM
B 105
Albury, NSW
Rock
104.9 FM
106.3 FM
Canberra
Adult Contemporary
106.3 FM
ARNSAT
Satellite distribution
of radio programming
ARN Radio Sales
National Representation Company
Legend
Corporate Headquarters
Networks
Radio Stations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Comparison of 1995 vs. 1994
Consolidated
Consolidated net broadcasting revenue in 1995
increased 41% to $243,813,000 from $173,109,000 in
1994. Station operating expenses in 1995
increased 31% to $131,258,000 compared to
$100,437,000 for 1994. Station operating income
before depreciation and amortization in 1995
increased to $112,555,000 from $72,673,000, or
55%. Depreciation and amortization increased 37%
to $33,769,000 in 1995 from $24,669,000 in 1994.
Interest expense increased to $20,751,000 from
$7,669,000 or 171%. Net income was $32,014,000 in
1995 compared to $22,009,000 for 1994. Equity in
net income of, and other income from,
nonconsolidated affiliates was $2,927,000 in 1995.
Income tax expense in 1995 was $20,730,000,
reflecting an annual effective rate of 40%,
compared to $14,387,000, or a 40% effective rate
in 1994.
The majority of the increase in net broadcasting
revenue was due to the additional revenue
associated with radio and television stations
acquired in 1995 and the inclusion of a full year
of operations for those stations acquired in 1994.
These stations are as follows:
Acquisition Network or
Date Station Location
1995 Acquisitions
January 1, 1995 KMJQ-FM Houston, TX
January 1, 1995 KPRC-AM/KSEV-AM (2) Houston, TX
October 17, 1995 Voice of
Southwest Agriculture San Angelo, TX
October 31, 1995 WHP-TV Harrisburg, PA
October 31, 1995 WLYH-TV (1) Harrisburg, PA
1994 Acquisitions
January 14, 1994 KEBC-FM Oklahoma City, OK
February 28, 1994 KLRT-TV/KASN-TV(1) Little Rock, AR
March 9, 1994 WAXY-FM Miami/
(now WBGG-FM) Ft. Lauderdale, FL
August 15, 1994 KBXX-FM Houston, TX
October 12, 1994 Metroplex Miami/Ft. Lauderdale,
Communications, Tampa, FL;
Inc. Cleveland, OH
November 1, 1994 WENZ-FM (1) Cleveland, OH
December 1, 1994 WXXA-TV Albany, NY
(1) The Company operates these stations under time
sales or time brokerage agreements and does not
own the FCC licenses.
(2) The Company acquired an 80% interest in these
stations.
Station operating expenses rose due to the
increase in selling expenses associated with this
revenue increase and the additional operating
expenses associated with the above acquisitions.
The major cause of the increase in depreciation
and amortization was the acquisition of the
tangible and intangible assets associated with the
purchases of the above mentioned stations. The
majority of the increase in interest expense was
due to an increase in the average amount of debt
outstanding and an increase in the average
interest rate from 5.7% in 1994 to 6.8% in 1995.
The equity in net income of, and other income
from, nonconsolidated affiliates resulted from the
Company's purchase of a 50% interest in the
Australian Radio Network Pty Ltd (ARN), which owns
and operates radio stations, a narrowcast radio
broadcast service and a radio representation
company in Australia and the purchase of 21.4% of
the Common Stock of Heftel Broadcasting
Corporation (Heftel), a Spanish-language radio
broadcaster in the United States. Income tax
expense was up due to the increase in earnings.
Net income rose for the above stated reasons, but
was partially offset by a $2,315,000, or 45%,
increase in corporate related expenses warranted
by the increase in current business activity.
RADIO
Net broadcasting revenue in 1995 increased 51% to
$141,737,000 from $94,098,000 in 1994. Station
operating expenses increased 36% to $85,024,000 in
1995, compared to $62,383,000 for 1994. Station
operating income before depreciation and
amortization in 1995 increased to $56,713,000 from
$31,715,000, or 79%. Depreciation and amortization
increased 62% to $19,981,000 from $12,324,000.
Station operating income increased from
$19,390,000 in 1994 to $36,732,000 in 1995, or
89%.
The majority of the increase in net broadcasting
revenue, station operating expenses and
depreciation and amortization was due to the
aforementioned radio and network acquisitions. The
increase in station operating income was primarily
due to the inclusion of the operating results of
the above stated acquisitions. At December 31,
1995 the radio segment included 36 stations for
which the Company owns the Federal Communications
Commission (FCC) license and seven stations
operated under lease management or time brokerage
agreements. These 43 stations operate in 12
different markets. The radio segment also operates
five networks.
With the passage of the Telecommunications Act
(the Act) in February 1996, the limit on the
maximum number of licenses that one company may
own in the United States was eliminated, and the
limit on the number of licenses that one company
may own in any given market was changed. This
limit depends on the size of the market; in the
largest markets, for example, one company may not
own more than eight licenses total, with no more
than five licenses of one service (AM or FM). This
allows the Company significant flexibility in
future growth in its radio broadcasting
operations.
TELEVISION
Net broadcasting revenue in 1995 increased 29% to
$102,076,000 from $79,012,000. Station operating
expenses in 1995 increased 21% to $46,234,000
compared to $38,054,000 for 1994. Station
operating income before depreciation and
amortization in 1995 increased to $55,842,000 from
$40,958,000, or 36%. Depreciation and
amortization increased 12% to $13,788,000 from
$12,344,000. Station operating income increased to
$42,054,000 from $28,614,000, or 47%.
The majority of the increase in net broadcasting
revenue was due to the increase in advertising
revenue resulting from improved ratings at the
majority of the television stations, the
additional revenue associated with the television
stations acquired in 1995, and the inclusion of a
full year of operations for those stations
acquired in 1994. Station operating expenses rose
due to the increase in selling expenses associated
with these revenue increases, the expenses
associated with the start up of two news
departments, and the operating expenses of the
newly acquired stations. The major cause of the
increase in depreciation and amortization was the
acquisition of the tangible and intangible assets
associated with the purchase of the aforementioned
stations. At December 31, 1995, the television
segment included ten television stations for which
the Company owns the license and six stations
which are operated under lease management or time
brokerage agreements. These 16 stations operate in
ten different markets.
With passage of the Act in February 1996, the
restrictions on ownership of television stations
include a national ownership limit of stations
that control no more that 35% of the total United
States television audience and the limit of one
license per market for any one broadcaster. This
allows the Company greater opportunity to expand
its presence in television broadcasting.
Comparison of 1994 vs. 1993
Consolidated
Consolidated net broadcasting revenue in 1994
increased 46% to $173,109,000 from $118,183,000.
Station operating expenses in 1994 increased 32%
to $100,437,000, compared to $75,990,000 for 1993.
Station operating income before depreciation and
amortization in 1994 increased to $72,673,000 from
$42,193,000, or 72%. Depreciation and
amortization increased 41% to $24,669,000 from
$17,447,000. Interest expense increased to
$7,669,000 from $5,390,000, or 42%. Other income
(expense) increased from ($196,000) to $1,161,000.
Net income was $22,009,000 for 1994, compared to
$9,123,000 in 1993. Income tax expense in 1994
was $14,387,000, reflecting an annual average
effective tax rate of 40%, compared to $6,572,000,
or a 42% effective rate in 1993.
The majority of the increase in net broadcasting
revenue was due to the additional revenue
associated with the radio and television stations
acquired in 1994 and the inclusion of a full year
of operations for those stations acquired in 1993.
These stations are as follows:
Acquisition Network or
Date Station Location
1994 Acquisitions
January 14, 1994 KEBC-FM Oklahoma City, OK
February 28, 1994 KLRT-TV/KASN-TV (1) Little Rock, AR
March 9, 1994 WAXY-FM Miami/
(now WBGG-FM) Ft. Lauderdale, FL
August 15, 1994 KBXX-FM Houston, TX
October 12, 1994 Metroplex Miami/Ft. Lauderdale,
Communications, Inc. Tampa, FL;
Cleveland, OH
November 1, 1994 WENZ-FM (1) Cleveland, OH
December 1, 1994 WXXA-TV Albany, NY
1993 Acquisitions
February 1, 1993 KQXT-FM San Antonio, TX
March 9, 1993 KHFI-FM Austin, TX
March 25, 1993 WYLD-AM/FM New Orleans, LA
July 1, 1993 KSJL-AM (now KTKR-AM) San Antonio, TX
August 19, 1993 WLMT-TV (1) Memphis, TN
September 15, 1993 WRXL-FM, WRNL-AM Richmond, VA
(now WRVH-AM)
Virginia News Network
October 13, 1993 KITN-TV (now WFTC-TV) Minneapolis, MN
November 3, 1993 KTFO-TV (1) Tulsa, OK
(1) The Company operates these stations under
lease management agreements and does not own the
FCC licenses.
Station operating expenses rose due to the
increase in selling expenses associated with this
revenue increase and the additional operating
expenses associated with the above acquisitions.
The major cause of the increase in depreciation
and amortization was the acquisition of the
tangible and intangible assets associated with the
purchases of the above mentioned stations. The
majority of the increase in interest expense was
due to an increase in the average amount of debt
outstanding and an increase in the average
interest rate from 5.2% to 5.7%.
Income tax expense was up due to the increase in
earnings, while the average effective rate was
down due to the drop in the amount of
nondeductible goodwill as a percentage of
earnings.
Net income rose for the above stated reasons, but
was partially offset by a $1,636,000 increase in
corporate related expenses warranted by the
increase in current business activity.
RADIO
Net broadcasting revenue in 1994 increased 31% to
$94,098,000 from $71,605,000. Station operating
expenses increased 19% to $62,383,000, compared to
$52,254,000 for 1993. Station operating income
before depreciation and amortization in 1994
increased $31,714,000 from $19,351,000, or 64%.
Depreciation and amortization increased 35% to
$12,324,000 from $9,114,000. Station operating
income increased to 89% to $19,390,000 in 1994
from $10,237,000 in 1993.
The majority of the increase in net broadcasting
revenue, station operating expenses and
depreciation and amortization was due to the
aforementioned radio and network acquisitions.
The increase in station operating income was
primarily due to the inclusion of the operating
results of the aforementioned radio and network
acquisitions. At December 31, 1994, the radio
segment included 33 stations for which the Company
was the licensee and six stations operated under
time sales or time brokerage agreements, all of
which operated in twelve different markets.
TELEVISION
Net broadcasting revenue in 1994 increased 70% to
$79,012,000 from $46,577,000. Station operating
expenses in 1994 increased 60% to $38,054,000
compared to $23,736,000 for 1993. Station
operating income before depreciation and
amortization in 1994 increased to $40,958,000 from
$22,842,000, or 79%. Depreciation and
amortization increased 48% to $12,344,000 from
$8,333,000. Station operating income increased
97% to $28,614,000 in 1994 from $14,508,000 in
1993.
The majority of the increase in net broadcasting
revenue was due to the inclusion of the
aforementioned television acquisitions in 1994 and
1993. Station operating expenses rose due to the
increase in selling expenses associated with these
revenue increases as well as the operating
expenses of the new stations. The major cause of
the increase in depreciation and amortization was
the acquisition of tangible and intangible assets
associated with the purchase of the aforementioned
television stations. At December 31, 1994, the
television segment included nine television
stations for which the Company was the licensee
and four stations which were operated under time
sales or time brokerage agreements, all of which
operated in nine different markets.
LIQUIDITY AND CAPITAL RESOURCES
The major sources of capital for the Company
historically have been cash flow from operations,
advances on its revolving long-term line of credit
facility (the credit facility), and funds provided
by the initial stock offering in 1984 and
subsequent stock offerings in July 1991 and
October 1993. Historically, cash flow has
exceeded earnings by a significant amount due to
the high amortization and depreciation associated
with the broadcasting industry.
Effective September 30, 1995, the Company
refinanced the credit facility, increasing the
total funds available to $600,000,000. This
facility converts into a reducing revolving line
of credit on the last business day of September
1998, with quarterly repayment of the outstanding
principal balance to begin the last business day
of December 1998 and continue during the
subsequent five year period, with the entire
balance to be repaid by the last business day of
September 2003.
During 1995, the Company used the credit facility
to purchase broadcasting assets (radio and
television stations) and equity interests in the
broadcasting operations of ARN and Heftel.
Advances on the credit facility related to such
purchases totaled $162,600,000. The Company made
principal payments on the credit facility totaling
$64,800,000.
During the first quarter of 1996, the Company
purchased the broadcasting assets of, and entered
into a local marketing agreement for, radio
stations WOOD-AM/FM and WBCT-FM in Grand Rapids,
MI for approximately $42,000,000, using the credit
facility and cash flow from operations to fund the
acquisition.
After giving effect to the above mentioned
transaction subsequent to December 31, 1995, the
Company had $367,000,000 outstanding under the
credit facility, with $211,000,000 available for
future borrowings. Interest rates on most of
these borrowings adjust every 30 days. Based on
the outstanding debt under the credit facility at
December 31, 1996, a 1% increase in interest rates
would result in a net after tax charge to the
Company's earnings of approximately $1,997,950.
In addition, other notes payable amounting to
$12,570,026 were outstanding at December 31, 1995.
The Company also had $5,391,104 in unrestricted
cash and cash equivalents at December 31, 1995.
The Company expects that cash flow from
operations in 1996 will be sufficient to make all
required interest and principal payments on long-
term debt.
CAPITAL EXPENDITURES AND PROGRAM COMMITMENTS
Capital expenditures of $15,110,000 during 1995
included $3,806,000 and $1,437,000 for land and
buildings, and broadcasting equipment,
respectively, for the radio segment and $1,122,000
and $8,745,000 for land and buildings, and
broadcasting equipment, respectively, for the
television segment. Capital expenditures in 1994
in the amounts of $1,889,000 and $3,858,000 for
the radio and television segments, respectively,
were entirely for the purchase of broadcasting
equipment. The majority of the increase in capital
outlays in 1995 for the Company was attributable
to the start-up of news departments at two of the
stations in the television segment and the
purchase of land and buildings in the radio
segment.
Capital outlays are expected to increase very
little in 1996, reflective only of the growth in
the number of radio and television stations. As
the operator of 16 television stations and one
sports network, the Company will continue to enter
into programming commitments to purchase the
broadcast rights to various feature films,
syndicated shows, sports events and other
programming. Total commitments at December 31,
1995 were $10,358,000. These commitments were not
available for television or radio broadcast at
December 31, 1995 but are expected to become
available over the next few years, at which time
the commitments will
be recorded. Most commitments will then be payable
over a period not exceeding five years.
The Company anticipates paying for these program
commitments and capital outlays with cash
generated from operations. It anticipates funding
any subsequent radio and television station
acquisitions with the credit facility and cash
flow generated from operations.
OTHER
Accounting Pronouncement
In 1996, the Company will adopt Statement of
Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, which becomes
effective for the fiscal year ended December 31,
1996. The adoption of this new accounting standard
is not expected to have a material impact on the
Company.
Inflation
Inflation has affected the Company's performance
in terms of higher costs for wages, salaries and
equipment. Although the exact impact of inflation
is indeterminable, the Company believes it has
offset these higher costs by increasing the
effective advertising rates of most of its radio
and television stations.
1995 Financial Report
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
The consolidated financial statements and notes
related thereto were prepared by and are the
responsibility of management. The financial
statements and related notes were prepared in
conformity with generally accepted accounting
principles and include amounts based upon
management's best estimates and judgments.
It is management's objective to ensure the
integrity and objectivity of its financial data
through systems of internal controls designed to
provide reasonable assurance that all transactions
are properly recorded in the Company's books and
records, that assets are safeguarded from
unauthorized use, and that financial records are
reliable to serve as a basis for preparation of
financial statements.
The financial statements have been audited by our
independent auditors, Ernst & Young LLP, to the
extent required by generally accepted auditing
standards and, accordingly, they have expressed
their professional opinion on the financial
statements in their report included herein.
The Board of Directors meets with the independent
auditors and management periodically to satisfy
itself that they are properly discharging their
responsibilities. The independent auditors have
unrestricted access to the Board, without
management present, to discuss the results of
their audit and the quality of financial reporting
and internal accounting controls.
Lowry Mays
President and Chief Executive Officer
Herbert W. Hill, Jr.
Vice President/Controller
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND
BOARD OF DIRECTORS
CLEAR CHANNEL COMMUNICATIONS, INC.
We have audited the accompanying consolidated
balance sheets of Clear Channel Communications,
Inc. and Subsidiaries (the Company) as of December
31, 1995 and 1994, and the related consolidated
statements of earnings, changes in shareholders'
equity and cash flow for each of the three years
in the period ended December 31, 1995. These
financial statements are the responsibility of the
Company's management. Our responsibility is to
express an opinion on these financial statements
based on our audits. The financial statements of
the Australian Radio Network Pty Ltd, a
corporation in which the Company has a 50%
interest, have been audited by other auditors
whose report has been furnished to us; insofar as
our opinion on the consolidated financial
statements relates to data included for the
Australian Radio Network Pty Ltd, it is based
solely on their report.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management,
as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report
of other auditors, the consolidated financial
statements referred to above present fairly, in
all material respects, the consolidated financial
position of Clear Channel Communications, Inc. and
Subsidiaries at December 31, 1995 and 1994, and
the consolidated results of their operations and
their cash flows for each of the three years in
the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
San Antonio, Texas
February 16, 1996
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
1995 1994
-------------- --------------
Current Assets
Cash and cash equivalents $ 5,391,104 $ 6,817,595
Accounts receivable, less
allowance of $ 3,809,529
in 1995 and $3,117,496 in 1994 52,920,450 38,280,518
Film rights - current 12,173,527 8,847,262
-------------- --------------
Total Current Assets 70,485,081 53,945,375
Property, Plant and Equipment
Land 7,821,899 6,409,013
Buildings 17,068,026 10,642,563
Transmitter and studio equipment 109,517,279 93,530,635
Furniture and other equipment 13,996,987 13,514,125
Leasehold improvements 4,560,289 4,059,725
Construction in progress 5,079,864 784,850
--------------- --------------
158,044,344 128,940,911
Less accumulated depreciation 58,159,152 43,623,032
--------------- --------------
99,885,192 85,317,879
Intangible Assets
Leases 1,455,000 1,455,000
Network affiliation agreements 23,422,904 20,484,904
Licenses and goodwill 286,406,955 194,408,601
Covenants not-to-compete 22,871,932 22,271,938
Other intangible assets 4,361,987 2,858,436
--------------- --------------
338,518,778 241,478,879
Less accumulated amortization 52,192,327 33,861,800
--------------- --------------
286,326,451 207,617,079
Other
Restricted cash - 38,500,000
Film rights 15,968,502 12,653,817
Equity investments in,
and advances to,
nonconsolidated affiliates 81,911,343 -
Other assets 7,021,531 7,998,036
Other investments 1,412,704 5,561,839
---------------- --------------
Total Assets $ 563,010,804 $ 411,594,025
================ ==============
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended December 31,
1995 1994 1993
------------ ------------- ------------
Gross broadcasting revenue $283,357,052 $ 200,694,908 $135,680,023
Less: agency and national
representative commissions 39,543,935 27,585,534 17,497,384
------------ ------------- ------------
Net broadcasting revenue 243,813,117 173,109,374 118,182,639
Station operating expenses 131,258,210 100,436,858 75,990,031
Depr. and amortization 33,768,882 24,668,540 17,447,262
------------ ------------- ------------
Station operating income 78,786,025 48,003,976 24,745,346
Corporate general and
administrative expenses 7,414,457 5,099,834 3,463,523
Operating income 71,371,568 42,904,142 21,281,823
Interest expense 20,751,454 7,669,000 5,389,691
Other income (expense)-net (803,280) 1,161,456 (196,482)
Equity in net income of,
and other income from,
nonconsolidated affiliates 2,927,191 - -
------------ ------------- ------------
Income before income taxes 52,744,025 36,396,598 15,695,650
Income taxes 20,730,410 14,387,102 6,572,434
------------ ------------- ------------
Net income $ 32,013,615 $ 22,009,496 $ 9,123,216
============ ============= ============
Net income per common
share $ .91 $ .63 $ .29
============ ============ ============
Weighted average common
and common share
equivalents outstanding 35,100,398 34,662,906 31,100,522
============ =========== ============
See Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Additional
Common paid-in Retained Treasury
Stock capital earnings Other stock Total
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1993 $ 1,198,692 $ 26,986,856 $ 5,212,863 - ($2,343,642) $ 31,054,769
Net income for year 9,123,216 9,123,216
Exercise of stock options 869 89,028 89,897
Stock split effected in the
form of a dividend 343,015 (343,015) -
Proceeds from issuance of
1,725,000 shares of Common
Stock 172,500 57,902,364 58,074,864
------------ ------------- ------------ ------- ------------ ------------
Balances at December 31, 1993 1,715,076 84,635,233 14,336,079 - (2,343,642) 98,342,746
Net income for year 22,009,496 22,009,496
Exercise of stock options 1,168 2,805,735 (27,440) 2,779,463
Issuance of 119,048 shares
of Common Stock to purchase
minority interest 1,891,968 1,609,532 3
Issuance of 117,975 shares of
Common Stock for a business
acquisition 6,797 3,202,203 691,000 3,900,000
------------ ------------- ------------ -------- ------------ ------------
Balances at December 31, 1994 1,723,041 92,535,139 36,345,575 - (70,550) 130,533,205
Net income for year 32,013,615 32,013,615
Exercise of stock options 7,209 627,018 (100,448) 533,779
Currency translation adjustment $102,292 102,292
Unrealized holding gains on
marketable securities 529,744 529,744
Stock split 1,729,019 (1,729,019) -
------------ ------------- ------------ --------- ------------ ------------
Balances at December 31, 1995 $ 3,459,269 $ 91,433,138 $ 68,359,190 $632,036 ($170,998) $163,712,635
============ ============= ============ ========= ============ ============
See Notes to Consolidated Financial Statements
</TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1995 1994 1993
Net Cash Flow From
Operating Activities $ 64,330,005 $ 41,131,501 $ 27,780,463
Cash Flows From Investing
Activities:
Decrease (increase) in
restricted cash 38,500,000 (38,500,000) -
(Increase) in equity
investments in and
advances to nonconsol-
idated affiliates-net (81,279,307) - -
Purchases of property,
plant and equipment (15,109,896) (5,747,166) (2,691,743)
Proceeds from disposal
of property, plant and
equipment - 130,047 109,175
Proceeds from disposal
of broadcasting assets 383,053 2,025,000 -
Acquisition of broadcasting
assets (105,135,886) (127,427,369) (68,231,275)
Purchase of minority interest - (4,000,000) -
(Increase) decrease in
other investments 4,149,136 (4,135,718) (525,068)
(Increase) in other
intangible assets (1,870,183) (1,160,990) (333,050)
(Increase) decrease in
other-net 691,503 (1,094,531) (2,427,534)
------------ ------------- -------------
Net cash (used in)
investing activities (159,671,580) (179,910,727) (74,099,495)
Cash Flows From Financing Activities:
Proceeds of long-term debt 162,600,000 165,100,000 63,400,000
Payments on long-term debt (64,800,000) (25,800,000) (72,500,000)
Payments of current
maturities (4,418,695) (1,999,492) (18,954)
Exercise of stock options 533,779 2,779,463 89,897
Proceeds from issuance
of Common Stock 58,074,864
------------ ------------ -------------
Net cash provided by
financing activities 93,915,084 140,079,971 49,045,807
------------ ------------ -------------
Net increase (decrease)
in cash (1,426,491) 1,300,745 2,726,775
Cash at beginning of year 6,817,595 5,516,850 2,790,075
------------- ------------ -------------
Cash at end of year $ 5,391,104 $ 6,817,595 $ 5,516,850
============= ============ =============
See Notes to Consolidated Financial Statements
SCHEDULE RECONCILING EARNINGS TO
NET CASH FROM OPERATING ACTIVITIES
Year Ended December 31,
1995 1994 1993
Net income $ 32,013,615 $ 22,009,496 $ 9,123,216
Reconciling Items:
Depreciation 15,379,826 12,639,104 9,216,982
Amortization of intangibles 18,389,056 12,029,436 8,230,280
Deferred taxes 2,953,612 188,059 68,001
Amortization of film rights 11,262,835 9,857,530 5,935,921
Payments on film
liabilities (10,353,200) (10,037,749) (6,195,072)
(Gain) loss on disposal
of assets 404,994 (598,863) 7,943
Changes in operating assets and liabilities:
(Increase) accounts
receivable (11,544,653) (8,408,540) (6,667,872)
Decrease federal income
tax receivable - - 1,936,146
Increase (decrease)
accounts payable (372,119) 1,151,467 1,751,352
Increase (decrease)
accrued interest (233,219) 485,721 (203,634)
Increase (decrease)
accrued expenses 3,831,264 (221,855) 2,548,202
Increase accrued
income and other taxes 2,597,994 2,037,695 2,028,998
----------- ----------- -----------
Net cash from
operating activities $64,330,005 $41,131,501 $27,780,463
=========== =========== ===========
See Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements include the
accounts of the Company and its subsidiaries,
substantially all of which are wholly-owned.
Significant intercompany accounts have been
eliminated in consolidation. Investments in
nonconsolidated affiliates are accounted for under
the equity method of accounting. Certain amounts
in prior years have been reclassified to conform
to the 1995 presentation.
Property, Plant and Equipment:
Property, plant and equipment are stated at cost.
Depreciation is computed principally by the
straight-line method at rates which, in the
opinion of management, are adequate to allocate
the cost of such assets over their estimated
useful lives, which are as follows:
Buildings - 10 to 30 years
Transmitter and studio equipment - 7 to 15 years
Furniture and other equipment - 5 to 10 years
Leasehold improvements - generally life of lease
Expenditures for maintenance and repairs are
charged to operations as incurred, whereas
expenditures for renewal and betterments
are capitalized.
Intangible Assets:
Intangible assets are stated at cost and are being
amortized by the straight-line method. For the
years prior to 1993, excess cost over the fair
value of net assets acquired (goodwill) and
certain licenses were amortized between 25 and 40
years. All goodwill and licenses acquired
subsequent to 1992 are being amortized over 25
years. The Company evaluates the carrying values
of goodwill and licenses to determine if the facts
and circumstances suggest that they may be
impaired. If this review indicates that goodwill
and licenses will not be recoverable, as
determined based on the undiscounted cash flows of
the entity acquired over the remaining
amortization period, the carrying value of the
goodwill and licenses will be reduced accordingly.
Amortization of goodwill and licenses was
$9,918,585, $4,481,660 and $1,976,972 in 1995,
1994 and 1993, respectively.
Covenants not-to-compete are amortized over the
respective lives of the agreements. Network
affiliation agreements are being amortized over 10
years. Leases are amortized over the remaining
lease terms.
The periods of amortization are evaluated
annually to determine whether circumstances
warrant revision.
Film Rights:
The capitalized costs of film rights are recorded
when the license period begins and the film rights
are available for use. The rights are amortized
based on the number of showings or license
periods.
Unamortized film rights assets are classified as
current or noncurrent based on estimated usage.
Amortization of film rights is included in station
operating expenses. Film rights liabilities are
classified as current or noncurrent based on
anticipated payments.
Barter Transactions:
Revenue from barter transactions is recognized
when advertisements are broadcast, and merchandise
or services received are charged to expense when
received or used.
Income Taxes:
The Company accounts for income taxes using
Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes (SFAS 109). Under
SFAS 109, income taxes for financial reporting
purposes are determined using the liability
method. Under this method, deferred tax assets and
liabilities are determined based on differences
between financial reporting bases and tax bases of
assets and liabilities and are measured using the
enacted tax rates expected to apply to taxable
income in the periods in which the deferred tax
asset or liability is expected to be realized or
settled.
Foreign Currency Gains and Losses:
Components of the Company's foreign currency gains
and losses are included in shareholders' equity,
while other components are included in the
determination of net income for the period.
Foreign currency translation adjustments, which
result from the translation of financial statement
information from Australian dollars to U.S.
dollars for the Company's investment in Australian
Radio Network Pty Ltd. (ARN), are accounted for as
a separate component of shareholders' equity.
Transaction gains or losses resulting from cash
transactions between the Company and ARN are
recorded as income or expense as incurred. See
Note I for further discussion of the Company's
equity investment in ARN.
During 1995, net translation gains or losses
resulting from the translation of ARN financial
statement information from Australian dollars to
U.S. dollars in the reconciliation of Australian
accounting principles to accounting principles
generally accepted in the United States (U.S.
GAAP) amounted to $102,292, and net transaction
gains amounted to $101,319.
Cash and Cash Equivalents:
Cash and cash equivalents include all highly
liquid investments with an original maturity of
three months or less.
Financial Instruments:
The carrying amounts of the Company's financial
instruments approximate their fair value.
Use of Estimates:
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the amounts reported
in the financial statements and accompanying
notes. Actual results could differ from those
estimates.
NOTE B - LONG-TERM DEBT
Long-term debt at December 31, 1995 and 1994
consisted of the following:
December 31,
1995 1994
Revolving long-term line of credit facility
payable to banks,
three years interest only through September 1998,
payable quarterly, rate based upon prime, LIBOR
or Fed funds rate, at the Company's discretion,
principal to be paid in full by September 2003,
$275.0 million remains undrawn, secured by 100%
of the Common Stock of the Company's wholly
owned subsidiaries (1) $325,000,000 $227,200,000
Note payable to third party, interest and
principal due October 1996, 6% interest,
guaranteed by a subsidiary 2,518,858 5,188,847
Notes payable to third parties, interest
paid quarterly, principal due 1999
5.25% interest rate, unsecured 2,700,000 2,700,000
Other long-term debt 7,351,168 7,699,874
------------ ------------
337,570,026 242,788,721
Less: current portion 3,406,297 4,584,335
------------ ------------
Total long-term debt $334,163,729 $238,204,386
============ ============
(1) Principal repayment on the credit facility
begins the last business day of December 1998 and
continues quarterly through the last business day
of September 2003, when the commitment must be
paid in full. Of the $275.0 million undrawn, $3.0
million is unavailable due to the note payable to
third party (including interest) described above
and $19.0 million is unavailable due to several
guarantees and letters of credit, as described in
Note I. This leaves $253.0 million available at
December 31, 1995 for future borrowings under the
credit facility.
The Company's current line of credit agreement
with banks contains certain covenants which substantially
restrict, among other matters, the payment of cash dividends.
Future maturities of long-term debt at December
31, 1995 are as follows:
1996 $ 3,406,297
1997 1,207,111
1998 9,602,280
1999 42,641,838
2000 57,275,000
2001 and thereafter 223,437,500
------------
$337,570,026
============
Interest paid in 1995, 1994 and 1993 amounted to
$20,984,673, $7,183,279 and $5,593,325, respectively.
The Company leases office space and certain
broadcasting facilities and equipment under long-
term operating leases. Some of the lease
agreements contain renewal options and annual
rental escalation clauses (generally tied to the
consumer price index or a maximum of 5%), as well
as provisions for the payment of utilities and
maintenance by the Company. As of December 31,
1995, the Company's future minimum rental
commitments, under noncancelable lease agreements
with terms in excess of one year, consist of the
following:
1996 $ 2,849,252
1997 2,408,095
1998 2,098,871
1999 1,620,034
2000 1,103,663
2001 and thereafter 5,312,252
------------
$ 15,392,167
============
Rent expense charged to operations for 1995, 1994
and 1993 was $4,510,413, $3,272,870 and
$2,344,385, respectively.
The Company's film rights commitments and related
film assets are recorded on the earliest date the
rights are available for telecast. At December 31,
1995, the future payments on these film rights
liabilities are as follows:
1996 $13,109,024
1997 9,174,074
1998 5,670,702
1999 2,112,874
2000 185,096
2001 and thereafter 1,066
-----------
$30,252,836
===========
Commitments for additional film license agreements
in the amount of $7,515,749 have been executed.
However, they are not included in the amounts
above because the programs were not available for
telecast as of December 31, 1995. In addition,
commitments for sports rights have been executed
in the amount of $2,842,000 for future radio and
television broadcast of sporting events.
In October 1995, the Board of Directors authorized
a two-for-one stock split distributed on November
30, 1995 to stockholders of record on November 15,
1995.
In February 1994 and 1993, the Board of Directors
authorized five-for-four stock splits in the form
of 25 percent stock dividends distributed on
February 22, 1994 and February 19, 1993,
respectively, to stockholders of record on
February 15, 1994 and February 12, 1993,
respectively.
A total of 17,290,188; 6,860,300 and 4,794,354
shares, respectively, were issued in connection
with the 1995, 1994 and 1993 stock splits.
Fractional shares were paid in cash based on the
closing price on the record date. All share, per
share, stock price and stock option amounts shown
in the financial statements (except the balance
sheet and statement of changes in shareholders'
equity) and related footnotes have been restated
to reflect the stock splits.
NOTE D - STOCK SPLITS AND DIVIDENDS
In October 1995, the Board of Directors authorized
a two-for-one stock split distributed on November
30, 1995 to stockholders of record on November 15,
1995.
In February 1994 and 1993, the Board of Directors
authorized five-for-four stock splits in the form
of 25 percent stock dividends distributed on
February 22, 1994 and February 19, 1993,
respectively, to stockholders of record on
February 15, 1994 and February 12, 1993,
respectively.
A total of 17,290,188; 6,860,300 and 4,794,354
shares, respectively, were issued in connection
with the 1995, 1994 and 1993 stock splits.
Fractional shares were paid in cash based on the
closing price on the record date. All share, per
share, stock price and stock option amounts shown
in the financial statements (except the balance
sheet and statement of changes in shareholders'
equity) and related footnotes have been restated
to reflect the stock splits.
NOTE E - BUSINESS ACQUISITIONS AND DISPOSITIONS
During 1995, 1994 and 1993, the Company acquired
substantially all the broadcasting assets of the
following radio stations, television stations and
news and agricultural networks, which were all
principally funded by borrowings under the credit
facility.
Acquisition Date Network or Station Location Purchase Price
1995 Acquisitions
January 1, 1995 KMJQ-FM Houston, TX $36,025,000
January 1, 1995 KPRC-AM/KSEV-AM (3) Houston, TX 26,800,000
October 17, 1995 Voice of Southwest
Agriculture San Angelo, TX 2,191,252
October 31, 1995 WHP-TV Harrisburg, PA 30,044,634
October 31, 1995 WLYH-TV (1) Harrisburg, PA 9,000,000
1994 Acquisitions
January 14, 1994 KEBC-FM Oklahoma City, OK 7,500,000
February 28, 1994 KLRT-TV/KASN-TV (1) Little Rock, AR 18,280,000
March 9, 1994 WAXY-FM Miami/
(now WBGG-FM) Ft. Lauderdale, FL 14,000,000
August 15, 1994 KBXX-FM Houston, TX 21,000,000
October 12, 1994 Metroplex Miami/
Communications, Ft. Lauderdale,
Inc. (2) Tampa, FL;
Cleveland, OH 48,394,000
November 1, 1994 WENZ-FM (1) Cleveland, OH 6,000,000
December 1, 1994 WXXA-TV Albany, NY 25,500,000
1993 Acquisitions
February 1, 1993 KQXT-FM San Antonio, TX 8,200,000
March 9, 1993 KHFI-FM Austin, TX 3,500,000
March 25, 1993 WYLD-AM/FM New Orleans, LA 7,731,000
July 1, 1993 KSJL-AM (now KTKR-AM) San Antonio, TX 1,000,000
August 19, 1993 WLMT-TV (1) Memphis, TN 7,600,000
September 15, 1993 WRXL-FM, WRNL-AM
(now WRVH-AM) Richmond, VA 9,500,000
Virginia News Network
October 13, 1993 KITN-TV
(now WFTC-TV) Minneapolis, MN 35,076,000
November 3, 1993 KTFO-TV (1) Tulsa, OK 2,700,000
(1) The Company operates these stations under time sales or
time brokerage agreements and does not own the FCC licenses.
(2) The Company issued 135,950 shares of Common
Stock and released 100,000 shares of treasury
stock in conjunction with this purchase.
(3) The Company acquired an 80% interest in these
two stations.
The following is a summary of the assets acquired
and the consideration given for the above stated
acquisitions:
1995 1994 1993
Property, plant and
equipment $ 15,012,828 $ 26,385,571 $ 26,392,219
Accounts receivable 3,095,279 5,334,476 2,466,089
Licenses, goodwill and
other assets 93,716,385 113,444,182 56,497,812
------------ ------------- -------------
Total assets acquired 111,824,492 145,164,229 85,356,120
Less:
Seller financing (1,400,000)
Liabilities assumed (5,288,606) (13,836,860) (17,124,845)
Common Stock issued - (3,900,000) -
------------ ------------- -------------
Cash paid on acquisitions $ 105,135,886 $ 127,427,369 $ 68,231,275
============= ============== =============
The results of operations for 1995, 1994, and 1993
include the operations of each station, for which
the Company purchased the license, from the
respective date of acquisition except for WRXL-FM
and WRNL-AM (now WRVH-AM), where the results of
operations were included since April 1, 1993 via a
time brokerage agreement. Assuming each of the
acquisitions had occurred at January 1, 1993,
unaudited pro forma consolidated results of
operations would have been as follows:
Pro Forma (Unaudited)
Year Ended December 31,
in thousands (except per share amounts)
1995 1994 1993
Net broadcasting revenue $ 252,884 $ 228,923 $ 192,358
Net income $ 34,719 $ 15,084 $ 15,172
Net income per share $ .99 $ .44 $ .49
The pro forma information above is presented in
response to applicable accounting rules relating
to business acquisitions and is not necessarily
indicative of the actual results that would have
been achieved had each of the stations been
acquired at the beginning of 1993, nor is it
indicative of future results of operations.
In January 1995, the Company sold KYOK-AM and KHYS-
FM in Houston, TX and KALO-AM in Beaumont/Port
Arthur, TX for $2,475,000, $5,000,000 and
$450,000, respectively, to a third party, of which
$350,000 was in cash and the remainder in notes
receivable. Of the resulting gain, approximately
$324,000 is included in other income, and the
remaining $5,014,000 is deferred. The net assets
and operations of these stations were not
significant.
During 1994, the Company sold substantially all
the broadcasting assets of four radio stations.
KEYN-FM and KQAM-AM in Wichita, KS were sold for
$2,000,000 to a third party, while KORA-FM and
KTAM-AM, in Bryan/College Station, TX, were sold
to a former employee for $25,000 in cash and
$2,200,000 in notes receivable. These transactions
resulted in a net gain of approximately $700,000
which is included in other income. Net assets and
operations of these four radio stations were not
significant.
NOTE F - INCOME TAXES
Significant components of the provision for income
taxes are as follows:
1995 1994 1993
Current - federal $ 16,084,974 $ 12,068,573 $ 5,519,762
Deferred 2,953,612 188,059 68,001
State 1,691,824 2,130,470 984,671
------------- ------------ ------------
Total $ 20,730,410 $ 14,387,102 $ 6,572,434
============= ============ ============
Significant components of the Company's deferred
tax liabilities and assets as of December 31, 1995
and 1994 are as follows:
1995 1994
Deferred tax liabilities:
Tax over book depreciation $ 6,658,528 $ 6,887,492
Film amortization 778,366 747,854
Basis reduction of acquired assets 558,000 -
Other 326,600 362,495
-------------- --------------
Total deferred tax liabilities 8,321,494 7,997,841
Deferred tax assets:
Gain on sale of assets 360,895 342,008
Book over tax amortization 2,270,963 2,726,763
Deferred income 136,801 197,603
NOL carryforwards - 1,933,980
Other - 198,264
Total deferred tax assets 2,768,659 5,398,618
Net deferred tax liabilities $ 5,552,835 $ 2,599,223
The reconciliation of income tax computed at the
U.S. federal statutory tax rates to income tax
expense is:
1995 1994 1993
----------------- ----------------- -----------------
Amount Percent Amount Percent Amount Percent
Income tax
expense
at statutory
rates $18,460,409 35% $12,738,809 35% $5,493,477 35%
State income
taxes, net
of federal
tax benefit 1,099,686 2% 1,384,806 4% 640,036 4%
Amortization
of goodwill 1,543,250 3% 461,261 1% 318,395 2%
Other, net (372,935) (197,774) 120,526 1%
------------ --- ----------- --- ----------- ---
$ 20,730,410 40% $14,387,102 40% $6,572,434 42%
============ === =========== === =========== ===
Income taxes paid in 1995, 1994 and 1993 amounted
to $18,132,416, $13,107,514 and $3,900,337,
respectively. Federal income tax refunds received
in 1993 amounted to $1,639,245.
The Company acquired certain net operating loss
carryforwards in conjunction with its purchase of
KLRT/KASN-TV and Metroplex Communications, Inc. At
December 31, 1995, the Company had no remaining
net operating loss carryforwards.
NOTE G - STOCK OPTIONS
At December 31, 1995, the Company had options
outstanding to purchase 764,102 shares and had
reserved an additional 1,190,187 shares of the
Company's Common Stock for future options. All
option plans contain anti-dilutive provisions that
require the adjustment of the number of shares of
the Company's Common Stock represented by each
option for any stock splits or stock dividends.
This does not apply to the 1991 Non-Qualified
Stock Option Plan of the Company's wholly owned
subsidiary, Clear Channel Television, Inc. (CCTV),
which authorizes the granting of options on shares
of CCTV Common Stock. A summary of the Company's
various option plans is as follows:
1984 STOCK OPTION PLAN
The Company's 1984 Stock Option Plan (1984 Plan)
expired on December 31, 1993. Options previously
granted will continue to be outstanding. The
options on shares of the Company's Common Stock
under the plan were granted to officers and key
employees at no less than 100% of the fair market
value of the underlying stock on the date of the
grant. Options under the 1984 Plan are valid for a
term not exceeding five years, and they are
forfeited in the event the employee terminates his
or her employment with the Company. As of January
1, 1995, options on 421,442 shares were
outstanding under the 1984 Plan (including the
increase of 210,721 shares for the retroactive
treatment of the 1995 stock split).
During 1995, no new options were granted. Options
on 131,877 shares were exercised at prices ranging
from $1.99 to $5.32 and options on 12,018 shares
were forfeited.
As of December 31, 1995, options on 277,547 shares
were outstanding with exercise prices ranging from
$2.88 to $12.75, vesting dates ranging from
February 6, 1994 to August 16, 1996 and expiration
dates ranging from February 6, 1996 to August 16,
1998.
1994 STOCK OPTION PLAN
Effective February 2, 1994, the Company adopted
the 1994 Incentive Stock Option Plan (1994 Plan)
under which options to acquire up to 750,000
shares of Common Stock may be granted. Options
under this plan are granted to officers and key
employees at no less than 100% of the fair market
value of the underlying stock on the date of the
grant, for a term not exceeding five years and are
forfeited in the event the employee terminates his
or her employment with the Company.
As of January 1, 1995, options on 61,570 shares
were outstanding under the 1994 Plan (including
the increase of 30,785 shares for the retroactive
treatment of the 1995 stock split).
During 1995, options on 11,112 shares were granted
under the 1994 Plan, and options on 11,894 shares
were forfeited. No options were exercised, as the
earliest vesting date under this plan is February
2, 1997.
As of December 31, 1995, there were options on
689,212 shares available for grant and options on
60,788 shares outstanding with exercise prices
ranging from $16.15 to $25.56, vesting dates
ranging from February 2, 1997 to February 8, 1998
and expiration dates ranging from February 8, 2002
to February 8, 2000.
1994 NON-QUALIFIED STOCK OPTION PLAN
Effective February 2, 1994, the Company adopted
the 1994 Non- Qualified Stock Option Plan (1994
N.Q. Plan) under which options to acquire up to
750,000 shares of Common Stock may be granted. The
options under this plan are granted to officers,
directors and employees of the Company and its
affiliates at exercise prices determined
by the Compensation Committee on the date of the
grant. Options granted under the 1994 N.Q. Plan are granted for a
term not exceeding ten years and are forfeited in
the event the employee (director) terminates his
or her employment (relationship) with the Company
or its affiliates.
As of January 1, 1995, options on 175,000 shares
were outstanding under the 1994 N.Q. Plan
(including the increase of 87,500 shares for the
retroactive treatment of the 1995 stock split).
These options on 175,000 shares include options
granted to an officer/director of the Company and
the directors of the Company to purchase 125,000
and 50,000 shares, respectively, of the Company's
Common Stock at an exercise price of $16.15, which
was equal to the fair market value of the stock at
the date of grant. The options granted to the
officer/director are exercisable immediately,
while the options granted to the directors vest
20% per year. All options granted in 1994 to the
officer/director and to the directors expire on
February 2, 2004.
During 1995, no options were exercised, and
options on 6,000 shares were forfeited. Also
during 1995, options on 80,025 shares of the
Company's Common Stock were granted to employees
of the Company and its affiliates at the fair
market value of the stock at the respective dates
of grant.
As of December 31, 1995, there were options on
500,975 shares available for grant and options on
249,025 shares outstanding with exercise prices
ranging from $16.15 to $41.38, vesting dates
ranging from February 2, 1994 to November 30, 2000
and expiration dates ranging from February 2, 1996
to February 2, 2004.
OTHER STOCK OPTIONS GRANTED
During 1993, the Company issued an option to an
officer/director of the Company to purchase
114,242 shares of the Company's Common Stock at an
exercise price of $8.45, which was equal to the
fair market value of the stock at the date of
grant.
In February 1993, the Company granted options to
the directors to purchase a total of 62,500 shares
of the Company's Common Stock at an exercise price
of $8.32. These options vest 20% per year and do
not expire.
In February 1991, CCTV, a wholly owned subsidiary
of the Company, adopted the 1991 Non-Qualified
Stock Option Plan which authorized the granting of
options to purchase 50,000 shares of CCTV Common
Stock. In February 1993, CCTV elected to
discontinue the granting of options under this
plan. At December 31, 1995, there were 9,500
options outstanding under this plan, with an
exercise date of January 1, 1999.
In addition, in January 1994, an officer of CCTV
exercised his option to purchase 100,000 shares of
CCTV's Common Stock at $1.00 per share. In July
1994, the Board of Directors authorized the
Company to purchase the 100,000 CCTV shares from
said officer. As consideration, the Company paid
$4,000,000 in cash and issued 238,096 shares
(adjusted for the Company's 1995 two-for-one stock
split) of the Company's Common Stock out of
Treasury. The Company recorded this transaction as
an acquisition (and elimination) of the minority
interest in CCTV, with the resulting excess cost
allocated to goodwill.
NOTE H - EMPLOYEE BENEFIT PLANS
Effective March 1, 1987, the Company adopted the
Clear Channel Communications, Inc. 401(K) Savings
Plan for the purpose of providing retirement
benefits for substantially all employees.
Contributions to the Plan are made both by the
employees and the Company. The Company matches 35%
of the first 5% of an employee's deferred
compensation to a maximum of $9,240 in 1995.
Company matched contributions vest to the
employees based upon their years of service to the
Company. Contributions to this Plan of $461,038,
$398,369 and $292,814 were charged to expense for
1995, 1994 and 1993, respectively.
The Company does not offer or provide post-
retirement health care benefits to any of its
employees.
NOTE I - INVESTMENTS
On May 24, 1995, the Company purchased 21.4% of
the outstanding common stock of Heftel
Broadcasting Corporation (Heftel) a Spanish-
language radio broadcaster in the United States.
On May 11, 1995, the Company purchased a 50%
interest in ARN, an Australian company which owns
and operates radio stations, a narrowcast radio
broadcast service and a radio representation
company in Australia.
These investments are not consolidated, but are
accounted for under the equity method of
accounting, whereby the Company records its
investments in these entities in the balance sheet
as "Equity investments in, and advances to,
nonconsolidated affiliates." The Company's
interest in the operations of Heftel and ARN are
recorded in the income statement as "Equity in net
income of, and other income from, nonconsolidated
affiliates."
The Company's $285,451 equity in net income of
Heftel recorded for the period May 24 to December
31, 1995 is calculated as 21.4% of the net income
reported by Heftel for the two quarters ended June
30, 1995 and September 30, 1995, with a pro rata
allocation applied to the quarter ended June 30,
1995 based on the number of days during that
quarter that the Company held its investment.
The Company's $2,911,765 equity in the net income
of, and other income from, ARN for the period May
11 to December 31, 1995 is determined by
reconciling ARN's net income for that period under
Australian accounting principles (Australian GAAP)
to net income under accounting principles
generally accepted in the United States (U.S.
GAAP), plus the interest income and management
fees totaling $1,252,851 and $148,100,
respectively, paid by ARN to the Company.
The following table presents a rollforward of the
Company's investments in ARN and Heftel.
ARN Heftel Total
At acquisition date $74,838,980 $20,498,612 $95,337,592
Dividends and other
returns of investment
received (17,086,795) - (17,086,795)
Equity in net income of,
and other income from,
nonconsolidated affiliate 2,911,765 285,451 3,197,216
Amortization of excess
cost, included in equity
in net income - (270,025) (270,025)
Currency translation
adjustments 102,292 - 102,292
Foreign currency
transaction gains 101,319 - 101,319
Unrealized gains on
marketable securities 529,744 - 529,744
----------- ----------- ------------
End of year $61,397,305 $20,514,038 $ 81,911,343
=========== =========== ============
The following table presents selected financial
information for ARN for the period from May 11 to
December 31, 1995 - the period during which the
Company held its investment in ARN. For
convenience purposes only, data for ARN have been
translated from Australian dollars to U.S. dollars
at the December 31, 1995 exchange rate.
ARN in Australian GAAP
Balance sheet information
at December 31, 1995:
Current assets $ 22,600,044
Noncurrent assets 134,875,697
Current liabilities 27,726,534
Noncurrent liabilities 44,246,707
Shareholders' equity 85,502,500
Income statement information for period
investment held in 1995:
Net broadcasting revenues 45,938,169
Station operating expenses 32,240,125
Net income 14,288,682
The Company's equity in net income of ARN, which
is based on U.S. GAAP, is not directly comparable
to net income reported by ARN, which is based on
Australian GAAP. The most significant differences
in accounting treatment between U.S. and
Australian GAAP all decrease net income under U.S.
GAAP. Such differences include radio license
amortization in the amount of $3,024,171, reversal
of profit on sale of stations within one year of
acquisition in the amount of $6,347,773 and the
reversal of certain restructuring reserves
capitalized under Australian GAAP in the amount of
$1,915,250.
During February 1994, the Company exercised its
option to acquire the remaining 51% of the Common
Stock of its 49% owned unconsolidated subsidiary
Clear Channel Television of Little Rock, Inc.
(CCTLR) for a nominal amount of $510 from an
officer and director. CCTLR owned and operated
KLRT-TV and KASN-TV in Little Rock, AR. Total
assets of this subsidiary amounted to $17,146,000;
current and long-term debt amounted to
$21,833,000; and the deficiency in assets was
$5,240,000. Also, during February 1994, the
Company loaned CCTLR $18,900,000 in order that
CCTLR could settle its obligation with its
principal creditor. Upon consummation of these
transactions, the Company began consolidating
CCTLR on March 1, 1994.
In addition, during 1995, 1994 and 1993, the
Company provided approximately $10,000,000,
$2,200,000 and $2,600,000, respectively, in
financing to third parties, which was used to
effect the acquisition of radio and television
broadcasting operations. The financing provided in
1995 was in the form of a $9,500,000 guarantee of
debt and a $500,000 cash advance secured by an
option to purchase the broadcasting assets of a
certain television station at a nominal amount.
The financing provided in 1994 and 1993 was in the
form of a loan to former employees secured by the
broadcasting assets of certain radio stations. The
Company has no voting or equity interest in the
third parties. The Company is accounting for these
transactions in a manner similar to the equity
method, the effect of which was not significant
for the years ended December 31, 1995, 1994 or
1993. The total amount of $4,697,000 due to the
Company at December 31, 1995 under these
arrangements is included in other assets.
NOTE J - CONTINGENCIES
From time to time, claims are made and lawsuits
are filed against the Company, arising out of the
ordinary business of the Company. In the opinion
of the Company's management, liabilities, if any,
arising from these actions are either covered by
insurance or adequate reserves, or would not have
a material adverse effect on the financial
condition of the Company.
NOTE K - SUBSEQUENT EVENTS
During the first quarter of 1996, the Company
acquired the broadcasting assets of radio stations
WOOD-AM/FM and WBCT-FM in Grand Rapids, Michigan.
As consideration, the Company paid approximately
$42,000,000. Financing was provided by the credit
facility and cash flow from operations.
NOTE L - SEGMENT DATA
The Company consists of two principal business
segments - radio broadcasting and television
broadcasting. At December 31, 1995, the radio
segment included 36 stations for which the Company
is the licensee and seven stations operated under
lease management or time brokerage agreements.
These 43 stations operate in 12 different markets.
The radio segment also operates five networks.
At December 31, 1995, the television segment
included ten television stations for which the
Company is the licensee and six stations which are
operated under lease management or time brokerage
agreements. These 16 stations operate in ten
different markets. Substantially all revenues
represent income from unaffiliated companies.
1995 1994 1993
RADIO
Net broadcasting revenue $ 141,737,053 $ 94,097,668 $ 71,605,141
Station operating expenses 85,023,929 62,383,246 52,254,074
Depreciation 6,973,801 5,664,700 4,605,256
Amortization of intangibles 13,007,026 6,659,726 4,508,583
Station operating income 36,732,297 19,389,996 10,237,228
Total identifiable assets 340,684,912 244,296,718 114,684,055
Capital expenditures 5,242,553 1,888,787 1,616,617
TELEVISION
Net broadcasting revenue 102,076,064 79,011,706 46,577,498
Station operating expenses 46,234,281 38,053,612 23,735,957
Depreciation 8,406,025 6,974,404 4,611,726
Amortization of intangibles 5,382,030 5,369,710 3,721,697
Station operating income 42,053,728 28,613,980 14,508,118
Total identifiable assets 222,325,892 167,297,307 112,892,486
Capital expenditures 9,867,343 3,858,379 1,075,126
CONSOLIDATED
Net broadcasting revenue 243,813,117 173,109,374 118,182,639
Station operating expenses 131,258,210 100,436,858 75,990,031
Depreciation 15,379,826 12,639,104 9,216,982
Amortization of intangibles 18,389,056 12,029,436 8,230,280
Station operating income 78,786,025 48,003,976 24,745,346
Total identifiable assets 563,010,804 411,594,025 227,576,541
Capital expenditures 15,109,896 5,747,166 2,691,743
See Note I for discussion of nonconsolidated equity investees
NOTE M - QUARTERLY RESULTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
March 31, June 30, September 30, December 31,
1995 1994 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross broadcasting
revenue $ 58,646,216 $ 38,871,413 $ 72,342,267 $ 48,110,302 $ 68,130,871 $ 47,573,068 $ 84,237,698 $ 66,140,125
Net broadcasting
revenue $ 50,476,379 $ 33,917,189 $ 62,047,364 $ 41,444,716 $ 58,661,201 $ 41,009,946 $ 72,628,173 $ 56,737,523
Station operating
expenses 31,800,664 22,020,153 32,471,374 23,690,102 30,727,392 23,767,486 36,258,780 30,959,117
Depreciation and
amortization 8,399,455 5,479,616 8,165,573 5,785,149 8,018,075 6,189,146 9,185,779 7,214,629
Station operating
income 10,276,260 6,417,420 21,410,417 11,969,465 19,915,734 11,053,314 27,183,614 18,563,777
Corporate expenses 1,530,324 1,231,337 1,585,898 1,061,724 1,608,243 1,092,338 2,689,992 1,714,435
Operating income 8,745,936 5,186,083 19,824,519 10,907,741 18,307,491 9,960,976 24,493,622 16,849,342
Interest expense (4,447,973) (1,203,843) (5,214,279) (1,712,075) (5,559,145) (1,845,578) (5,530,057) (2,907,504)
Equity in net income of,
and other income from,
nonconsolidated affiliates - - 478,186 - 1,337,233 - 1,111,772 -
Other income (expense) 258,580 (455,943) (241,341) 697,066 (98,095) 650,064 (722,424) 270,269
Income before income
taxes 4,556,543 3,526,297 14,847,085 9,892,732 13,987,484 8,765,462 19,352,913 14,212,107
Income taxes 1,877,377 1,479,348 5,709,243 3,821,243 5,874,076 3,342,051 7,269,714 5,744,460
Net income $2,679,166 $2,046,949 $9,137,842 $6,071,489 $ 8,113,408 $ 5,423,411 $12,083,199 $ 8,467,647
Net income per common
share (1) $ .08 $ .06 $ .26 $ .18 $ .23 $ .16 $ .34 $ .24
Weighted average common
and common share
equivalents
outstanding(1) 35,039,024 34,409,378 35,055,968 34,425,888 35,102,458 34,676,440 35,126,109 34,983,926
Stock price: (1)
High $ 30.2500 $ 20.1875 $ 34.7500 $ 19.5625 $ 40.8750 $ 26.0000 $ 44.1250 $ 25.8750
Low 25.0625 15.8500 26.8750 16.1875 30.8125 18.0625 36.2500 20.6250
(1) Adjusted for two-for-one stock split declared
by Board of Directors in October 1995.
</TABLE>
The Company's Common Stock was traded on the
American Stock Exchange until November 4, 1994
under the symbol CCU. Subsequent thereto, the
stock is traded on the New York Stock Exchange
under the symbol CCU.
Selected Financial Data
<TABLE>
<CAPTION>
Statement of Operations Data:
At or For the Year Ended December 31,
1995(5) 1994(4) 1993(3) 1992(2) 1991
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Gross broadcasting revenue $283,357 $200,695 $135,680 $ 94,472 $ 74,142
======== ======== ======== ======== ========
Net broadcasting revenue $243,813 $173,109 $118,183 $ 82,205 $ 64,384
Station operating expenses 131,258 100,437 75,990 53,532 44,981
Depreciation and amortization 33,770 24,668 17,447 12,253 7,641
-------- -------- -------- -------- --------
Station operating income 78,785 48,004 24,746 16,420 11,762
Corporate expenses 7,414 5,100 3,464 2,890 2,403
-------- -------- -------- -------- --------
Operating income 71,371 42,904 21,282 13,530 9,359
Interest expense (20,751) (7,669) (5,390) (4,739) (5,371)
Other income (expense) (803) 1,161 (196) (1,217) (1,483)
Equity in net income of,
and other income from,
nonconsolidated affiliates 2,927 - - - -
-------- -------- -------- --------- --------
Income before income taxes 52,744 36,396 15,696 7,574 2,505
Income taxes 20,730 14,387 6,573 3,281 1,379
--------- -------- -------- --------- --------
Net income $ 32,014 $ 22,009 $ 9,123 $ 4,293 $ 1,126
========= ======== ======== ========= ========
Net income per
common share (1) $ .91 $ .63 $ .29 $ .14 $ .04
========= ======== ======== ======== ========
Weighted average common
and common share
equivalents outstanding(1) 35,100 34,663 31,101 29,660 25,976
========= ======== ======== ======== ========
Cash dividends per share (1) - - - - -
========= ======== ======== ======== ========
Balance Sheet Data:
Current assets $ 70,485 $ 53,945 $ 38,191 $ 24,844 $ 20,521
Property, plant and
equipment - net 99,885 85,318 67,750 48,017 27,169
Long-term debt, net of
current maturities 334,164 238,204 87,815 97,000 48,110
Current liabilities 36,005 27,679 26,125 10,073 9,960
Total assets 563,011 411,594 227,577 146,993 92,450
Shareholders' equity 163,713 130,533 98,343 31,055 24,787
(1) All per share amounts have been adjusted to
reflect stock splits issued on the following dates
and in the following ratios:
Date of Split Ratio of Split
November 1995 two-for-one
February 1994 five-for-four
February 1993 five-for-four
February 1992 five-for-four
(2) Includes eleven months' results of operations
of the Kentucky News Network, nine months' results
of operations of WPTY-TV, eight months' results of
operations of WKCI-FM and WAVZ-AM and six months'
results of operations of KEYN-FM, KQAM-AM, WRVA-
AM, WRVQ-FM and WRBQ-AM/FM - all acquired in 1992.
(3) Includes eleven months' results of operations
of KQXT-FM, ten months' results of operations of
KHFI-FM, nine months' results of operations of
WYLD-AM/FM, WRXL-FM, WRNL-AM (now WRVH-AM) and the
Virginia News Network, six months' results of
operations of KSJL-AM (now KTKR-AM), four and one
half months' results of operations of WLMT-TV,
three months' results of operations of KITN-TV
(now WFTC-TV) and two months' results of
operations of KTFO-TV - all acquired in 1993.
(4) Includes twelve months' results of operations
of KEBC-FM, ten months' results of operations of
WAXY-FM (now WBGG-FM) and KLRT-TV and KASN-TV,
four and one half months' results of operations of
KBXX-FM, two and one half months' results of
operations of Metroplex Communications, Inc., two
months' results of operations of WENZ-FM and one
months' results of operations of WXXA-TV - all
acquired in 1994.
(5) Includes twelve months' results of operations
of KMJQ-FM, KPRC-AM, and KSEV-AM, two and one half
months' results of operations of VSA and two
months' results of operations of WHP-TV and WLYH-
TV - all acquired in 1995.
</TABLE>
Corporate Officers
Lowry Mays
President / Chief Executive Officer
Mark P. Mays
Senior Vice President / Operations
Herbert W. Hill, Jr.
Vice President / Controller
Randall Mays
Vice President / Treasurer
Kenneth E. Wyker
Vice President / Legal Affairs
Board of Directors
Lowry Mays
President / Chief Executive Officer
Alan D. Feld
Partner: Akin, Gump, Strauss, Hauer and Feld
Red McCombs
Private Investor
Theodore H. Strauss*
Senior Managing Director: Bear, Stearns & Co., Inc.
John H. Williams*
Senior Vice President: Everen Securities, Inc.
*member of the audit committee
Radio
James D. Smith
Regional Vice President
Oklahoma
Miles Chandler
Vice President
Oklahoma City
Robert T. Cohen
Vice President
San Antonio
Linda Forem
Vice President
Richmond
Carl Hamilton
Vice President
Houston
Ernest Jackson
Vice President
Houston
Earnest James
Vice President
New Orleans
Betty Kocurek
Vice President
San Antonio
Kevin Malone
Vice President
Tampa
David Manning
Vice President
Tampa
Carl McNeill
Vice President
Richmond
Dan Patrick
Vice President
Houston
David Ross
Vice President
Miami
Robert R. Scherer
Vice President
Louisville
Walt Tiburski
Vice President
Cleveland
Stan Webb
Vice President
Austin
Tim West
Vice President
Oklahoma City
Faith Zila
Vice President
New Haven
Television
W. Ripperton Riordan
Executive Vice President /
Chief Operating Officer
Minneapolis
David Bird
Vice President
Minneapolis
Hal Capron
Vice President
Tulsa
Andy Comegys
Vice President
Mobile/Pensacola
David D'Antuono
Vice President
Albany
John Feeser
Vice President
Harrisburg
Jack Jacobson
General Manager
Tucson
Josh McGraw
Vice President
Jacksonville
Jack Peck
Vice President
Memphis
Steve Spendlove
Vice President
Wichita
Jerry Whitener
Vice President
Little Rock
Australia
Nigel Milan
Chief Executive Officer
Sydney
Rhys Holleran
General Manager
Melbourne
Graham Miles
General Manager
Sydney
Rob Molhoek
General Manager
Albury/Wodonga
John Hamilton
Chief Financial Officer
Sydney
Stephen Pead
General Manager
Canberra
Peter Verhoeven
General Manager
Brisbane
John Williams
General Manager
Sydney
Transfer Agent and Registrar
Bank of New York
101 Barclay Street
22 Floor West
New York, NY 10286
Independent Auditors
Ernst & Young, LLP
San Antonio, Texas
A copy of the Company's Annual Report on Form 10-
K filed with the Securities and Exchange
Commission may be obtained without charge upon
written request to:
Herbert W. Hill, Jr.
Vice President
Clear Channel Communications, Inc.
P.O. Box 659512
San Antonio, Texas
78265-9512
Annual Meeting of Shareholders
The annual meeting of shareholders will be held at
200 Concord Plaza on the 5th Floor in the
Conference Room, San Antonio, Texas,
on Thursday, April 25, 1996, at 11 a.m.
Clear Channel Communications, Inc.
Mailing Address
P.O. Box 659512
San Antonio, Texas
78265-9512
Corporate Address
200 Concord Plaza
Suite 600
San Antonio, Texas
78216-6940
210.822.2828
[facsimile 210.822.2299]
EXHIBIT 22 - Subsidiaries of Registrant, Clear Channel Communications, Inc.
Name State of Incorporation
Clear Channel Communications of Memphis, Inc. Texas
Clear Channel Television, Inc. Nevada
Clear Channel Radio, Inc. Nevada
Clear Channel Television Licenses, Inc. Nevada
Clear Channel Radio Licenses, Inc. Nevada
Clear Channel Management, Inc. Delaware
Snowden Broadcasting of New Orleans, L.C. Texas
Texas Clear Channel Metroplex, Inc. Nevada
Clear Channel Metroplex Licenses, Inc. Nevada
Clear Channel Holdings, Inc. Nevada
Clear Channel Productions, Inc. Nevada
CCC-Houston A M LTD Texas
CCR Houston-Nevada, Inc. Nevada
Clear Channel Real Estate Nevada
EXHIBIT 24.1 - CONSENT OF INDEPENDENT AUDITORS -
ERNST & YOUNG LLP
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Clear Channel Communications, Inc. of our
report dated February 16, 1996, included in the 1995 Annual
Report to Shareholders of Clear Channel Communications, Inc.
Our audits also included the financial statement schedules of
Clear Channel Communications, Inc. listed in Item 14(a). These
schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material
respects the information set forth therein.
We also consent to the incorporation by reference in the
Registration Statements (Forms S-8) pertaining to the 1984
Incentive Stock Option Plan of Clear Channel Communications,
Inc. (No. 33-14193); the Clear Channel Communications, Inc.
Nonqualified Stock Option Plan (No. 33-59772); and the
Clear Channel Communications, Inc. 1994 Incentive Stock
Option Plan, Clear Channel Communications, Inc. 1994
Nonqualified Stock Option Plan, Clear Channel Communications,
Inc. Directors' Nonqualified Stock Option Plan, and Option
Agreement for Officer (No. 33-64463) of our report dated
February 16, 1996, with respect to the consolidated financial
statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the
financial statement schedules included in this Annual Report
(Form 10-K) for the year ended December 31, 1995.
ERNST & YOUNG LLP
San Antonio, Texas
March 25, 1996
EXHIBIT 24.2 - CONSENT OF INDEPENDENT AUDITORS -
KPMG
We consent to the incorporation by reference in the Registration
Statements (Forms S-8) pertaining to the 1984 Incentive Stock
Option Plan of Clear Channel Communications, Inc. (No. 33-14193);
the Clear Channel Communications, Inc. Nonqualified Stock Option
Plan (No. 33-59772); and the Clear channel Communications, Inc.
1994 Incentive Stock Option Plan, Clear Channel Communications,
Inc. Directors' Nonqualified Stock Option Plan, and Option
Agreement for Officer (No. 33-64463) of our report dated 12 February,
1996, with respect to the consolidated financial statements
incorporated herein by reference, and our report included herein
with respect to the financial information of Australian Radio Network
Pty Ltd included in this Annual Report (Form 10-K) for the year ended
December 31, 1995.
KPMG
Sydney, Australia
March 27, 1996
EXHIBIT 99.1 -- REPORT OF INDEPENDENT AUDITORS - KPMG
The Board of Directors of Australian Radio Network Pty Limited
We have audited the consolidated balance sheet of the Australian
Radio Network Pty Limited and its controlled entities ("Australian
Radio Network") as at December 31, 1995, and the related
consolidated profit and loss account and statement of cash flows
for the year ended December 31, 1995, all expressed in Australian
dollars. These consolidated financial statements are the responsibility
of the Australian Radio Network's management. Our responsibility
is to express an opinion on these consolidated financial statements
based on our audit.
We conducted our audit in accordance with the Australian auditing
standards that are substantially equivalent to United States generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Australian
Radio Network as a t December 31, 1995, and the results of their
operations and their cash flows for the year ended December 31, 1995
in conformity with accounting principles generally accepted in Australia.
Generally accepted accounting principles in Australia vary in certain
significant respects from generally accepted accounting principles in
the United States. Application of generally accepted accounting
principles in the United States would have affected results of operations
for the period May 11, 1995 to December 31, 1995, and shareholders'
equity as of December 31, 1995, to the extent summarised in the
information accompanying the annual financial statements.
KPMG
Sydney, Australia
12 February, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned on
March 25, 1996, thereunto duly authorized.
Clear Channel
Communications, Inc.
(Registrant)
By L. Lowry Mays
L. Lowry Mays, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant in the capacities and on the date
indicated.
Signature Title Date
L. Lowry Mays President and Director March 29, 1996
L. Lowry Mays (Chief Executive Officer)
Herbert W. Hill, Jr. Vice President/Controller March 29, 1996
Herbert W. Hill, Jr. (Principal Financial Officer)
B. J. McCombs
B. J. McCombs Director March 29,1996
Alan D. Feld
Alan D. Feld Director March 29,1996
Theodore H. Strauss
Theodore H. Strauss Director March 29,1996
John H. Williams
John H. Williams Director March 29,1996
<TABLE> <S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 5391
<SECURITIES> 0
<RECEIVABLES> 52920
<ALLOWANCES> 3810
<INVENTORY> 0
<CURRENT-ASSETS> 70485
<PP&E> 158044
<DEPRECIATION> 58159
<TOTAL-ASSETS> 563011
<CURRENT-LIABILITIES> 36005
<BONDS> 334164
<COMMON> 3459
0
0
<OTHER-SE> 160253
<TOTAL-LIABILITY-AND-EQUITY> 563011
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<TOTAL-REVENUES> 243813
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<TOTAL-COSTS> 131258
<OTHER-EXPENSES> 6611
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<INTEREST-EXPENSE> 20751
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</TABLE>
