<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
Under The Securities Act of 1933
---------------------
CLEAR CHANNEL COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
200 CONCORD PLAZA, SUITE 600
SAN ANTONIO, TEXAS 78216
(210) 822-2828
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
<TABLE>
<C> <C>
TEXAS 74-1787539
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
---------------------
L. LOWRY MAYS
CLEAR CHANNEL COMMUNICATIONS, INC.
200 CONCORD PLAZA, SUITE 600
SAN ANTONIO, TEXAS 78216
(210) 822-2828
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
<TABLE>
<S> <C>
COPIES TO:
STEPHEN C. MOUNT STEPHEN A. RIDDICK
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. PIPER & MARBURY L.L.P.
1500 NATIONSBANK PLAZA 36 SOUTH CHARLES STREET
300 CONVENT STREET BALTIMORE, MARYLAND 21201
SAN ANTONIO, TEXAS 78205
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
==================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- ------------------------------------------------------------------------------------------------------------------
Common Stock...................... 10,614,068 $48.1875 $511,465,402 $154,990
==================================================================================================================
</TABLE>
(1) Includes 614,068 shares that the Underwriters have the option to purchase to
cover over-allotments, if any.
(2) Pursuant to Rule 457(c), the offering price and registration fee are
computed on the basis of the average of the high and low prices of the
Common Stock, as reported by the New York Stock Exchange on April 17, 1997.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
APRIL 18, 1997
10,000,000 SHARES
<TABLE>
<S> <C>
[CLR CH LOGO] [CLEAR CHANNEL COMMUNICATIONS, INC.]
</TABLE>
---------------------
Of the 10,000,000 shares of Common Stock offered hereby (the "Offering"),
4,093,790 shares are being sold by Clear Channel Communications, Inc. (the
"Company") and 5,906,210 shares are being sold by certain selling shareholders
named herein (the "Selling Shareholders"). See "Selling Shareholders." The
Company will not receive any of the proceeds from the sale of Common Stock by
the Selling Shareholders. The Common Stock of the Company is traded on the New
York Stock Exchange under the symbol "CCU". On April 17, 1997, the last reported
sale price of the Common Stock was $47.875 per share. See "Price Range of Common
Stock."
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
==================================================================================================================
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO DISCOUNTS AND TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS(2)
- ------------------------------------------------------------------------------------------------------------------
Per Share..............
- ------------------------------------------------------------------------------------------------------------------
Total(3)...............
==================================================================================================================
</TABLE>
(1) See "Underwriting" for information relating to the indemnification of the
Underwriters.
(2) Before deducting expenses payable by the Company and the Selling
Shareholders estimated at $500,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 614,068 additional shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, and Proceeds to
Company will be $ , $ and $ , respectively. See
"Underwriting."
---------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the Common Stock will be made at the offices of Alex.
Brown & Sons Incorporated, Baltimore, Maryland, on or about , 1997.
ALEX. BROWN & SONS
INCORPORATED
CREDIT SUISSE FIRST BOSTON
FURMAN SELZ
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MONTGOMERY SECURITIES
SALOMON BROTHERS INC
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 3
[ARTWORK]
IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS PARTICIPATING IN THIS
OFFERING MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NEW YORK STOCK EXCHANGE IN ACCORDANCE WITH RULE 103 UNDER REGULATION M. SEE
"UNDERWRITING."
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing in the
documents incorporated by reference into this Prospectus. All information set
forth herein has been adjusted to reflect five-for-four stock splits effected in
February 1992, February 1993, and February 1994, and two-for-one stock splits
effected in November 1995 and December 1996. Unless the context otherwise
requires, references herein to the "Company" are to Clear Channel
Communications, Inc. and its consolidated subsidiaries, and references herein to
"Eller Media" are to Eller Media Corporation and its consolidated subsidiaries
prior to the consummation of the Eller Media Acquisition (as hereinafter
defined). Unless otherwise indicated, the information in this Prospectus assumes
no exercise of the Underwriters' over-allotment option. See "Underwriting."
THE COMPANY
The Company, which began operations in 1972, is a diversified media company
that currently owns or programs 112 radio stations and 18 television stations in
28 domestic markets and is one of the largest domestic outdoor advertising
companies based on its total advertising display inventory of approximately
50,000 display faces in 15 major metropolitan markets. In addition, the Company
owns a 50% equity interest in the Australian Radio Network Pty. Ltd. ("ARN"),
which operates ten radio stations in Australia, a one-third equity interest in
the New Zealand Radio Network, which operates 52 radio stations throughout New
Zealand, and a 32.3% equity interest in Heftel Broadcasting Corporation
(Nasdaq:HBCCA) ("Heftel"), a leading domestic Spanish-language broadcaster which
operates 38 radio stations in 11 domestic markets. The Company currently has
acquisitions pending for 17 radio stations, including 8 stations which the
Company currently programs and/or sells air time under Local Marketing
Agreements ("LMA") or Joint Sales Agreements ("JSA"), in 3 domestic markets.
After completion of the pending acquisitions, the Company will own or program
121 radio stations.
The 38 AM and 74 FM radio stations currently owned or programmed by the
Company are principally located in the South, Southeast, Southwest, Northeast
and Midwest. These radio stations employ a wide variety of programming formats,
such as News/Talk/Sports, Country, Adult Contemporary, Urban and Album Rock. The
18 television stations currently owned or programmed by the Company are located
in the South, Southeast, Northeast and Midwest. Seven of these television
stations are affiliated with the FOX television network; seven are affiliated
with the UPN television network; one is affiliated with the ABC television
network; one is affiliated with the NBC television network; and two are
affiliated with the CBS television network. Additionally, the Company operates
five radio networks serving Oklahoma, Texas, Iowa, Kentucky and Virginia. In
1996, the Company derived approximately 62% of its net broadcasting revenue from
radio operations and approximately 38% from television operations.
The Company, through its recent acquisition of Eller Media, is one of the
largest domestic outdoor advertising companies with a total advertising display
inventory of approximately 50,000 display faces. The Company provides outdoor
advertising services in 15 major metropolitan markets. The Company currently has
both outdoor advertising and broadcasting assets in seven domestic markets, as
well as in five additional domestic markets currently served by Heftel. The
markets in which the Company now provides outdoor advertising services represent
approximately 22% of the total U.S. population and approximately 50% of the
rapidly growing U.S. Hispanic population. The Company now has a significant
presence in eight of the ten largest U.S. Hispanic markets, including Los
Angeles, Miami, Chicago and San Antonio. See "Business -- Outdoor Advertising."
The Company's successful operating strategies and acquisition track record,
combined with its diversity of radio and television stations in terms of markets
and formats, have enabled the Company to achieve consistent growth in revenue
and cash flow. Since 1992, the Company has achieved compounded annual growth
rates of approximately 43% in net revenue, approximately 52% in
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<PAGE> 5
broadcast cash flow (defined as station operating income before depreciation,
amortization and corporate expenses) and approximately 58% in after-tax cash
flow (defined as net income before unusual items plus depreciation, amortization
of intangibles -- including non-consolidated affiliates -- and deferred taxes).
COMPANY STRATEGY
The Company's overall strategy is to assist its customers in marketing
their products and services in the most effective and cost-efficient manner
possible. As such, the Company has worked to assemble assets that it believes
are most suited for this purpose. While the Company has traditionally focused on
radio and television broadcasting, it has recently added outdoor advertising
assets to its holdings through its acquisition of Eller Media. The Company plans
to use its further diversified collection of assets, along with the operating
expertise of its management, to continue to generate healthy internal growth.
The Company believes it can augment this internal growth with the opportunistic
acquisition of additional media assets. Such potential acquisitions will be
evaluated based on their strategic value to the Company. The Company believes
that additional acquisitions that meet the Company's criteria will add revenue
and cash flow to its results and improve the performance of the Company's
existing assets. Historically, the Company has been able to generate significant
returns for its investors while maintaining financial flexibility through the
prudent use of leverage. The Company believes that this prudent use of leverage
has also contributed to the Company's relatively low cost of capital. The
Company believes that focusing on its clients' goals, creating a sales-intensive
operating organization, and maintaining a conservative financial position are
aspects of its operating strategy which are more effective in combination than
they would be independently.
The Company believes that the potential exists for cooperation between its
various business segments and that it can help its customers market their
products and services more effectively and efficiently by offering greater
flexibility in the choice of media outlets for marketing messages. The Company
is now able to offer additional advertising solutions for its customers in those
markets where it operates radio and television stations and outdoor advertising
displays. Additionally, the Company intends to use its various business segments
to cross-promote one another when possible. In this way, the Company believes
that its combination of assets will allow it to offer greater value to its
customers.
Broadcast Strategy. The Company's broadcast strategy is to identify and
acquire under-performing stations on favorable terms and to utilize management's
extensive operating experience to improve the performance of such stations as
well as its existing stations through effective programming, reduction of costs
and aggressive promotion, marketing and sales. In addition, the Company employs
a marketing strategy that emphasizes direct sales to local customers rather than
through advertising agencies and other intermediaries. The Company believes that
this focus has enabled its stations to achieve market revenue shares exceeding
their audience shares.
The Company's radio strategy is to assemble and operate a cluster of radio
stations in each of its principal markets. The Company believes that by
controlling a larger share of the total advertising inventory in a particular
market, it can offer advertisers attractive packages of advertising options. The
Company also believes that its cluster approach will allow it to operate its
stations with more highly skilled local management teams and eliminate
duplicative operating and overhead expenses. The Company's television strategy
is to own and program one station in each of its markets and to program an
additional station under an LMA in each such market. In seven of its television
markets, the Company already programs an additional television station under an
LMA.
Outdoor Advertising Strategy. The Company's outdoor advertising strategy is
to expand its market presence in the outdoor advertising business and improve
its operating results by (i) managing the advertising rates and occupancy levels
of its displays to maximize market revenues; (ii) attracting new categories of
advertisers to the outdoor medium through significant
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<PAGE> 6
investments in sales and marketing resources; (iii) increasing focus on local
advertising sales; (iv) constructing new displays and upgrading its existing
displays; (v) taking advantage of technological advances which increase both
sales force productivity and production department efficiency; and (vi)
acquiring additional displays in its existing markets and expanding into
additional markets where the Company already has a broadcasting presence as well
as the country's largest media markets and their surrounding regional areas. The
Company believes this strategy enhances its ability to effectively respond to
advertisers' needs.
To support this outdoor advertising operating strategy, the Company has
decentralized its operating structure related to outdoor advertising in order to
place authority, autonomy and accountability at the market level and provide
local management with the tools necessary to oversee sales, display development,
administration and production and to identify suitable acquisition candidates.
The Company also maintains a fully-staffed sales and marketing office in New
York which services national outdoor advertising accounts and supports the
Company's local sales force in each market. The Company believes that one of its
strongest competitive advantages is its unique blend of highly experienced
corporate and local market management.
RECENT DEVELOPMENTS
ELLER MEDIA CORPORATION
On April 10, 1997, the Company acquired approximately 93% of the
outstanding stock of Eller Media for a total consideration of approximately $623
million, consisting of approximately $325 million in cash and 6,643,637 shares
of Common Stock (approximately $298 million in Common Stock based on a price per
share of approximately $44.8625 per share) (the "Eller Media Acquisition").
Immediately following the consummation of the Eller Media Acquisition, the
Company retired approximately $417 million of Eller Media's outstanding bank
debt through borrowings under the Company's credit facility (the "Credit
Facility"). In addition, the Company issued options (with an estimated fair
value of approximately $51 million) to purchase 1,468,182 shares of the
Company's Common Stock in connection with the assumption of Eller Media's
outstanding stock options. The Company also agreed to issue 147,858 shares of
Common Stock pursuant to certain phantom stock plan obligations assumed by the
Company as part of the Eller Media Acquisition. The holders of the approximately
7% of the outstanding capital stock of Eller Media not purchased by the Company
have the right to require the Company to acquire such stock for 1,081,469 shares
of the Company's Common Stock until April 10, 2002. From and after April 10,
2004, the Company will have the right to acquire this minority interest stake in
Eller Media for 1,081,469 shares of its Common Stock or before such date upon
the occurrence of certain events. For the twelve month period ended December 31,
1996, Eller Media had net revenues, operating cash flow and an operating cash
flow margin of $237 million, $91 million and 38.5%, respectively. On April 29,
1997, Karl Eller, the Chief Executive Officer of Eller Media, will be appointed
to the Board of Directors of the Company. Karl Eller will remain with the
Company to run Eller Media as a subsidiary of the Company. Mr. Eller's existing
employment contract, which has approximately two and one-half years until
expiration, will remain in place. In addition, Mr. Eller and other members of
the Eller Media management team have a significant stake in the Company's stock
options through the conversion of existing Eller Media stock options into
options to purchase the Company's Common Stock.
Following the consummation of the Eller Media Acquisition, the Company
became one of the largest domestic outdoor advertising companies with total
advertising display inventory of approximately 50,000 display faces. It now
provides outdoor advertising services in 15 major metropolitan markets. The
Company currently has both outdoor advertising and broadcasting assets in seven
domestic markets, as well as in five additional domestic markets currently
served by Heftel. The markets in which the Company now provides outdoor
advertising services represent approximately 22% of the total U.S. population
and approximately 50% of the rapidly growing U.S. Hispanic population. The
Company now has a significant presence in eight of the ten largest U.S. Hispanic
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<PAGE> 7
markets, including Los Angeles, Miami, Chicago and San Antonio. See
"Business -- Outdoor Advertising."
HEFTEL BROADCASTING CORPORATION
On February 14, 1997, the Company's nonconsolidated affiliate, Heftel, the
largest domestic Spanish language radio broadcasting company, completed a merger
with Tichenor Media System, Inc. ("Tichenor"), then the third largest Spanish
language radio broadcasting company. Following the merger, Heftel owns or
programs 38 radio stations in 11 markets, including stations in each of the top
ten Hispanic markets. The Company's total ownership interest in Heftel was
reduced to approximately 32.3% of the total outstanding common stock of Heftel
(voting and non-voting) following the issuance of 4.8 million shares of voting
common stock by Heftel in a public offering, the sale by the Company of 350,000
shares of Heftel's common stock in such public offering and the issuance of
approximately 5.6 million shares of Heftel's voting common stock to former
Tichenor shareholders and warrant holders. In the merger, all of the Company's
voting common stock of Heftel and shares of Tichenor's common stock owned by the
Company were converted into shares of convertible nonvoting common stock of
Heftel in order to comply with the cross-interest policy of the Federal
Communications Commission (the "FCC").
OTHER COMPLETED ACQUISITIONS
Since December 31, 1996, the Company completed the acquisition of 13
additional radio stations for approximately $91.5 million. The Company has also
acquired a broadcasting license for approximately $1.0 million. Eller Media or
the Company have completed the acquisition of 166 display faces for
approximately $17.9 million. These acquisitions include:
- -In January 1997, the Company acquired WZZU-FM in Raleigh, North Carolina from
Ceder Raleigh Limited Partnership for approximately $7.5 million.
- -In January 1997, the Company acquired WQMF-FM in Louisville, Kentucky from
Otting Broadcasting, Inc. and PAO Communications, Inc. for approximately $13.5
million.
- -In February 1997, the Company acquired WVTI-FM (formerly WAKX-FM) in Grand
Rapids, Michigan from Pathfinder Communications Corporation for approximately
$4.1 million.
- -In February 1997, the Company acquired KHOM-FM in Houma, Louisiana from KHOM
Associates, LLP for approximately $6.9 million.
- -In February 1997, the Company acquired the FCC license of KJOJ-AM in Conroe,
Texas from Family Group Enterprises, Inc. for approximately $1.0 million. The
broadcasting assets other than the FCC license were acquired in May 1996 as
part of the acquisition of USRadio, Inc.
- -In March 1997, the Company's 80% owned subsidiary, Radio Enterprises, Inc.,
completed the purchase of WQBK-FM, WQBJ-FM, WXCR-FM and WQBK-AM in Albany, New
York from Maximum Media Inc. and DJAMedia Inc. for approximately $7.5 million.
- -In April 1997, the Company acquired WOKY-AM and WMIL-FM in Milwaukee, Wisconsin
from Chancellor Broadcasting for approximately $41 million.
- -In April 1997, the Company acquired WOLZ-FM, WKII-AM and WFSN-FM in Ft. Myers,
Florida from Osborne Communications and Corkscrew Broadcasting for
approximately $11 million.
- -Since January 1, 1997, Eller Media or the Company have purchased 166 display
faces in 17 transactions for an aggregate of $17.9 million, including the
issuance of a promissory note in the principal amount of $9.5 million
convertible into approximately 1% of the outstanding stock of Eller Media.
These display faces are located in eight existing markets.
PENDING ACQUISITIONS
Since December 31, 1996, the Company has entered into definitive agreements
to purchase 12 additional radio stations for approximately $64 million. Each of
these acquisitions is subject to
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the approval of certain governmental authorities, including the FCC, the Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division"), and other closing conditions.
There can be no assurance that such acquisitions will be consummated or, if
consummated, the terms thereof. Pending acquisitions include:
- -In February 1997, the Company entered into a definitive agreement to acquire
WDUR-AM, WFXC-FM and WFXK-FM in Raleigh, North Carolina from Pinnacle
Broadcasting, Inc. for approximately $20 million.
- -In March 1997, the Company entered into a definitive agreement to acquire
WKSJ-FM, WKSJ-AM, WMXC-FM, WDWG-FM, WRKH-FM and WNTM-AM in Mobile, Alabama from
Capitol Broadcasting Company, L.L.C. for approximately $24 million.
- -In April 1997, the Company entered into a definitive agreement to acquire
KMVK-FM, KSSN-FM and KOLL-FM in Little Rock, Arkansas from Triathlon
Broadcasting of Little Rock, Inc., for approximately $20 million.
The Company has its principal executive offices at 200 Concord Plaza, Suite
600, San Antonio, Texas 78216 (telephone: 210-822-2828).
THE OFFERING
Common Stock to be offered by the Company....... 4,093,790 shares
Common Stock to be offered by the Selling
Shareholders.................................... 5,906,210 shares
Common Stock to be outstanding after the
Offering........................................ 88,016,587 shares(1)
Use of proceeds................................. To repay indebtedness under
the Credit Facility
New York Stock Exchange symbol.................. CCU
- ---------------
(1) Excludes 2,967,782 shares of Common Stock currently issuable upon exercise
of options to purchase shares of the Company's Common Stock at prices
ranging from $3.26 to $43.45 per share and 147,858 shares of Common Stock
issuable pursuant to phantom stock plan obligations assumed by the Company
as part of the Eller Media Acquisition.
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SUMMARY FINANCIAL INFORMATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED DECEMBER 31, ELLER MEDIA
----------------------- ACQUISITION
1992 1993 1994 1995 1996 1996(2)
------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Net revenue........................... $84,485 $121,118 $178,053 $250,059 $351,739 $588,771
Operating expenses.................... 55,812 78,925 105,380 137,504 198,332 340,171
Depreciation and amortization......... 12,253 17,447 24,669 33,769 45,790 109,954
------- -------- -------- -------- -------- --------
Operating income before corporate
expenses............................ 16,420 24,746 48,004 78,786 107,617 138,646
Corporate expenses.................... 2,890 3,464 5,100 7,414 8,527 18,731
------- -------- -------- -------- -------- --------
Operating income...................... 13,530 21,282 42,904 71,372 99,090 119,915
Interest expense...................... (4,739) (5,390) (7,669) (20,752) (30,080) (75,777)
Other income (expense)................ (1,217) (196) 1,161 (803) 2,230 (4,491)
------- -------- -------- -------- -------- --------
Income before income taxes............ 7,574 15,696 36,396 49,817 71,240 39,647
Income taxes.......................... 3,281 6,573 14,387 20,292 28,386 24,104
------- -------- -------- -------- -------- --------
Income before equity in net income
(loss) of, and other income from
nonconsolidated affiliates.......... 4,293 9,123 22,009 29,525 42,854 15,543
Equity in net income (loss) of, and
other income from, nonconsolidated
affiliates.......................... -- -- -- 2,489 (5,158) (5,158)
------- -------- -------- -------- -------- --------
Net income............................ $ 4,293 $ 9,123 $ 22,009 $ 32,014 $ 37,696 $ 10,385
======= ======== ======== ======== ======== ========
Net income per common share........... $ .07 $ .15 $ .32 $ .46 $ .50 $ .13
======= ======== ======== ======== ======== ========
Weighted average common shares and
common share equivalents
outstanding......................... 59,320 62,202 69,326 70,201 74,649 82,484
======= ======== ======== ======== ======== ========
After-tax cash flow(3)................ $17,147 $ 26,638 $ 46,866 $ 71,140 $107,318 $144,171
======= ======== ======== ======== ======== ========
After-tax cash flow per
share(4)............................ $ .29 $ .43 $ .68 $ 1.01 $ 1.44 $ 1.75
======= ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------ AS ADJUSTED
1992 1993 1994 1995 1996 1996(5)
------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....... $ 2,790 $ 5,517 $ 6,818 $ 5,391 $ 16,701 $ 17,574
Total assets.................... 146,993 227,577 411,594 563,011 1,324,711 2,494,888
Long-term debt, net of current
maturities.................... 97,000 87,815 238,204 334,164 725,132 1,273,357
Shareholders' equity............ 31,055 98,343 130,533 163,713 513,431 1,050,946
</TABLE>
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- ---------------
(1) The comparability of results of operations is affected by acquisitions
consummated in each of the periods presented.
(2) Gives effect to the Eller Media Acquisition as if such acquisition had been
consummated on January 1, 1996 and excludes Eller Media's extraordinary loss
on debt extinguishment (net of tax benefit) of $4,537,000. The pro forma
financial information is based on a preliminary purchase price allocation
and does not give effect to any other completed or pending acquisition.
(3) Defined as net income before unusual items plus depreciation, amortization
of intangibles (including non-consolidated affiliates) and deferred taxes.
After-tax cash flow is presented here not as a measure of operating results
and does not purport to represent cash provided by operating activities.
After-tax cash flow should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles.
(4) Defined as after-tax cash flow divided by weighted average common shares and
common share equivalents outstanding.
(5) As adjusted to give effect to the Eller Media Acquisition as if such
acquisition had been consummated on December 31, 1996 and to give effect to
the Offering and the application of the estimated net proceeds therefrom of
$188,827,000 (assuming a public offering price of $47.875 per share). The
pro forma financial information is based on a preliminary purchase price
allocation and does not give effect to any other completed or pending
acquisition.
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<PAGE> 11
RISK FACTORS
Prospective purchasers of the Common Stock should consider carefully the
factors set forth below, as well as the other information contained in this
Prospectus.
SIGNIFICANT SHAREHOLDERS
Upon completion of the Offering, the two principal shareholders of the
Company, L. Lowry Mays, Chairman, Chief Executive Officer and a Director of the
Company, and B.J. McCombs, a Director of the Company, collectively will own
beneficially approximately 29.3% of the outstanding shares of Common Stock (or
approximately 29.1% if the Underwriters' over-allotment option is exercised in
full). As a result, Messrs. Mays and McCombs will be able to exert significant
influence over the outcome of elections of the Company's directors and other
matters requiring the vote or consent of the shareholders of the Company. The
Company, L. Lowry Mays and B.J. McCombs are parties to a Buy-Sell Agreement (the
"Repurchase Agreement") restricting the disposition of shares of Common Stock
owned by Messrs. Mays and McCombs. See "Description of Capital Stock --
Repurchase Agreement."
DEPENDENCE ON KEY PERSONNEL
The Company believes that its success will continue to be dependent upon
its ability to attract and retain skilled managers and other personnel,
including its Chairman and Chief Executive Officer, L. Lowry Mays. The Company
has entered into an employment agreement expiring in 2001 with Mr. Mays and
other employment agreements expiring at various times with key personnel. The
Company does not maintain a key man life insurance policy on Mr. Mays.
FINANCIAL LEVERAGE
After giving effect to the sale of the Common Stock offered hereby and the
application of the estimated net proceeds therefrom (assuming a public offering
price of $47.875 per share) and the Eller Media Acquisition, the Company would
have had, at December 31, 1996, borrowings under its then existing credit
facility of approximately $1,262,177,000 and shareholders' equity of
$1,050,946,000. The Company has borrowed and expects to continue borrowing to
finance acquisitions of broadcasting and other media-related and outdoor
advertising properties and for other corporate purposes. On April 10, 1997, in
connection with the Eller Media Acquisition, the Company amended its Credit
Facility increasing the amount it may borrow to $1,750,000,000 at floating rates
(currently LIBOR plus 0.50%). In connection with pending acquisitions, the
Company may incur $79.3 million of additional indebtedness prior to the
application of the proceeds of the Offering if all such acquisitions are
consummated. The Company will use the proceeds from the Offering to repay debt
previously drawn under its Credit Facility. The Company will have sufficient
funds under the Credit Facility to consummate all of the pending acquisitions
contemplated herein. Future acquisitions of radio and television stations and
other media-related and outdoor advertising properties effected in connection
with the implementation of the Company's acquisition strategy are expected to be
financed from increased borrowings under the Credit Facility, other debt or
equity financings and cash flow from operations. See "-- Risk of Acquisition
Strategy; Capital Requirements." Because of the amount of the Company's
indebtedness, a significant portion of the Company's operating income is
required for debt service. The Company's leverage could make it vulnerable to an
increase in interest rates or a downturn in the operating performance of its
radio and television stations or in general economic conditions. The Credit
Facility contains certain financial and operational covenants and other
restrictions with which the Company must comply, including limitations on
capital expenditures, the incurrence of additional indebtedness, payment of cash
dividends, and requirements to maintain certain financial ratios. See "Dividend
Policy".
10
<PAGE> 12
GOVERNMENT REGULATION
Broadcasting. The domestic broadcasting industry is subject to extensive
federal regulation which, among other things, requires approval by the FCC for
the issuance, renewal, transfer and assignment of broadcasting station operating
licenses and limits the number of broadcasting properties the Company may
acquire. The Telecommunications Act of 1996 (the "1996 Act"), which became law
on February 8, 1996, creates significant new opportunities for broadcasting
companies but also creates uncertainties as to how the FCC and the courts will
enforce and interpret the 1996 Act.
The Company's business will continue to be dependent upon acquiring and
maintaining broadcasting licenses issued by the FCC, which are issued for a
maximum term of eight years. Although it is rare for the FCC to deny a renewal
application, there can be no assurance that future renewal applications will be
approved, or that renewals will not include conditions or qualifications that
could adversely affect the Company's operations. Moreover, governmental
regulations and policies may change over time and there can be no assurance that
such changes would not have a material adverse impact upon the Company's
business, financial condition and results of operations. For example, the FCC
currently is considering whether to revise its policy with regard to television
LMAs and there can be no guarantee that the Company will be able to program
stations under existing LMAs for the remainder of their current terms, extend
existing LMAs beyond their current terms, or to enter into LMAs in other markets
in which the Company owns and operates television stations.
Outdoor Advertising. Outdoor advertising displays are subject to
governmental regulation at the federal, state and local levels. These
regulations, in some cases, limit the height, size, location and operation of
billboards and, in limited circumstances, regulate the content of the
advertising copy displayed on the billboards. Some governmental regulations
prohibit the construction of new billboards or the replacement, relocation,
enlargement or upgrading of existing structures. Some cities, including two
within the Company's markets (Houston and San Francisco), have adopted
amortization ordinances under which, after the expiration of a specified period
of time, billboards must be removed at the owner's expense and without payment
of compensation. Ordinances requiring the removal of billboards without
compensation, whether through amortization or otherwise, are being challenged in
various state and federal courts with conflicting results. The Houston ordinance
has been the subject of litigation for over five years and is currently not
being enforced. The Company believes that its operations will not be materially
affected by the Houston amortization ordinance even if it is enforced, as a
substantial portion of the Company's Houston inventory consists of bulletins and
30-sheet posters located near federal highways where the Highway Beautification
Act of 1965 would require just compensation in the event of any required
removal. The Company's operations have not been materially affected by the San
Francisco amortization ordinances since its signs conform to effective
ordinances and state law currently prevents effectiveness of other ordinances
which require removal of signs without compensation. There can be no assurance
that the Company will be successful in negotiating acceptable arrangements in
circumstances in which its displays are subject to removal or amortization, and
what effect, if any, such regulations may have on the Company's operations. In
addition, the Company is unable to predict what additional regulations may be
imposed on outdoor advertising in the future. Legislation regulating the content
of billboard advertisements has been introduced in Congress from time to time in
the past. Changes in laws and regulations affecting outdoor advertising at any
level of government could have a material adverse effect on the Company.
On a pro forma basis, approximately 5% of the Company's 1996 net revenues
were derived from tobacco advertising. In August 1996, the U.S. Food and Drug
Administration issued final regulations governing certain marketing practices in
the tobacco industry, including a prohibition of tobacco product billboard
advertisements within 1,000 feet of schools and playgrounds and a requirement
that all tobacco product advertisements on billboards be in black and white and
contain only text. These regulations will become effective in August 1997. In
addition, it recently has been reported that certain cigarette manufacturers who
are defendants in numerous class action suits throughout
11
<PAGE> 13
the U.S. have proposed an out of court settlement with respect to such suits
that could potentially include restrictions on billboard advertising by these
and other cigarette manufacturers. There can be no assurance as to the effect of
these regulations, potential legislation or settlement discussions on the
Company's business and on its net revenues and financial position. A reduction
in billboard advertising by the tobacco industry would cause an immediate
reduction in the Company's direct revenue from such advertisers and would
simultaneously increase the available space on the existing inventory of
billboards in the outdoor advertising industry. This could in turn result in a
lowering of outdoor advertising rates in each of the Company's outdoor
advertising markets or limit the ability of industry participants to increase
rates for some period of time. Any such consequence could have a material
adverse effect on the Company.
Environmental. As the owner, lessee or operator of various real properties
and facilities, the Company is subject to various federal, state and local
environmental laws and regulations. Historically, compliance with such laws and
regulations has not had a material adverse effect on the Company's business.
There can be no assurance, however, that compliance with existing or new
environmental laws and regulations will not require the Company to make
significant expenditures in the future.
ANTITRUST MATTERS
An important element of the Company's growth strategy involves the
acquisition of additional radio stations and other media-related and outdoor
advertising properties, many of which are likely to require preacquisition
antitrust review by the FTC and the Antitrust Division. Following passage of the
1996 Act, the Antitrust Division has become more aggressive in reviewing
proposed acquisitions of radio stations and radio station networks, particularly
in instances where the proposed acquiror already owns one or more radio stations
in a particular market and the acquisition involves another radio station in the
same market. Recently, the Antitrust Division has obtained consent decrees
requiring radio station divestitures in a particular market based on allegations
that acquisitions would lead to unacceptable concentration levels. There can be
no assurance that the Antitrust Division or the FTC will not seek to bar the
Company from acquiring additional radio or television stations or other
media-related and outdoor advertising properties in any market where the Company
already has a significant position.
RISK OF ACQUISITION STRATEGY; CAPITAL REQUIREMENTS
The Company intends to pursue growth through the opportunistic acquisition
of broadcasting companies, radio and television station groups, individual radio
and television stations, outdoor advertising companies and outdoor advertising
display faces. The Company routinely reviews potential acquisitions. Although no
agreements have been reached regarding any such potential acquisitions, except
as described in this Prospectus, it is likely that the Company will continue to
experience significant expansion in the future. As a result, the Company's
management will be required to effectively manage a rapidly expanding and
significantly larger portfolio of broadcasting and outdoor advertising
properties. The Company's acquisition strategy involves numerous other risks,
including difficulties in the integration of operations and systems, the
diversion of management's attention from other business concerns and the
potential loss of key employees of acquired companies or stations. There can be
no assurance such acquisitions will benefit the Company.
The consummation of domestic broadcasting acquisitions, including all
pending acquisitions, requires FCC approval with respect to the transfer of the
broadcast license of the acquired station. There can be no assurance that the
FCC will approve pending or future acquisitions, or that the Company will be
able to consummate such acquisitions.
The Company is likely to face competition from other broadcasting and
outdoor advertising companies for available acquisition opportunities. In
addition, if the prices sought by sellers of broadcasting and outdoor
advertising properties continue to rise, the Company may find fewer
12
<PAGE> 14
acceptable acquisition opportunities. In addition, the purchase price of
possible acquisitions could require additional debt or equity financing on the
part of the Company. See "-- Financial Leverage." Additional indebtedness could
increase the Company's leverage and make the Company more vulnerable to economic
downturns and may limit its ability to withstand competitive pressures.
Additional equity financing could result in dilution to the purchasers of the
Common Stock offered hereby. There can be no assurance that the Company will
have sufficient capital resources to complete acquisitions, that acquisitions
can be completed on terms acceptable to the Company or that any acquisitions
that are completed can be integrated successfully into the Company.
INTEGRATION OF THE BUSINESS OF THE COMPANY AND ELLER MEDIA
The Eller Media Acquisition involves the integration of two companies that
have previously operated independently. There can be no assurance that the
Company will successfully integrate the operations of Eller Media with those of
the Company or that all of the benefits expected from such integration will be
realized. Any delays or unexpected costs incurred in connection with such
integration could have an adverse effect on the Company's business, operating
results or financial position. Additionally, there can be no assurance that the
operations, management and personnel of the two companies will be compatible or
that the Company will not experience the loss of key personnel. There can be no
assurance that such integration will not adversely affect the operations of the
Company.
COMPETITION; BUSINESS RISKS
The Company's three business segments are in highly competitive businesses.
The Company's radio and television stations and outdoor advertising properties
compete for audiences and advertising revenues with other radio and television
stations and outdoor advertising companies, as well as with other media, such as
newspapers, magazines, cable television, and direct mail, within their
respective markets. Audience ratings and market shares are subject to change and
any adverse change in a particular market could have a material adverse effect
on the Company's revenue in that market. Future operations are further subject
to many variables which could have an adverse effect upon the Company's
financial performance. These variables include economic conditions, both general
and relative to the broadcasting industry; shifts in population and other
demographics; the level of competition for advertising dollars; fluctuations in
operating costs; technological changes and innovations; changes in labor
conditions; and changes in governmental regulations and policies and actions of
federal regulatory bodies. Although the Company believes that each of its
business segments is able to compete effectively in its respective markets,
there can be no assurance that the Company will be able to maintain or increase
its current audience ratings and advertising revenues.
NEW TECHNOLOGIES
The FCC is considering ways to introduce new technologies to the radio
broadcast industry, including satellite and terrestrial delivery of digital
audio broadcasting and the standardization of available technologies which
significantly enhance the sound quality of AM broadcasts. The Company is unable
to predict the effect any such new technology will have on the Company's
financial condition or results of operations. On April 3, 1997, the FCC
announced that it had adopted rules that will allow television broadcasters to
provide digital television ("DTV") to consumers. The FCC also adopted a table of
allotments for DTV, which will provide eligible existing broadcasters with a
second channel on which to provide DTV service. The allotment plan is based on
the use of channels 2-51, although the "core" DTV spectrum will be between
channels 2-46 or 7-51. Ultimately, the FCC plans to recover the channels
currently used for analog broadcasting and will decide at a later date the use
of the spectrum ultimately recovered. Television broadcasters will be allowed to
use their channels according to their best business judgment. Such uses can
include multiple standard definition program channels, data transfer,
subscription video, interactive materials, and audio signals, although
broadcasters will be required to provide a free digital video
13
<PAGE> 15
programming service that is at least comparable to today's analog service.
Broadcasters will not be required to air "high definition" programming or,
initially, to simulcast their analog programming on the digital channel.
Affiliates of ABC, CBS, NBC and FOX in the top 10 television markets will be
required to be on the air with a digital signal by May 1, 1999. Affiliates of
those networks in markets 11-30 will be required to be on the air with a digital
signal by November 1, 1999, and remaining commercial broadcasters within five
years. The FCC stated that broadcasters will remain public trustees and that it
will issue a notice to determine the extent of broadcasters' future public
interest obligations. The Company will incur considerable expense in the
conversion to DTV and the Company is unable to predict the extent or timing of
consumer demand for any such DTV services.
SHARES ELIGIBLE FOR FUTURE SALE
The 10,000,000 shares of Common Stock sold in the Offering will be freely
tradeable without restriction or further registration under the Securities Act
of 1933, as amended (the "1933 Act"), unless acquired by "affiliates" (as
defined in Rule 144 promulgated by the Securities and Exchange Commission under
the 1933 Act ("Rule 144)). Beginning 90 days after the date of this Prospectus,
approximately 14,539,919 shares of Common Stock owned by L. Lowry Mays and
approximately 11,262,936 shares of Common Stock owned by B. J. McCombs will be
eligible for sale in the public market, although they will remain subject to
certain limitations imposed on affiliates under Rule 144. See "Shares Eligible
For Future Sale."
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act. Discussions containing such forward-looking
statements may be found in the material set forth under "Summary" and "The
Company," as well as within the Prospectus generally. In addition, when used in
this Prospectus, the words "believes," "anticipates," "expects" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to a number of risks and uncertainties. Actual results in the future
could differ materially from those described in the forward-looking statements
as a result of the risk factors set forth herein and the matters set forth in
the Prospectus generally. The Company undertakes no obligation to publicly
release the results of any revisions to these forward-looking statements that
may be made to reflect any future events or circumstances. The Company cautions
the reader, however, that this list of risk factors may not be exhaustive.
14
<PAGE> 16
CAPITALIZATION
The following table sets forth the current portion of long-term debt and
capitalization of the Company as of December 31, 1996, pro forma to give effect
to the Eller Media Acquisition and as adjusted to give effect to the Eller Media
Acquisition and the consummation of the Offering at an assumed price of $47.875
per share.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------------------------
ACTUAL PRO FORMA(1) AS ADJUSTED(1)(2)
---------- ------------ -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt....... $ 1,479 $ 1,479 $ 1,479
========== ========== ==========
Credit Facility(3)...................... $ 717,175 $1,451,004 $1,262,177
Other long-term debt.................... 7,957 11,180 11,180
Shareholders' equity:
Preferred Stock, $1.00 par value,
2,000,000 shares authorized, no
shares issued and outstanding...... -- -- --
Common Stock, $.10 par value,
100,000,000 shares authorized,
76,992,078 shares issued and
outstanding, (87,729,505 shares as
adjusted).......................... 7,699 8,363 8,773
Additional paid-in capital.............. 398,622 746,646 935,063
Retained earnings....................... 106,055 106,055 106,055
Other equity............................ 1,226 1,226 1,226
Cost of shares (26,878) held in
treasury.............................. (171) (171) (171)
---------- ---------- ----------
Total shareholders' equity............ 513,431 862,119 1,050,946
---------- ---------- ----------
Total capitalization.......... $1,238,563 $2,324,303 $2,324,303
========== ========== ==========
</TABLE>
- ---------------
(1) Pro forma to give effect to the Eller Media Acquisition as if such
acquisition had been consummated on December 31, 1996.
(2) As adjusted to give effect to the Eller Media Acquisition as if such
acquisition had been consummated on December 31, 1996 and to the Offering
and the application of the estimated net proceeds therefrom of $188,827,000
(at an assumed offering price of $47.875 per share).
(3) The Company incurred $91,500,000 in additional indebtedness subsequent to
December 31, 1996 that was related to acquisitions other than the Eller
Media Acquisition and may incur additional indebtedness of up to $79,300,000
in connection with various pending acquisitions.
DIVIDEND POLICY
The Company currently expects to retain its earnings for the development
and expansion of its business. Any future decision by the Board of Directors to
pay cash dividends will depend upon, among other factors, the Company's
earnings, financial position and capital requirements. The Company's Credit
Facility limits the Company's ability to pay dividends, other than dividends
payable wholly in capital stock of the Company.
15
<PAGE> 17
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 4,093,790 shares of
Common Stock offered by the Company hereby, after deducting underwriting
discounts and commissions and the estimated expenses of the Offering, are
estimated to be $188,827,000 (at an assumed offering price of $47.875 per
share). All of such net proceeds received by the Company will be used to repay
borrowings outstanding under the Credit Facility. As of April 17, 1997, a total
of approximately $1,496,650,000 in borrowings was outstanding under the Credit
Facility and the effective interest rate thereon was approximately 6.2%.
Borrowings under the Credit Facility have been used to finance, in part, the
Eller Media Acquisition and the other acquisitions discussed in this Prospectus.
Borrowings under the Credit Facility, which must be paid in full by September
2003, currently bear interest at a floating rate based on the LIBOR plus 0.50%.
Upon repayment of such borrowings, the amount repaid will become immediately
available to the Company for re-borrowing under the Credit Facility, subject to
the satisfaction of certain conditions. The Company expects that amounts
available for re-borrowing under the Credit Facility as a result of the
application of the net proceeds of the Offering, together with additional
amounts that become available for borrowing under the Credit Facility, will be
used to finance the pending acquisitions discussed in this Prospectus. Future
acquisitions of radio and television stations and other media-related properties
effected in connection with the implementation of the Company's acquisition
strategy are expected to be financed from increased borrowings under the Credit
Facility, other debt or equity financings and cash flow from operations. The
Company will not receive any of the proceeds from the sale of shares by the
Selling Shareholders.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") under the symbol "CCU." The following table sets forth, for the periods
indicated, the high and low closing sale prices per share (as adjusted for all
stock splits to date) as reported on the NYSE.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
First Quarter............................................. $15.13 $12.53
Second Quarter............................................ 17.38 13.44
Third Quarter............................................. 20.44 15.41
Fourth Quarter............................................ 22.06 18.13
YEAR ENDED DECEMBER 31, 1996:
First Quarter............................................. $29.13 $20.50
Second Quarter............................................ 43.00 27.00
Third Quarter............................................. 44.56 36.56
Fourth Quarter............................................ 44.38 31.00
YEAR ENDED DECEMBER 31, 1997:
First Quarter............................................. $49.63 $34.25
Second Quarter (through April 17, 1997)................... 49.50 42.75
</TABLE>
On March 1, 1997, there were approximately 6,400 shareholders of record of
the Company's Common Stock.
16
<PAGE> 18
SELECTED FINANCIAL INFORMATION
The selected financial information presented below for the five years ended
December 31, 1996 has been derived from the consolidated financial statements of
the Company, which have been audited by Ernst & Young LLP, independent auditors.
The pro forma financial information presents results of operations of the
Company as if the Eller Media Acquisition had been consummated on January 1,
1996. The pro forma information is unaudited and is not necessarily indicative
of the results of operations of the Company had such acquisition occurred at the
beginning of such period or of the Company's results of operations for any
future periods. The following selected financial information should be read in
conjunction with the consolidated financial statements and notes thereto of the
Company, the pro forma financial statements of the Company and Eller Media and
the consolidated financial statements and notes thereto of Eller Media, all of
which are incorporated herein by reference.
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION> PRO FORMA
ELLER MEDIA
YEAR ENDED DECEMBER 31, ACQUISITION
----------------------- -----------
1992 1993 1994 1995 1996 1996 (2)
-------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA(1):
Net revenue............ $ 84,485 $121,118 $178,053 $250,059 $351,739 $588,771
Operating expenses..... 55,812 78,925 105,380 137,504 198,332 340,171
Depreciation and
amortization........ 12,253 17,447 24,669 33,769 45,790 109,954
-------- -------- -------- -------- -------- --------
Operating income before
corporate
expenses............ 16,420 24,746 48,004 78,786 107,617 138,646
Corporate expenses..... 2,890 3,464 5,100 7,414 8,527 18,731
-------- -------- -------- -------- -------- --------
Operating income....... 13,530 21,282 42,904 71,372 99,090 119,915
Interest expense....... (4,739) (5,390) (7,669) (20,752) (30,080) (75,777)
Other income
(expense)........... (1,217) (196) 1,161 (803) 2,230 (4,491)
-------- -------- -------- -------- -------- --------
Income before income
taxes............... 7,574 15,696 36,396 49,817 71,240 39,647
Income taxes........... 3,281 6,573 14,387 20,292 28,386 24,104
-------- -------- -------- -------- -------- --------
Income before equity in
net income (loss)
of, and other income
from nonconsolidated
affiliates.......... 4,293 9,123 22,009 29,525 42,854 15,543
Equity in net income
(loss) of, and other
income from,
nonconsolidated
affiliates.......... -- -- -- 2,489 (5,158) (5,158)
-------- -------- -------- -------- -------- --------
Net income............. $ 4,293 $ 9,123 $ 22,009 $ 32,014 $ 37,696 $ 10,385
======== ======== ======== ======== ======== ========
Net income per common
share............... $ .07 $ .15 $ .32 $ .46 $ .50 $ .13
======== ======== ======== ======== ======== ========
Weighted average common
shares and common
share equivalents
outstanding......... 59,320 62,202 69,326 70,201 74,649 82,484
======== ======== ======== ======== ======== ========
After-tax cash
flow(3)............. $ 17,147 $ 26,638 $ 46,866 $ 71,140 $107,318 $144,171
======== ======== ======== ======== ======== ========
After-tax cash flow per
share(4)............ $ .29 $ .43 $ .68 $ 1.01 $ 1.44 $ 1.75
======== ======== ======== ======== ======== ========
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
DECEMBER 31, AS
------------ ADJUSTED
1992 1993 1994 1995 1996 1996 (5)
-------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents...... $ 2,790 $ 5,517 $ 6,818 $ 5,391 $ 16,701 $ 17,574
Current assets...... 24,844 38,191 53,945 70,485 113,164 160,438
Property, plant and
equipment --
net.............. 48,017 67,750 85,318 99,885 147,838 654,060
Total assets........ 146,993 227,577 411,594 563,011 1,324,711 2,494,888
Current
liabilities...... 10,073 26,125 27,679 36,005 43,462 91,838
Long-term debt, net
of current
maturities....... 97,000 87,815 238,204 334,164 725,132 1,273,357
Shareholders'
equity........... 31,055 98,343 130,533 163,713 513,431 1,050,946
</TABLE>
- ---------------
(1) The comparability of results of operations is affected by acquisitions
consummated in each of the periods presented.
(2) Gives effect to the Eller Media Acquisition as if such acquisition had been
consummated on January 1, 1996 and excludes Eller Media's extraordinary loss
on debt extinguishment (net of tax benefit) of $4,537,000. The pro forma
financial information is based on a preliminary purchase price allocation
and does not give effect to any other completed or pending acquisition.
(3) Defined as net income before unusual items plus depreciation, amortization
of intangibles (including non-consolidated affiliates) and deferred taxes.
After-tax cash flow is presented here not as a measure of operating results
and does not purport to represent cash provided by operating activities.
After-tax cash flow should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles.
(4) Defined as after-tax cash flow divided by weighted average common shares and
common share equivalents outstanding.
(5) As adjusted to give effect to the Eller Media Acquisition as if such
acquisition had been consummated on December 31, 1996 and to give effect to
the Offering and the application of the estimated net proceeds therefrom of
$188,827,000 (assuming a public offering price of $47.875 per share). The
pro forma financial information is based on a preliminary purchase price
allocation and does not give effect to any other completed or pending
acquisition.
18
<PAGE> 20
BUSINESS
The Company consists of three principal business segments -- radio
broadcasting, television broadcasting and outdoor advertising. Currently, the
radio segment includes 101 stations for which the Company is the licensee and 11
stations for which the Company programs and/or sells air time under LMAs or
JSAs. These 112 stations operate in 27 different markets. The radio segment also
operates five networks. Assuming all pending acquisitions are consummated (which
include 8 stations for which the Company programs and/or sells air time under
LMAs or JSAs), the Company will own 121 radio stations in 28 markets. The
television segment includes 11 television stations for which the Company is the
licensee and 7 stations programmed under LMAs. These 18 stations operate in
eleven different markets. The outdoor advertising segment has an advertising
display inventory of approximately 50,000 display faces and provides outdoor
advertising in 15 major metropolitan markets.
INDUSTRY SEGMENTS
Selected historical financial information relating to radio and television
broadcasting for 1994, 1995 and 1996 is presented in the following table:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
RADIO
Net broadcasting revenue................... $ 95,862,834 $144,244,066 $217,189,250
Station operating expenses................. 64,148,412 87,530,942 126,627,982
Depreciation............................... 5,664,700 6,973,801 8,916,495
Amortization of intangibles................ 6,659,726 13,007,026 18,839,820
------------ ------------ ------------
Station operating income................... $ 19,389,996 $ 36,732,297 $ 62,804,953
============ ============ ============
TELEVISION
Net broadcasting revenue................... $ 82,189,748 $105,815,314 $134,549,604
Station operating expenses................. 41,231,654 49,973,531 71,703,668
Depreciation............................... 6,974,404 8,406,025 10,419,895
Amortization of intangibles................ 5,369,710 5,382,030 7,613,554
------------ ------------ ------------
Station operating income................... $ 28,613,980 $ 42,053,728 $ 44,812,487
============ ============ ============
CONSOLIDATED
Net broadcasting revenue................... $178,052,582 $250,059,380 $351,738,854
Station operating expenses................. 105,380,066 137,504,473 198,331,650
Depreciation............................... 12,639,104 15,379,826 19,336,390
Amortization of intangibles................ 12,029,436 18,389,056 26,453,374
------------ ------------ ------------
Station operating income................... $ 48,003,976 $ 78,786,025 $107,617,440
============ ============ ============
</TABLE>
Selected historical financial information related to the outdoor
advertising segment for Eller Media for 1996 is presented in the following
table:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996*
-----------------
<S> <C>
Net revenue............................. $237,032
Operating expenses...................... 145,743
Depreciation and amortization and other
noncash expenses...................... 46,569
--------
Operating Income........................ $ 44,720
========
</TABLE>
- ---------------
* Eller Media was formed on August 17, 1995, through the combination of Patrick
Media Group, Inc. and Eller Investment Company.
19
<PAGE> 21
RADIO BROADCASTING
The following table sets forth selected information with regard to each of
the Company's 38 AM and 74 FM radio stations and five radio networks which it
owned or programmed as of March 31, 1997, and those stations for which an
acquisition is pending.
<TABLE>
<CAPTION>
TARGET DATE OF
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY
----------------------- ----------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
HOUSTON, TX(9)
KPRC-AM(3)(5)............................ Adults 25-54 News/Talk/Sports Jan. 1995 950 AM
KSEV-AM(3)(5)............................ Adults 25-54 News/Talk/Sports Jan. 1995 700 AM
KMJQ-FM(5)............................... Adults 24-54 Adult Urban Contemporary Jan. 1995 102.1 FM
KBXX-FM(5)............................... Adults 18-49 Urban Contemporary Aug. 1994 97.9 FM
KHYS-FM(4)(5)............................ Adults 25-54 Rhythmic CHR LMA 98.5 FM
KJOJ-AM(5)............................... Adults 25-54 Christian Jan. 1997 880 AM
KJOJ-FM(5)............................... Adults 25-54 Rhythmic CHR May 1996 103.3 FM
MIAMI/FT. LAUDERDALE, FL(11)
WHYI-FM.................................. Adults 18-49 Contemporary Hits Oct. 1994 100.7 FM
WBGG-FM.................................. Adults 18-49 Classic Rock Mar. 1994 105.9 FM
TAMPA/ST. PETERSBURG, FL(21)
WMTX-AM.................................. Adults 25-54 Sports/Talk Oct. 1994 1040 AM
WMTX-FM.................................. Adults 25-54 Hot Adult Contemporary Oct. 1994 95.7 FM
WRBQ-AM.................................. Adults 18-49 Adult Urban Contemporary July 1992 1380 AM
WRBQ-FM.................................. Adults 25-54 Country July 1992 104.7 FM
CLEVELAND, OH(22)
WNCX-FM.................................. Adults 25-54 Classic Rock Oct. 1994 98.5 FM
WERE-AM.................................. Adults 25-54 News/Talk Oct. 1994 1300 AM
WENZ-FM.................................. Adults 18-49 Alternative Rock May 1996 107.9 FM
MILWAUKEE, WI(29)
WKKV-FM.................................. Adults 18-49 Urban Contemporary May 1996 100.7 FM
WMIL-FM.................................. Adults 25-54 Country Apr. 1997 106.1 FM
WOKY-AM.................................. Adults 35-64 Adult Standards Apr. 1997 920 AM
PROVIDENCE, RI(31)
WWBB-FM.................................. Adults 25-54 Oldies Dec. 1996 101.5 FM
WWRX-FM.................................. Adults 25-54 Classic Rock Dec. 1996 103.7 FM
NORFOLK, VA(33)
WOWI-FM.................................. Adults 18-49 Urban Contemporary May 1996 102.9 FM
WJCD-FM.................................. Adults 25-54 Smooth Jazz May 1996 105.3 FM
WMYK-FM.................................. Adults 25-54 Rythmic CHR Nov. 1996 92.1 FM
WSVY-FM.................................. Adults 25-54 Adult Urban Contemporary Oct. 1996 107.7 FM
SAN ANTONIO, TX(34)
WOAI-AM(5)............................... Adults 25-54 News/Talk/Sports June 1975 1200 AM
KQXT-FM(5)............................... Adults 25-54 Adult Contemporary Feb. 1993 101.9 FM
KTKR-AM(5)............................... Adults 25-54 News/Talk/Sports July 1993 760 AM
KAJA-FM(5)............................... Adults 25-54 Country Mar. 1972 97.3 FM
KSJL-FM(5)(6)............................ Adults 25-54 Urban Adult Contemporary JSA 96.1 FM
NEW ORLEANS, LA(39)
WODT-AM.................................. Adults 25-54 Blues Oct. 1984 1280 AM
WQUE-FM(7)............................... Adults 18-49 Urban Contemporary Oct. 1984 93.3 FM
WYLD-AM.................................. Adults 25-54 Gospel Aug. 1995 940 AM
WYLD-FM.................................. Adults 25-54 Urban Adult Contemporary Jan. 1995 98.5 FM
WNOE-FM.................................. Adults 25-54 Country Aug. 1996 101.1 FM
KKND-FM.................................. Adults 25-54 Alternative Rock Aug. 1996 106.7 FM
KHOM-FM.................................. Adults 18-34 Contemporary Hits Feb. 1997 104.1 FM
GREENSBORO, NC(41)
WXRA-FM.................................. Adults 18-49 Alternative Rock Aug. 1996 94.5 FM
WTQR-FM.................................. Adults 25-54 Country Aug. 1996 104.1 FM
WSJS-AM.................................. Adults 25-54 News/Talk Aug. 1996 600 AM
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
TARGET DATE OF
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY
----------------------- ----------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
MEMPHIS, TN(43)
WHRK-FM.................................. Adults 18-49 Urban Contemporary May 1996 97.1 FM
WDIA-AM.................................. Adults 25-54 Adult Urban May 1996 1070 AM
WEGR-FM.................................. Adults 25-54 Classic Rock Dec. 1996 102.7 FM
WREC-AM.................................. Adults 35-64 News/Talk Dec. 1996 600 AM
WRXQ-FM.................................. Adults 18-49 Alternative Rock Dec. 1996 95.7 FM
KJMS-FM.................................. Adults 18-49 Urban Adult Contemporary Dec. 1996 101.1 FM
KWAM-AM.................................. Adults 25-54 Religious Dec. 1996 990 AM
RALEIGH, NC(48)
WQOK-FM.................................. Adults 18-49 Urban Contemporary May 1996 97.5 FM
WZZU-FM.................................. Adults 25-54 Classic Hits Jan. 1997 105.3 FM
WDUR-AM(4)............................... Adults 25-54 Urban Oldies LMA/Pending 1490 AM
WXFC-FM(4)............................... Adults 25-54 Urban Adult LMA/Pending 107.1 FM
WXFK-FM(4)............................... Adults 18-49 Urban Adult LMA/Pending 104.3 FM
LOUISVILLE, KY(50)
WHAS-AM.................................. Adults 25-54 News/Talk/Sports Sept. 1986 840 AM
WAMZ-FM.................................. Adults 25-54 Country Sept. 1986 97.5 FM
WHKW-FM.................................. Adults 25-54 Country Jan. 1997 98.9 FM
WTFX-FM.................................. Adults 25-54 Modern Rock Oct. 1996 100.5 FM
WWKY-AM.................................. Adults 25-54 News/Talk/Sports Oct. 1996 790 AM
WKJK-AM.................................. Adults 35-54 Country Oct. 1996 1080 AM
WQMF-FM.................................. Adults 25-54 Classic Rock Jan. 1997 95.7 FM
AUSTIN, TX(51)
KPEZ-FM(5)............................... Adults 25-54 Classic Rock July 1982 102.3 FM
KHFI-FM(5)............................... Adults 18-49 Contemporary Hits Mar. 1993 96.7 FM
KEYI-FM(5)............................... Adults 25-54 Oldies Aug. 1996 103.5 FM
KFON-AM(5)............................... Adults 25-54 Sports Aug. 1996 1490 AM
OKLAHOMA CITY, OK(52)
KTOK-AM(7)............................... Adults 25-54 News/Talk/Sports Oct. 1984 1000 AM
KEBC-AM(7)............................... Adults 18-49 News/Talk/Spanish Jan. 1994 1340 AM
KJYO-FM(7)............................... Adults 18-34 Contemporary Hits Oct. 1984 102.7 FM
WKY-AM(4)(7)............................. Adults 25-54 News/Talk LMA 930 AM
KTST-FM(7)............................... Adults 18-34 Country Aug. 1996 101.9 FM
KXXY-FM(7)............................... Adults 25-54 Country Aug. 1996 96.1 FM
KNRX-FM(7)............................... Adults 18-49 New Alternative Rock Jan. 1994 94.7 FM
RICHMOND, VA(56)
WRVA-AM.................................. Adults 25-54 News/Talk/Sports July 1992 1140 AM
WRNL-AM.................................. Adults 25-54 Sports Sept. 1993 910 AM
WRVQ-FM.................................. Adults 18-49 Contemporary Hits July 1992 94.5 FM
WRXL-FM.................................. Adults 18-49 Album Oriented Rock Sept. 1993 102.1 FM
WTVR-FM.................................. Adults 25-54 Soft AC May 1996 98.1 FM
WTVR-AM.................................. Adults 35-64 Nostalgia May 1996 1380 AM
ALBANY, NY(57)
WQBK-FM(3)............................... Adults 18-49 Alternative Rock Mar. 1997 103.9 FM
WQBJ-FM(3)............................... Adults 18-49 Alternative Rock Mar. 1997 103.5 FM
WQBK-AM(3)............................... Adults 35-64 News/Talk Mar. 1997 1300 AM
WXCR-FM(3)............................... Adults 25-54 Classic Rock Mar. 1997 102.3 FM
TULSA, OK(61)
KAKC-AM(7)............................... Adults 25-54 News/Sports/Oldies Oct. 1973 1300 AM
KMOD-FM(7)............................... Adults 25-54 Album Oriented Rock Oct. 1973 97.5 FM
KQLL-AM(4)(7)............................ Adults 25-54 Sports/Talk LMA/Pending 1430 AM
KQLL-FM(4)(7)............................ Adults 25-54 Oldies LMA/Pending 106.1 FM
KOAS-FM(6)(7)............................ Adults 25-54 Smooth Jazz JSA/Pending 92.1 FM
</TABLE>
21
<PAGE> 23
<TABLE>
<CAPTION>
TARGET DATE OF
MARKET(RANK)/STATION(1) AUDIENCE(2) STATION FORMAT ACQUISITION FREQUENCY
----------------------- ----------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
GRAND RAPIDS, MI(66)
WOOD-AM.................................. Adults 25-54 Talk May 1996 1300 AM
WOOD-FM.................................. Adults 25-54 Adult Contemporary May 1996 105.7 FM
WBCT-FM.................................. Adults 18-49 Country May 1996 93.7 FM
WTKG-AM.................................. Adults 25-54 News/Talk/Sports Oct. 1996 1230 AM
WCUZ-FM.................................. Adults 25-54 Country Oct. 1996 101.3 FM
WVTI-FM.................................. Adults 25-54 Hot Adult Contemporary Feb. 1997 96.1 FM
EL PASO, TX(69)
KPRR-FM(5)............................... Adults 18-49 Contemporary Hits May 1996 102.1 FM
KHEY-FM(5)............................... Adults 25-54 Country May 1996 96.3 FM
KHEY-AM(5)............................... Adults 25-54 Oldies May 1996 690 AM
FT. MYERS/NAPLES, FL(76)
WCKT-FM.................................. Adults 25-54 Country Aug. 1996 107.1 FM
WXRM-FM.................................. Adults 25-54 Soft Adult Contemporary Aug. 1996 105.5 FM
WKII-AM.................................. Adults 35-64 Nostalgia March 1997 1090 AM
WFSN-FM.................................. Adults 25-64 Country March 1997 100.1 FM
WOLZ-FM.................................. Adults 25-64 Oldies March 1997 95.3 FM
SPRINGFIELD, MA(77)
WHYN-AM.................................. Adults 25-54 News/Talk/Sports Aug. 1996 560 AM
WHYN-FM.................................. Adults 25-54 Adult Contemporary Aug. 1996 93.1 FM
LITTLE ROCK, AR(82)
KDDK-FM.................................. Adults 25-54 Country May 1996 100.3 FM
KMJX-FM.................................. Adults 25-54 Classic Rock May 1996 105.1 FM
KMVK-FM.................................. Adults 25-54 Country Pending 106.7 FM
KSSN-FM.................................. Adults 25-54 Country Pending 95.7 FM
KOLL-FM.................................. Adults 25-54 Oldies Pending 94.9 FM
MOBILE, AL(84)
WKSJ-FM.................................. Adults 35-64 Country Pending 94.9FM
WKSJ-AM.................................. Adults 35-64 Country Pending 1270 AM
WMXC-FM.................................. Adults 25-54 Adult Contemporary Pending 99.9FM
WRKH-FM.................................. Adults 25-54 Classic Rock Pending 96.1FM
WDWG-FM.................................. Adults 25-54 Country Pending 104.1FM
WNTM-AM.................................. Adults 18-49 News/Talk Pending 710AM
COLUMBIA, SC(88)
WWDM-FM.................................. Adults 25-54 Urban Contemporary Aug. 1996 101.3 FM
WARQ-FM.................................. Adults 18-49 Alternative Rock Aug. 1996 93.5 FM
NEW HAVEN, CT(97)
WKCI-FM.................................. Adults 18-49 Contemporary Hits May 1992 101.3 FM
WAVZ-AM.................................. Adults 25-54 Nostalgia May 1992 1300 AM
WELI-AM.................................. Adults 25-54 News/Talk Oct. 1984 960 AM
LANCASTER, PA(107)
WLAN-FM(4)............................... Adults 18-49 Hot Adult Contemporary LMA/Pending 96.9 FM
WLAN-AM(4)............................... Adults 25-54 Big Band LMA/Pending 1390 AM
READING, PA(130)
WRAW-AM.................................. Adults 35-64 Middle of the Road May 1996 1340 AM
WRFY-FM.................................. Adults 18-49 Contemporary Hits May 1996 102.5 FM
</TABLE>
22
<PAGE> 24
RADIO NETWORKS
<TABLE>
<CAPTION>
TARGET DATE OF
MARKET/NETWORK AUDIENCE NETWORK FORMAT ACQUISITION
-------------- ------------ -------------- -----------
<S> <C> <C> <C>
LOUISVILLE, KY
Kentucky News Network................. Adults 25-54 News/Agriculture Jan. 1992
RICHMOND, VA
Virginia News Networks................ Adults 25-54 News/Agriculture Sept. 1993
OKLAHOMA CITY, OK
Oklahoma News Network................. Adults 25-54 News/Agriculture Oct. 1984
SAN ANGELO, TX
Voice of Southwest Agriculture........ Adults 25-54 News/Agriculture Oct. 1995
COLLEGE STATION, TX/DES MOINES, IA
Clear Channel Sports.................. Adults 18-49 College Sports Networks Various
</TABLE>
- ---------------
(1) Number in parenthesis next to each market indicates that market's national
rank according to BIA Publications, Inc.'s "Investing in Radio 1997 Market
Report, 1st Edition."
(2) Due to variations that may exist within the same station programming
format(such as variations in the tempo of the music or the age of the songs
broadcast), the primary demographic may be different even though the station
programming format is the same.
(3) 80% owned by the Company.
(4) LMA(FCC license not owned by the Company).
(5) Application for renewal of license filed with the FCC on April 11, 1997.
(6) JSA(FCC license not owned and station not programmed by the Company).
(7) Application for renewal of license pending with the FCC.
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 nation's largest national advertising representation firms, whereby
the firm will dedicate certain personnel to work exclusively for the Company's
radio stations. The Company believes this arrangement will help its stations to
achieve higher shares of national advertising revenue.
23
<PAGE> 25
TELEVISION BROADCASTING
The following table sets forth selected information with regard to each of
the 18 television stations which the Company owned or programmed as of March 31,
1997.
<TABLE>
<CAPTION>
NETWORK DATE OF
MARKET (RANK)/STATION(1) AFFILIATION CHANNEL ACQUISITION
------------------------ ----------- ------- -----------
<S> <C> <C> <C>
MINNEAPOLIS, MN(14)
WFTC-TV FOX TV-29 Oct. 1993
MEMPHIS, TN(42)
WPTY-TV(2) ABC TV-24 Apr. 1992
WLMT-TV(3) UPN TV-30 LMA
HARRISBURG/LEBANON/LANCASTER, PA(45)
WHP-TV CBS TV-21 Oct. 1995
WLYH-TV(3) UPN TV-15 LMA
PROVIDENCE/NEW BEDFORD, RI(47)
WPRI-TV CBS TV-12 Jul 1996
WNAC-TV(3) FOX TV-64 LMA
ALBANY/SCHENECTADY/TROY, NY(52)
WXXA-TV FOX TV-23 Dec. 1994
JACKSONVILLE, FL(54)
WAWS-TV FOX TV-30 Sept. 1989
WTEV-TV(3) UPN TV-47 LMA
LITTLE ROCK, AR(58)
KLRT-TV(4) FOX TV-16 Feb. 1994
KASN-TV(3) UPN TV-38 LMA
TULSA, OK(58)
KOKI-TV FOX TV-23 Dec. 1989
KTFO-TV(3) UPN TV-41 LMA
MOBILE, AL/PENSACOLA, FL(61)
WPMI-TV(4) NBC TV-15 Dec. 1988
WJTC-TV(3) UPN TV-44 LMA
WICHITA, KS(65)
KSAS-TV FOX TV-24 Aug. 1990
TUCSON, AZ(78)
KTTU-TV(4) UPN TV-18 Feb. 1989
</TABLE>
- ---------------
(1) Number in parentheses next to each market indicates that market's national
rank according to BIA Publications, Inc.'s "Investing in Television 1997
Market Report, 1st Edition."
(2) Application for renewal of license filed with the FCC on April 1, 1997.
(3) LMA (FCC license not owned by the Company).
(4) Application for renewal of license pending with the FCC.
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, Alabama
and to ABC in Memphis, Tennessee have reduced the Company's need to obtain
outside programming.
The primary sources of programming for the Company's affiliated television
stations are their respective 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
24
<PAGE> 26
during the programming. For 1996, the Fox, NBC and ABC networks' primary
programming was intended to appeal primarily to a target audience of 18-49 year
old adults, while the CBS network's primary programming was intended to appeal
primarily to a target audience of 25-54 year old adults.
The second source of programming is the production of local news
programming on the Fox, CBS, ABC and NBC affiliate stations in Jacksonville,
Florida; Harrisburg, Pennsylvania; Memphis, Tennessee; Mobile, Alabama;
Providence, Rhode Island; and Albany, New York, 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.
Each Fox contract currently runs for a five year term expiring in 1998,
except for the Fox contract for WXXA-TV Albany, New York, which expires in 1999,
and may be renewed by Fox or the Company. Based on the performance of its
Fox-affiliated stations to date, the Company expects it will continue to be able
to renew its Fox contracts, although no assurances in this regard can be given.
The network affiliation agreements with ABC (for WPTY-TV in Memphis, Tennessee,
effective December 1, 1995), CBS (for WHP-TV in Harrisburg, Pennsylvania,
renewed and effective December 18, 1995), NBC (for WPMI-TV in Mobile, Alabama,
effective January 1, 1996) and UPN (for KTTU-TV in Tucson, Arizona, entered into
in 1995) run for ten-year terms.
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
broadcasting revenue is seasonal, with the fourth quarter typically generating
the highest level of revenue and the first quarter typically generating the
lowest. The fourth quarter generally reflects higher advertising in preparation
for the holiday season and 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.
OUTDOOR ADVERTISING
Following the consummation of the Eller Media Acquisition, the Company,
through its wholly owned subsidiary, Eller Media, became one of the largest
domestic outdoor advertising companies based on its total advertising display
inventory of approximately 50,000 display faces. The Company now provides
outdoor advertising services in 15 major metropolitan markets located in five
operating regions: California, Texas, the Midwest, the Southeast and the
Southwest. The Company currently has both outdoor advertising and broadcasting
assets in seven domestic markets, as well as in five additional domestic markets
currently served by Heftel. The markets in which the Company now provides
outdoor advertising services represent approximately 22% of the total U.S.
population and approximately 50% of the rapidly growing U.S. Hispanic
population. The Company has a significant outdoor advertising presence in eight
of the ten largest U.S. Hispanic markets, including Los Angeles, Miami, Chicago
and San Antonio.
The outdoor advertising industry has experienced increased advertiser
interest and revenue growth in recent years. Outdoor advertising generated total
revenues of approximately $1.8 billion in 1995, or approximately 1.1% of the
total advertising expenditures in the United States, and the out-of-home
advertising industry generated revenues in excess of $3.0 billion in 1995,
according to estimates by the Outdoor Advertising Association of America (the
"OAAA"). Outdoor advertising's 1995 revenues represent growth of approximately
8.2% over estimated total 1994 revenues, which
25
<PAGE> 27
compares favorably to the growth of total U.S. advertising expenditures of
approximately 7.7% during the same period.
Outdoor advertising offers repetitive impact and lower cost-per-thousand
impressions, a commonly used media measurement, as compared to competitive
media, including television, radio, newspapers, magazines and direct mail
marketing. The outdoor advertising industry has benefited from the growth in
automobile travel time for business and leisure due to increased highway
congestion and continued demographic shifts of residences and businesses from
the cities to outlying suburbs. In all cases, outdoor advertising can be
combined with other media such as radio and television to reinforce messages
being provided to consumers.
The outdoor advertising industry is comprised of several large outdoor
advertising and media companies with operations in multiple markets, as well as
many smaller and local companies operating a limited number of structures in a
single or few local markets. While the industry has experienced some
consolidation within the past few years, the OAAA estimates that there are still
approximately 1,000 companies in the outdoor advertising industry operating
approximately 396,000 billboard displays. The Company expects the trend of
consolidation in the outdoor advertising industry to continue.
The Company's outdoor advertising strategy is to expand its market presence
and improve its operating results by (i) managing the advertising rates and
occupancy levels of its displays to maximize market revenues; (ii) attracting
new categories of advertisers to the outdoor medium through significant
investments in sales and marketing resources; (iii) increasing focus on local
advertising sales; (iv) constructing new displays and upgrading its existing
displays; (v) taking advantage of technological advances which increase both
sales force productivity and production department efficiency; and (vi)
acquiring additional displays in its existing markets and expanding into
additional markets where the Company already has a broadcasting presence as well
as into the country's largest media markets and their surrounding regional
areas. The Company believes this operating strategy enhances its ability to
effectively respond to advertisers' needs.
To support this operating strategy, the Company has decentralized its
operating structure in order to place authority, autonomy and accountability for
its outdoor advertising segment at the market level and provide local management
with the tools necessary to oversee sales, display development, administration
and production and to identify suitable acquisition candidates. The Company also
maintains a fully-staffed sales and marketing office in New York which services
national outdoor advertising accounts and supports the Company's local sales
force in each market. The Company believes that one of its strongest competitive
advantages is its unique blend of highly experienced corporate and local market
management.
The Company focuses its efforts on local sales. Local advertisers tend to
have smaller advertising budgets and require greater assistance from the
Company's production and creative personnel to design and produce advertising
copy. In local sales, the Company often expends more sales efforts on educating
customers regarding the benefits of outdoor media and helping potential
customers develop an advertising strategy using outdoor advertising. While price
and availability are important competitive factors, service and customer
relationships are also critical components of local sales.
The Company operates the following types of outdoor advertising billboards
and displays:
- Bulletins generally are 14 feet high by 48 feet wide (672 square feet
wide) or 20 feet high by 60 feet wide (1,200 square feet) and consist of
panels on which advertising copy is displayed. Bulletin advertising copy
is either printed with computer-generated graphics on a single sheet of
vinyl that is "wrapped" around the structure, or is hand painted and
attached to the outdoor advertising structure. Bulletins also include
"wallscapes" that are painted on vinyl surfaces or directly on the sides
of buildings, typically four stories or less. Because of their greater
impact and higher cost, bulletins are usually located on major highways
and freeways.
26
<PAGE> 28
In addition, wallscapes are located on major freeways, commuter and
tourist routes and in downtown business districts.
- Premier Panels(TM) generally are 12 feet high by 25 feet wide (300 square
feet) and have vinyl wrapped around the display face. Premier Panels(TM)
are built on superior 30-sheet poster locations that deliver a
"bulletin-like" display. The Company also offers unique Premier
Plus(TM)panels, 25 feet high by 25 feet wide (625 square feet), that
consist of two stacked 30-sheet posters which are converted into one
larger individual display face.
- 30-sheet posters generally are 12 feet high by 25 feet wide (300 square
feet) and are the most common type of billboard. Advertising copy for
30-sheet posters consists of lithographed or silk-screened paper sheets
supplied by the advertiser that are pasted and applied like wallpaper to
the face of the display. Thirty-sheet posters are typically concentrated
on major surface arteries.
- 8-sheet posters usually are 6 feet high by 12 feet wide (72 square feet).
Displays are prepared and mounted in the same manner as 30-sheet posters.
Most 8-sheet posters, because of their smaller size, are concentrated on
city streets targeting pedestrian traffic.
- Transit displays are lithographed or silk-screened paper sheets located
on bus and commuter train exteriors, commuter rail terminals, interior
train cars, bus shelters and subway platforms. The Company's transit
customers include the San Francisco Bay Area Rapid Transit (BART) and the
Metropolitan Rail (METRA) in Chicago.
Billboards generally are mounted on structures owned by the outdoor
advertising company and located on sites that are either owned or leased by it
or on which it has acquired a permanent easement. Bus shelters are usually
constructed, owned and maintained by the outdoor service provider under
revenue-sharing arrangements with a municipality or transit authority. During
1996, the Company invested approximately $14.2 million for new display
construction and for ongoing enhancement of its existing display inventory. Over
90% of the Company's bulletin inventory has been retrofitted for vinyl.
The following table sets forth certain information with respect to the
Company's outdoor advertising display faces as of April 17, 1997:
<TABLE>
<CAPTION>
PREMIER
PANEL(TM)
AND
PREMIER TOTAL
MARKET PLUS(TM) 30-SHEET 8-SHEET TRANSIT DISPLAY
MARKET RANK(1) BULLETINS PANELS POSTERS POSTERS DISPLAYS FACES
------ ------- --------- --------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA:
Los Angeles(2).................. 2 722 116 4,875 -- 1,168 6,881
San Diego....................... 15 112 125 575 -- -- 812
San Francisco/Oakland(3)........ 4 386 320 1,554 432 6,812 9,504
Sacramento...................... 29 91 44 426 -- 142 703
TEXAS:
Dallas/Fort Worth............... 7 681 84 2,075 135 -- 2,975
Houston......................... 9 559 647 2,215 1,860 -- 5,281
San Antonio..................... 34 754 -- 1,374 1,332 -- 3,460
MIDWEST:
Chicago......................... 3 451 17 2,858 -- 3,078 6,404
Cleveland(4).................... 22 261 6 2,007 -- -- 2,274
Milwaukee....................... 28 137 30 821 -- -- 988
</TABLE>
27
<PAGE> 29
<TABLE>
<CAPTION>
PREMIER
PANEL(TM)
AND
PREMIER TOTAL
MARKET PLUS(TM) 30-SHEET 8-SHEET TRANSIT DISPLAY
MARKET RANK(1) BULLETINS PANELS POSTERS POSTERS DISPLAYS FACES
------ ------- --------- --------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SOUTHEAST:
Miami........................... 11 -- -- -- -- 2,088 2,088
Atlanta......................... 12 365 26 1,132 -- -- 1,523
Tampa(5)........................ 21 522 45 1,471 -- -- 2,038
SOUTHWEST:
Phoenix......................... 20 365 -- -- -- -- 365
El Paso......................... 70 284 11 545 544 -- 1,384
===== ===== ====== ===== ====== ======
TOTAL........................... 5,690(6) 1,471 21,928 4,303 13,288 46,680(7)
===== ===== ====== ===== ====== ======
</TABLE>
- ---------------
(1) Market rank of the largest city in each market.
(2) Includes Los Angeles, Orange, Riverside, San Bernardino and Ventura
counties.
(3) Includes San Francisco, Oakland, San Jose, Santa Cruz and Solano counties.
(4) Includes Akron and Canton.
(5) Includes Sarasota and Bradenton.
(6) Includes 21 wallscapes.
(7) Excludes 4,086 convenience store displays.
Advertising rates are based on a particular display's exposure (or number of
"impressions" delivered) in relation to the demographics of the particular
market and its location within that market. The number of "impressions"
delivered by a display is measured by the number of vehicles passing the site
during a defined period and is weighted to give effect to such factors as its
proximity to other displays, the speed and viewing angle of approaching traffic,
the national average of adults riding in vehicles and whether the display is
illuminated. The number of impressions delivered by a display is verified by
independent auditing companies.
The Company has a diversified customer base in its outdoor advertising
segment of over 3,000 advertisers and advertising agency clients. The size and
geographic diversity of the Company's markets allow it to attract national
advertisers, often by packaging displays in several of its markets in a single
contract to allow a national advertiser to simplify its purchasing process and
present its message in several markets. National advertisers generally seek wide
exposure in major markets and therefore tend to make larger purchases. The
Company competes for national advertisers primarily on the basis of price,
location of displays, availability and service. In addition, the Company
believes that its outdoor advertising inventory reaches approximately 50% of the
rapidly growing U.S. Hispanic population. The Company has a significant presence
in eight of the ten largest U.S. Hispanic markets, including Los Angeles, Miami,
Chicago and San Antonio.
Tobacco revenues have historically accounted for a significant portion of
outdoor advertising revenues. In 1991 and 1992, the leading tobacco companies
substantially reduced their expenditures for outdoor advertising due to a
declining population of smokers, societal pressures, consolidation in the
tobacco industry and price competition from generic brands. Since tobacco
advertisers often utilized some of the industry's prime inventory, the decline
in tobacco-related advertising expenditures has made space available for other
advertisers, including those that had not traditionally utilized outdoor
advertising. As a result of this decline in tobacco-related advertising revenues
and the increased use of outdoor advertising by other advertisers, such as
entertainment companies, retailers, financial institutions and other businesses,
the range of the Company's advertisers has become quite diverse.
28
<PAGE> 30
The Company owns or has permanent easements on relatively few parcels of
real property that serve as the sites for its outdoor displays. The Company's
remaining approximately 18,343 billboard sites are leased. The Company's leases
are for varying terms ranging from month-to-month or year-to-year to terms of
ten years or longer, and many provide for renewal options. There is no
significant concentration of displays under any one lease or subject to
negotiation with any one landlord. The Company believes that an important part
of its management activity is to negotiate suitable lease renewals and
extensions.
As of December 31, 1996, Eller Media employed approximately 973 people in
its outdoor advertising segment, of whom, approximately 192 were primarily
engaged in sales and marketing, 588 were engaged in painting, bill posting and
construction and maintenance of displays and the balance were employed in
financial, public affairs, real estate, administrative and other capacities.
MANAGEMENT
The Company believes that one of its most important assets is its
experienced management team. With respect to its broadcasting operations,
general managers are responsible for the day-to-day operation of their
respective stations. The Company believes that the autonomy of its general
managers enables it to attract top quality managers capable of implementing the
Company's aggressive marketing strategy and reacting to competition in the local
markets. Most general managers have stock options in the Company. As an
additional incentive, a portion of each manager's compensation is related to the
performance of the profit centers for which he or she is responsible. In an
effort to monitor expenses, corporate management routinely reviews staffing
levels and operating costs. Combined with the centralized accounting functions,
this monitoring enables the Company to control expenses effectively. Corporate
management also advises local general managers on broad policy matters and is
responsible for long-range planning, allocating resources, and financial
reporting and controls.
With respect to the Company's outdoor advertising operations, Karl Eller
will remain with the Company to run Eller Media as a wholly-owned subsidiary.
Mr. Eller's existing employment contract, which has approximately two and
one-half years until expiration, will remain in place. On April 29, 1997, Karl
Eller will be appointed to the Board of Directors of the Company. In addition,
Mr. Eller and other members of the Eller Media management team have stock
options in the Company. Members of the Eller Media management team led by Karl
Eller have proven themselves to be leaders in the outdoor advertising industry,
and their experience will be an important asset to the Company.
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<PAGE> 31
SELLING SHAREHOLDERS
The table below sets forth the beneficial ownership of the Company's Common
Stock by the Selling Shareholders as of April 17, 1997, and after giving effect
to the sale of shares offered by the Company and the Selling Shareholders
hereby.
<TABLE>
<CAPTION>
SHARES SHARES BENEFICIALLY OWNED
BENEFICIALLY AFTER THE OFFERING (1)
OWNED SHARES --------------------------
PRIOR TO BEING PERCENT OF
SELLING SHAREHOLDER OFFERING(1) OFFERED NUMBER(1) OUTSTANDING
------------------- ------------ --------- ---------- ------------
<S> <C> <C> <C> <C>
Hellman & Friedman Capital Partners III,
L.P.(2)................................ 5,566,114 4,951,884 614,230 *
H&F Orchard Partners III, L.P.(2)........ 409,708 364,495 45,213 *
H&F International Partners III,
L.P.(2)................................ 123,458 109,834 13,624 *
H. Irving Grousbeck(3)................... 197,495 175,701 21,794 *
American Media Management, Inc.(4)....... 41,713 37,110 4,603 *
Richard Reiss, Jr.(3).................... 101,920 92,440 9,480 *
K. Tucker Anderson....................... 5,842 5,197 645 *
Glen Krevlin, as Trustee f/b/o Nina
Krevlin, Glenn Krevlin, Michael Krevlin
and Jill Krevlin....................... 1,947 1,732 215 *
Patricia Salas Pineda(3)................. 820 730 90 *
Steven G. Mihaylo........................ 84,138 74,712 9,426 *
El Dorado Investment Company............. 99,925 92,375 7,550 *
--------- --------- -------
Total.......................... 6,633,080 5,906,210 726,870
========= ========= =======
</TABLE>
- ---------------
* Less than 1%.
(1) Reflects an aggregate of 726,870 shares of Common Stock held in escrow
pursuant to the Escrow Agreement by and among the Company, Paul Meyer
("Stockholder Representative"), EM Holdings LLC, and Chase Trust Company of
California, dated April 10, 1997 in connection with the Eller Acquisition.
(2) Hellman & Friedman Capital Partners III, L.P., H&F Orchard Partners III,
L.P. and H&F International Partners III, L.P. (the "Partnerships") are each
investment partnerships that collectively held the controlling interest in
Eller Media prior to the Eller Media Acquisition. Certain affiliates of the
general partner of the Partnerships served as directors and officers of
Eller Media prior to the Eller Media Acquisition; all such affiliates ceased
to hold such positions effective as of the consummation of the Eller Media
Acquisition.
(3) Prior to the Eller Media Acquisition, individual served as a director of
Eller Media.
(4) Prior to the Eller Media Acquisition, Mr. Arthur Kern, a director of
American Media Management, Inc., served as a director of Eller Media.
30
<PAGE> 32
SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Upon completion of the Offering, the Company will have 88,016,587 shares of
Common Stock outstanding (assuming no exercise of the Underwriter's
overallotment option). All of the 10,000,000 shares offered hereby (plus up to
614,068 additional shares in the event the Underwriters exercise their
overallotment option) will be freely transferable without restriction or further
registration under the Securities Act, unless purchased by an "affiliate" of the
Company (as that term is defined under the Securities Act). Substantially all of
the 14,539,919 shares owned by L. Lowry Mays and the 11,262,936 shares owned by
B.J. McCombs are subject to certain of the resale limitations of Rule 144
because Messrs. Mays and McCombs are affiliates of the Company.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) who has beneficially owned restricted shares of
Common Stock for at least one year is entitled to sell, within any three-month
period, a number of such shares which does not exceed the greater of 1% of the
then outstanding shares of Common Stock (88,016,587 shares immediately after the
Offering) or the average weekly public trading volume of the Common Stock during
the four calendar weeks preceding the date on which notice of the sale is filed
with the Securities and Exchange Commission. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. Any person (or
persons whose shares are aggregated) who has not been an affiliate of the
Company at any time during the past three months preceding a sale and who has
owned shares of Common Stock for at least two years is entitled to sell such
shares under Rule 144(k) without regard to the volume limitations, manner of
sale provisions, public information or notice requirements of Rule 144.
The Company cannot make any predictions as to the effect, if any, sales of
shares of Common Stock, or the availability of shares for future sale, will have
on the market price of the Common Stock prevailing from time to time.
REGISTRATION RIGHTS; STOCKHOLDERS AGREEMENT
In connection with the consummation of the Eller Media Acquisition, the
Company granted certain former stockholders of Eller Media (the "Eller Media
Stockholders") certain demand and piggyback registration rights pursuant to a
Registration Rights Agreement. The Eller Media Stockholders were granted three
demand registrations (including the demand registration right used in
conjunction with this Offering) which shall expire on the later of April 10,
1999, or the date when certain of the Eller Media Stockholders own less than
2,285,000 shares of the Company's Common Stock. After the successful completion
of this Offering, the Eller Media Stockholders will own 734,427 shares of Common
Stock, excluding options. The piggyback registration rights expire on the later
of the date when the shares of the Company's Common Stock held by the Eller
Media Stockholders have a value of less than $20 million or April 10, 2002. In
addition, the Eller Media Stockholders agreed to certain "holdback" restrictions
in the event of a public offering by the Company. In addition, the Company is
obligated to file a registration statement on Form S-8 registering the 1,468,182
shares of the Company's Common Stock issuable upon the exercise of stock options
issued by the Company to former option holders of Eller Media.
In connection with the consummation of the Eller Media Acquisition, the
Company and Eller Media also entered into a Stockholders Agreement with the
holders of approximately 7% of Eller Media's outstanding common stock (the
"Minority Stockholders"). Pursuant to the Stockholders Agreement, until April
10, 2002, the Minority Stockholders shall have the right to require the Company
to purchase their outstanding shares of Eller Media common stock for an
aggregate of 1,081,469 shares of the Company's Common Stock. Such right may be
exercised in whole or in part on no more than three occasions. From and after
April 10, 2004, and prior to such date upon the occurrence of certain events,
the Company shall have the right to purchase all of Minority
31
<PAGE> 33
Stockholders' shares of Eller Media common stock for an aggregate of 1,081,469
shares of the Company's Common Stock. Such shares, unless issued pursuant to an
effective registration statement, shall be considered "restricted" securities
and will be subject to certain transfer restriction. See "-- General."
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 2,000,000 shares of
preferred stock, $1.00 par value per share ("Preferred Stock"), and 100,000,000
shares of Common Stock, $.10 par value per share, of which no shares of
Preferred Stock and 77,279,160 shares of Common Stock were issued and
outstanding at April 17, 1997, excluding the 36,940 held in treasury.
PREFERRED STOCK
The Board of Directors has the authority to issue up to 2,000,000 shares of
Preferred Stock, in one or more series, and to fix the rights, preferences,
privileges and qualifications thereof without any further vote or action by the
shareholders. The issuance of Preferred Stock could decrease the amount of
earnings and assets available for distribution to holders of Common Stock, and
adversely affect the rights and powers, including voting rights, of such holders
and may have the effect of delaying, deferring or preventing a change in control
of the Company. No shares of Preferred Stock have ever been issued, and the
Company does not presently contemplate the issuance of Preferred Stock.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters
submitted to a vote of shareholders of the Company and to ratably receive
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor, subject to the payment of any
preferential dividends declared with respect to any Preferred Stock that from
time to time may be outstanding. Upon liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in any assets
available for distribution to shareholders after payment of all obligations of
the Company, subject to the rights to receive preferential distributions of the
holders of any Preferred Stock then outstanding.
Shareholders do not have cumulative voting rights or preemptive or other
rights to acquire or subscribe to additional, unissued or treasury shares. The
shares of Common Stock currently outstanding are, and the shares of Common Stock
offered hereby will be, upon issuance thereof, validly issued, fully paid and
nonassessable.
REPURCHASE AGREEMENT
In May 1977, the Company and its then shareholders, including L. Lowry Mays
and B.J. McCombs, entered into a Buy-Sell Agreement (the "Repurchase Agreement")
restricting the disposition of the outstanding shares of Common Stock owned by
L. Lowry Mays and B.J. McCombs and their heirs, legal representatives,
successors and assigns (collectively, the "Restricted Parties"). The Repurchase
Agreement provides that in the event that a Restricted Party desires to dispose
of his shares, other than by disposition by will or intestacy or through gifts
to such Restricted Party's spouse or children, such shares must be offered for a
period of 30 days to the Company. Any shares not purchased by the Company must
then be offered for a period of 30 days to the other Restricted Parties. If all
of the offered shares are not purchased by the Company or the other Restricted
Parties, the Restricted Party offering his shares may sell them to a third party
during a period of 90 days thereafter at a price and on terms not more favorable
than those offered to the Company and the other Restricted Parties. In addition,
a Restricted Party may not individually or in concert with others sell any
shares so as to deliver voting control to a third party without providing in any
such sale that all Restricted Parties will be offered the same price and terms
for their shares. The Repurchase
32
<PAGE> 34
Agreement will continue in effect following the Offering and may preserve the
control of the present principal shareholders.
FOREIGN OWNERSHIP
As a consequence of the restrictions imposed by the Communications Act on
ownership of Common Stock by aliens, the Company's bylaws were amended effective
December 31, 1983 to provide that (i) not more than one-fifth of the shares
outstanding shall at any time be owned of record, or voted, by or for the
account of aliens, their representatives, a foreign government or a corporation
organized under the laws of a foreign country, (ii) the Company shall not be
owned or controlled directly or indirectly by any other corporation of which any
officer or more than one-fourth of the directors are aliens or of which more
than one-fourth of the shares are owned of record or voted by aliens, (iii) no
person who is an alien may be elected or serve as an officer or director of the
Company, and (iv) if the stock records of the Company shall at any time reflect
one-fifth ownership, no transfers of additional shares to aliens shall be made
and, if it shall thereafter be found that any such additional shares are in fact
held by or for the account of an alien, such shares shall not be entitled to
vote, to receive dividends or to have any other rights. The holder of such
shares will be required to transfer them to a United States citizen or to the
Company. This restriction will be applicable to the shares of Common Stock
offered hereby and to the issuance or transfer of such shares after the date of
this Prospectus. The Company's stock certificates will bear a legend setting
forth this restriction. Since the bylaws were amended, the Communications Act
has been revised to remove the limitations on alien officers and directors.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters") have severally agreed to purchase
from the Company and the Selling Shareholders the following respective number of
shares of Common Stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Alex. Brown & Sons Incorporated.............................
Credit Suisse First Boston Corporation......................
Furman Selz LLC.............................................
Goldman, Sachs & Co. .......................................
Lehman Brothers Inc. .......................................
Montgomery Securities.......................................
Salomon Brothers Inc........................................
---------
Total.............................................
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of Common Stock offered hereby if any of
such shares are purchased.
The Company and the Selling Shareholders have been advised by the
Underwriters that the Underwriters propose to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other
dealers. After the Offering, the offering price and other selling terms may be
changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to 614,068
additional shares of Common Stock at the
33
<PAGE> 35
public offering price less the underwriting discounts and commission set forth
on the cover page of this Prospectus. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof that the number of shares of
Common Stock to be purchased by it shown in the above table bears to 10,000,000,
and the Company will be obligated, pursuant to the option, to sell such shares
to the Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of Common Stock offered hereby.
If purchased, the Underwriters will offer such additional shares on the same
terms as those in which the 10,000,000 shares are being offered.
The Underwriting Agreement contains covenants of indemnity and contribution
among the Company, the Selling Shareholders and the Underwriters with respect to
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
To facilitate the offering of the Common Stock, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price of
the Common Stock. Specifically, the Underwriters may over-allot shares of the
Common Stock in connection with the offering, thereby creating a short position
in the Underwriters' account. Additionally, to cover such over-allotments or to
stabilize the market price of the Common Stock, the Underwriters may bid for,
and purchase, shares of the Common Stock at a level above that which might
otherwise prevail in the open market. The Underwriters are not required to
engage in these activities, and, if commenced, any such activities may be
discontinued at any time. The Underwriters also may reclaim selling concessions
allowed to an Underwriter or dealer, if the Underwriters repurchase shares
distributed by that Underwriter or dealer.
The Company, Messrs. L. Lowry Mays and B.J. McCombs and the Selling
Shareholders have agreed that they will not, directly or indirectly, offer, sell
or otherwise dispose of any equity securities of the Company or any securities
convertible into, or exchangeable for, or any rights to purchase or acquire,
equity securities of the Company (other than employee stock options granted by
the Company in the ordinary course of business) for a period of 90 days after
the date of this Prospectus, without the prior written consent of Alex. Brown &
Sons Incorporated.
LEGAL OPINIONS
Certain legal matters in connection with the shares of Common Stock offered
hereby will be passed upon for the Company by its special counsel, Akin, Gump,
Strauss, Hauer & Feld, L.L.P. (a partnership including professional
corporations), San Antonio, Texas, and for the Underwriters by their special
counsel, Piper & Marbury L.L.P., Baltimore, Maryland. Alan D. Feld, the sole
shareholder of a professional corporation which is a partner of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., is a director of the Company and owns 48,000
shares of Common Stock (including presently exercisable nonqualified options to
acquire 40,000 shares).
EXPERTS
The consolidated financial statements (and schedules) of the Company
included or incorporated by reference in the Company's Annual Report (Form 10-K)
for the year ended December 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included or
incorporated by reference therein and incorporated herein by reference which, as
to the years 1995 and 1996, are based in part on the report of KPMG, independent
auditors. The financial statements and schedules referred to above are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
The consolidated financial statements of Australian Radio Network Pty Ltd
not separately presented in the Company's Annual Report (Form 10-K) for the year
ended December 31, 1996, have been audited by KPMG, independent auditors, as set
forth in their report thereon included
34
<PAGE> 36
therein and incorporated herein by reference. Such report referred to above is
incorporated herein by reference in reliance upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Eller Media Corporation as of
December 31, 1996 and 1995 and for the year ended December 31, 1996 and for the
period from August 18, 1995 through December 31, 1995, together with the
consolidated financial statements of PMG Holdings, Inc. and subsidiaries and the
combined financial statements of Eller Investment Company, Inc. for the period
from January 1, 1995 to August 17, 1995, incorporated by reference in this
prospectus and elsewhere in the registration statement are included in the
Company's current report on Form 8-K, filed on April 17, 1997, have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
The combined financial statements of Eller Investment Company, Inc. as of
and for the period ended December 31, 1994, incorporated by reference in this
prospectus and elsewhere in the registration statement or included in the
Company's current report on form 8-K, filed April 17, 1997, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto and are incorporated by reference herein in reliance
upon the authority of said firm as experts in accounting and auditing in giving
said reports.
The consolidated financial statements of PMG Holdings, Inc. and
Subsidiaries as of December 31, 1994 and for the year then ended included in the
Company's Current Report (Form 8-K) dated April 17, 1997, incorporated by
reference herein have been so included in reliance on the report of KPMG Peat
Marwick LLP, independent accountants, and upon the authority of said firm as
experts in auditing and accounting.
The consolidated financial statements of US Radio, Inc. for the years ended
December 31, 1995 and 1994, included in the Company's Current Report (Form 8-K)
dated May 24, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The combined financial statements of Ragan Henry Communications Group,
L.P., US Radio, L.P. and US Radio Stations, L.P. for the year ended December 31,
1994, included in the Company's Current Report (Form 8-K) dated May 24, 1996
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon incorporated herein by reference. Such combined financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Radio Equity Partners, L.P. and
its subsidiary as of December 31, 1995 and 1994, and for the years then ended
have been incorporated herein by reference in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, appearing in the
Form 8-K of Clear Channel Communications, Inc. dated June 5, 1996, and upon the
authority of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements filed by the Company with the Commission pursuant to the
information requirements of the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, 13th Floor, New
York, New York 10048; Los Angeles Regional Office, Suite 1100, 5670
35
<PAGE> 37
Wilshire Boulevard, Los Angeles, California 90036; and Chicago Regional Office,
500 W. Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such
material may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a site on the World Wide Web at http://www.sec.gov
that contains reports, proxies and information statements and other information
regarding registrants (including the Company) that file electronically. In
addition, reports, proxy statements and other information concerning the Company
can be inspected and copied at the offices of the New York Stock Exchange
("NYSE"), 20 Broad Street, New York, New York 10005, on which the Common Stock
of the Company (symbol: "CCU") is listed.
This Prospectus, which constitutes a part of a Registration Statement filed
by the Company with the Commission under the Securities Act, omits certain
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement and to the exhibits thereto for further
information with respect to the Company and the Common Stock offered hereby.
Statements contained herein concerning provisions of any document are not
necessarily complete, and each statement is qualified in its entirety by
reference to the copy of such document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference
into this Prospectus and made a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, dated March 31, 1997.
2. The Company's Current Report on Form 8-K dated April 17, 1997.
3. The Company's Current Report on Form 8-K dated May 24, 1996.
4. The Company's Current Report on Form 8-K dated June 5, 1996.
Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering of the Common Stock offered hereby shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. To the extent that any
proxy statement is incorporated by reference herein, such incorporation shall
not include any information contained in such proxy statement which is not,
pursuant to the Commission's rules, deemed to be "filed" with the Commission or
subject to the liabilities of Section 18 of the Exchange Act.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document described
above (other than exhibits, unless such exhibits are specifically incorporated
by reference). Requests for such copies should be directed to Houston Lane,
Clear Channel Communications, Inc., 200 Concord Plaza, Suite 600, San Antonio,
Texas 78216 (telephone: (210) 822-2828).
36
<PAGE> 38
============================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................... 3
Risk Factors................................ 10
Capitalization.............................. 15
Dividend Policy............................. 15
Use of Proceeds............................. 16
Price Range of Common Stock................. 16
Selected Financial Information.............. 17
Business.................................... 19
Selling Shareholders........................ 30
Shares Eligible for Future Sale............. 31
Description of Capital Stock................ 32
Underwriting................................ 33
Legal Opinions.............................. 34
Experts..................................... 34
Available Information....................... 35
Incorporation of Certain Documents by
Reference................................. 36
</TABLE>
============================================================
============================================================
10,000,000 SHARES
[CLEAR CHANNEL LOGO]
[CLEAR CHANNEL COMMUNICATIONS, INC.]
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
ALEX. BROWN & SONS
INCORPORATED
CREDIT SUISSE FIRST BOSTON
FURMAN SELZ
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MONTGOMERY SECURITIES
SALOMON BROTHERS INC
, 1997
============================================================
<PAGE> 39
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses (other than underwriting discounts and commissions)
in connection with the issuance and distribution of the Common Stock registered
hereby are as follows:
<TABLE>
<S> <C>
SEC registration fee.................... $154,990
NASD filing fee......................... 30,500
NYSE listing fee........................
Legal fees and expenses.................
Accounting fees and expenses............
Blue Sky fees and expenses..............
Printing and engraving expenses.........
Miscellaneous...........................
Total......................... $
</TABLE>
- ---------------
* Estimated.
The foregoing expenses will be paid by the registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act provides for
indemnification of directors and officers in certain circumstances. In addition,
the Texas Miscellaneous Corporation Law provides that a corporation may amend
its Articles of Incorporation to provide that no director shall be liable to the
registrant or its shareholders for monetary damages for an act or omission in
the director's capacity as a director, provided that the liability of a director
is not eliminated or limited (i) for any breach of the director's duty of
loyalty to the registrant or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
(iii) any transaction from which such director derived an improper personal
benefit, or (iv) an act or omission for which the liability of a director is
expressly provided by an applicable statute. The registrant has amended its
Articles of Incorporation and added Article Eleven adopting such limitations on
a director's liability. The registrant's Articles of Incorporation also provide
in Article Nine, for indemnification of directors or officers in connection with
the defense or settlement of suits brought against them in their capacities as
directors or officers of the Company, except in respect of liabilities arising
from gross negligence or willful misconduct in the performance of their duties.
Article IX(8) of the registrant's bylaws provides for indemnification of
any person made a party to a proceeding by reason of such person's status as a
director, officer, employee, partner or trustee of the Company, except in
respect of liabilities arising from negligence or misconduct in the performance
of their duties.
The Underwriting Agreement provides for indemnification by the Underwriters
of the registrant, its directors and officers, and by the registrant of the
Underwriters, for certain liabilities, including liabilities arising under the
Securities Act.
An insurance policy obtained by the registrant provides for indemnification
of officers and directors of the registrant and certain other persons against
liabilities and expenses incurred by any of them in certain stated proceedings
and under certain stated conditions.
II-1
<PAGE> 40
ITEM 16. EXHIBITS
EXHIBITS.
<TABLE>
<S> <S>
1 -- Form of Underwriting Agreement.(a)
2.1 -- Stock Purchase Agreement By and Among Clear Channel
Communications, Inc., Eller Media Corporation and the
Stockholders of Eller Media Corporation, dated February
25, 1997. (Incorporated by reference to the exhibits of
the Company's Form 10-K dated March 31, 1997).
2.2 -- Amendment to Stock Purchase Agreement by and among Clear
Channel Communications, Inc., Eller Media Corporation and
the Stockholders of Eller Media Corporation, dated April
10, 1997. (Incorporated by reference to the exhibits of
the Company's Current Report on Form 8-K dated April 17,
1997.)
2.3 -- Registration Rights Agreement by and between Clear
Channel Communications, Inc., and the Stockholders of
Eller Media Corporation, dated April 10, 1997.
(Incorporated by reference to the exhibits of the
Company's Current Report on Form 8-K dated April 17,
1997.)
2.4 -- Stockholders Agreement by and between Clear Channel
Communications, Inc., and EM Holdings LLC, dated April
10, 1997. (Incorporated by reference to the exhibits of
the Company's Current Report on Form 8-K dated April 17,
1997.)
2.5 -- Escrow Agreement By and Among Eller Media Corporation,
Clear Channel Communications, Inc., and EM Holdings LLC,
and Chase Trust Company of California, Dated April 10,
1997. (Incorporated by reference to the exhibits of the
Company's Current Report on Form 8-K dated April 17,
1997.)
4.1 -- Buy-Sell Agreement by and between Clear Channel
Communications, Inc., L. Lowry Mays, B. J. McCombs, John
M. Schaefer and John W. Barger, dated May 31, 1977.
(Incorporated by reference to the exhibits of the
Company's Registration Statement on Form S-1 (Reg. No.
289161) dated April 19, 1984.)
5 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.(a)
*23.1 -- Consent of Ernst & Young LLP.
*23.2 -- Consent of Ernst & Young LLP.
*23.3 -- Consent of Ernst & Young LLP.
*23.4 -- Consent of KPMG.
*23.5 -- Consent of KPMG Peat Marwick LLP.
*23.6 -- Consent of Arthur Andersen LLP.
*23.7 -- Consent of KPMG Peat Marwick LLP.
23.8 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in opinion filed as Exhibit 5).
</TABLE>
- ---------------
* Filed herewith.
(a) To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report
II-2
<PAGE> 41
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
new securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Antonio, State of Texas, on April 18, 1997.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/ L. LOWRY MAYS
----------------------------------
L. Lowry Mays
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of Clear Channel Communications, Inc., hereby constitute and appoint L.
Lowry Mays, Randall T. Mays and Herbert W. Hill, Jr., and each of them, his true
and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and his name place and stead, in any and all capacities,
to execute any and all amendments (including post-effective amendments) to this
Registration Statement, and any and all Registration Statements filed pursuant
to Rule 462 under the Securities Act of 1933, as amended, and to file the same
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ L. LOWRY MAYS Chief Executive Officer and April 18,
- ----------------------------------------------------- Director 1997
L. Lowry Mays
/s/ RANDALL T. MAYS Senior Vice President/Chief April 18,
- ----------------------------------------------------- Financial Officer (Principal 1997
Randall T. Mays Financial Officer)
/s/ HERBERT W. HILL, JR. Senior Vice President/Chief April 18,
- ----------------------------------------------------- Accounting Officer 1997
Herbert W. Hill, Jr. (Principal Accounting
Officer)
/s/ ALAN D. FELD Director April 18,
- ----------------------------------------------------- 1997
Alan D. Feld
/s/ B.J. MCCOMBS Director April 18,
- ----------------------------------------------------- 1997
B.J. McCombs
/s/ THEODORE H. STRAUSS Director April 18,
- ----------------------------------------------------- 1997
Theodore H. Strauss
/s/ JOHN H. WILLIAMS Director April 18,
- ----------------------------------------------------- 1997
John H. Williams
</TABLE>
<PAGE> 43
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1 -- Form of Underwriting Agreement.(a)
2.1 -- Stock Purchase Agreement By and Among Clear Channel
Communications, Inc., Eller Media Corporation and the
Stockholders of Eller Media Corporation, dated February
25, 1997. (Incorporated by reference to the exhibits of
the Company's Form 10-K dated March 31, 1997).
2.2 -- Amendment to Stock Purchase Agreement by and among Clear
Channel Communications, Inc., Eller Media Corporation and
the Stockholders of Eller Media Corporation, dated April
10, 1997. (Incorporated by reference to the exhibits of
the Company's Current Report on Form 8-K dated April 17,
1997.)
2.3 -- Registration Rights Agreement by and between Clear
Channel Communications, Inc., and the Stockholders of
Eller Media Corporation, dated April 10, 1997.
(Incorporated by reference to the exhibits of the
Company's Current Report on Form 8-K dated April 17,
1997.)
2.4 -- Stockholders Agreement by and between Clear Channel
Communications, Inc., and EM Holdings LLC, dated April
10, 1997. (Incorporated by reference to the exhibits of
the Company's Current Report on Form 8-K dated April 17,
1997.)
2.5 -- Escrow Agreement By and Among Eller Media Corporation,
Clear Channel Communications, Inc., and EM Holdings LLC,
and Chase Trust Company of California, Dated April 10,
1997. (Incorporated by reference to the exhibits of the
Company's Current Report on Form 8-K dated April 17,
1997.)
4.1 -- Buy-Sell Agreement by and between Clear Channel
Communications, Inc., L. Lowry Mays, B. J. McCombs, John
M. Schaefer and John W. Barger, dated May 31, 1977.
(Incorporated by reference to the exhibits of the
Company's Registration Statement on Form S-1 (Reg. No.
289161) dated April 19, 1984.)
5 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.(a)
*23.1 -- Consent of Ernst & Young LLP.
*23.2 -- Consent of Ernst & Young LLP.
*23.3 -- Consent of Ernst & Young LLP.
*23.4 -- Consent of KPMG.
*23.5 -- Consent of KPMG Peat Marwick LLP.
*23.6 -- Consent of Arthur Andersen LLP.
*23.7 -- Consent of KPMG Peat Marwick LLP.
23.8 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in opinion filed as Exhibit 5).
</TABLE>
- ---------------
* Filed herewith.
(a) To be filed by amendment.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the references to our firm under the captions "Selected
Financial Information" and "Experts" in the Registration Statement (Form S-3)
and related Prospectus of Clear Channel Communications, Inc. for the
registration of shares of its common stock and to the incorporation by
reference therein of our reports dated February 17, 1997, (except for Note K, as
to which the date is February 25, 1997), with respect to the consolidated
financial statements of Clear Channel Communications, Inc. incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31, 1996
and the related financial statement schedules included therein, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
April 18, 1997
San Antonio, Texas
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 4, 1996, with respect to the consolidated
financial statements of US Radio, Inc. incorporated by reference in the
Registration Statement (Form S-3) and related Prospectus of Clear Channel
Communications, Inc. for the registration of shares of its common
Stock.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
April 18, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 10, 1995, with respect to the combined
financial statements of Ragan Henry Communications Group, L.P., US Radio, L.P.
and US Radio Stations, L.P. incorporated by reference in the Registration
Statement (Form S-3) and related Prospectus of Clear Channel Communications,
Inc. for the registration of shares of its common stock.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
April 18, 1997
<PAGE> 1
EXHIBIT 23.4
CONSENT OF KPMG
Board of Directors
Clear Channel Communications, Inc.
We consent to the incorporation by reference in the registration statement
on Form S-3 of Clear Channel Communications, Inc. of our report dated 4 March
1997, with respect to the consolidated balance sheets of Australian Radio
Network Pty Limited and its controlled entities as at December 31, 1996 and 1995
and the related consolidated profit and loss accounts and statements of cash
flows for the years then ended (not separately incorporated by reference in such
registration statement), which report appears in the December 31, 1996 Annual
Report on Form 10-K of Clear Channel Communications, Inc.
Additionally, we consent to the references to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG
Sydney, Australia
April 18, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
PMG Holdings, Inc.
We consent to the incorporation by reference in the Registration Statement
on Form S-3 of Clear Channel Communications, Inc. of our report dated April 27,
1995 with respect to the consolidated balance sheet of PMG Holdings, Inc. and
subsidiaries as of December 31, 1994 and the related consolidated statements of
operations, changes in stockholders' deficit and cash flows for the year then
ended, which report appears in the Form 8-K of Clear Channel Communications,
Inc. dated April 17, 1997.
We also consent to the reference to our firm under the heading "Experts" in
the Registration Statement.
/s/ KPMG PEAT MARWICK LLP
Stamford, Connecticut
April 16, 1997
<PAGE> 1
EXHIBIT 23.6
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement on Form S-3 of our reports dated
March 14, 1997 and March 9, 1995 included in Clear Channel Communications, Inc.
current report on Form 8-K, filed April 17, 1997, and to all references to our
Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Phoenix, Arizona,
April 16, 1997.
<PAGE> 1
EXHIBIT 23.7
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Clear Channel Communications, Inc.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
New York, New York
April 17, 1997
