KATZ MEDIA CORP, S-4, 1998-12-23

KATZ MEDIA CORP
S-4, 1998-12-23
ADVERTISING AGENCIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
AND THE GUARANTORS NAMED IN THE ATTACHED TABLE OF CO-REGISTRANTS
(Exact name of Co-Registrants as specified in their charters)
---------------------

<TABLE>
<S> <C> <C>
DELAWARE 4832 75-2451687
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

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<TABLE>
<S> <C>
(FOR CO-REGISTRANTS, PLEASE SEE "TABLE OF CO-REGISTRANTS" ON THE FOLLOWING PAGE)

JEFFREY A. MARCUS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
300 CRESCENT COURT, SUITE 600 300 CRESCENT COURT, SUITE 600
DALLAS, TEXAS 75201 DALLAS, TEXAS 75201
(214) 922-8700 (214) 922-8700
(Address, including zip code, and telephone number, (Name, address, including zip code, telephone
including area code, of Co-Registrant's principal executive offices) number, including area code, of agent for service)
</TABLE>

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Copies To:

<TABLE>
<S> <C>
MICHAEL A. SASLAW, ESQ. RICHARD A. B. GLEINER, ESQ.
WEIL, GOTSHAL & MANGES LLP SENIOR VICE PRESIDENT AND
100 CRESCENT COURT, SUITE 1300 GENERAL COUNSEL
DALLAS, TEXAS 75201 CHANCELLOR MEDIA CORPORATION
(214) 746-7700 OF LOS ANGELES
300 CRESCENT COURT, SUITE 600
DALLAS, TEXAS 75201
(214) 746-7700
</TABLE>

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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 the earlier effective
registration statement for the same offering. [ ]
- ------------------

If this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
- ------------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM OFFERING MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE PRICE PER AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED NOTE OFFERING PRICE(1) FEE(2)
<S> <C> <C> <C> <C>
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8% Senior Notes due 2008............ $750,000,000 100% $750,000,000 $208,500.00
- ----------------------------------------------------------------------------------------------------------------------
Guarantees of the 8% Senior Notes
due 2008(3)....................... -- -- -- --
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</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) The registration fee has been calculated in accordance with Rule 457(f)
under the Securities Act of 1933, as amended.

(3) The 8% Senior Notes due 2008 are guaranteed by the Co-Registrants on a
senior unsecured basis. No separate consideration will be paid in respect of
the guarantees.

THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2

TABLE OF CO-REGISTRANTS

<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION
OF PRIMARY STANDARD IRS
INCORPORATION INDUSTRIAL EMPLOYER
OR CLASSIFICATION IDENTIFICATION
NAME FORMATION CODE NUMBER NUMBER
---- -------------- ---------------- --------------
<S> <C> <C> <C>
Chancellor Media Corporation of the Lone Star State...... Delaware 4832 99-0248294
KZPS/KDGE License Corp. ................................. Delaware 4832 75-2449662
Chancellor Media Corporation of California............... Delaware 4832 59-2312787
KIOI License Corp. ...................................... Delaware 4832 75-2449654
Chancellor Media Corporation of Illinois................. Delaware 4832 75-2490925
Chancellor Media Illinois License Corp. ................. Delaware 4832 75-2528716
Chancellor Media Corporation of Dade County.............. Delaware 4832 59-2312792
WVCG License Corp. ...................................... Delaware 4832 75-2449668
Chancellor Media Corporation of Massachusetts............ Delaware 4832 04-3216274
Chancellor Media Pennsylvania License Corp. ............. Delaware 4832 04-3221375
Chancellor Media Corporation of Miami.................... Delaware 4832 04-3216285
WEDR License Corp. ...................................... Delaware 4832 04-3216278
Chancellor Media Corporation of Houston Limited
Partnership............................................ Delaware 4832 75-2486577
Chancellor Media Corporation of Houston.................. Delaware 4832 75-2486583
Chancellor Media Corporation of the Keystone State....... Delaware 4832 04-3221374
Chancellor Media Corporation of New York................. Delaware 4832 75-2775716
Chancellor Media Corporation of Charlotte................ Delaware 4832 62-1364794
WIOQ License Corp. ...................................... Delaware 4832 36-3906002
Chancellor Media Corporation of Washington, D.C. ........ Delaware 4832 75-2432561
Chancellor Media Corporation of St. Louis................ Delaware 4832 75-2449637
Chancellor Media Corporation of Michigan................. Delaware 4832 75-2775714
Chancellor Media/WAXQ Inc. .............................. Delaware 4832 13-3387794
WAXQ License Corp. ...................................... Delaware 4832 75-2788524
Chancellor Media/KCMG Inc. .............................. Delaware 4832 13-3930133
Chancellor Media/Riverside Broadcasting Co., Inc. ....... Delaware 4832 13-2688382
WLTW License Corp. ...................................... Delaware 4832 75-2788528
Chancellor Media Corporation of the Capital City......... Delaware 4832 75-2647157
Chancellor Media D.C. License Corp. ..................... Delaware 4832 75-2647158
Chancellor Media Licensee Company........................ Delaware 4832 75-2544625
Chancellor Media/Trefoil Communications, Inc. ........... Delaware 4832 95-3278846
Chancellor Media/Shamrock Broadcasting, Inc. ............ Delaware 4832 95-4068583
Chancellor Media/Shamrock Radio Licenses, Inc. .......... Delaware 4832 95-4501833
Chancellor Media/Shamrock Broadcasting Licenses of
Denver, Inc. .......................................... Delaware 4832 75-2688376
Chancellor Media/Shamrock Broadcasting of Texas, Inc. ... Texas 4832 71-0527506
Chancellor Media/Shamrock Radio Licenses, LLC............ Delaware 4832 75-2779594
Chancellor Media Outdoor Corporation..................... Delaware 7319 75-2779605
Chancellor Media Nevada Sign Corporation................. Delaware 7319 75-2788530
Chancellor Media MW Sign Corporation..................... Delaware 7319 75-2779602
Chancellor Media Martin Corporation...................... Delaware 7319 75-2779598
Western Poster Service, Inc. ............................ Texas 7319 75-2084318
The AMFM Radio Networks, Inc. ........................... Delaware 4832 52-2100851
Chancellor Media Air Services Corporation................ Delaware 7319 75-2771440
</TABLE>
<PAGE> 3
TABLE OF CO-REGISTRANTS -- (CONTINUED)

THIS PROSPECTUS, DATED DECEMBER 23, 1998, IS SUBJECT TO COMPLETION AND
AMENDMENT.

PROSPECTUS
OFFER TO EXCHANGE ALL OUTSTANDING

8% SENIOR NOTES DUE 2008
FOR
8% SENIOR NOTES DUE 2008

CHANCELLOR MEDIA CORPORATION
OF LOS ANGELES

We hereby offer, upon the terms and conditions described in this Prospectus, to
exchange all of our outstanding 8% Senior Notes due 2008 ("Old Notes") for our
registered 8% Senior Notes due 2008 ("New Notes"). The Old Notes and New Notes
are sometimes collectively referred to as the "Notes." The Old Notes were issued
on November 12, 1998 and, as of the date of this Prospectus, an aggregate
principal amount of $750.0 million is outstanding. The terms of the New Notes
are identical to the terms of the Old Notes except that the New Notes are
registered under the Securities Act of 1933, as amended, and will not contain
any legends restricting their transfer. The New Notes and the Old Notes are
sometimes collectively referred to herein as the "Notes."

INFORMATION ABOUT THE NOTES:

<TABLE>
<S> <C>
- The Notes will mature on November 1, 2008.
- -----------------------------------------------------
* PLEASE CONSIDER THE FOLLOWING: - We will pay interest on the Notes semi-annually on May 1 and
November 1 of each year beginning May 1, 1999, at the rate
- You should carefully review the Risk Factors of 8% per annum.
beginning on page of this Prospectus.
- We have the option to redeem all or a portion of the Notes
- Our offer to exchange Old Notes for New Notes at any time at the redemption price set forth on page of
will be open until 5:00 p.m., New York City time, this Prospectus.
on , 1999, unless we extend the
offer. - We also have the option to redeem up to 25% of the original
aggregate principal amount of the Notes on or prior to
- You should also carefully review the procedures November 1, 2001 with the net cash proceeds from a public
for tendering the Old Notes beginning on page equity offering.
of this Prospectus.
- The Notes are senior unsecured obligations and are of equal
- If you fail to tender your Old Notes, you will ranking in right of payment to our existing and future
continue to hold unregistered securities and senior debt and rank senior in right of payment to our
your ability to transfer them could be adversely existing and future subordinated debt. Please be advised
affected. that, as of September 30, 1998, we had $1.3 billion of
senior debt of equal ranking in right of payment to the
- No public market currently exists for the Notes. Notes.
We do not intend to list the New Notes on any
securities exchange and, therefore, no active - The Notes are fully and unconditionally guaranteed on an
public market is anticipated. unsecured senior basis by all of our direct and indirect
domestic subsidiaries on the date the Old Notes were
- ----------------------------------------------------- issued (the "Guarantors").
</TABLE>

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------

THE DATE OF THIS PROSPECTUS IS , 1999

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 5

WHERE YOU CAN FIND MORE INFORMATION

We, together with Chancellor Media Corporation ("Chancellor Media"), our
indirect parent corporation, file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). You may read and copy any reports, statements and other information
we file at the SEC's public reference rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call 1-800-SEC-0330 for further information
on the public reference rooms. Our filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at http://www.sec.gov.

We, together with the Guarantors, have filed a Registration Statement on Form
S-4 to register with the SEC the New Notes to be issued in exchange for the Old
Notes. This Prospectus is part of that Registration Statement. As allowed by the
SEC's rules, this Prospectus does not contain all of the information you can
find in the Registration Statement or the exhibits to the Registration
Statement.

WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE TRANSACTIONS WE DISCUSS IN THIS PROSPECTUS OTHER THAN
THOSE CONTAINED HEREIN OR IN THE DOCUMENTS WE INCORPORATE HEREIN BY REFERENCE.
IF YOU ARE GIVEN ANY INFORMATION OR REPRESENTATIONS ABOUT THESE MATTERS THAT IS
NOT DISCUSSED OR INCORPORATED IN THIS PROSPECTUS, YOU MUST NOT RELY ON THAT
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SECURITIES ANYWHERE OR TO ANYONE WHERE OR TO WHOM WE ARE NOT
PERMITTED TO OFFER OR SELL SECURITIES UNDER APPLICABLE LAW. THE DELIVERY OF THIS
PROSPECTUS OFFERED HEREBY DOES NOT, UNDER ANY CIRCUMSTANCES, MEAN THAT THERE HAS
NOT BEEN A CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF. IT ALSO DOES NOT MEAN
THAT THE INFORMATION IN THIS PROSPECTUS OR IN THE DOCUMENTS WE INCORPORATE
HEREIN BY REFERENCE IS CORRECT AFTER THIS DATE.

CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements about our financial
condition, results of operations and business. These statements may be made
expressly in this document, or may be "incorporated by reference" to other
documents we have filed with the SEC. You can find many of these statements by
looking for words such as "believes," "expects," "anticipates," "estimates," or
similar expressions used in this Prospectus or incorporated herein.

These forward-looking statements are subject to numerous assumptions, risks and
uncertainties. Factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by us in those statements include, among
others, the following:

- - our ability to pay interest and principal on a very large amount of debt;

- - the competitive nature of the radio broadcasting, outdoor advertising and
media representation businesses;

- - our ability to successfully integrate our completed and pending acquisitions;

- - our ability to successfully compete in our new business platforms, including
outdoor advertising and media representation;

- - changes in governmental regulation of radio broadcasting by the Federal
Communications Commission (the "FCC");

(i)
<PAGE> 6

- - increased antitrust scrutiny of the broadcasting industry by the Antitrust
Division of the Department of Justice (the "DOJ") and the Federal Trade
Commission (the "FTC"), including limitations on future acquisition
opportunities and possible radio divestiture requirements; and

- - increased competition from new technologies, including satellite radio
programming and the Internet.

Because such statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by the forward-looking
statements. You are cautioned not to place undue reliance on such statements,
which speak only as of the date of this Prospectus or, in the case of documents
incorporated by reference, the date of such document.

We do not undertake any responsibility to release publicly any revisions to
these forward-looking statements to take into account events or circumstances
that occur after the date of this Prospectus. Additionally, we don't undertake
any responsibility to update you on the occurrence of any unanticipated events
which may cause actual results to differ from those expressed or implied by the
forward-looking statements contained or incorporated by reference in this
Prospectus.

(ii)
<PAGE> 7

PROSPECTUS SUMMARY

This brief summary highlights selected information from the Prospectus. It does
not contain all of the information that is important to you. We urge you to
carefully read and review the entire Prospectus and the other documents to which
it refers to fully understand the terms of the New Notes and the exchange offer.
Chancellor Media Corporation of Los Angeles is sometimes referred to herein as
"CMCLA" and, together with its subsidiaries as the "Company."

THE COMPANY

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
300 Crescent Court, Suite 600
Dallas, Texas 75201
(214) 922-8700

The Company, an indirect wholly-owned subsidiary of Chancellor Media, is a
diversified multi-media company that (i) owns and/or operates a radio station
portfolio consisting of 118 radio stations (including 13 stations currently
operated under time brokerage agreements) in 22 of the largest U.S. markets and
Puerto Rico, (ii) provides national media sales representation through Katz
Media Group, Inc., a wholly-owned subsidiary, and (iii) has a significant and
growing outdoor (billboard) advertising presence. After completing all of our
announced transactions, we will own or operate 123 radio stations in 25 markets
and over 37,000 outdoor advertising displays in 37 states.

On a pro forma basis, after giving effect to the transactions described in the
"Pro Forma Financial Information" beginning on page P-1, we would have had net
revenue of $1.1 billion and broadcast cash flow of $512.8 million for the nine
months ended September 30, 1998. Also, our pro forma broadcast cash flow margin
for the same period would have been 46%, and approximately 65% of pro forma net
revenue for the period would have been generated in "superduopoly" markets
(markets in which we own four or five FM stations). Furthermore, we would have
generated approximately 75% of our net revenue from radio operations,
approximately 11% from our media representation operations and approximately 14%
from our outdoor advertising operations.

BUSINESS STRATEGY

Our strategy is to create a leading multi-media company with an overlapping
presence in radio and outdoor advertising markets. To this end, we have built a
diversified portfolio of media assets which allows us to present more options
and greater value to our advertising clients. We believe that the multi-media
platform creates significant growth opportunities through cross-selling,
cross-promotion and cost savings in markets where our radio and advertising
operations overlap.

Radio Broadcast Strategy. The business strategy of our radio group is to
assemble and operate radio station clusters in order to maximize the broadcast
cash flow generated in each market. We believe that radio station clusters
attract increased revenues in a particular market by delivering larger combined
audiences to advertisers and by engaging in joint marketing and promotional
activities.
1
<PAGE> 8

Media Representation Strategy. The business strategy of our media representation
business is to create a leading national representation firm serving all types
of electronic media. We believe we can continue to generate revenue and cash
flow growth in the media representation business by expanding our market share
and improving our national sales effort.

Outdoor Advertising Strategy. The business strategy of our outdoor advertising
group is to create and develop one of the leading outdoor advertising companies
in the country through acquisitions that complement our existing outdoor and
radio markets. We will focus on strengthening our operating results by
increasing market penetration, maximizing rates and occupancy levels in each of
our markets and capitalizing on technological advancements to improve quality
and reduce costs.

RECENT DEVELOPMENTS

Completed Transactions. Since January 1, 1997, we have completed a number of
transactions. Through these various transactions, we have:

- - added 72 radio stations to our portfolio;

- - acquired a full service media representation firm; and

- - entered into the outdoor advertising business by acquiring over 37,000
billboards.

Pending Transactions. We also currently have a number of significant pending
transactions.

- - On February 20, 1998, we entered into an agreement with Capstar Broadcasting
Corporation to acquire certain of its stations through a series of purchases
and exchanges over a period of three years.

- - On April 8, 1998, we entered into an agreement to acquire Petry Media
Corporation, a leading independent television representation firm. We are
currently negotiating with the DOJ about their antitrust review of this
transaction. Accordingly, we cannot be sure the transaction will be completed
on its terms or at all.

- - On August 11, 1998, we entered into agreements to acquire four FM and two AM
stations in Cleveland. We recently began operating one of the FM stations in
Cleveland under a time brokerage agreement.

- - On August 20, 1998, we entered into an agreement to sell WMVP-AM in Chicago to
ABC, Inc. ABC recently began operating WMVP-AM under a time brokerage
agreement.

- - On September 3, 1998, we entered into an agreement to acquire Pegasus
Broadcasting of San Juan, L.L.C., a television broadcasting company which owns
a television station in Puerto Rico.

- - On September 15, 1998, we entered into an agreement to acquire KKFR-FM and
KFYI-AM in Phoenix from The Broadcast Group, Inc. We recently began operating
KKFR-FM and KFYI-AM under a time brokerage agreement.
2
<PAGE> 9

For a more detailed explanation of the terms of the foregoing pending
transactions, we advise you to review "Business -- Recent
Developments -- Pending Transactions of CMCLA," beginning on page .

Pending Transactions of Chancellor Media Corporation. Chancellor Media, our
indirect parent corporation, has also recently entered into some significant
transactions.

- - On July 7, 1998, Chancellor Media entered into an agreement by which the
ultimate parent corporation of LIN Television Corporation will merge into
Chancellor Media. Upon consummation of the merger, it is expected that LIN
will own or operate 12 television stations in eight markets in the United
States.

- - On August 26, 1998, Chancellor Media and Capstar Broadcasting Corporation
entered into an agreement to merge in a stock-for-stock transaction that will
create the nation's largest radio broadcasting company.

For a more detailed explanation of the terms of the foregoing pending
transactions of Chancellor Media, we advise you to review "Business -- Recent
Developments -- Pending Transactions of Chancellor Media," beginning on page .
3
<PAGE> 10

THE EXCHANGE OFFER

SECURITIES TO BE EXCHANGED... On November 12, 1998, we issued $750.0 million
aggregate principal amount of Old Notes to the
initial purchaser (the "Original Offering") in a
transaction exempt from the registration
requirements of the Securities Act of 1933, as
amended (the "Securities Act"). The terms of the
New Notes and the Old Notes are substantially
identical in all material respects, except that
the New Notes will be freely transferable by the
holders thereof except as otherwise provided
herein. See "Description of New Notes."

THE EXCHANGE OFFER........... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes.
As of the date hereof, Old Notes representing
$750.0 million aggregate principal amount are
outstanding.

Based on interpretations by the staff of the
SEC, as set forth in no-action letters issued to
certain third parties unrelated to us, we,
together with the Guarantors believe that New
Notes issued pursuant to the exchange offer in
exchange for Old Notes may be offered for
resale, resold or otherwise transferred by
holders thereof (other than any holder which is
an "affiliate" of the Company or the Guarantors
within the meaning of Rule 405 promulgated under
the Securities Act, or a broker-dealer who
purchased Old Notes directly from us to resell
pursuant to Rule 144A or any other available
exemption promulgated under the Securities Act),
without compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders'
business and such holders have no arrangement
with any person to engage in a distribution of
New Notes.

However, the SEC has not considered the exchange
offer in the context of a no-action letter and
we cannot be sure that the staff of the SEC
would make a similar determination with respect
to the exchange offer as in such other
circumstances. Furthermore, each holder, other
than a broker-dealer, must acknowledge that it
is not engaged in, and does not intend to engage
in, a distribution of such New Notes and has no
arrangement or understanding to participate in a
distribution of New Notes. Each broker-dealer
that receives New Notes for its own account
pursuant to the exchange offer must acknowledge
that it will comply with the prospectus delivery
requirements of the Securities Act in connec-
4
<PAGE> 11

tion with any resale of such New Notes.
Broker-dealers who acquired Old Notes directly
from us and not as a result of market-making
activities or other trading activities may not
rely on the staff's interpretations discussed
above or participate in the exchange offer and
must comply with the prospectus delivery
requirements of the Securities Act in order to
resell the Old Notes.

REGISTRATION RIGHTS
AGREEMENT.................. We sold the Old Notes on November 12, 1998, in a
private placement in reliance on Section 4(2) of
the Securities Act. The Old Notes were
immediately resold by the initial purchaser in
reliance on Rule 144A promulgated under the
Securities Act. In connection with the sale, we,
together with the Guarantors, entered into a
Registration Rights Agreement with the initial
purchaser (the "Registration Rights Agreement")
requiring us to make the exchange offer. The
Registration Rights Agreement further provides
that we, together with the Guarantors, must use
our reasonable best efforts to (i) cause the
Registration Statement with respect to the
exchange offer to be declared effective within
180 days of the date on which we issued the Old
Notes and (ii) consummate the exchange offer on
or before the 225th business day following the
date on which we issued the Old Notes. See "The
Exchange Offer -- Purpose and Effect."

EXPIRATION DATE.............. The exchange offer will expire at 5:00 p.m., New
York City time, , 1999 or such
later date and time to which it is extended.

WITHDRAWAL................... The tender of the Old Notes pursuant to the
exchange offer may be withdrawn at any time
prior to 5:00 p.m., New York City time, on
, 1999, or such later date and
time to which we extend the offer. Any Old Notes
not accepted for exchange for any reason will be
returned without expense to the tendering holder
thereof as soon as practicable after the
expiration or termination of the exchange offer.

INTEREST ON THE NEW NOTES AND
THE OLD NOTES.............. Interest on the New Notes will accrue from the
date of the original issuance of the Old Notes
or from the date of the last periodic payment of
interest on the Old Notes, whichever is later.
No additional interest will be paid on Old Notes
tendered and accepted for exchange.
5
<PAGE> 12

CONDITIONS TO THE EXCHANGE
OFFER...................... The exchange offer is subject to certain
customary conditions, certain of which may be
waived by us. See "The Exchange Offer -- Certain
Conditions to Exchange Offer."

PROCEDURES FOR TENDERING OLD
NOTES...................... Each holder of the Old Notes wishing to accept
the exchange offer must complete, sign and date
the letter of transmittal, or a copy thereof, in
accordance with the instructions contained
herein and therein, and mail or otherwise
deliver the letter of transmittal, or the copy,
together with the Old Notes and any other
required documentation, to the exchange agent at
the address set forth herein. Persons holding
the Old Notes through the Depository Trust
Company ("DTC") and wishing to accept the
exchange offer must do so pursuant to the DTC's
Automated Tender Offer Program, by which each
tendering participant will agree to be bound by
the letter of transmittal. By executing or
agreeing to be bound by the letter of
transmittal, each holder will represent to us
and the Guarantors that, among other things, (i)
the New Notes acquired pursuant to the exchange
offer are being obtained in the ordinary course
of business of the person receiving such New
Notes, whether or not such person is the
registered holder of the Old Notes, (ii) the
holder is not engaging in and does not intend to
engage in a distribution of such New Notes,
(iii) the holder does not have an arrangement or
understanding with any person to participate in
the distribution of such New Notes, and (iv) the
holder is not an "affiliate," as defined under
Rule 405 promulgated under the Securities Act,
of the Company or the Guarantors.

Pursuant to the Registration Rights Agreement if
(i) we determine that we are not permitted to
effect the exchange offer as contemplated hereby
because of any change in applicable law or SEC
policy, or (ii) any holder of Transfer
Restricted Securities (as defined on page )
notifies us prior to the 20th day following
consummation of the exchange offer (a) that it
is prohibited by law or SEC policy from
participating in the exchange offer, (b) that it
may not resell the New Notes acquired by it in
the exchange offer to the public without
delivering a prospectus and that this Prospectus
is not appropriate or available for such resales
or (c) that it is a broker-dealer and owns Old
Notes acquired directly from us or an affiliate
of ours, we are
6
<PAGE> 13

required to file a "shelf" registration
statement for a continuous offering pursuant to
Rule 415 under the Securities Act in respect of
the Old Notes.

We will accept for exchange any and all Old
Notes which are properly tendered (and not
withdrawn) in the exchange offer prior to 5:00
p.m., New York City time, on , 1999.
The New Notes issued pursuant to the exchange
offer will be delivered promptly following the
expiration date. See "The Exchange
Offer -- Terms of the Exchange Offer."

EXCHANGE AGENT............... The Bank of New York is serving as Exchange
Agent (the "Exchange Agent") in connection with
the exchange offer.

FEDERAL INCOME TAX
CONSIDERATIONS............. The exchange of Old Notes for New Notes pursuant
to the exchange offer should not constitute a
sale or an exchange for federal income tax
purposes. See "Certain Federal Income Tax
Considerations."

EFFECT OF NOT TENDERING...... Old Notes that are not tendered or that are
tendered but not accepted will, following the
completion of the exchange offer, continue to be
subject to the existing restrictions upon
transfer thereof. We will have no further
obligation to provide for the registration under
the Securities Act of such Old Notes.
7
<PAGE> 14

THE NEW NOTES

The summary below describes the principal terms of the New Notes. Certain of the
terms and conditions described below are subject to important limitations and
exceptions. The "Description of the New Notes" section of this Prospectus
beginning on page contains a more detailed description of the terms and
conditions of the New Notes.

Issuer....................... Chancellor Media Corporation of Los Angeles

Securities Offered........... $750,000,000 principal amount of 8% Senior Notes
due 2008

Maturity..................... November 1, 2008

Interest Rate................ 8% per year (calculated using a 360-day year)

Ranking...................... The New Notes will be senior unsecured
obligations of the Company and will rank equal
in right of payment to our existing and future
senior debt and senior in right of payment to
all of our existing and future subordinated
debt. As of September 30, 1998, on a pro forma
basis, we estimate that we and our subsidiaries
would have had approximately $2.3 billion of
senior debt and approximately $160.0 million
more that we have available to borrow under our
senior credit facility. Because they are
unsecured, the New Notes will be effectively
subordinated in right of payment to all of our
secured debt to the extent of such security. Our
senior credit facility is presently secured by,
among other things, a pledge of substantially
all of the equity interests of our subsidiaries.
Other than the senior credit facility, we do not
presently have outstanding any material secured
indebtedness.

Guarantees................... Our domestic subsidiaries on the issue date, as
well as future subsidiaries that guarantee our
obligations under our senior credit facility,
will guarantee the New Notes with unsecured
unconditional guarantees of payment that will
rank equal to the Guarantors' senior debt in
right of payment and senior to the Guarantors'
subordinated debt in right of payment. The
Guarantees will be effectively subordinated in
right of payment to the secured debt of the
Guarantors to the same extent as the New Notes
are effectively subordinated to our secured
debt.

Optional Redemption.......... We can redeem the Notes at any time at a price
of 100% of the principal amount plus the
Applicable Premium (as defined on page ).
8
<PAGE> 15

Optional Redemption after
Public Equity Offerings.... At any time (which may be more than once) before
the third anniversary of the issue date of the
Old Notes, we can choose to buy back up to 25%
of the outstanding Notes with money that we or
our parent companies raise in one or more public
equity offerings, as long as we:

- pay 108% of the face amount of the Notes, plus
interest;

- we buy back the Notes within 90 days of the
completion of the public equity offering; and

- at least $562.5 million of the principal
amount of the Notes remain outstanding
afterwards.

Change of Control Offer...... If a "Change of Control" of the Company occurs
(as defined on page ), we must give holders
of the Notes an opportunity to sell us their
Notes at 101% of their face amount, plus accrued
interest.

We might not be able to pay you the required
price for New Notes you request us to purchase
at the time of a Change of Control because we
may also have to repay our senior credit
facility and may not have enough funds to repay
all of our senior debt at that time.

Asset Sale Proceeds.......... If we engage in certain asset sales, we must
generally either use the proceeds to repay our
senior credit facility or other senior debt,
invest the net cash proceeds from such sales in
our business within a period of time or make an
offer to purchase a principal amount of Notes
equal to the excess net cash proceeds from those
asset sales. The purchase price of the Notes in
that case would be 100% of their principal
amount, plus accrued and unpaid interest.

Certain Indenture
Provisions................... The indenture governing the Notes contains
covenants limiting our (and most of our
subsidiaries') ability to:

- incur additional debt or enter into sale and
leaseback transactions;

- pay dividends or distributions on capital
stock or repurchase capital stock;

- issue stock of subsidiaries;

- make certain investments;

- enter into transactions with affiliates;

- merge or consolidate with another company; and

- transfer and sell assets.

These covenants are subject to a number of
important limitations and exceptions and are
more fully described
9
<PAGE> 16

under "Description of the New Notes" beginning
on page .

Use of Proceeds.............. The Company will not receive any cash proceeds
from the issuance of the New Notes pursuant to
this Prospectus.

RISK FACTORS

We urge you to carefully review the Risk Factors beginning on page for a
discussion of factors you should consider before exchanging your Old Notes for
New Notes.
10
<PAGE> 17

SUMMARY PRO FORMA FINANCIAL INFORMATION

We have summarized below the unaudited combined pro forma financial information
of the Company for the year ended December 31, 1997 and for the nine months
ended September 30, 1998. The information should be read in conjunction with the
unaudited pro forma condensed financial statements included on Pages P-1 through
P-26 of this Prospectus and in conjunction with our historical financial
statements and related notes included on Pages F-1 through F-139 of this
Prospectus.

You should be aware that this pro forma information may not be indicative of
what actual results will be in the future or would have been for the periods
presented.

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1997 SEPTEMBER 30, 1998
-------------------------------------- --------------------------------------
COMPANY AS COMPANY AS
ADJUSTED FOR ADJUSTED FOR
THE THE
COMPANY COMPLETED COMPANY COMPANY COMPLETED COMPANY
HISTORICAL TRANSACTIONS PRO FORMA HISTORICAL TRANSACTIONS PRO FORMA
---------- ------------ ---------- ---------- ------------ ----------
(IN THOUSANDS EXCEPT MARGIN DATA)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net revenues....................... $582,078 $1,227,083 $1,308,652 $ 899,096 $1,059,774 $1,103,242
Operating expenses excluding
depreciation and amortization.... 316,248 688,503 733,677 491,924 571,272 590,454
Operating income (loss)............ 58,406 18,833 (5,735) 10,865 5,979 (13,192)
Interest expense, net.............. 83,095 327,008 375,440 135,709 236,668 273,332
Net loss........................... (18,844) (187,203) (230,179) (123,227) (131,291) (165,249)
Preferred stock dividends.......... 12,901 -- -- 17,601 -- --
Net loss attributable to common
stock............................ (31,745) (187,203) (230,179) (140,828) (131,291) (165,249)
OTHER DATA:
Broadcast cash flow(1)............. $265,830 $ 538,580 $ 574,975 $ 407,172 $ 488,502 $ 512,788
Broadcast cash flow margin......... 46% 44% 44% 45% 46% 46%
EBITDA(1).......................... $244,388 $ 495,588 $ 531,502 $ 381,984 $ 457,339 $ 481,625
Ratio of earnings to fixed
charges(2)....................... -- -- -- -- -- --
</TABLE>

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1998
-----------------------------------------
COMPANY
AS ADJUSTED
FOR THE
COMPANY COMPLETED COMPANY
HISTORICAL TRANSACTIONS PRO FORMA
---------- ------------ ----------
(IN THOUSANDS EXCEPT MARGIN DATA)
<S> <C> <C> <C>
BALANCE SHEET DATA (END OF PERIOD):
Working capital............................................. $ 199,325 $ 223,546 $ 234,423
Intangible assets, net...................................... 4,916,533 5,889,764 6,768,514
Total assets................................................ 5,905,378 7,037,617 7,789,523
Long-term debt.............................................. 3,018,000 4,145,280 4,844,407
Stockholder's equity........................................ 2,336,772 2,336,772 2,346,365
</TABLE>

11
<PAGE> 18

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

(1) Broadcast cash flow consists of operating income excluding depreciation,
amortization, corporate general and administrative expense, and other
non-cash and non-recurring charges. EBITDA consists of operating income
before depreciation and amortization, and other non-cash and non-recurring
charges. Although broadcast cash flow and EBITDA are not calculated in
accordance with generally accepted accounting principles, the Company
believes that broadcast cash flow and EBITDA are widely used as a measure of
operating performance. Nevertheless, these measures should not be considered
in isolation or as a substitute for operating income, cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. Broadcast cash flow and EBITDA do
not take into account the Company's debt service requirements and other
commitments and, accordingly, broadcast cash flow and EBITDA are not
necessarily indicative of amounts that may be available for reinvestment in
the Company's business or other discretionary uses. Not all companies
calculate broadcast cash flow and EBITDA in the same fashion and therefore
the information presented may not be comparable to other similarly titled
information of other companies.

(2) For purposes of this calculation, "earnings" consist of income (loss) before
income taxes and fixed charges. "Fixed charges" consist of interest,
amortization of debt issuance costs and the component of rental expense
believed by management to be representative of the interest factor thereon.
Earnings were insufficient to cover fixed charges by $6,692 and $91,518 for
the year ended December 31, 1997 and the nine months ended September 30,
1998, respectively. On a pro forma basis after giving effect to the
Completed Transactions as defined on page , financing transactions
undertaken by the Company and Chancellor Radio Broadcasting Company ("CRBC")
during 1997 and the 1998 Financing Transactions (as defined on page ),
earnings were insufficient to cover fixed charges by $290,821 and $202,406
for the year ended December 31, 1997 and the nine months ended September 30,
1998, respectively. On a pro forma basis after giving effect to the
transactions described in "Pro Forma Financial Information" beginning on
page P-1, earnings were insufficient to cover fixed charges by $362,464 and
$259,114 for the year ended December 31, 1997 and the nine months ended
September 30, 1998, respectively.
12
<PAGE> 19

RISK FACTORS

In addition to the other information set forth in this Prospectus, you should
carefully consider the following information about our business before
exchanging your Old Notes for New Notes.

SUBSTANTIAL INDEBTEDNESS OF THE COMPANY

We have a large amount of consolidated indebtedness when compared to the equity
of our stockholders. We are subject to the terms of a senior loan agreement and
various indentures relating to our outstanding senior subordinated notes. The
terms of the senior loan agreement and the various indentures limit, but do not
prohibit, the incurrence of additional indebtedness by us. Please be aware of
the following:

- - As of September 30, 1998, we had outstanding long-term indebtedness of
approximately $3.0 billion, an accumulated deficit of $317.5 million and
stockholder's equity of $2.3 billion.

- - As of September 30, 1998, on a pro forma basis after giving effect to the
transactions described in the "Pro Forma Financial Information" beginning on
page P-1, we would have had outstanding long-term debt of approximately $4.8
billion, an accumulated deficit of $307.9 million and stockholder's equity of
$2.3 billion. See "Pro Forma Financial Information" and "Capitalization."

- - In addition to the long-term indebtedness referred to above, we expect to
finance the acquisition of Petry Media Corporation (the "Petry Acquisition")
and the acquisition of Pegasus Broadcasting of San Juan, L.L.C. (the "Pegasus
Acquisition") through the incurrence of up to approximately $199.1 million in
additional long-term indebtedness.

Such a large amount of indebtedness could have negative consequences for us,
including without limitation, the following:

- - our ability to obtain financing in the future could be limited;

- - much of our cash flow will be dedicated to interest obligations and
unavailable for other purposes;

- - the high level of indebtedness limits our flexibility to deal with changing
economic, business and competitive conditions;

- - some of our borrowings are at variable rates of interest which makes us
vulnerable to increases in interest rates; and

- - certain of our agreements have many restrictive operating and financial
covenants with which we must comply.

Our failure to comply with the covenants could be an event of default and could
accelerate our payment obligations and, in some cases, could affect other
obligations with cross-default or cross-acceleration provisions.

Our ability to satisfy our payment obligations will depend, in large part, on
our performance. Our performance will ultimately be affected by general economic
and business factors, many of which will be outside of our control. We believe
that our cash

13
<PAGE> 20

flow combined with borrowings under our senior credit facility will be enough to
meet our expenses and interest obligations. However, if we cannot satisfy our
payment obligations, we will be forced to find alternative sources of funds by
selling assets, restructuring, refinancing debt or seeking additional equity
capital. There can be no assurance that any of these alternative sources would
be available on satisfactory terms or at all.

EFFECTIVE SUBORDINATION OF THE NOTES TO SECURED INDEBTEDNESS

Because the Notes are unsecured, the Notes will be effectively subordinated to
all of our secured debt to the extent of such security. Our senior credit
facility is presently secured by, among other things, a pledge of substantially
all of the equity interests of our subsidiaries. Other than the senior credit
facility, we do not presently have outstanding any material secured
indebtedness. In addition, the Guarantees will likewise be effectively
subordinated to all of the Guarantors' secured indebtedness to the extent of
such security.

The indenture governing the Notes permits the Company to incur substantial
additional senior indebtedness that could be secured by liens on the Company's
and its subsidiaries' assets. Accordingly, the Company may in the future incur
substantial additional secured indebtedness to which the Notes would be
effectively subordinated.

RESTRICTIONS IMPOSED ON THE COMPANY BY AGREEMENTS GOVERNING DEBT INSTRUMENTS

Our senior loan agreement, the indenture governing the Notes, and the various
indentures relating to our outstanding senior subordinated notes contain certain
covenants that restrict (or will restrict), among other things, our ability to
incur additional debt, incur liens, pay dividends or make certain types of
payments, sell certain assets, enter into certain transactions with affiliates,
enter into sale and leaseback transactions, conduct businesses other than the
ownership and operation of radio and television broadcast stations and
businesses related thereto, merge or consolidate with any other person or
dispose of all or substantially all of our assets. Also, our senior loan
agreement requires us to maintain certain financial ratios and satisfy financial
condition tests. Our ability to comply with the ratios and the tests will be
affected by events outside of our control and there can be no assurance that we
will meet those tests. A breach of any of the covenants or failure to meet the
tests could result in an event of default which would allow the lenders to
declare all amounts outstanding immediately due and payable. In the case of our
senior loan agreement, if we were unable to pay the amounts due, the lenders
could, subject to compliance with applicable FCC rules, proceed against the
collateral securing the indebtedness. If the amounts outstanding under the loan
agreement were accelerated, there can be no assurance that our assets would be
sufficient to repay the amount in full.

HISTORY OF NET LOSSES AND INSUFFICIENCY OF EARNINGS TO COVER FIXED CHARGES

In the past, we have experienced net losses as a result of significant interest
charges, non-recurring expenses and amortization charges relating to
acquisitions. Our net loss attributable to common stock for the years ended
December 31, 1995, 1996 and 1997 and the nine months ended September 30, 1998
was $5.9 million, $16.2 million, $31.7 million and $140.8 million, respectively.
On a pro forma basis, after giving effect to the transactions described in "Pro
Forma Financial Information" beginning on page P-1, the

14
<PAGE> 21

net loss attributable to common stock for the year ended December 31, 1997 and
the nine months ended September 30, 1998 would have been $230.2 million and
$165.2 million, respectively. Since acquisitions are a central focus of our
operating strategy, we expect the charges and expenses to have a negative impact
on our results.

DIFFICULTY OF INTEGRATING ACQUISITIONS AND ENTERING NEW LINES OF BUSINESS

We have recently acquired or are in the process of acquiring a number of
entities in various lines of business. Consequently, management's focus will be
on integrating many new acquisitions, learning new industries and conducting its
operations on a much larger scale. For the immediate future, management's focus
will be on the following:

- - Outdoor Advertising. Through our recent acquisitions of Martin Media and the
Outdoor Advertising division of Whiteco Industries, Inc. (the "Whiteco
Acquisition"), we have entered into billboard and other outdoor advertising.
Although management believes this new business is complementary to the
broadcasting business, management will be operating a business not previously
undertaken by it as well as integrating new employees.

- - Media Representation. Through our recent acquisition of Katz Media Group,
Inc., we have entered into the media representation business, and if we
complete the Petry Acquisition, we will expand this line of business. Although
management has experience in this line of business at the local level, it must
focus on operating the business and managing personnel on a national level.

- - New National Radio Network. Through The AMFM Radio Networks, we are operating
a new national radio network. Some of our stations have syndicated programs
created locally in the past, but we have never undertaken a radio network at a
national level. Management will focus on competing with other established
state and national radio networks in this regard.

We intend to continue to consider strategic acquisitions to expand or complement
our current businesses. The need for management to focus on acquisitions and the
integration of new businesses could divert the attention of management from
other general business concerns. We cannot be sure that management will be
successful in integrating acquisitions or new lines of business with its
existing businesses.

Our acquisition strategy involves other risks, including without limitation,
increasing our debt payment obligations and the potential loss of valuable
employees. The availability of additional financing cannot be assured and,
depending on the terms of the potential acquisitions, may be restricted by the
terms of our senior loan agreement and the various indentures relating to our
outstanding senior subordinated notes. There can be no assurance that any future
acquisitions will not have a material adverse effect on our financial condition
and results of operations.

COMPETITIVE NATURE OF RADIO BROADCASTING, OUTDOOR ADVERTISING AND MEDIA
REPRESENTATION

The radio broadcasting industry is very competitive. The success of each of our
stations is dependent, in large part, upon its audience rating and our share of
advertising revenue within each market. Our stations compete with other radio
stations in each market, as well

15
<PAGE> 22

as with other media. We also compete with other companies for acquisition
opportunities, and prices for stations have increased dramatically in recent
periods. Some of the other broadcasting companies may have greater access to
capital resources than we do. Also, if the trend towards consolidation in the
radio industry continues, certain competitors may emerge with more stations and
the ability to deliver larger audiences to potential advertisers. Our audience
ratings and market share are and will be subject to change, and any adverse
change in a particular market could have a material adverse effect on the
revenue of the stations located in that market. There can be no assurance that
any one of our radio stations will be able to maintain or increase its current
audience ratings or advertising market share.

Each of the radio broadcasting, outdoor advertising and media representation
industries are subject to competition from a variety of sources.

Radio Broadcasting Competition. In addition to competition from traditional
advertising media such as print, television and outdoor advertising, the radio
broadcasting industry is subject to competition from new media technologies that
are being developed and introduced such as the following:

- - The delivery of audio programming by cable television systems, direct
broadcasting satellite ("DBS") systems and other digital audio broadcasting
formats to local and national audiences.

- - The FCC has auctioned spectrum for a new satellite-delivered Digital Audio
Radio Service ("DARS"). These actions may result in the introduction of
several new satellite radio services with sound quality equivalent to compact
discs.

- - The introduction of In Band On Channel ("IBOC") digital radio. IBOC could
provide multi-channel, multi-format digital radio services in the same band
width currently occupied by traditional AM and FM radio services.

Outdoor Advertising Competition. Our outdoor advertising business faces
competition from various advertising companies and other media such as the
following:

- - radio and television advertising;

- - print media;

- - direct mail marketing; and

- - other "out-of-home" advertising media, which includes displays in shopping
malls, supermarkets, airports, sports stadia and arenas, movie theaters, and
on taxis, buses, subways and other forms of public transportation.

Media Representation Competition. The success of our media representation
operations depends on our ability to maintain and acquire representation
contracts with radio and television stations and cable systems, the inventory of
time it represents and the experience of our management and personnel. We
compete to gain client stations with other independent and network media
representatives and direct national advertising. We then compete to sell air
time to advertisers with the following:

- - newspapers;

- - magazines;

- - outdoor advertising;

16
<PAGE> 23

- - transit advertising;

- - yellow page directories; and

- - point of sale advertising.

POTENTIAL DELAY IN CONSUMMATION OF PENDING TRANSACTIONS DUE TO ANTITRUST REVIEW

As a result of the concentration of ownership in the radio broadcast industry,
the DOJ has been looking closely at acquisitions in the industry, including
certain of our transactions. The consummation of each of our pending
transactions is, and any of the future transactions contemplated by us will
likely be, subject to the notification filing requirements, applicable waiting
periods and possible review by the DOJ or the FTC under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). DOJ review of
certain transactions has caused, and may continue to cause, delays in
anticipated closings of certain transactions and, in some cases, may result in
attempts by the DOJ to enjoin such transactions or negotiate modifications to
the proposed terms. Such delays, injunctions or modifications could have a
negative effect on us and result in the abandonment of some otherwise attractive
opportunities.

The DOJ has stated publicly that it will look at some radio station acquisitions
more closely when they exceed established benchmarks. However, to date, the DOJ
has investigated transactions falling below the benchmarks and has cleared
transactions exceeding the benchmarks. Although we do not believe that our
acquisition strategy as a whole will be negatively affected in any material way
by antitrust review or by additional divestitures we may have to make as a
result of such review, there can be no assurance that this will be the case.

We have been dealing with the DOJ on the following pending acquisition:

- - Petry Acquisition. On June 3, 1998, the DOJ issued a second request for
additional information under the HSR Act to which we have responded. The
Company and Petry are still negotiating with the DOJ regarding this
transaction and have agreed to extend the waiting period under the HSR Act
pending completion of these discussions. Accordingly, at this time, we cannot
be sure of the terms on which this transaction will be completed, if at all.

LICENSING AND OWNERSHIP ISSUES RELATING TO FEDERAL REGULATION OF THE RADIO
BROADCASTING INDUSTRY

Licenses. The radio broadcasting industry is subject to extensive regulation by
the FCC under the Communications Act of 1934, as amended (the "Communications
Act"). Approval of the FCC is required for the issuance, renewal or transfer of
radio broadcast station operating licenses, including licenses involved in many
of our Pending Transactions. Our business is dependent upon its ability to hold
radio broadcasting licenses from the FCC that are issued for terms of up to
eight years. FCC regulation of licenses presents the following issues for us:

- - There can be no assurance that any of the stations' licenses will be renewed
at their expiration dates; and

- - if granted, the licenses may include conditions and qualifications that could
adversely affect our operations.

17
<PAGE> 24

Moreover, the laws, policies and regulations of the FCC may change significantly
over time and we cannot be sure whether those changes will have a negative
effect on our business.

Ownership. The Communications Act and the FCC rules impose specific limits on
the number of stations an entity can own in a single market. Compliance with the
FCC's multiple ownership rules is expected to cause us, as well as other
companies, to pass on certain acquisition opportunities we might otherwise
pursue. Compliance with these rules by third parties may also have a significant
impact on us as, for example, in precluding the consummation of swap
transactions that would cause such third parties to violate the multiple
ownership rules. The multiple ownership rules are as follows:

- - In markets with 45 or more stations, ownership is limited to eight stations,
no more than five of which can be AM or FM;

- - in markets with 30 to 44 stations, ownership is limited to seven stations, no
more than four of which can be AM or FM;

- - in markets with 15 to 29 stations, ownership is limited to six stations, no
more than four of which can be AM or FM; and

- - in markets with 14 or fewer stations, ownership is limited to no more than 50%
of the market's total and no more than three AM or FM stations.

In addition to our radio broadcast interests, the ownership interests of certain
of our directors may be attributed to us. For example, three of our directors
(Thomas O. Hicks, Lawrence D. Stuart, Jr. and Michael J. Levitt) are also among
the directors of Capstar Broadcasting Corporation ("Capstar"), an entity
Chancellor Media has agreed to acquire (the "Capstar Merger"). Capstar presently
owns or proposes to acquire over 355 stations serving 83 mid-sized markets
throughout the United States. Because of those directors' positions on the
Capstar board of directors, if any such broadcast interests overlap with our
directly-held radio broadcast interests in our markets, such interests are
combined with our interests in those markets when determining whether we comply
with the multiple ownership rules. Also, LIN Television Corporation ("LIN
Television"), the indirect operating subsidiary of Ranger Equity Holdings
Corporation ("LIN") (which has agreed to merge with Chancellor Media (the "LIN
Merger")), owns or operates twelve television stations in eight markets. Two of
LIN's directors (Messrs. Hicks and Levitt) are also our directors and,
accordingly, LIN's television broadcast interests are combined with our
broadcast interests for determining our compliance with multiple ownership
rules. In addition, Hicks, Muse, Tate & Furst, Incorporated ("Hicks Muse") and
four of our directors (Thomas O. Hicks, Lawrence D. Stuart, Jr., Michael J.
Levitt and John H. Massey) also have attributable interests in Sunrise
Broadcasting, Inc. ("Sunrise"), which owns or proposes to acquire a number of
television stations in several markets. Under the FCC's one-to-a-market rules, a
party may not have attributable interests in more than one television station or
radio stations and a television station in the same market unless a waiver is
granted by the FCC. As a result of these attributable interests, our future
acquisition strategy may be negatively affected. There can be no assurance that
these additional attributable interests will not have a negative effect on our
future acquisition strategy or on our business, financial condition and results
of operations.

In addition to its multiple ownership rules, the FCC has recently issued public
notices suggesting that it may examine and impose limits upon the advertising
revenue share

18
<PAGE> 25

acquired by one entity in a single market. It is not clear how the FCC will
proceed in this area or how any policy it may adopt will interact with the
review of similar issues by the DOJ or the FTC.

POTENTIAL LOSS OF ADVERTISING SPACE TO REGULATION OF OUTDOOR ADVERTISING

Outdoor advertising displays are subject to 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 have
adopted amortization ordinances under which, after the expiration of a certain
period of time, billboards must be removed at the owner's expense and without
the payment of consideration. 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.

Although we believe that our operations will not be materially affected by the
amortization ordinances even if they are enforced, we cannot be sure that we
will be successful in negotiating acceptable arrangements if our displays are
subject to removal or amortization, and what effect, if any, such regulations
may have on our operations. In addition, we are 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 in the past. Changes in laws and regulations affecting
outdoor advertising at any level of government could have a negative effect on
our outdoor advertising business. See "-- Potential Loss of Advertisers due to
Tobacco Industry Regulation" and "Business -- Government Regulation."

POTENTIAL LOSS OF ADVERTISERS DUE TO TOBACCO INDUSTRY REGULATION

Outdoor advertising of tobacco products is affected by federal, state and local
legislation and various regulations. Local and state governments have passed
ordinances or statutes to limit outdoor advertising of tobacco products.
Increasing political pressure will likely lead to the passage of additional
legislation and the adoption of additional regulations to limit the content and
placement of outdoor advertising relating to the sale of tobacco products. In
addition, it has been reported that certain cigarette manufacturers who are
defendants in numerous class action suits throughout the United States have
reached agreements for out of court settlements with respect to such suits that
is likely to include restrictions on billboard advertising by these and other
cigarette manufacturers.

We cannot determine the effect of these regulations or any legislation on our
outdoor advertising business and its overall financial position at this time. A
reduction in billboard advertising by the tobacco industry would cause an
immediate reduction in direct revenue from tobacco advertisers and
simultaneously increase the available space on the inventory of billboards in
the outdoor advertising industry. This could in turn result in a lowering of
rates in each of our markets or limit the ability of the industry as a whole to
increase rates for some period of time. Such a development could have an adverse
effect on our business.

19
<PAGE> 26

CONTROL OF THE COMPANY BY HICKS MUSE

Prior to the LIN Merger and the Capstar Merger, Thomas O. Hicks and affiliates
of Hicks Muse hold approximately 11.9% of the outstanding shares of Chancellor
Media common stock. Affiliates of Hicks Muse have a controlling interest in
Capstar and LIN and a large investment in Chancellor Media. Immediately
following the LIN Merger and the Capstar Merger and the issuance of Chancellor
Media common stock, it is expected that Mr. Hicks and affiliates of Hicks Muse
will control approximately 30.5% of the outstanding shares (26.0% on a
fully-diluted basis) of Chancellor Media common stock. Additionally, Messrs.
Hicks, Lawrence D. Stuart, Jr., and Michael J. Levitt, each directors of
Chancellor Media, are also principals or executive officers of Hicks Muse.
Accordingly, Mr. Hicks and Hicks Muse will continue to have a great deal of
influence over the management policies of Chancellor Media and all matters
submitted to a vote of the holders of Chancellor Media common stock. Also, the
combined voting power of Mr. Hicks and Hicks Muse may have the effect of
discouraging certain types of transactions involving an actual or potential
change of control of Chancellor Media.

POTENTIAL ADVERSE CONSEQUENCES TO HOLDERS OF THE NOTES IF A COURT FINDS A
FRAUDULENT CONVEYANCE

Various fraudulent conveyance laws have been passed for the protection of
creditors. These laws may be applied by a court to subordinate or avoid the
Notes or the Guarantees in favor of our other existing or future creditors or
those of the Guarantors.

If a court in a lawsuit on behalf of one of our unpaid creditors or a
representative of one of our creditors were to find that, at the time we issued
the Notes, we:

- - intended to hinder, delay or defraud any existing or future creditor or
considered insolvency with the intent to favor one or more creditors over
others; or

- - did not receive fair consideration or reasonably equivalent value for issuing
the Notes and we,

- were insolvent;

- were made insolvent by issuing the Notes;

- were engaged or about to engage in a business or transaction for which our
remaining assets would be unreasonably small to carry on our business; or

- intended to take on, or believed that we would take on, more debts than we
could pay,

such court could void our obligations under the Notes and void such
transactions. On the other hand, in such event, claims of holders of such Notes
could be subordinated to claims of our other creditors.

Our obligations under the Notes are guaranteed by each of the Guarantors. If a
court were to find that:

- - the Guarantee was taken on by the Guarantor with the intent to hinder, delay
or defraud any existing or future creditor or the Guarantor considered
insolvency with the intent to favor one or more creditors over others; or

20
<PAGE> 27

- - the Guarantor did not receive fair consideration or reasonably equivalent
value for issuing the Guarantee and the Guarantor,

- was insolvent;

- was made insolvent by issuing the Guarantee;

- was engaged or about to engage in a business or transaction for which its
remaining assets of the Guarantor would be unreasonably small to carry on
its business; or

- intended to take on, or believed that it would take on, more debts than it
could pay,

the court could void or subordinate the Guarantee in favor of the Guarantor's
creditors. Among other things, a legal challenge to any of the Guarantees based
on fraudulent conveyance grounds may focus on the benefit, if any, realized by a
Guarantor as a result of our issuance of the Notes.

If any Guarantee is avoided or deemed to be unenforceable, holders of the Notes
would not have any claim against that Guarantor. Such holders would only be our
creditors and creditors of the remaining Guarantors, if any. In such event, the
claims of the holders of the Notes against such Guarantor would be subject to
the prior payment of all liabilities and preferred stock claims of the
Guarantor. The Guarantors cannot be sure that there would be enough assets to
satisfy the claims of the holders of the Notes relating to any voided portion of
a Guarantee.

Based upon information currently available to us, we believe that the Notes and
the Guarantees are being incurred for proper purposes and in good faith. Also,
we believe that we and each of the Guarantors:

- - are solvent and will continue to be solvent after giving effect to the
issuance of the Notes and the Guarantees, as the case may be;

- - will have enough capital for carrying on its business after the issuance of
the Notes and the Guarantees, as the case may be; and

- - will be able to pay our debts.

DIFFICULTY OF SATISFYING PAYMENT OBLIGATIONS UPON A CHANGE OF CONTROL

If a Change of Control occurs, we may be required to make an offer to purchase
all of the Notes then outstanding. We would be required to purchase the Notes at
101% of their principal amount, plus accrued interest to the date of repurchase.
If a Change of Control occurs, we may also have to repay our senior credit
facility and may not have enough funds to repay all of our senior debt at that
time. If we are required to purchase the Notes, we would need to secure
third-party financing if we do not have available funds to meet our purchase
obligations. However, we cannot be sure that we would be able to secure such
financing on favorable terms, if at all.

Also, our financing arrangements may restrict our ability to repurchase the
notes, including pursuant to a Change of Control offer. For example, a Change of
Control will result in an event of default under the senior loan agreement and
may lead to an acceleration of other senior indebtedness, if any. In such event,
our senior loan agreement and any other senior indebtedness would be equal in
right of payment to the Notes. In addition, a Change of Control could require
the Company to offer to repurchase our existing senior subordinated

21
<PAGE> 28

notes. See "Description of the Notes -- Change of Control," and "Description of
Certain Indebtedness." The inability to repay senior indebtedness, if
accelerated, and to purchase all of the tendered Notes, would constitute an
event of default under the indenture governing the Notes.

LACK OF AN ESTABLISHED MARKET FOR THE NEW NOTES

Prior to the Offering, there has been no public market for the New Notes. We do
not plan on listing the New Notes on any securities exchange. The Initial
Purchasers have told us that they plan on making a market in the New Notes, but
they do not have to do so, and may discontinue such activities at any time.
Accordingly, we cannot determine:

- - the likelihood that an active market for the New Notes will develop;

- - the liquidity of any such market;

- - the ability of holders to sell their New Notes; or

- - the prices that they may obtain for their New Notes if sold.

Future trading prices for the New Notes will depend upon many factors,
including, among others, our operating results, the market for similar
securities and changing interest rates.

22
<PAGE> 29

USE OF PROCEEDS

We will not receive any cash proceeds from the issuance of the New Notes. In
consideration for issuing the New Notes as contemplated in this Prospectus, we
will receive in exchange Old Notes in like principal amount, which will be
cancelled and as such will not result in any increase in our indebtedness.

CAPITALIZATION

The following table sets forth the (i) actual capitalization of the Company at
September 30, 1998, (ii) such pro forma capitalization as adjusted to give
effect to the Completed Transactions and the 9% Notes Offering (as defined on
page ) and (iii) such pro forma capitalization as further adjusted to give
effect to the Pending Transactions (excluding the Petry Acquisition and the
Pegasus Acquisition). See "Pro Forma Financial Information" on page P-1.

<TABLE>
<CAPTION>
COMPANY AS ADJUSTED
COMPANY FOR THE COMPLETED COMPANY
HISTORICAL TRANSACTIONS PRO FORMA
----------- ------------------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt:
Senior Credit Facility(1).................. $ 1,268,000 $1,645,280 $2,344,407(2)
8% Senior Notes due 2008................... -- 750,000 750,000
9 3/8% Senior Subordinated Notes due
2004..................................... 200,000 200,000 200,000
8 3/4% Senior Subordinated Notes due
2007..................................... 200,000 200,000 200,000
10 1/2% Senior Subordinated Notes due
2007..................................... 100,000 100,000 100,000
8 1/8% Senior Subordinated Notes due
2007..................................... 500,000 500,000 500,000
9% Senior Subordinated Notes due 2008...... 750,000 750,000 750,000
----------- ---------- ----------
Total long-term debt................ 3,018,000 4,145,280 4,844,407(2)
Stockholder's equity:
Common stock............................... 1 1 1
Additional paid-in capital................. 2,654,273 2,654,273 2,654,273
Accumulated deficit........................ (317,502) (317,502) (307,909)
----------- ---------- ----------
Total stockholder's equity............... 2,336,772 2,336,772 2,346,365
----------- ---------- ----------
Total capitalization................ $ 5,354,772 $6,482,052 $7,190,772(2)
=========== ========== ==========
</TABLE>

23
<PAGE> 30

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

(1) The Senior Credit Facility (as defined on page ) currently provides for
a total commitment of $2.50 billion, consisting of a $1.60 billion reducing
revolving credit facility and a $900.0 million term loan facility. In
addition to the Senior Credit Facility, the Company expects to be able to
access the Additional Facility Indebtedness (as defined on page ) in
the amount of $250.0 million. Although there can be no assurance, the
Company believes that amounts available under the Senior Credit Facility and
the $250.0 million potentially available under the Additional Facility
Indebtedness will be used to finance the remaining Pending Transactions as
well as future acquisitions. Other potential sources of financing for the
Pending Transactions and future acquisitions include cash flow from
operations, additional debt or equity financings, the sale of non-core
assets or a combination of those methods. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

(2) Consistent with the presentation of the Company's pro forma financial
information included elsewhere herein, the pro forma capitalization does not
give effect to borrowings that the Company expects to make in order to
finance the Petry Acquisition and the Pegasus Acquisition. If the pro forma
capitalization is further adjusted to give effect to the Petry Acquisition
and the Pegasus Acquisition, the long-term debt amount reflected above under
the Senior Credit Facility would be approximately $2.5 billion, the total
long-term debt would be $5.0 billion and the total capitalization would be
$7.4 billion. The total cash financing required to consummate the Petry
Acquisition and the Pegasus Acquisition is expected to be approximately
$199.1 million.

24
<PAGE> 31

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

We are providing the following financial information to aid you in your analysis
of the Company and an investment in the New Notes. We derived this information
from our audited financial statements for 1993 through 1997 and our unaudited
financial statements for the nine months ended September 30, 1997 and 1998. The
information is only a summary and you should read it in conjunction with our
historical financial statements and related notes included on page F-1 through
F-139 of this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -----------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- --------- ---------- ----------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIO AND MARGIN DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Gross revenues.......................... $106,813 $125,478 $ 186,365 $ 337,405 $ 663,804 $ 382,994 $1,015,562
Net revenues............................ 93,504 109,516 162,931 293,850 582,078 333,283 899,096
Operating expenses excluding
depreciation and amortization......... 60,656 68,852 97,674 174,344 316,248 184,713 491,924
Depreciation and amortization........... 33,524 30,596 47,005 93,749 185,982 104,386 311,644
Corporate general and administrative.... 2,378 2,672 4,475 7,797 21,442 11,646 25,188
Other nonrecurring costs(1)............. 7,002 -- -- -- -- -- 59,475
-------- -------- --------- ---------- ----------- ---------- ----------
Operating income (loss)................. (10,056) 7,396 13,777 17,960 58,406 32,538 10,865
Interest expense, net................... 13,730 13,718 19,144 37,050 83,095 45,036 135,709
Other (income) expense, net(2).......... (3,037) (6,361) 291 -- (17,997) (18,380) (33,326)
-------- -------- --------- ---------- ----------- ---------- ----------
Income (loss) before income taxes and
extraordinary item.................... (20,749) 39 (5,658) (19,090) (6,692) 5,882 (91,518)
Income tax expense (benefit)............ -- -- 192 (2,896) 7,802 5,244 (15,380)
-------- -------- --------- ---------- ----------- ---------- ----------
Income (loss) before extraordinary
item.................................. (20,749) 39 (5,850) (16,194) (14,494) 638 (76,138)
Extraordinary loss, net of tax
benefit(3)............................ -- 3,585 -- -- 4,350 4,350 47,089
-------- -------- --------- ---------- ----------- ---------- ----------
Net loss................................ (20,749) (3,546) (5,850) (16,194) (18,844) (3,712) (123,227)
Preferred stock dividends(4)............ -- -- -- -- 12,901 2,779 17,601
-------- -------- --------- ---------- ----------- ---------- ----------
Net loss attributable to common stock... $(20,749) $ (3,546) $ (5,850) $ (16,194) $ (31,745) $ (6,491) $ (140,828)
======== ======== ========= ========== =========== ========== ==========
CONSOLIDATED BALANCE SHEET DATA (END OF
PERIOD):
Working capital......................... $ 7,873 $ 15,952 $ 30,556 $ 41,421 $ 112,644 $ 123,805 $ 199,325
Intangible assets, net.................. 212,517 233,494 458,787 853,643 4,404,443 3,828,014 4,916,533
Total assets............................ 283,505 297,990 552,347 1,020,959 4,961,477 4,213,376 5,905,378
Long-term debt (including current
portion)(5)........................... 152,000 174,000 201,000 358,000 2,573,000 1,857,000 3,018,000
Redeemable preferred stock.............. -- -- -- -- 331,208 338,566 --
Stockholder's equity.................... 120,968 112,353 304,577 549,411 1,480,207 1,508,666 2,336,772
OTHER FINANCIAL DATA:
Broadcast cash flow(6).................. $ 32,848 $ 40,664 $ 65,257 $ 119,506 $ 265,830 $ 148,570 $ 407,172
Ratio of earnings to fixed charges(7)... -- 1.0x -- -- -- -- --
</TABLE>

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

(1) Consists of a non-cash charge resulting from the grant of employee stock
options prior to Chancellor Media's initial public offering in 1993 and of a
one-time executive severance charge related to the resignation of Scott K.
Ginsburg as President and Chief Executive Officer of Chancellor Media,
Chancellor Mezzanine Holdings Corporation ("CMHC") and the Company in 1998
and new employment agreements entered into with certain members of executive
management.

25
<PAGE> 32

(2) Includes gain on the dispositions of assets of $3,392, $6,991, $18,380 and
$18,380 in 1993, 1994, 1997 and the nine months ended September 30, 1997,
respectively. Includes a gain on the disposition of representation contracts
of $29,767 and a gain from the WFLN Settlement (as defined on page ) of
$3,559 for the nine months ended September 30, 1998.

(3) In connection with its debt refinancing in 1994, 1997 and the nine months
ended September 30, 1997, the Company wrote off the unamortized balance of
deferred debt issuance costs of $3,585, $4,350 and $4,350, respectively, as
an extraordinary charge. For the nine months ended September 30, 1998, the
Company recorded an extraordinary charge of $47,089 (net of a tax benefit of
$25,357) consisting of premiums, estimated transaction costs and the
unamortized balance of deferred debt issuance costs related to the 12%
Debentures Tender Offer (as defined on page ) and the 12 1/4% Debentures
Tender Offer (as defined on page ).

(4) For the year ended December 31, 1997, represents preferred stock dividends
on the 12% Preferred Stock (as defined on page ) and the 12 1/4% Preferred
Stock (as defined on page ) for the period September 5, 1997 to December
31, 1997. For the nine months ended September 30, 1998, represents preferred
stock dividends on the 12% Preferred Stock for the period from January 1,
1998 through May 13, 1998 and on the 12 1/4% Preferred Stock for the period
from January 1, 1998 through July 23, 1998. Such preferred stock was issued
by the Company on September 5, 1997 in exchange for the substantially
identical securities of CRBC, which was merged into CMCLA.

(5) The current portion of the Company's long-term debt was $10,625, $4,000,
$4,000, $26,500, $0, $0 and $0 at December 31, 1993, 1994, 1995, 1996 and
1997 and September 30, 1997 and 1998, respectively.

(6) Broadcast cash flow consists of operating income excluding depreciation and
amortization, corporate general and administrative expense and other
non-cash and non-recurring charges. Although broadcast cash flow is not
calculated in accordance with generally accepted accounting principles, the
Company believes that broadcast cash flow is widely used as a measure of
operating performance. Nevertheless, this measure should not be considered
in isolation or as a substitute for operating income, cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. Broadcast cash flow does not take
into account the Company's debt service requirements and other commitments
and, accordingly, broadcast cash flow is not necessarily indicative of
amounts that may be available for reinvestment in the Company's business or
other discretionary uses. Not all companies calculate broadcast cash flow in
the same fashion and therefore the information presented may not be
comparable to similarly titled information of other companies.

(7) For purposes of this calculation, "earnings" consist of income (loss) before
income taxes and fixed charges. "Fixed charges" consist of interest,
amortization of debt issuance costs and the component of rental expense
believed by management to be representative of the interest factor thereon.
Earnings were insufficient to cover fixed charges by $20,749, $5,658,
$19,090 and $6,692 for the years ended December 31, 1993, 1995, 1996 and
1997, respectively, and by $91,518 for the nine months ended September 30,
1998.

26
<PAGE> 33

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company's results of operations from period to period have not historically
been comparable because of the impact of the various acquisitions and
dispositions that the Company has completed. For a description of the
transactions completed by the Company during 1997 and to date in 1998, see
"Business -- Recent Developments -- Transactions Completed Since January 1,
1997."

In the following analysis, management discusses the Company's broadcast cash
flow. The performance of a radio station group is customarily measured by its
ability to generate broadcast cash flow. The two components of broadcast cash
flow are gross revenues (net of agency commissions) and operating expenses
(excluding depreciation and amortization, corporate general and administrative
expense and non-cash and non-recurring charges). The primary source of revenues
is the sale of broadcasting time for advertising. The Company's most significant
operating expenses for purposes of the computation of broadcast cash flow are
employee salaries and commissions, programming expenses, and advertising and
promotion expenses. The Company strives to control these expenses by working
closely with local station management. The Company's revenues vary throughout
the year. As is typical in the radio broadcasting industry, the Company's first
calendar quarter generally produces the lowest revenues, and the fourth quarter
generally produces the highest revenues.

Although broadcast cash flow is not calculated in accordance with generally
accepted accounting principles, the Company believes that it is widely used as a
measure of operating performance. Nevertheless, this measure should not be
considered in isolation or as a substitute for operating income, cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. Broadcast cash flow does not take into
account the Company's debt service requirements and other commitments and,
accordingly, broadcast cash flow is not necessarily indicative of amounts that
may be available for dividends, reinvestment in the Company's business or other
discretionary uses. Not all companies calculate broadcast cash flow in the same
fashion and therefore the Company's broadcast cash flow information may not be
comparable to similarly titled information of other companies.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997

The Company's results of operations for the nine months ended September 30, 1998
are not comparable to the results of operations for the nine months ended
September 30, 1997 due to the impact of the Chancellor Merger (as defined on
page ), the Viacom Acquisition (as defined on page ), the Katz Acquisition
(as defined on page ), the Martin Acquisition (as defined on page ) and
various other acquisitions and dispositions discussed in "Business -- Recent
Developments."

Net revenues for the nine months ended September 30, 1998 increased 169.8% to
$899.1 million compared to $333.3 million for the nine months ended September
30, 1997. Operating expenses excluding depreciation and amortization for the
nine months ended

27
<PAGE> 34

September 30, 1998 increased 166.3% to $491.9 million compared to $184.7 million
for the nine months ended September 30, 1997. Operating income excluding
depreciation and amortization, corporate general and administrative expense and
other non-cash and non-recurring charges (broadcast cash flow) for the nine
months ended September 30, 1998 increased 174.1% to $407.2 million compared to
$148.6 million for the nine months ended September 30, 1997. The increase in net
revenues, operating expenses, and broadcast cash flow for the nine months ended
September 30, 1998 was primarily attributable to the net impact of the
Chancellor Merger, the Viacom Acquisition, the Katz Acquisition, the Martin
Acquisition and the various acquisitions and dispositions discussed elsewhere
herein, in addition to the overall net operational improvements realized by the
Company.

Depreciation and amortization for the nine months ended September 30, 1998
increased 198.5% to $311.6 million compared to $104.4 million for the nine
months ended September 30, 1997. The increase is primarily due to the impact of
the Chancellor Merger, the Viacom Acquisition, the Katz Acquisition and the
Martin Acquisition, as well as other acquisitions completed during 1997 and to
date in 1998.

Corporate general and administrative expenses for the nine months ended
September 30, 1998 increased 116.3% to $25.2 million compared to $11.6 million
for the nine months ended September 30, 1997. The increase is due to the growth
of the Company, and the related increase in properties and staff, primarily due
to recent acquisitions.

The executive severance charge of $59.5 million for the nine months ended
September 30, 1998 represents a one-time charge incurred in connection with the
resignation of Scott K. Ginsburg as President and Chief Executive Officer of the
Company.

As a result of the above factors, the Company realized operating income of $10.9
million for the nine months ended September 30, 1998 compared to $32.5 million
of operating income for the nine months ended September 30, 1997.

For the nine months ended September 30, 1998, the Company recorded a gain on
disposition of representation contracts of $29.8 million related to its media
representation operations. The Company entered into the media representation
business with the Katz Acquisition on October 28, 1997.

Interest expense, net for the nine months ended September 30, 1998 increased
201.3% to $135.7 million compared to $45.0 million for the same period in 1997.
The net increase in interest expense was primarily due to (i) additional bank
borrowings under the Senior Credit Facility required to finance the various
acquisitions discussed elsewhere herein offset by repayment of borrowings from
the net proceeds of the Company's various radio station dispositions and the
1998 Equity Offering (as defined on page ), (ii) the assumption of CRBC's
9 3/8% Senior Subordinated Notes due 2004 (the "9 3/8% Notes") and 8 3/4% Senior
Subordinated Notes due 2007 (the "8 3/4% Notes") upon consummation of the
Chancellor Merger on September 5, 1997, (iii) the assumption of Katz' 10 1/2%
Senior Subordinated Notes due 2007 (the "10 1/2% Notes") upon consummation of
the Katz Acquisition on October 28, 1997 and (iv) the issuance of the 8 1/8%
Senior Subordinated Notes due 2007 (the "8 1/8% Notes") by the Company on
December 22, 1997.

For the nine months ended September 30, 1997, other income of $18.4 million
represents a gain on the disposition of assets related to the dispositions of
WNKS-FM in Charlotte ($3.5 million), WPNT-FM in Chicago ($0.5 million), WEJM-FM
in Chicago ($9.3 million), the FCC authorizations and certain transmission
equipment previously used

28
<PAGE> 35

in the operation of KYLD-FM in San Francisco ($1.7 million) and WEJM-AM in
Chicago ($3.4 million). For the nine months ended September 30, 1998, other
income represents a gain from the WFLN Settlement of $3.6 million.

The income tax benefit for the nine months ended September 30, 1998 is comprised
of current state tax expense and a deferred federal income tax benefit.

Dividends on preferred stock of CMCLA were $17.6 million for the nine months
ended September 30, 1998, which represent dividends on CMCLA's 12% Exchangeable
Preferred Stock (the "12% Preferred Stock") for the period from January 1, 1998
through May 13, 1998 and on CMCLA's 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock (the "12 1/4% Preferred Stock") for the period from
January 1, 1998 to July 23, 1998, each issued in September 1997 as part of the
Chancellor Merger. On May 13, 1998, CMCLA exchanged all shares of the 12%
Preferred Stock for its 12% Debentures (as defined on page 44) and on July 23,
1998, CMCLA exchanged all shares of the 12 1/4% Preferred Stock for its 12 1/4%
Debentures. The 12% Debentures and 12 1/4% Debentures (as defined on page 44)
were subsequently repurchased by CMCLA.

For the nine months ended September 30, 1997, the Company recorded an
extraordinary charge of $4.4 million (net of a tax benefit of $2.3 million)
consisting of the write-off of the unamortized balance of deferred debt issuance
costs related to the amendment and restatement of the Company's Senior Credit
Facility on April 25, 1997. For the nine months ended September 30, 1998, the
Company recorded an extraordinary charge of $47.1 million (net of a tax benefit
of $25.4 million) consisting of the premiums, estimated transaction costs and
the write-off of the unamortized balance of deferred debt issuance costs in
connection with the 12% Debentures Tender Offer and 12 1/4% Debentures Tender
Offer.

Dividends on Chancellor Media's preferred stock were $19.3 million for the nine
months ended September 30, 1998 compared to $5.7 million for the same period in
1997. The increase is due to dividends on the $3.00 Convertible Preferred Stock
issued in June 1997 and dividends on the 7% Convertible Preferred Stock issued
in September 1997 as part of the Chancellor Merger.

As a result of the above factors, the Company incurred a $160.1 million net loss
attributable to common stockholders for the nine months ended September 30, 1998
compared to a net loss attributable to common stockholders of $12.2 million for
the nine months ended September 30, 1997.

The basic and diluted loss per common share for the nine months ended September
30, 1998 was $1.17 compared to $0.14 for the nine months ended September 30,
1997.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

The Company's results of operations for the year ended December 31, 1997 are not
comparable to the results of operations for the year ended December 31, 1996 due
to the impact of the Chancellor Merger, the Viacom Acquisition, the Katz
Acquisition and various other station acquisitions and dispositions discussed in
"Business -- Recent Developments."

Net revenues for the year ended December 31, 1997 increased 98.1% to $582.1
million compared to $293.9 million for the year ended December 31, 1996.
Operating expenses excluding depreciation and amortization for 1997 increased
81.4% to $316.2 million

29
<PAGE> 36

compared to $174.3 million in 1996. Operating income excluding depreciation and
amortization, corporate general and administrative expense and other non-cash
and non-recurring charges (broadcast cash flow) for 1997 increased 122.4% to
$265.8 million compared to $119.5 million in 1996. The increase in net revenues,
operating expenses, and broadcast cash flow was primarily attributable to the
net impact of the various acquisitions and dispositions discussed elsewhere
herein, in addition to the overall net operational improvements realized by the
Company.

Depreciation and amortization for 1997 increased 98.4% to $186.0 million
compared to $93.7 million in 1996. The increase is primarily due to the impact
of the various acquisitions and dispositions discussed elsewhere herein.

Corporate general and administrative expenses for 1997 increased 175.0% to $21.4
million compared to $7.8 million in 1996. The increase is due to the growth of
the Company, and related increase in properties and staff, primarily due to
recent acquisitions.

As a result of the above factors, operating income for 1997 increased 225.2% to
$58.4 million compared to $18.0 million in 1996.

Interest expense for 1997 increased 126.6% to $85.0 million compared to $37.5
million in 1996. The net increase in interest expense was primarily due to (i)
additional bank borrowings under the Senior Credit Facility required to finance
the various acquisitions discussed elsewhere herein offset by repayment of
borrowings from the net proceeds of the Company's various radio station
dispositions, (ii) the assumption of the 9 3/8% Notes and the 8 3/4% Notes upon
consummation of the Chancellor Merger on September 5, 1997 and (iii) the
assumption of the 10 1/2% Notes upon consummation of the Katz Acquisition on
October 28, 1997.

The Company recorded a gain on disposition of assets of $18.4 million in 1997
related to the dispositions of WNKS-FM in Charlotte ($3.5 million), WPNT-FM in
Chicago ($0.5 million), WEJM-FM in Chicago ($9.3 million), WEJM-AM in Chicago
($3.4 million) and the FCC authorizations and certain transmission equipment
previously used in the operation of KYLD-FM in San Francisco ($1.7 million).

The provision for income tax expense of $7.8 million for the year ended December
31, 1997 is comprised of current federal and state income taxes of $6.8 million
and $4.8 million, respectively, and a deferred federal income tax benefit of
$3.8 million.

The Company recorded an extraordinary charge of $4.4 million (net of a tax
benefit of $2.3 million) in 1997, consisting of the write-off of the unamortized
balance of deferred debt issuance costs related to the amendment and restatement
of the Company's Senior Credit Facility on April 25, 1997.

Dividends on preferred stock were $12.9 million in 1997, representing dividends
on the 12 1/4% Preferred Stock and 12% Preferred Stock issued in September 1997
as part of the Chancellor Merger.

As a result of the above factors, the Company incurred a $31.7 million net loss
attributable to common stock in 1997 compared to a $16.2 million net loss in
1996.

30
<PAGE> 37

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

The Company's results of operations for the year ended December 31, 1996 are not
comparable to the results of operations for the year ended December 31, 1995 due
to the impact of the Company's acquisition of Pyramid Communications, Inc. on
January 17, 1996 (the "Pyramid Acquisition") and various other station
acquisitions and dispositions.

Net revenues for the year ended December 31, 1996 increased 80.4% to $293.9
million compared to $162.9 million for the year ended December 31, 1995.
Operating expenses excluding depreciation and amortization for 1996 increased
78.5% to $174.3 million compared to $97.7 million in 1995. Operating income
excluding depreciation and amortization, corporate general and administrative
expense and other non-cash and non-recurring charges (broadcast cash flow) for
1996 increased 83.1% or $54.2 million to $119.5 million compared to $65.3
million in 1995. The increase in net revenues, operating expenses, and broadcast
cash flow was primarily attributable to the impact of various station
acquisitions and dispositions, in addition to the overall net operational
improvements realized by the Company's radio stations.

Depreciation and amortization for 1996 increased 99.4% to $93.7 million compared
to $47.0 million in 1995. The increase represents additional depreciation and
amortization expenses due to the impact of recent acquisitions, offset by
decreases due to certain intangibles which became fully amortized in 1995 and
1996.

Corporate general and administrative expenses for 1996 increased 74.2% to $7.8
million compared to $4.5 million in 1995. The increase is due to the growth of
the Company, and related increase in properties and staff, primarily due to
recent acquisitions.

As a result of the above factors, operating income for 1996 increased 30.4% to
$18.0 million compared to $13.8 million in 1995.

Interest expense for 1996 increased 95.4% to $37.5 million compared to $19.2
million in 1995. The net increase in interest expense was primarily due to
additional bank borrowings required to finance the Pyramid Acquisition as well
as the other station acquisitions, offset by repayment of borrowings under the
Company's prior senior credit facility from the net proceeds of the offering in
October 1996 by Chancellor Media of 18,000,000 shares of its common stock, the
net proceeds of which Chancellor Media contributed to the Company, and an
overall decrease in the Company's borrowing rates.

The provision for income tax expense for the year ended December 31, 1996 is
comprised of current federal and state taxes of $.5 million and $1.0 million,
respectively, and a deferred federal income tax benefit of $4.4 million.

As a result of the above factors, the Company incurred a $16.2 million net loss
attributable to common stockholders in 1996 compared to a $5.9 million net loss
in 1995.

LIQUIDITY AND CAPITAL RESOURCES

Overview. The Company historically has generated sufficient cash flow from
operations to finance its existing operational requirements and debt service
requirements, and the Company anticipates that this will continue to be the
case. The Company historically has used the proceeds of bank debt and private
and public debt and equity offerings,

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supplemented by cash flow from operations not required to fund operational
requirements and debt service, to fund implementation of the Company's
acquisition strategy.

The total cash financing required to consummate the Pending Transactions is
expected to be $919.2 million. The Company expects to receive $21.0 million in
cash from the completion of the Chicago Disposition. Accordingly, the Company
will require at least $898.2 million in additional financing to consummate the
Pending Transactions. Although there can be no assurance, the Company expects
that $355.4 million of such amount will be required to be borrowed during the
first quarter of 1999 (for the Cleveland Acquisitions, as defined on page ,
and the Pegasus Acquisition), $90.0 million will be required to be borrowed
during the second quarter of 1999 (for the Phoenix Acquisition, as defined on
page ) and the remaining $344.3 million will be required to be borrowed for
the Capstar/SFX Transaction (as defined on page ) over the three year period
in which the Capstar/SFX Stations (as defined on page ) will be acquired. In
addition, financing of $129.5 million will be required if the Petry Acquisition
is consummated. Depending on the timing of the consummation of the Pending
Transactions, the Company may need to obtain additional financing.

The Company believes that amounts available under the Senior Credit Facility and
the $250.0 million potentially available under the Additional Facility
Indebtedness will be used to finance the remaining Pending Transactions as well
as future acquisitions. The Senior Credit Facility currently provides for a
total commitment of $2.50 billion, consisting of $1.60 billion reducing
revolving credit facility and a $900.0 million term loan facility. Other
potential sources of financing for the Pending Transactions and future
acquisitions include cash flow from operations, additional debt or equity
financings, the sale of non-core assets or a combination of those sources.

In addition to debt service requirements under the Senior Credit Facility, the
Company is required to pay interest on the existing senior subordinated notes.
Interest payment requirements of the Company on the existing senior subordinated
notes are $154.9 million per year. Interest payment requirements of the Company
on the Notes are $60.0 million per year. Cash dividend requirements of
Chancellor Media on its $3.00 Convertible Preferred Stock and its 7% Convertible
Preferred Stock are $25.7 million per year. Because Chancellor Media is a
holding company with no significant assets other than the common stock of CMHC.
Chancellor Media will rely solely on dividends from CMHC, which in turn is
expected to distribute dividends paid to it by the Company and other
subsidiaries to Chancellor Media, to permit Chancellor Media to pay cash
dividends on the $3.00 Convertible Preferred Stock and the 7% Convertible
Preferred Stock. The Senior Credit Facility, the indenture governing the Notes
and the indentures governing the existing senior subordinated notes limit, but
do not prohibit, the Company from paying such dividends to CMHC.

RECENTLY-ISSUED ACCOUNTING PRINCIPLES

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. This
Statement establishes standards for reporting information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial reports issued to
stockholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers.

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SFAS No. 131 is effective for fiscal years beginning after December 15, 1997.
Management does not anticipate that this Statement will have a significant
effect on the Company's consolidated financial statements.

In February 1998, the Financial Accounting Standards Board issued SFAS No. 132,
Employers' Disclosure about Pensions and Other Postretirement Benefits. This
Statement revises employers' disclosures about pensions and other postretirement
benefit plans. It does not change the measurement or recognition of those plans.
SFAS No. 132 is effective for fiscal years beginning after December 15, 1997.
Management does not anticipate that this Statement will have a significant
effect on the Company's consolidated financial statements.

In April 1998, Accounting Standards Executive Committee ("ACSEC") issued
Statement of Position ("SOP") No. 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") effective for fiscal years beginning after December 15,
1998. This SOP provides guidance on the financial reporting of start-up costs
and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. Initial application of SOP 98-5
should be reported as the cumulative effect of a change in accounting principle,
as described in Accounting Principles Board (APB) Opinion No. 20, "Accounting
Changes." When adopting this SOP, entities are not required to report the pro
forma effects of retroactive application. Management does not believe the
implementation of SOP 98-5 will have a material impact on the Company's
consolidated financial statements.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. SFAS No.
133 is effective for all fiscal quarters of all fiscal years beginning after
June 15, 1999. Management does not anticipate that this Statement will have a
material impact on the Company's consolidated financial statements.

YEAR 2000 ISSUE

The "Year 2000 Issue" is whether the Company's computer systems will properly
recognize date sensitive information when the year changes to 2000, or "00."
Systems that do not properly recognize such information could generate erroneous
data or cause a system to fail. The Company has conducted a comprehensive review
of its computer systems to identify the systems that could be affected by the
Year 2000 Issue and has developed an implementation plan. The Company uses
purchased software programs for a variety of functions, including general
ledger, accounts payable and accounts receivable accounting packages. The
companies providing these software programs are Year 2000 compliant, and the
Company has received Year 2000 compliance certificates from these software
vendors. The Company's Year 2000 implementation plan also includes ensuring that
all individual work stations and other equipment with embedded chips or
processors are Year 2000 compliant. The Company is in the process of reviewing
various modification and replacement plans related to the recent Whiteco
Acquisition and expects to complete its review by early 1999. Costs associated
with ensuring that the Company's existing systems are Year 2000 compliant and
replacing certain existing systems are currently expected to be approximately
$5.1 million, of which $0.3 million has been incurred to date. These cost
estimates are subject to change based on further analysis, and any change in
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such costs may be material. The Company believes that the Year 2000 Issue will
not pose significant operational problems for the Company's computer systems
and, therefore, will not have a material impact on the operations of the
Company.

In addition, the Company reviews the computer systems of companies it intends to
acquire in order to assess whether such systems are Year 2000 compliant. To the
extent such systems are not Year 2000 compliant, the Company will develop an
implementation plan to ensure such systems are Year 2000 compliant or will
convert such systems to the Company's computer systems which are Year 2000
compliant. There is no guarantee that the systems of companies to be acquired by
the Company in the future will be timely converted and would not have an adverse
effect on the operations of the Company.

The ability of third parties with whom the Company transacts business to
adequately address their Year 2000 issues is outside of the Company's control.
Therefore, there can be no assurance that the failure of such third parties to
adequately address their Year 2000 issues will not have a material adverse
effect on the Company's business, financial condition, cash flows and results of
operations. The Company expects to develop contingency plans intended to
mitigate any possible disruption in business that may result from certain of the
Company's systems or the systems of third parties that are not Year 2000
compliant.

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BUSINESS

The Company, an indirect wholly owned subsidiary of Chancellor Media, is a
diversified multi-media company that (i) owns and/or operates Chancellor Radio
Group ("CRG") which consists of 118 radio stations (including 13 stations
currently operated under time brokerage agreements) in 22 of the largest U.S.
markets and Puerto Rico, (ii) provides national media sales representation
("Media Representation") through Katz Media Group, Inc. ("Katz"), a wholly owned
subsidiary and (iii) has a significant and growing outdoor advertising presence
through Chancellor Outdoor Group ("COG"). Chancellor Media will also have a
meaningful presence in the television broadcasting sector through its recently
announced acquisition of LIN and an expanded presence in mid-sized markets
through its pending acquisition of Capstar. See "-- Recent Developments" and
"-- Pending Transactions of Chancellor Media."

CHANCELLOR RADIO GROUP

The Company's current radio station portfolio (including 13 stations currently
operated under time brokerage agreements) consists of 118 stations (89 FM and 29
AM), including a total of 15 markets in which the Company owns four or five FM
stations ("superduopolies"). The Company owns superduopolies in 11 of the
nation's 15 largest radio markets -- Los Angeles, New York, Chicago, San
Francisco, Dallas/Ft. Worth, Philadelphia, Washington, D.C., Houston, Detroit,
Denver and Minneapolis-St. Paul and in four other large markets -- Phoenix,
Pittsburgh, Orlando and Puerto Rico. Upon consummation of the Pending
Transactions, the Company will own 123 stations (92 FM and 31 AM) and will
increase its number of superduopolies to 16 with the addition of four FM and two
AM stations in Cleveland.

As a complement to its radio broadcasting operations, the Company formed a
national radio network, The AMFM Radio Networks, which began broadcasting
advertising over the Company's portfolio of stations and stations owned by
Capstar in January 1998. Management believes that The AMFM Radio Networks will
allow the Company to further leverage this broad station base, personalities and
advertising inventory by delivering a national audience of approximately 66
million listeners (including approximately 45 million listeners from the
Company's portfolio of stations) to network advertisers. The AMFM Radio Networks
has expanded through the acquisition of syndicated programming shows including
American Top 40 with Casey Kasem, Rockline, Modern Rock Live, Reelin' in the
Years and Live from the Pit.

The Company's radio station portfolio is geographically diversified and employs
a wide variety of programming formats, including adult contemporary,
contemporary hit radio, urban, jazz, country, oldies, news/talk, rock and
sports. Each of the Company's radio stations targets a specific demographic
audience within a market, with the majority of the stations appealing primarily
to 18 to 34 or 25 to 54 year old men and/or women, the demographic groups most
sought after by advertisers. Management believes that, because of the size and
diversity of its radio station portfolio, the Company is not unduly reliant on
the performance of any one station or market. No single market to be served by
the Company represented more than 9% of the Company's pro forma broadcast cash
flow for the nine months ended September 30, 1998 (excluding the Petry
Acquisition and the Pegasus Acquisition).

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MEDIA REPRESENTATION

The Company entered into the media representation business with the acquisition
of Katz on October 28, 1997. Katz is a full-service media representation firm
serving multiple types of electronic media, with leading market share in the
representation of radio and television stations and cable television systems.
Katz is retained on an exclusive basis by radio stations, television stations
and cable television systems in over 200 designated market areas throughout the
United States, including at least one radio or television station in each of the
50 largest designated market areas, to sell national spot advertising air time.
If the Petry Acquisition is consummated, the Company will expand its presence in
the television representation business.

CHANCELLOR OUTDOOR GROUP

In July 1998, the Company entered the outdoor advertising business with the
acquisition of Martin Media, an outdoor advertising company with over 14,500
billboards and outdoor displays in 12 states. As a result of the consummation of
the Whiteco Acquisition, the Chancellor Outdoor Group now owns and operates over
37,000 outdoor advertising display faces in 37 states and ranks among the top
five outdoor companies in the United States.

CONSOLIDATED COMPANY

On a pro forma basis after giving effect to the transactions described in "Pro
Forma Financial Information" beginning on page P-1, the Company would have had
net revenue and broadcast cash flow of approximately $1.1 billion and $512.8
million, respectively, for the nine months ended September 30, 1998, its pro
forma broadcast cash flow margin for such period would have been 46%, and
approximately 65% of pro forma net revenue for such period would have been
generated by markets in which the Company owns superduopolies. Furthermore, the
Company would have generated approximately 75% of its net revenue from radio
operations, approximately 11% from media representation operations and
approximately 14% from outdoor advertising operations. The Petry Acquisition and
the Pegasus Acquisition are excluded from the pro forma information included in
this Prospectus for a number of reasons including (a) uncertainties regarding on
what terms, and in some cases, whether such transaction will be consummated, (b)
whether such acquisition will be consummated by the Company or another
stand-alone entity formed by Chancellor Media, or (c) the availability of
appropriate financial information. In the opinion of management of the Company,
such information is not material to such pro forma presentations, either
individually or in the aggregate.

RECENT DEVELOPMENTS

TRANSACTIONS COMPLETED SINCE JANUARY 1, 1997

On January 31, 1997, the Company acquired WWWW-FM and WDFN-AM in Detroit from
affiliates of CRBC for $30.0 million in cash plus various other direct
acquisition costs. The Company had previously provided certain sales and
promotional functions to WWWW-FM and WDFN-AM under a joint sales agreement since
February 14, 1996 and subsequently operated the stations under a time brokerage
agreement since April 1, 1996.

On January 31, 1997, the Company acquired KKSF-FM and KDFC-FM/AM in San
Francisco from affiliates of the Brown Organization for $115.0 million in cash
plus various other direct acquisition costs. The Company had previously been
operating KKSF-FM and

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KDFC-FM/AM under a time brokerage agreement since November 1, 1996. On July 21,
1997, the Company sold KDFC-FM to Bonneville International Corporation
("Bonneville") for $50.0 million in cash. The assets of KDFC-FM were classified
as assets held for sale in connection with the purchase price allocation of the
acquisition of KKSF-FM and KDFC-FM/AM and no gain or loss was recognized by the
Company upon consummation of the sale.

On April 1, 1997, the Company acquired WJLB-FM and WMXD-FM in Detroit from
Secret Communications Limited Partnership ("Secret") for $168.0 million in cash
plus various other direct acquisition costs. The Company had previously been
operating WJLB-FM and WMXD-FM under time brokerage agreements since September 1,
1996.

On April 3, 1997, the Company exchanged WQRS-FM in Detroit (which the Company
acquired on April 3, 1997 from Secret for $32.0 million in cash plus various
other direct acquisition costs), to affiliates of Greater Media Radio, Inc.
("Greater Media") in return for WWRC-AM in Washington, D.C. (now known as
WTEM-AM) and $9.5 million in cash. The net purchase price to the Company of
WWRC-AM was therefore $22.5 million. The Company had previously been operating
WWRC-AM under a time brokerage agreement since June 17, 1996.

On May 1, 1997, the Company acquired WDAS-FM/AM in Philadelphia from affiliates
of Beasley FM Acquisition Corporation for $103.0 million in cash plus various
other direct acquisition costs.

On May 15, 1997, the Company exchanged five of its six stations in Charlotte,
North Carolina (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM) for two FM stations in
Philadelphia (WIOQ-FM and WUSL-FM) owned by EZ Communications, Inc. ("EZ") in
Philadelphia (the "Charlotte Exchange"), and also sold the Company's sixth radio
station in Charlotte, WNKS-FM, to EZ for $10.0 million in cash and recognized a
gain of $3.5 million.

On May 30, 1997, the Company acquired WPNT-FM in Chicago from affiliates of
Century Broadcasting Company for $75.7 million in cash (including $2.0 million
for the purchase of the station's accounts receivable) plus various other direct
acquisition costs. On June 19, 1997, the Company sold WPNT-FM in Chicago to
Bonneville for $75.0 million in cash and recognized a gain of $0.5 million.

On June 3, 1997, the Company sold WEJM-FM in Chicago to affiliates of Crawford
Broadcasting for $14.8 million in cash and recognized a gain of $9.3 million.

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assets of WJZW-FM, as well as the assets of WZHF-AM and WBZS-AM, which were also
sold on August 13, 1997, were accounted for as assets held for sale in
connection with the purchase price allocation of the Viacom Acquisition and no
gain or loss was recognized by the Company upon consummation of the sales.

On July 7, 1997, the Company sold the FCC authorizations and certain
transmission equipment previously used in the operation of KYLD-FM in San
Francisco to Susquehanna Radio Corporation ("Susquehanna") for $44.0 million in
cash and recognized a gain of $1.7 million. Simultaneously therewith, CRBC sold
the call letters "KSAN-FM" (which CRBC previously used in San Francisco) to
Susquehanna. On July 7, 1997, the Company and CRBC entered into a time brokerage
agreement to enable the Company to operate KYLD-FM on the frequency previously
assigned to KSAN-FM, and on July 7, 1997, CRBC changed the call letters of
KSAN-FM to KYLD-FM. Upon the consummation of the Chancellor Merger, the Company
changed the format of the new KYLD-FM to the format previously operated on the
old KYLD-FM.

On July 14, 1997, the Company completed the disposition of WLUP-FM in Chicago to
Bonneville for net proceeds of $80.0 million which were held by a qualified
intermediary pending the completion of the deferred exchange of WLUP-FM for
KZPS-FM and KDGE-FM in Dallas. On October 7, 1997, the Company applied the net
proceeds from the disposition of WLUP-FM of $80.0 million in cash, plus an
additional $3.5 million and various other direct acquisition costs, in a
deferred exchange of WLUP-FM for KZPS-FM and KDGE-FM in Dallas. The Company had
previously operated KZPS-FM and KDGE-FM under time brokerage agreements
effective August 1, 1997.

On July 21, 1997, the Company entered into a time brokerage agreement with CRBC
whereby the Company began managing certain limited functions of CRBC's stations
KBGG-FM, KNEW-AM and KABL-FM in San Francisco pending the consummation of the
Chancellor Merger (as defined herein), which occurred on September 5, 1997.

On August 13, 1997, the Company sold WBZS-AM and WZHF-AM in Washington, D.C.
(acquired as part of the Viacom Acquisition) and KDFC-AM in San Francisco to
affiliates of Douglas Broadcasting ("Douglas") for $18.0 million in the form of
a promissory note. The promissory note, as amended on May 1, 1998, bears
interest at 7 3/4% from the closing date through February 28, 1998 and at 10.0%
from March 1, 1998 through the remainder of the term of the note, with a balloon
principal payment due four years after closing. At closing, Douglas posted a
$1.0 million letter of credit for the benefit of the Company that will remain
outstanding until all amounts due under the promissory note are paid.

On August 27, 1997, the Company sold WEJM-AM in Chicago to Douglas for $7.5
million in cash and recognized a gain of $3.3 million.

On September 5, 1997, pursuant to an Amended and Restated Agreement and Plan of
Merger, dated as of February 19, 1997 and amended and restated on July 31, 1997
(the "Chancellor Merger Agreement"), among CBC, CRBC, Evergreen Media
Corporation ("Evergreen"), Evergreen Mezzanine Holdings Corporation ("EMHC"),
and Evergreen Media Corporation of Los Angeles ("EMCLA"), (i) CBC was merged
with and into EMHC, a direct, wholly-owned subsidiary of Evergreen, with EMHC
remaining as the surviving corporation and (ii) CRBC was merged with and into
EMCLA, a direct, wholly-owned subsidiary of EMHC with EMCLA remaining as the
surviving corporation (collectively, the "Chancellor Merger"). Upon consummation
of the Chancellor Merger,
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Evergreen was renamed Chancellor Media Corporation, EMHC was renamed Chancellor
Mezzanine Holdings Corporation and EMCLA was renamed Chancellor Media
Corporation of Los Angeles. Consummation of the Chancellor Merger added 52 radio
stations (36 FM and 16 AM) to the Company's portfolio of stations, including 13
stations in markets in which the Company previously operated. The total purchase
price allocated to net assets acquired was approximately $2.0 billion which
included (i) the conversion of each outstanding share of CBC's common stock into
0.9091 shares of Chancellor Media's common stock, resulting in the issuance of
34,617,460 shares of Chancellor Media's common stock at $15.50 per share, (ii)
the assumption of long-term debt of CRBC of $949.0 million which included $549.0
million of borrowings outstanding under the CRBC senior credit facility, $200.0
million of CRBC's 9 3/8% Notes and $200.0 million of CRBC's 8 3/4% Notes, (iii)
the issuance of 2,117,629 shares of CMCLA's 12% Preferred Stock in exchange for
CRBC's substantially identical securities with a fair value of $215.6 million
including accrued and unpaid dividends of $3.8 million, (iv) the issuance of
1,000,000 shares of CMCLA's 12 1/4% Preferred Stock in exchange for CRBC's
substantially identical securities with a fair value of $120.2 million including
accrued and unpaid dividends of $0.8 million, (v) the issuance of 2,200,000
shares of Chancellor Media's 7% Convertible Preferred Stock in exchange for
CBC's substantially identical securities with a fair value of $111.1 million
including accrued and unpaid dividends of $1.1 million, (vi) the assumption of
stock options issued to CBC stock option holders with a fair value of $35.0
million and (vii) estimated acquisition costs of $31.0 million.

On October 28, 1997, Chancellor Media and the Company acquired Katz, a
full-service media representation firm, in a tender offer transaction for a
total purchase price of approximately $379.1 million which included (i) the
conversion of each outstanding share of Katz Common Stock into the right to
receive $11.00 in cash, resulting in total cash payments of $149.6 million, (ii)
the assumption of long-term debt of Katz and its subsidiaries of $222.0 million
which included $122.0 million of borrowings outstanding under the Katz senior
credit facility and $100.0 million of 10 1/2% Notes of Katz Media Corporation (a
subsidiary of Katz) and (iii) estimated acquisition costs of $7.5 million (the
"Katz Acquisition").

On December 29, 1997, the Company acquired five radio stations from Pacific and
Southern Company, Inc., a subsidiary of Gannett Co., Inc., consisting of
WGCI-FM/AM in Chicago for $140.0 million, KKBQ-FM/AM in Houston for $110.0
million and KHKS-FM in Dallas for $90.0 million, for an aggregate purchase price
of $340.0 million in cash plus various other direct acquisition costs.

On January 30, 1998, the Company acquired KXPK-FM in Denver from Ever Green
Wireless LLC (which is unrelated to the Company) for $26.0 million in cash plus
various other direct acquisition costs, of which $1.7 million was previously
paid by CRBC as escrow funds and are classified as other assets at December 31,
1997. The Company had previously operated KXPK-FM under a time brokerage
agreement since September 1, 1997.

On April 3, 1998, the Company exchanged WTOP-AM in Washington, KZLA-FM in Los
Angeles and WGMS-FM in Washington plus $63.0 million in cash (including $3.0
million paid by the Company in escrow and classified as other assets at December
31, 1997) to Bonneville for WBIX-FM in New York, KLDE-FM in Houston and KBIG-FM
in Los Angeles (the "Bonneville Exchange"). The Company had previously operated
KLDE-FM

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and KBIG-FM under time brokerage agreements since October 1, 1997 and WBIX-FM
since October 10, 1997, and had sold substantially all of the broadcast time of
WTOP-AM, KZLA-FM and WGMS-FM to Bonneville since October 1, 1997.

On April 13, 1998, the Company and Secret entered into a settlement agreement
regarding WFLN-FM in Philadelphia. Previously in August 1996, the Company and
Secret had entered into an agreement under which the Company would acquire
WFLN-FM from Secret for $37.8 million in cash. In April 1997, the Company
entered into an agreement to sell WFLN-FM to Greater Media for $41.8 million in
cash. On July 16, 1997, Secret purported to terminate the sale of WFLN-FM to the
Company. The Company subsequently brought suit against Secret to enforce its
rights to acquire WFLN-FM. Pursuant to a court settlement entered in August 1997
and the settlement agreement between the Company and Secret entered on April 13,
1998, (i) Secret sold WFLN-FM directly to Greater Media for $37.8 million, (ii)
Greater Media deposited $4.1 million (the difference between the Company's
proposed acquisition price for WFLN-FM from Secret and the Company's proposed
sale price for WFLN-FM to Greater Media) with the court and (iii) the Company
received $3.5 million of such amount deposited by Greater Media with the court,
plus interest earned during the period which the court held such amounts (the
"WFLN Settlement"), and Secret received the balance of such amounts.

On May 29, 1998, as part of the Capstar/SFX Transaction, the Company exchanged
WAPE-FM and WFYV-FM in Jacksonville (valued for purposes of the Capstar/SFX
Transaction at $53.0 million) plus $90.3 million in cash to Capstar in return
for KODA-FM in Houston (the "Houston Exchange"). Furthermore, on May 29, 1998,
Capstar sold KKPN-FM in Houston (acquired by Capstar as part of Capstar's
acquisition of SFX Broadcasting, Inc. ("SFX")) due to the attributable ownership
of Hicks Muse in both Capstar and the Company in order to comply with the FCC's
multiple ownership limits. In connection with Capstar's sale of KKPN-FM, the
Company received a commission from Capstar of $1.7 million. On May 29, 1998, the
Company also provided a loan (the "Capstar Loan") to Capstar in the principal
amount of $150.0 million as part of the Capstar/SFX Transaction. The Capstar
Loan bears interest at the rate of 12% per annum (subject to increase in certain
circumstances), and is secured by a senior pledge of common stock of Capstar's
direct subsidiary. A portion of the Capstar Loan will be prepaid by Capstar in
connection with the Company's acquisition of, and the proceeds of such
prepayment would be used by the Company as a portion of the purchase price for,
each Capstar/SFX Station. Hicks Muse, which is a substantial shareholder of the
Company, controls Capstar, and certain officers and directors of the Company are
directors and/or executive officers of Capstar and/or Hicks Muse.

On June 1, 1998, the Company acquired WWDC-FM/AM in Washington, D.C. from
Capitol Broadcasting Company and its affiliates for $74.1 million in cash
(including $2.1 million for the purchase of the stations' accounts receivable)
plus various other direct acquisition costs, of which $4.0 million was
previously paid by the Company as escrow funds and are classified as other
assets at December 31, 1997 (the "Capitol Broadcasting Acquisition").

On May 1, 1998, the Company formed a new marketing group division in an effort
to enhance the revenues the Company derives from its sales promotion activities.
On June 1, 1998, the Company acquired Global Sales Development, Inc., a
consulting firm based in

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Richmond, Virginia, for $0.7 million in cash plus various other direct
acquisition costs to lead its marketing efforts for this new division.

On June 15, 1998, the Company's national radio network, The AMFM Radio Networks,
acquired the syndicated programming shows of Global Satellite Network for $14.0
million in cash plus various other direct acquisition costs. The syndicated
programming shows acquired include "Rockline", "Modern Rock Live", "Reelin' in
the Years" and the concert series "Live from the Pit".

On July 31, 1998, the Company acquired Martin Media and certain affiliated
companies ("Martin Media"), an outdoor advertising company with over 14,500
billboards and outdoor displays in 12 states serving 23 markets, for $591.7
million in cash plus working capital of $19.4 million subject to certain
adjustments and various other direct acquisition costs of approximately $10.0
million (the "Martin Acquisition").

On August 28, 1998, the Company acquired various syndicated programming shows of
Casey Kasem and the related programming libraries for $7.2 million in cash and
$7.0 million in the form of a note due August 2000 (the "Kasem Acquisition").

In September and November 1998, the Company acquired approximately 600
additional billboards and outdoor displays in various markets for approximately
$23.1 million in cash (the "Other Outdoor Acquisitions").

On October 9, 1998, the Company acquired approximately a 22.4% non-voting equity
interest in Z-Spanish Media Corporation ("Z Spanish Media") for approximately
$25.0 million in cash. Z Spanish Media, which is headquartered in Sacramento,
California, is the owner and operator of 22 Hispanic format radio stations in
California, Texas, Arizona and Illinois.

On October 23, 1998, the Company acquired Primedia Broadcast Group, Inc. and
certain of its affiliates, which own and operate eight FM stations in Puerto
Rico, for approximately $76.1 million in cash less working capital deficit of
$1.3 million plus various other direct acquisition costs.

On November 13, 1998, the Company acquired approximately 1,000 display faces
from Kunz & Company for $33.3 million in cash plus various other direct
acquisition costs (the "Kunz Option"). Martin had previously paid $6.0 million
in cash to Kunz & Company on July 31, 1997. Martin began operating these 1,000
display faces under a management agreement effective July 31, 1997. In
connection with the acquisition of the Kunz & Company display faces, Chancellor
Media entered into a consent decree with the DOJ pursuant to which the Company
has agreed to divest approximately 130 display faces in the near future.

On December 1, 1998, the Company acquired the assets of the Outdoor Advertising
division of Whiteco Industries, Inc., an outdoor advertising company with over
22,000 billboards and outdoor displays in 34 states, for $930.0 million in cash
plus working capital and various other direct acquisition costs. In connection
with the Whiteco Acquisition, Chancellor Media entered into a consent decree
with the DOJ pursuant to which the Company has agreed to divest approximately
250 billboards in the near future.

The foregoing transactions (excluding the Other Outdoor Acquisitions and the
Kasem Acquisition) are collectively referred to herein as the "Completed
Transactions."

41
<PAGE> 48

PENDING TRANSACTIONS OF CMCLA

On February 20, 1998, the Company entered into an agreement to acquire from
Capstar KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and KQUE-AM in
Houston, KPLN-FM and KYXY-FM in San Diego and WDRV-FM, WJJJ-FM, WXDX-FM and
WDVE-FM in Pittsburgh (collectively, the "Capstar/ SFX Stations") for an
aggregate purchase price of approximately $637.5 million in a series of
purchases and exchanges over a period of three years (the "Capstar/SFX
Transaction"). The Capstar/SFX Stations were acquired by Capstar as part of
Capstar's acquisition of SFX on May 29, 1998. On May 29, 1998, the Company
completed the Houston Exchange and began operating the remaining ten Capstar/SFX
Stations under time brokerage agreements. The purchase price for the remaining
ten Capstar/ SFX Stations will be approximately $494.3 million. The Company is
currently assessing whether the terms of the Capstar/SFX Transaction will be
modified upon the consummation of the Capstar Merger by Chancellor Media.

On April 8, 1998, the Company entered into an agreement to acquire Petry Media
Corporation, a leading independent television representation firm. The agreement
currently provides for a purchase price of $129.5 million in cash. On June 3,
1998, the DOJ issued a second request for additional information under the HSR
Act in connection with the Petry Acquisition to which the Company has responded.
The Company and Petry are still negotiating with the DOJ regarding this
transaction and have agreed to extend the waiting period under the HSR Act
pending completion of these discussions. Accordingly, at this time, the Company
cannot be sure of the terms on which this transaction will be completed, if at
all.

On August 11, 1998, the Company entered into agreements to acquire four FM and
two AM radio stations in Cleveland for an aggregate purchase price of
approximately $275.0 million in cash plus various other direct acquisition costs
(the "Cleveland Acquisitions"). The Cleveland Acquisitions consist of the
purchase by the Company of (i) WDOK-FM and WRMR-AM from Independent Group
Limited Partnership, (ii) WZAK-FM from Zapis Communications, (iii) Zebra
Broadcasting Corporation which owns WZJM-FM and WJMO-AM and (iv) Wincom
Broadcasting Corporation which owns WQAL-FM. The consummation of each of the
Cleveland Acquisitions (other than the Wincom Acquisition) is contingent upon
the consummation of each of the other Cleveland Acquisitions (other than the
Wincom Acquisition). The Company began operating WQAL-FM under a time brokerage
agreement effective October 1, 1998. Although there can be no assurance, the
Company expects that the Cleveland Acquisitions will be consummated in the first
quarter of 1999.

On August 20, 1998, the Company entered into an agreement to sell WMVP-AM in
Chicago to ABC, Inc. for $21.0 million in cash (the "Chicago Disposition"). The
Company entered into a time brokerage agreement to sell substantially all of the
broadcast time of WMVP-AM effective September 10, 1998. Although there can be no
assurance, the Company expects that the Chicago Disposition will be consummated
in the fourth quarter of 1998.

On September 3, 1998, the Company entered into an agreement to acquire Pegasus,
a television broadcasting company which owns a television station in Puerto
Rico, for approximately $69.6 million in cash. Although there can be no
assurance, the Company expects that the Pegasus Acquisition will be consummated
in the first quarter of 1999. In

42
<PAGE> 49

connection with the LIN Merger, the Company may assign its rights under its
agreement with Pegasus to LIN.

On September 15, 1998, the Company entered into an agreement to acquire KKFR-FM
and KFYI-AM in Phoenix from The Broadcast Group, Inc. for $90.0 million in cash
(the "Phoenix Acquisition"). The Company began operating KKFR-FM and KFYI-AM
under a time brokerage agreement effective November 5, 1998. Although there can
be no assurance, the Company expects that the Phoenix Acquisition will be
consummated in the second quarter of 1999.

The foregoing transactions are collectively referred to herein as the "Pending
Transactions." Consummation of each of the Pending Transactions discussed above
is subject to various conditions, including, in certain cases, approval from the
FCC and the expiration or early termination of any waiting period required under
the HSR Act. Except as described above, the Company believes that such
conditions will be satisfied in the ordinary course, but there can be no
assurance that this will be the case.

PENDING TRANSACTIONS OF CHANCELLOR MEDIA

On July 7, 1998, Chancellor Media entered into an agreement whereby the ultimate
parent of LIN will merge into Chancellor Media. Pursuant to this agreement,
Chancellor Media will issue .0300 shares of Chancellor Media common stock for
each share of LIN's common stock resulting in the issuance of approximately 17.7
million shares (comprised of approximately 16.2 million newly issued shares, the
assumption of LIN phantom stock units representing approximately 0.4 million
shares and the assumption of LIN options representing the right to purchase
approximately 1.1 million shares). Upon consummation of the LIN Merger, it is
expected that LIN will own or operate 12 television stations in eight markets in
the United States. Upon consummation of the LIN Merger, LIN will be operated as
a separate, stand-alone company from CMCLA. Accordingly, the assets, liabilities
and results of operations of LIN will not be reflected in the consolidated
financial statements of the Company. Although there can be no assurance,
Chancellor Media expects that the LIN Merger will be consummated in the first
quarter of 1999.

On August 26, 1998, Chancellor Media and Capstar entered into an agreement to
merge in a stock-for-stock transaction that will create the nation's largest
radio broadcasting entity. Pursuant to this agreement, Chancellor Media will
acquire Capstar in a reverse merger in which Capstar will be renamed Chancellor
Media Corporation. Each share of Chancellor Media common stock will represent
one share in the combined entity. Each share of Capstar common stock will
represent 0.480 shares of common stock in the combined entity, subject to an
upward adjustment not to exceed 0.025 shares to the extent that Capstar's 1998
cash flow from specified assets exceeds certain specified targets. Upon
consummation of its pending transactions, Capstar will own and operate more than
355 radio stations serving 83 mid-sized markets nationwide. Upon consummation of
the Capstar Merger, Capstar's radio stations will be operated by stand-alone
companies which are separate from CMCLA and its subsidiaries. Accordingly, the
assets, liabilities, and results of operations of Capstar will not be reflected
in the consolidated financial statements of the Company. Although there can be
no assurance, Chancellor Media expects that the Capstar Merger will be
consummated in the second quarter of 1999.

43
<PAGE> 50

1998 FINANCING TRANSACTIONS

On March 13, 1998, Chancellor Media completed an offering of 21,850,000 shares
of its common stock (the "1998 Equity Offering"). The net proceeds from the 1998
Equity Offering of approximately $994.6 million were contributed to the Company
and were used to reduce bank borrowings under the revolving credit portion of
the Senior Credit Facility and the excess proceeds were initially invested in
short-term investment grade securities. The Company subsequently used the excess
proceeds for general corporate purposes, including the financing of the
Bonneville Exchange, the Capstar Loan and a portion of the Houston Exchange.

On May 8, 1998, the Company completed a consent solicitation (the "12% Preferred
Stock Consent Solicitation") to modify certain timing restrictions on its
ability to exchange all shares of its 12% Preferred Stock for its 12%
Subordinated Exchange Debentures due 2009 (the "12% Debentures"). Consenting
holders of 12% Preferred Stock received payments of $0.05 per share of 12%
Preferred Stock. On May 13, 1998, the Company exchanged the shares of 12%
Preferred Stock for 12% Debentures (the "12% Exchange"). In connection with the
12% Preferred Stock Consent Solicitation and 12% Exchange, the Company incurred
approximately $0.3 million in transaction costs which were recorded as deferred
debt issuance costs.

On June 10, 1998, the Company completed a cash tender offer (the "12% Debentures
Tender Offer") for all of its 12% Debentures for an aggregate repurchase cost of
$262.5 million which included (i) the principal amount of the 12% Debentures of
$211.8 million, (ii) premiums on the repurchase of the 12% Debentures of $47.8
million, (iii) accrued and unpaid interest on the 12% Debentures from May 14,
1998 through June 10, 1998 of $2.0 million and (iv) estimated transaction costs
of $1.0 million. In connection with the 12% Debentures Tender Offer, the Company
recorded an extraordinary charge of $31.9 million (net of a tax benefit of $17.2
million) consisting of the premiums, estimated transaction costs and the
write-off of the unamortized balance of deferred debt issuance costs.

On July 20, 1998, the Company completed a consent solicitation (the "12 1/4%
Preferred Stock Consent Solicitation") to modify certain timing restrictions on
its ability to exchange all shares of its 12 1/4% Preferred Stock for its
12 1/4% Subordinated Exchange Debentures due 2008 (the "12 1/4% Debentures").
Consenting holders of 12 1/4% Preferred Stock received payments of $0.05 per
share of 12 1/4% Preferred Stock. On July 23, 1998, the Company exchanged the
shares of 12 1/4% Preferred Stock for 12 1/4% Debentures (the "12 1/4%
Exchange"). In connection with the 12 1/4% Preferred Stock Consent Solicitation
and 12 1/4% Exchange, the Company incurred approximately $0.2 million in
transaction costs which were recorded as deferred debt issuance costs.

On August 19, 1998, the Company completed a cash tender offer (the "12 1/4%
Debentures Tender Offer") for all of its 12 1/4% Debentures for an aggregate
repurchase cost of $144.5 million which included (i) the principal amount of the
12 1/4% Debentures of $119.4 million, (ii) premiums on the repurchase of the
12 1/4% Debentures of $22.7 million, (iii) accrued and unpaid interest on the
12 1/4% Debentures from August 16, 1998 through August 19, 1998 of $1.8 million
and (iv) estimated transaction costs of $0.6 million. In connection with the
12 1/4% Debentures Tender Offer, the Company recorded an extraordinary charge of
$15.2 million (net of a tax benefit of $8.2 million) consisting of

44
<PAGE> 51

the premiums, estimated transaction costs and the write-off of the unamortized
balance of deferred debt issuance costs.

On September 30, 1998, the Company issued $750.0 million aggregate principal
amount of the 9% Notes for net proceeds of approximately $730.0 million. The net
proceeds from the 9% Notes will be used to finance a portion of the Company's
Pending Transactions. Prior to consummation of the Pending Transactions, the
Company used the net proceeds to temporarily reduce borrowings outstanding under
the revolving credit portion of the Senior Credit Facility.

On November 17, 1998, the Company issued $750.0 million aggregate principal
amount of the Old Notes for net proceeds of approximately $730.0 million. The
net proceeds from the Original Offering will be used to reduce bank borrowings
under the revolving credit portion of the Senior Credit Facility and the excess
proceeds will be invested in short-term investment grade securities, pending use
for general corporate purposes.

The foregoing transactions are referred to herein as the "1998 Financing
Transactions."

OTHER TRANSACTIONS

On July 10, 1998, Chancellor Media entered into an agreement to acquire a 50%
economic interest in Grupo Radio Centro, S.A. de C.V. ("GRC"), an owner and
operator of radio stations in Mexico, for approximately $120.5 million in cash
and $116.5 million in Chancellor Media Common Stock. On October 15, 1998,
Chancellor Media announced that it had provided notice to GRC that it was
terminating the acquisition agreement in accordance with its terms. Chancellor
Media has received notice from GRC requesting arbitration under the terms of the
acquisition agreement of allegations that Chancellor Media wrongfully terminated
that agreement. Chancellor Media believes that it had a proper basis for
terminating the agreement in accordance with its terms and intends to contest
these allegations vigorously.

45
<PAGE> 52

RADIO BROADCASTING

The following table sets forth selected information with respect to the
portfolio of radio stations that are owned by the Company as of December 15,
1998 or would be owned upon consummation of the Pending Transactions (subject to
any divestitures required by the FCC and/or the DOJ as a condition to approving
any of the Pending Transactions).

New York, NY........ 2 WLTW-FM 5.5 Soft Adult Contemporary Persons 25-54 2
WKTU-FM 3.9 Rhythmic Contemporary Persons 25-54 6
Hits
WHTZ-FM 4.6 Contemporary Hit Radio Persons 18-34 4
WMGA-FM(5) 1.6 Jamming Oldies Persons 25-49 13
WAXQ-FM 1.7 Classic Rock Persons 25-54 15

Chicago, IL......... 3 WGCI-FM 8.0 Urban Contemporary Persons 18-34 1
WNUA-FM 4.3 Smooth Jazz Persons 25-54 3
WLIT-FM 3.8 Soft Adult Contemporary Persons 25-54 7
WVAZ-FM 4.9 Adult Urban Contemporary Persons 25-54 1
WRCX-FM(6) 2.0 Jamming Oldies Women 25-54 4
WGCI-AM(7) 1.2 Gospel Persons 25-54 21
WMVP-AM+ 0.7 Sports/Talk, Comedy Men 25-54 23
San Francisco, CA... 4 KYLD-FM 4.4 Contemporary Hits Persons 18-34 1
Radio/Dance
KMEL-FM 2.9 Contemporary Hits Persons 18-34 4
KKSF-FM 3.0 Smooth Jazz Persons 25-54 4
KABL-AM 3.6 Adult Standards Persons 35-64 14
KISQ-FM 3.4 Hit Base R&B Adult Persons 25-54 2
Contemporary
KIOI-FM 2.9 Adult Contemporary Women 25-54 3
KNEW-AM(8) 0.7 Adult Contemporary Women 25-54 46
Dallas, TX.......... 5 KHKS-FM 7.7 Top 40 Women 18-34 1
KZPS-FM 4.0 Classic Rock Persons 25-54 4
KDGE-FM 2.3 Alternative Rock Persons 18-34 6
KSKY-AM N/M Southern Gospel N/M N/M
Music/Religious
KBFB-FM* 2.4 Soft Rock Persons 25-54 16
KTXQ-FM*(9) 2.1 Jamming Oldies Persons 25-54 19
Philadelphia, PA.... 6 WDAS-FM 5.8 Urban Contemporary Persons 25-54 1
WUSL-FM 4.7 Urban Contemporary Women 18-34 1
WJJZ-FM 4.1 Smooth Jazz Persons 35-54 4
WIOQ-FM 4.0 Contemporary Hit Radio Persons 18-34 3
WYXR-FM 3.1 Hot Adult Contemporary Women 18-49 5
WDAS-AM 1.0 Gospel N/M N/M
</TABLE>

46
<PAGE> 53

<TABLE>
<CAPTION>
RANKING OF
STATION STATION RANKING
MARKET BY AUDIENCE TARGET IN TARGET
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
--------- ---------- ------- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Washington, D.C..... 7 WMZQ-FM 4.2 Country Persons 25-54 8
WASH-FM 4.0 Adult Contemporary Women 25-54 3
WBIG-FM 4.5 Oldies Persons 25-54 3
WGAY-FM 3.2 Adult Contemporary Persons 35-64 10
WTEM-AM 1.1 Sports/Talk Men 18-49 17
WWRC-AM 0.4 Talk Persons 35-64 28
WWDC-FM 3.3 Album Oriented Rock Persons 18-34 6
WWDC-AM 1.0 Music of Your Life Persons 55+ 6
Houston, TX......... 8 KKBQ-FM 3.7 Fresh Country Persons 25-54 10
KLDE-FM 4.3 Oldies Persons 25-54 5
KLOL-FM 3.5 Rock Men 18-34 3
KTRH-AM 4.1 News/Sports Men 25-54 9
KBME-AM 1.8 Popular Standards Persons 35-64 16
KODA-FM 6.4 Adult Contemporary Persons 25-54 1
KKRW-FM*(10) 3.3 Classic Rock Persons 25-54 8
KQUE-AM*(10) 0.1 Classic Rock Persons 25-54 35
Atlanta, GA......... 9 WFOX-FM 4.0 Oldies Persons 25-54 10
Boston, MA.......... 10 WJMN-FM 6.9 Contemporary Hits Persons 18-34 2
Radio/Rhythmic
WXKS-FM 5.6 Contemporary Hits Women 25-34 1
Radio/Top 40
WXKS-AM 2.3 Bloomberg News/Music Women 45-54 10
Memory
Detroit, MI......... 11 WJLB-FM 7.1 Urban Contemporary Persons 18-34 1
WNIC-FM 8.0 Adult Contemporary Women 25-54 1
WKQI-FM 4.6 Hot Adult Contemporary Women 25-54 4
WMXD-FM 3.6 Adult Urban Contemporary Persons 25-54 8
WWWW-FM 4.0 Country Women 25-54 6
WDFN-AM 1.5 Sports Men 25-49 8
WYUR-AM 0.4 Nostalgic N/M N/M
Miami/Ft.
Lauderdale, FL..... 12 WEDR-FM 7.4 Urban Contemporary Persons 25-54 1
WVCG-AM N/M Brokered(11) N/M N/M
Denver, CO.......... 14 KXKL-FM 4.9 Oldies Persons 25-54 5
KALC-FM 5.1 Hot Adult Contemporary Persons 18-34 1
KIMN-FM 3.5 70's Oldies Persons 25-54 11
KXPK-FM 2.9 Adult Modern Rock Persons 18-49 12
KVOD-FM 1.7 Classical Persons 25-54 20
KRRF-AM 0.8 Talk Men 25-54 18
</TABLE>

47
<PAGE> 54

<TABLE>
<CAPTION>
RANKING OF
STATION STATION RANKING
MARKET BY AUDIENCE TARGET IN TARGET
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
--------- ---------- ------- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Minneapolis/St.
Paul, MN........... 15 KEEY-FM 6.7 Country Persons 25-54 3
KDWB-FM 7.9 Contemporary Hit Radio Persons 18-34 2
KQQL-FM 5.1 Oldies Persons 25-54 6
KTCZ-FM 4.7 Progressive Album Rock Men 25-49 2
WRQC-FM 3.2 Active Rock Men 18-34 3
KFAN-AM 2.3 Sports Men 18-49 7
KXBR-AM 0.5 Classic Country Persons 35-64 14
Phoenix, AZ......... 16 KOY-AM 3.9 Adult Standards Persons 35-64 14
KMLE-FM 5.3 Country Persons 25-54 2
KOOL-FM 4.0 Oldies Persons 25-54 6
KYOT-FM 4.3 Contemporary Jazz Persons 25-54 7
KZON-FM 3.8 Alternative Rock Persons 18-34 4
KISO-AM 0.8 Country Persons 35-54 24
KFYI-AM* 5.3 News/Talk Persons 25-54 11
KKFR-FM* 5.2 Urban Contemporary Hit Persons 18-34 3
Radio
San Diego, CA....... 17 KYXY-FM* 6.3 Soft Adult Contemporary Persons 25-54 2
KPLN-FM* 2.5 Classic Rock Persons 25-54 10
Cincinnati, OH...... 19 WUBE-FM(12) 8.7 Country Persons 25-54 1
WYGY-FM(12) 2.6 Young Country Men 18-34 9
WBOB-AM 0.9 Sports/Talk Men 18-49 14
WUBE-AM N/M Sports/Talk Men 25-49 N/M
Cleveland, OH....... 23 WZAK-FM* 8.7 Urban Contemporary Women 25-54 2
WDOK-FM* 6.1 Soft Adult Contemporary Women 25-54 2
WRMR-AM* 5.8 Adult Standard Men 25-54 21
WZJM-FM* 5.6 Contemporary Hits Radio Women 18-34 2
WQAL-FM* 4.5 Hot Adult Contemporary Persons 25-54 8
WJMO-AM* 2.2 Oldies Persons 25-54 12
Pittsburgh, PA...... 24 WWSW-FM 5.9 Oldies Persons 25-54 3
WWSW-AM(13) 0.4 Oldies Persons 25-54 22
WDVE-FM* 9.7 Rock Persons 25-54 1
WXDX-FM* 5.0 Alternative Rock Persons 18-34 2
WJJJ-FM* 3.0 Smooth Jazz Persons 25-54 12
WDRV-FM* 3.6 Modern Hit Women 25-49 7
Orlando, FL......... 26 WJHM-FM 6.4 Urban Contemporary Persons 18-34 2
WOCL-FM 4.4 Oldies Persons 25-54 16
WXXL-FM 7.3 Contemporary Hit Radio Persons 18-34 1
WOMX-FM 7.0 Adult Contemporary Persons 25-54 1
Sacramento, CA...... 28 KFBK-AM 10.0 News/Talk Persons 25-54 1
KHYL-FM 4.1 Oldies Persons 25-54 5
KGBY-FM 4.5 Adult Contemporary Women 25-54 3
KSTE-AM 3.2 Talk Persons 25-54 14
Nassau/Suffolk
(Long Island) 45 WALK-FM 5.8 Adult Contemporary Persons 25-54 1
NY(14)...........
WALK-AM N/M Adult Contemporary Persons 35-64 N/M
</TABLE>

48
<PAGE> 55

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

N/A: Not available

N/M: Not meaningful

+ Indicates station to be disposed of in a pending transaction.

* Indicates station to be acquired in a pending transaction.

(1) Actual city of license may differ from metropolitan market served in
certain cases.

(2) Ranking of principal radio market served by the station among all U.S.
radio broadcast markets by aggregate 1997 gross radio broadcasting revenue
as reported by James H. Duncan, Duncan's Radio Market Guide (1998 ed.).

(3) Information derived from The Arbitron Company, Summer 1998, Local Market
Reports in the specified markets for listeners age 12 and over, Monday to
Sunday, 6:00 a.m. to Midnight. Copyright, The Arbitron Company.

(4) Information derived from The Arbitron Company, Summer 1998, Local Market
Reports in the specified markets for the Target Demographics specified for
listening Monday to Sunday, 6:00 a.m. to Midnight. Copyright, The Arbitron
Company.

(5) The format of WMGA-FM (formerly WBIX-FM) was changed from Hot Adult
Contemporary with a target demographic of Women 25-49 to Jamming Oldies
with a target demographic of Persons 25-49 effective December 4, 1998. The
station ranking in the target demographic for WMGA-FM for Summer 1998 is
based on the prior target demographic of Women 25-49.

(6) The format of WRCX-FM was changed from Rock with a target demographic of
Men 18-34 to Jamming Oldies with a target demographic of Women 25-54
effective November 2, 1998. The station ranking in the target demographic
for WRCX-FM for Summer 1998 is based on the prior target demographic of
Men 18-34.

(7) The format for WGCI-AM was changed from Urban/R&B with a target
demographic of Persons 18-34 to Gospel with a target demographic of
Persons 25-54 effective October 5, 1998. The station ranking for the
target demographic for

49
<PAGE> 56

WGCI-AM for Summer 1998 is based on the prior target demographic of
Persons 18-34.

(8) The format for KNEW-AM was changed from Country/Sports with a target
demographic of Persons 25-54 to Adult Contemporary with a target
demographic of Women 25-54 effective August 24, 1998. The station ranking
in the target demographic for KNEW-AM for Summer 1998 is based on the new
target demographic of Women 25-54. Programming is provided to KNEW-AM via
simulcast of programming broadcast on KIOI-FM.

(9) The format for KTXQ-FM was changed from Album Rock with a target
demographics of Persons 18-49 to Jamming Oldies with a target demographic
of Persons 25-54 effective August 28, 1998. The station ranking in the
target demographic for KTXQ-FM for Summer 1998 is based on the new target
demographic of Persons 25-54.

(10) Programming provided to KQUE-AM via simulcast of programming broadcast on
KKRW-FM.

(11) The Company sells airtime on WVCG-AM to third parties for broadcast of
specialty programming on a variety of topics.

(12) WUBE-FM and WYGY-FM are sold in combination.

(13) Programming provided to WWSW-AM via simulcast of programming broadcast on
WWSW-FM.

(14) Nassau/Suffolk (Long Island) may be considered part of the greater New
York market, although it is reported separately as a matter of convention.

OUTDOOR ADVERTISING

The following table sets forth selected information with respect to the
portfolio of outdoor displays that are owned by the Company as of December 1,
1998 (subject to divestitures required by the DOJ described below).

<TABLE>
<CAPTION>
TOTAL
DISPLAYS
--------
<S> <C>
MARTIN MEDIA:
Los Angeles (North), CA..................................... 877
Washington, D.C............................................. 297
San Diego, CA............................................... 275
Pittsburgh, PA.............................................. 3,564
Cincinnati, OH.............................................. 811
Kansas City, MO............................................. 167
Riverside/San Bernardino, CA................................ 357
Hartford, CT................................................ 413
Las Vegas, NV............................................... 985
Scranton/Wilkes-Barre, PA................................... 980
Bakersfield/Visalia, CA..................................... 1,584
Lubbock, TX................................................. 677
Odessa/Midland, TX.......................................... 704
Topeka, KS.................................................. 843
Amarillo, TX................................................ 1,064
</TABLE>

50
<PAGE> 57

<TABLE>
<CAPTION>
TOTAL
DISPLAYS
--------
<S> <C>
Charlottesville, VA......................................... 43
San Angelo, TX.............................................. 252
Bullhead/Laughlin, NV....................................... 355
Roanoke, VA................................................. 255
Yuma, AZ.................................................... 221
Abilene, TX................................................. 432
Sharon, PA.................................................. 218
Lawrence, KS................................................ 56
------
Total............................................. 15,430
======
WHITECO:
Central (Terre Haute, IN)................................... 1,750
Southwestern (Dallas, TX)................................... 1,701
Southeastern (Atlanta, GA).................................. 858
Providence, RI.............................................. 729
Western (St. Joseph, MO).................................... 2,855
Ohio (Columbus, OH)......................................... 1,292
Florida (Ocala, FL)......................................... 2,799
Milwaukee, WI............................................... 1,195
South Atlantic (Rocky Mt., NC).............................. 1,604
Harrisburg, PA.............................................. 1,303
Tyler, TX................................................... 1,753
Chicago, IL/Northwest, IN................................... 2,916
Evansville, IN.............................................. 1,032
Albany, NY.................................................. 682
------
Total............................................. 22,469
======
Grand Total....................................... 37,899+
======
</TABLE>

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

+ In connection with the Whiteco Acquisition and the Kunz Option, Chancellor
Media and the DOJ entered into consent decrees whereby the Company has agreed
to divest approximately 380 billboards in certain of the markets described in
these tables. The Company expects to try to enter into swap transactions with
billboards in other markets to effect such divestitures and, as a result, does
not anticipate the grand total of displays to change materially at this time.

COMPANY STRATEGY

The Company's overall strategy is to create a leading multi-media company with a
significant overlapping presence in radio and outdoor advertising markets. In
this regard, the Company has built a diversified portfolio of media assets which
enables the Company to deliver more options and greater value to its advertising
clients. The Company believes the multi-media platform creates significant
growth opportunities and synergies through cross selling, cross promotion and
cost savings in markets where radio and outdoor advertising operations overlap.
The Company plans on leveraging the extensive operating

51
<PAGE> 58

experience of its senior management team to continue to enhance revenue and cash
flow growth.

Radio Broadcast Strategy. The CRG senior management team, led by James E. de
Castro, President of CRG, has extensive experience in acquiring and operating
radio station groups. The CRG business strategy is to assemble and operate radio
station clusters in order to maximize the broadcast cash flow generated in each
market.

CRG seeks to capitalize on revenue growth and expense savings opportunities
through the successful integration of station cluster groups. Management
believes that radio station clusters can attract increased revenues in a market
by delivering larger combined audiences to advertisers and by engaging in joint
marketing and promotional activities. In addition, management expects to realize
significant expense savings through the consolidation of facilities and through
the economies of scale created in areas such as national representation
commissions, employee benefits, insurance premiums and other operating costs.

CRG also seeks to maximize station operating performance through intensive
market research, innovative programming and unique marketing campaigns to
establish strong listener loyalty and ensure steady long-term audience share
ratings. Management believes its ratings growth in many of its markets is driven
by CRG's ability to attract talented people and to continue delivering quality
programming to the listeners.

CRG also seeks to leverage its radio expertise and platform and enhance revenue
and cash flow growth through the continued expansion of its national radio
network, The AMFM Radio Networks, as well as through the development of
non-traditional revenues derived from radio sales promotion activities.

Media Representation Strategy. The Company's overall strategy for its media
representation business is to create a leading national representation firm
serving all types of electronic media. The Company believes it can continue to
generate revenue and cash flow growth in the media representation business by
expanding its market share and improving its national sales effort. Management
will seek to increase market share by developing new clients, expanding
operations in existing and new markets and acquiring representation contracts of
its competitors. The Company will continue to provide the highest level of
quality service to its clients by offering comprehensive advertisement, planning
and placement services, as well as a broad range of value added benefits,
including marketing, research, consulting and programming advisory services. The
Company will also have the ability to expand its level of service to advertisers
through the growth of its unwired network of radio and television stations which
provides advertisers with greater flexibility and the ability to target specific
demographic groups or markets.

Outdoor Advertising Strategy. The Chancellor Outdoor Group is led by James A.
McLaughlin, President of COG, an outdoor advertising industry veteran with over
25 years of experience. The COG strategy is to create and develop one of the top
five outdoor advertising companies in the United States through the
consolidation of Martin Media, acquired in July 1998, and the recent acquisition
of Whiteco, and additional acquisitions that complement the Company's existing
outdoor and radio markets. As a result of the recent acquisition of Whiteco, COG
now ranks as one of the top five outdoor advertising companies in the United
States. COG believes there are opportunities to generate significant revenue
growth and cost savings through the successful integration of the combined
operations of Martin Media and Whiteco.
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<PAGE> 59

COG's strategy is to realize revenue and expense synergies through the
consolidation of certain sales management, leasing management, marketing, and
accounting and administrative support functions. Additionally, COG will focus on
strengthening its operating results by increasing market penetration, maximizing
rates and occupancy levels in each of its markets and capitalizing on
technological advances such as computer vinyl technology to enhance the
attractiveness and flexibility of the outdoor medium while reducing costs. COG
also seeks to realize incremental benefits in markets where outdoor and radio
operations overlap by introducing radio advertisers to outdoor advertising which
provides an additional low cost medium to advertisers with local marketing
needs.

Management believes its newly acquired outdoor advertising portfolio combined
with the strength of its broad radio platform, national radio network and
national representation business will solidify the Company's position as a
leading multi-media company with the ability to effectively respond to customers
needs through a variety of advertising solutions and mediums.

ADVERTISING

The primary source of the Company's revenues is the sale of broadcasting time
for local, regional and national advertising. On a pro forma basis approximately
65% of the Company's gross radio revenues would have been generated from the
sale of local advertising for the nine months ended September 30, 1998. The
Company believes that radio is one of the most efficient, cost-effective means
for advertisers to reach specific demographic groups. The advertising rates
charged by the Company's radio stations are based primarily on (i) a station's
ability to attract audiences in the demographic groups targeted by its
advertisers (as measured principally by quarterly Arbitron rating surveys that
quantify the number of listeners tuned to the station at various times) and (ii)
the supply of and demand for radio advertising time. Advertising rates generally
are the highest during morning and evening drive-time hours.

Depending on the format of a particular station, there are predetermined numbers
of advertisements that are broadcast each hour. The Company determines the
number of advertisements broadcast hourly that can maximize available revenue
dollars without jeopardizing listening levels. Although the number of
advertisements broadcast during a given time period may vary, the total number
of advertisements broadcast on a particular station generally does not vary
significantly from year to year.

A station's sales staff generates most of its local and regional advertising
sales. To generate national advertising sales, the Company engages an
advertising representative for each of its stations that specializes in national
sales and is compensated on a commission-only basis. Most advertising contracts
are short-term and generally run only for a few weeks.

The Company's Katz media representation operations generate revenues primarily
through contractual commissions realized through the sale of national spot
advertising air time. National spot advertising air time is commercial air time
sold to advertisers on behalf of radio and television stations and cable systems
located outside the local markets of those stations and systems. Katz represents
its media clients pursuant to media representation contracts. Media
representation contracts typically have terms of up to ten years in initial
length. In connection with the substantial consolidation that has occurred in
the broadcast industry in recent years and the concomitant development of large
client station groups, the frequency of representation contract "buyouts" has
increased. These buyouts occur

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<PAGE> 60

because station groups have tended to negotiate exclusive, long-term
representation contracts with a single media representation firm covering all of
the station group's stations, including stations acquired after the date of the
initial representation contract. In the event that one of the station group's
stations is sold to an owner represented by a different firm, representation
contracts are frequently bought out by the successor representation firm. Katz
generally amortizes the cost of acquiring new representation contracts
associated with a buyout over the expected benefit period, and also generally
recognizes a gain on disposition of representation contracts associated with a
buyout of an existing client's contract.

The Company's outdoor advertising business generates revenues by contracting
with advertising agencies for the display of the advertising campaigns of their
clients. The Company pays commissions to the agencies for contracts procured
through those agencies. The advertising rates are based on a particular
display's exposure or number of "impressions" delivered. The number of
"impressions" delivered by a display is determined by considering a number of
factors such as 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.

COMPETITION

The radio broadcasting industry is a highly competitive business. The success of
each of the Company's stations is dependent, to a significant degree, upon its
audience ratings and share of the overall advertising revenue within its market.
The Company's radio stations compete for listeners and advertising revenues
directly with other radio stations, as well as with other media, within their
respective markets. Radio stations compete for listeners primarily on the basis
of program content and by hiring on-air talent that appeals to a particular
demographic group. By building a strong listener base comprised of a specific
demographic group in each of its markets, the Company is able to attract
advertisers who seek to reach those listeners. Other media, including broadcast
television, cable television, newspapers, magazines, direct mail coupons and
billboard advertising also compete with the Company's stations for advertising
revenues. The Company also competes with other broadcasting operators for
acquisition opportunities, and prices for radio stations in major markets have
increased significantly in recent periods. To the extent that the rapid pace of
consolidation in the radio broadcasting industry continues, certain competitors
may emerge with larger portfolios of major market radio stations, greater
ability to deliver large audiences to advertisers and more access to capital
resources than does the Company. The audience ratings and market share for the
Company are and will be subject to change and any adverse change in a particular
market could have a material and adverse effect on the revenue of its stations
located in that market. There can be no assurance that any one of the Company's
stations will be able to maintain or increase its current audience ratings or
advertising revenue market share.

The radio broadcasting industry is also subject to competition from new media
technologies that are being developed or introduced, such as the delivery of
audio programming by cable television systems, DBS systems, streaming and other
audio systems that use the Internet for delivery and other digital audio
broadcasting and narrowcasting formats to local and national audiences. In
addition, the FCC has auctioned spectrum for a new satellite-delivered DARS.
These actions may result in the introduction of several new national or regional
satellite radio services with sound quality equivalent to compact discs.

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Another possible competitor to traditional radio is IBOC digital radio. IBOC
could provide multi-channel, multi-format digital radio services in the same
band width currently occupied by traditional AM and FM radio services. The
Company cannot predict at this time the effect, if any, that any such new
technologies may have on the radio broadcasting industry.

The success of the Company's Katz media representation operations depends on
Katz' ability to maintain and acquire representation contracts with radio and
television stations and cable systems, the inventory of time Katz represents and
the experience of Katz' executive management and sales personnel. The media
representation business is highly competitive, both in terms of competition to
gain client stations and to sell air time to advertisers. Katz competes not only
with other independent and network media representatives but also with direct
national advertising. Katz also competes on behalf of its clients for
advertising dollars with other media such as newspapers and magazines, outdoor
advertising, transit advertising, direct response advertising, yellow page
directories and point of sale advertising.

The Company's outdoor advertising business also faces competition from a variety
of sources, including other outdoor advertising companies and other media such
as radio, television, print media and direct mail marketing. Additionally, the
Company must also compete with other "out-of-home" advertising media, which
includes advertising displays in shopping malls, supermarkets, airports, sports
stadiums and arenas, movie theaters, and on taxis, buses, subways and other
public transportation. Because the Company's outdoor advertising is a new
endeavor for the Company and its management and due to the fact that many of the
Company's competitors in the outdoor advertising business are larger and have
more experience and resources in the business, there can be no assurance that
the Company will be able to compete successfully within the outdoor advertising
industry.

REGULATION OF RADIO AND OUTDOOR ADVERTISING

RADIO BROADCASTING

Introduction. The radio broadcasting industry is subject to extensive and
changing regulation over, among other things, program content, technical
operations and business and employment practices.

The ownership, operation and sale of radio broadcast stations (including those
licensed to the Company) are subject to the jurisdiction of the FCC, which acts
under authority granted by the Communications Act. The Communications Act
prohibits the assignment or transfer of control of an FCC license without the
prior consent of the FCC. In determining whether to grant requests for consent
to such assignments or transfers, and in determining whether to grant or renew a
radio broadcast license, the FCC considers a number of factors pertaining to the
licensee (and proposed licensee), including: limitations on alien ownership and
the common ownership of television broadcast, radio broadcast and daily
newspaper properties, the "character" of the licensee (and proposed licensee)
and those persons or entities that have "attributable" interests, and compliance
with the Anti-Drug Abuse Act of 1988. Among other things, the FCC assigns
frequency bands for radio broadcasting; determines the particular frequencies,
locations and operating power of radio broadcast stations; issues, renews,
revokes and modifies radio broadcast station licenses; regulates equipment used
by radio broadcast stations; adopts and implements regulations and policies that
directly or indirectly affect the ownership, operation, program content and

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employment and business practices of radio broadcast stations; and has the power
to impose penalties for violations of its rules and the Communications Act.

The following is a brief summary of certain provisions of the Communications Act
and specific FCC rules and policies. Reference should be made to the
Communications Act, FCC rules, and the public notices and rulings of the FCC for
further information concerning the nature and extent of federal regulation of
radio broadcast stations.

Failure to observe these or other FCC rules and policies may result in the
imposition of various sanctions, including admonishment, monetary forfeitures,
the grant of "short" (less than the maximum eight-year term) renewal terms or,
for particularly egregious violations, the denial of a license renewal
application, the revocation of FCC licenses, or the denial of FCC consent to
acquire additional broadcast properties.

License Renewal. Radio broadcast licenses are granted for maximum terms of up to
eight years. They may be renewed through an application to the FCC, and, in
certain instances, licensees are entitled to renewal expectancies. During
certain periods when a renewal application is pending, competing applicants may
file for the radio frequency being used by the renewal applicant, although the
FCC is prohibited from considering such competing applications if the existing
license has satisfied certain obligations. Petitions to deny license renewals
can be filed by interested parties, including members of the public. The FCC is
required to hold hearings on a renewal application in certain circumstances.

The following table sets forth the date of acquisition by the Company of the
radio stations that are actually owned by the Company as of December 15, 1998 or
would be owned upon consummation of the Pending Transactions (subject to any
divestitures required by the FCC and/or the DOJ as a condition to approving any
of the Pending Transactions), the frequency of each such station, and the date
of expiration of such station's main FCC broadcast license:

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<PAGE> 63

<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
WMVP-AM+............... Chicago, IL 5/84 1000 kHz 12/04
KYLD-FM................ San Francisco, CA 9/97 94.9 MHz 12/05
KMEL-FM................ San Francisco, CA 11/92 106.1 MHz 12/05
KKSF-FM................ San Francisco, CA 1/97 103.7 MHz 12/05
KABL-AM................ San Francisco, CA 9/97 960 kHz 12/05
KISQ-FM................ San Francisco, CA 9/97 98.1 MHz 12/97*
KIOI-FM................ San Francisco, CA 4/94 101.3 MHz 12/05
KNEW-AM................ San Francisco, CA 9/97 910 kHz 12/05
KHKS-FM................ Dallas, TX 12/97 106.1 MHz 8/05
KZPS-FM................ Dallas, TX 10/97 92.5 MHz 8/05
KDGE-FM................ Dallas, TX 10/97 94.5 MHz 8/05
KSKY-AM................ Dallas, TX 5/95 660 kHz 8/05
KBFB-FMS............... Dallas, TX Pending 97.9 MHz 8/05
KTXQ-FMS............... Dallas, TX Pending 102.1 MHz 8/05
WDAS-FM................ Philadelphia, PA 5/97 105.3 MHz 8/06
WUSL-FM................ Philadelphia, PA 5/97 98.9 MHz 8/06
WJJZ-FM................ Philadelphia, PA 1/96 106.1 MHz 8/06
WIOQ-FM................ Philadelphia, PA 5/97 102.1 MHz 8/06
WYXR-FM................ Philadelphia, PA 1/96 104.5 MHz 8/98*
WDAS-AM................ Philadelphia, PA 5/97 1480 kHz 8/06
WMZQ-FM................ Washington, D.C. 7/97 98.7 MHz 10/03
WASH-FM................ Washington, D.C. 11/92 97.1 MHz 10/03
WBIG-FM................ Washington, D.C. 9/97 100.3 MHz 10/03
WGAY-FM................ Washington, D.C. 11/96 99.5 MHz 10/03
WTEM-AM(2)............. Washington, D.C. 4/97 980 kHz(2) 10/03
WWRC-AM(2)............. Washington, D.C. 9/97 570 kHz(2) 10/03
WWDC-FM................ Washington, D.C. 6/98 101.1 MHz 10/03
WWDC-AM................ Washington, D.C. 6/98 1260 kHz 10/03
KKBQ-FM................ Houston, TX 12/97 92.9 MHz 8/05
KLDE-FM................ Houston, TX 4/98 94.5 MHz 8/05
KLOL-FM................ Houston, TX 6/93 101.1 MHz 8/97*
KTRH-AM................ Houston, TX 6/93 740 kHz 8/05
KBME-AM................ Houston, TX 12/97 790 kHz 8/05
KODA-FM................ Houston, TX Pending 99.1 MHz 8/05
KKRW-FMS............... Houston, TX Pending 93.7 MHz 8/05
KQUE-AMS............... Houston, TX Pending 1230 kHz 8/05
WFOX-FM................ Atlanta, GA 9/97 97.1 MHz 4/04
WJMN-FM................ Boston, MA 1/96 94.5 MHz 4/06
WXKS-FM................ Boston, MA 1/96 107.9 MHz 4/06
WXKS-AM................ Boston, MA 1/96 1430 kHz 4/06
</TABLE>

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<PAGE> 64

<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
WJLB-FM................ Detroit, MI 4/97 97.9 MHz 10/04
WNIC-FM................ Detroit, MI 5/95 100.3 MHz 10/04
WKQI-FM................ Detroit, MI 5/95 95.5 MHz 10/04
WMXD-FM................ Detroit, MI 4/97 92.3 MHz 10/04
WWWW-FM................ Detroit, MI 1/97 106.7 MHz 10/04
WDFN-AM................ Detroit, MI 1/97 1130 kHz 10/04
WYUR-AM................ Detroit, MI 5/95 1310 kHz 10/04
WEDR-FM................ Miami/Ft. Lauderdale, FL 10/96 99.1 MHz 2/04
WVCG-AM................ Miami/Ft. Lauderdale, FL 7/83 1080 kHz 2/04
KXKL-FM................ Denver, CO 9/97 105.1 MHz 4/05
KALC-FM................ Denver, CO 9/97 105.9 MHz 4/05
KIMN-FM................ Denver, CO 9/97 100.3 MHz 4/05
KXPK-FM................ Denver, CO 1/98 96.5 MHz 4/05
KVOD-FM................ Denver, CO 9/97 92.5 MHz 4/05
KRRF-AM................ Denver, CO 9/97 1280 kHz 4/05
KEEY-FM................ Minneapolis/St. Paul, MN 9/97 102.1 MHz 4/05
KDWB-FM................ Minneapolis/St. Paul, MN 9/97 101.3 MHz 4/05
KQQL-FM................ Minneapolis/St. Paul, MN 9/97 107.9 MHz 4/05
KTCZ-FM................ Minneapolis/St. Paul, MN 9/97 97.1 MHz 4/05
WRQC-FM................ Minneapolis/St. Paul, MN 9/97 100.3 MHz 4/05
KFAN-AM................ Minneapolis/St. Paul, MN 9/97 1130 kHz 4/05
KXBR-AM................ Minneapolis/St. Paul, MN 9/97 690 kHz 4/05
KOY-AM................. Phoenix, AZ 9/97 550 kHz 10/05
KMLE-FM................ Phoenix, AZ 9/97 107.9 MHz 10/05
KOOL-FM................ Phoenix, AZ 9/97 94.5 MHz 10/05
KYOT-FM................ Phoenix, AZ 9/97 95.5 MHz 10/05
KZON-FM................ Phoenix, AZ 9/97 101.5 MHz 10/05
KISO-AM................ Phoenix, AZ 9/97 1230 kHz 10/05
KFYI-AMS............... Phoenix, AZ Pending 910 kHz 10/05
KKFR-FMS............... Phoenix, AZ Pending 92.3 MHz 10/05
KYXY-FMS............... San Diego, CA Pending 96.5 MHz 12/05
KPLN-FMS............... San Diego, CA Pending 103.7 MHz 12/97*
WUBE-FM................ Cincinnati, OH 9/97 105.1 MHz 10/04
WYGY-FM................ Cincinnati, OH 9/97 96.5 MHz 10/04
WBOB-AM................ Cincinnati, OH 9/97 1160 kHz 8/04
WUBE-AM................ Cincinnati, OH 9/97 1230 kHz 10/04
WZAK-FMS............... Cleveland, OH Pending 93.1 MHz 10/04
WDOK-FMS............... Cleveland, OH Pending 102.1 MHz 10/04
WRMR-AMS............... Cleveland, OH Pending 850 kHz 10/04
WZJM-FMS............... Cleveland, OH Pending 92.3 MHz 10/04
</TABLE>

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<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
WQAL-FMS............... Cleveland, OH Pending 104.1 MHz 10/04
WJMO-AMS............... Cleveland, OH Pending 1490 kHz 10/04
WWSW-FM................ Pittsburgh, PA 9/97 94.5 MHz 8/06
WWSW-AM................ Pittsburgh, PA 9/97 970 kHz 8/98*
WDVE-FMS............... Pittsburgh, PA Pending 102.5 MHz 8/98*
WXDX-FMS............... Pittsburgh, PA Pending 105.9 MHz 8/98*
WJJJ-FMS............... Pittsburgh, PA Pending 104.7 MHz 8/98*
WDRV-FMS............... Pittsburgh, PA Pending 96.1 MHz 8/06
WJHM-FM................ Orlando, FL 9/97 101.9 MHz 2/04
WOCL-FM................ Orlando, FL 9/97 105.9 MHz 2/04
WXXL-FM................ Orlando, FL 9/97 106.7 MHz 2/04
WOMX-FM................ Orlando, FL 9/97 105.1 MHz 2/04
KFBK-AM................ Sacramento, CA 9/97 1530 kHz 12/05
KHYL-FM................ Sacramento, CA 9/97 101.1 MHz 12/05
KGBY-FM................ Sacramento, CA 9/97 92.5 MHz 12/05
KSTE-AM................ Sacramento, CA 9/97 650 kHz 12/05
WALK-FM................ Nassau/Suffolk
(Long Island), NY 9/97 97.5 MHz 6/98*
WALK-AM................ Nassau/Suffolk
(Long Island), NY 9/97 1370 kHz 6/06
KGGI-FM................ Riverside/San Bernardino, CA 9/97 99.1 MHz 12/05
KKDD-AM................ Riverside/San Bernardino, CA 9/97 1290 kHz 12/05
WZNT-FM................ Puerto Rico 10/98 93.7 MHz 2/04
WOYE-FM................ Puerto Rico 10/98 94.1 MHz 2/04
WCOM-FM................ Puerto Rico 10/98 94.7 MHz 2/04
WOQI-FM................ Puerto Rico 10/98 93.3 MHz 2/04
WCTA-FM................ Puerto Rico 10/98 95.1 MHz 2/04
WIOA-FM................ Puerto Rico 10/98 99.9 MHz 2/04
WIOB-FM................ Puerto Rico 10/98 97.5 MHz 2/04
WIOC-FM................ Puerto Rico 10/98 105.1 MHz 2/04
</TABLE>

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

* Indicates pending renewal application.

+ Indicates station to be disposed of in a pending transaction.

S Indicates station to be acquired in a pending transaction.

(1) Actual city of license may differ from metropolitan market served in
certain cases.

(2) On March 9, 1998, the Company exchanged the call signs and formats of
WWRC-AM and WTEM-AM such that beginning on such date the call sign and
format of WWRC-AM were used on the 570 kHz frequency and the call sign and
format of WTEM-AM were used on the 980 kHz frequency.

Ownership Matters. Under the Communications Act, a broadcast license may not be
granted to or held by any corporation that has more than one-fifth of its
capital stock

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<PAGE> 66

owned or voted by aliens or their representatives, by foreign governments or
their representatives, or by non-U.S. corporations. Under the Communications
Act, a broadcast license also may not be granted to or held by any corporation
that is controlled, directly or indirectly, by any other corporation more than
one-fourth of whose capital stock is owned or voted by aliens or their
representatives, by foreign governments or their representatives, or by non-U.S.
corporations, if the FCC finds that the public interest will be served by the
refusal or revocation of such license. The Company has been advised that the FCC
staff has interpreted this provision of the Communications Act to require an
affirmative public interest finding before a broadcast license may be granted to
or held by any such corporation and that the FCC has made such an affirmative
finding only in limited circumstances. These restrictions apply in modified form
to other forms of business organizations, including partnerships. The Company,
therefore may be restricted from having more than one-fourth of its stock owned
or voted by aliens, foreign governments or non-U.S. corporations. The respective
Certificates of Incorporation of Chancellor Media and CMCLA contain prohibitions
on alien ownership and control that are intended to facilitate compliance with
the provisions of the Communications Act applicable to alien ownership. The
Company believes that in light of current levels of alien ownership of
Chancellor Media's capital stock, the foregoing restrictions are not likely to
have a material impact on Chancellor Media or CMCLA.

The Communications Act and FCC rules also generally prohibit the common
ownership, operation or control of a radio broadcast station and a television
broadcast station serving the same local market, and of a radio broadcast
station and a daily newspaper serving the same local market. Under these
"cross-ownership" rules, absent waivers, the Company would not be permitted to
acquire any daily newspaper or television broadcast station (other than
low-power television) in a local market where it then owned any radio broadcast
station. In October 1996, the Commission issued a Notice of Inquiry to explore
possible changes in the newspaper/broadcast cross-ownership waiver policy with
respect to newspaper/radio combinations, including the possibility of adopting a
waiver policy based on market size or on the number of independently owned media
in a market. In connection with the LIN Merger, the Capstar Merger and the
Pegasus Acquisition, Chancellor Media and the Company have requested or will
request certain waivers of the cross-ownership and one-to-a-market rules. The
Company expects that the FCC will grant such waivers in due course, however
there can be no assurance that this will be the result.

The Communications Act places the following limits on the numbers of stations in
the same market that can be under common ownership: in markets with 45 or more
stations, ownership is limited to eight stations, no more than five of which can
be in the same service (AM and FM each being a separate service); in markets
with 30-44 stations, ownership is limited to seven stations, no more than four
of which can be in the same service; in markets with 15-29 stations, ownership
is limited to six stations, no more than four of which can be in the same
service; and in markets with 14 or fewer stations, ownership is limited to no
more than 50% of the market's total with no more than three stations in the same
service.

Recently, the FCC has adopted a practice of including in the public notices of
certain applications a separate notice stating that the FCC intends to conduct
an analysis of the degree of market concentration that would result from a grant
of those applications, and inviting public comment on the issue of such
concentration and its effect on competition and diversity in the broadcast
markets affected. The FCC has not formally adopted

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changes to its rules regarding assignments of radio licenses or limits on radio
station ownership that reflect the factors to be used in such an analysis of
market concentration. Informally, the FCC has stated that it intends to invite
such comment when its preliminary analysis of an application reveals that,
following consummation of the assignment in question, fifty percent or more of
the radio advertising revenue generated in the market would be concentrated in
stations licensed to a single licensee, or seventy percent or more of the
revenue would be concentrated in the combined stations of any two licensees in
that market. The FCC has not thus far issued any decisions with respect to
assignment applications regarding which it has included such requests for
comment, and it is not certain what actions the FCC might take with regard to
such applications, what specific factors the FCC would rely on in taking such
actions, or whether such action by the FCC would withstand judicial review under
the Communications Act or other applicable laws. The FCC has included such a
request with its public notice of the Company's pending applications for the
Cleveland Acquisitions. Because of these multiple ownership rules and the
cross-interest policy described below, a purchaser of the Common Stock of
Chancellor Media or CMCLA who acquires an attributable interest in the Company
may violate the FCC's rules if it also has an "attributable" interest in other
television or radio stations, or in daily newspapers, depending on the number
and location of those radio or television stations or daily newspapers. Such a
purchaser also may be restricted in the companies in which it may invest, to the
extent that those investments give rise to an attributable interest. If an
attributable stockholder of the Company violates any of these ownership rules,
the Company may be unable to obtain from the FCC one or more authorizations
needed to conduct its radio station business and may be unable to obtain FCC
consents for certain future acquisitions.

The FCC generally applies its television/radio/newspaper cross-ownership rules,
and its broadcast multiple ownership rules, by considering the "attributable,"
or cognizable, interests held by a person or entity. A person or entity can have
an interest in a radio station, television station or daily newspaper by being
an officer, director, partner or stockholder of a company that owns that station
or newspaper. Whether that interest is cognizable under the FCC's ownership
rules is determined by the FCC's attribution rules. If an interest is
attributable, the FCC treats the person or entity who holds that interest as the
"owner" of the radio station, television station or daily newspaper in question,
and therefore subject to the FCC's ownership rules.

In the case of corporations, the interest of officers, directors and persons or
entities that directly or indirectly have the right to vote 5% or more of the
corporation's voting stock (or 10% or more of such stock in the case of
insurance companies, investment companies, bank trust departments and certain
other "passive investors" that hold such stock for investment purposes only) are
generally attributed with ownership of whatever radio stations, television
stations, and daily newspapers the corporation owns. Likewise, the interest of
an officer or a director of a corporate parent (as well as the corporate parent)
is generally attributed with ownership of whatever the subsidiary owns.

In the case of a partnership, the interest of a general partner is attributable,
as is the interest of any limited partner who is "materially involved" in the
media-related activities of the partnership. Debt instruments, non-voting stock,
options and warrants for voting stock that have not yet been exercised, limited
partnership interests where the limited partner is not "materially involved" in
the media-related activities of the partnership, and

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minority voting stock interests in corporations where there is a single holder
of more than 50% of the outstanding voting stock, generally do not subject their
holders to attribution.

In addition to the Company's radio broadcast interests, the ownership interests
of certain of the Company's directors may be attributed to the Company. For
example, three of the Company's directors (Thomas O. Hicks, Lawrence D. Stuart,
Jr. and Michael J. Levitt) are also among the directors of Capstar, an entity
Chancellor Media has agreed to acquire. Capstar presently owns or proposes to
acquire over 355 radio stations serving 83 mid-sized markets throughout the
United States. Because of those directors' positions on the Capstar board of
directors, if any such broadcast interests overlap with the Company's
directly-held radio broadcast interests in the Company's markets, such interests
are combined with the Company's interests in those markets when determining
whether we comply with the multiple ownership rules. Also, LIN Television, the
indirect operating subsidiary of LIN (which has agreed to merge with Chancellor
Media), owns or operates twelve television stations. Two of LIN's directors
(Messrs. Hicks and Levitt) are also the Company's directors and, accordingly,
LIN's television broadcast interests are combined with the Company's broadcast
interests for determining the Company's compliance with multiple ownership
rules. In addition, Hicks Muse and four of the Company's directors (Thomas O.
Hicks, Lawrence D. Stuart, Jr., Michael J. Levitt and John H. Massey) also have
attributable interests in Sunrise, which owns or proposes to acquire a number of
television stations in several markets. Under the FCC's one-to-a-market rules, a
party may not have attributable interests in more than one television station or
radio stations and a television station in the same market unless a waiver is
granted by the FCC. As a result of these attributable interests, the Company's
acquisition strategy may be adversely affected. There can be no assurance that
these attributable interests will not have a material adverse effect on the
Company's future acquisition strategy or on the business, financial condition
and results of operations of the Company.

The FCC has issued a Notice of Proposed Rulemaking (the "NPRM") that
contemplates tightening attribution standards where parties have multiple
nonattributable interests in and relationships with stations that would be
prohibited by the FCC's cross-interest rules, if the interests/relationships
were attributable. The NPRM contemplates that this change in attribution will
apply only to persons holding debt or equity interests that exceed certain
benchmarks.

In addition, the FCC has a "cross-interest" policy that under certain
circumstances could prohibit a person or entity with an attributable interest in
a broadcast station or daily newspaper from having a "meaningful"
non-attributable interest in another broadcast station or daily newspaper in the
same local market. Among other things, "meaningful" interests could include
significant equity interests (including non-voting stock, voting stock, and
limited partnership interests) and significant employment positions. This policy
may limit the permissible investments that an equity investor in the Company may
make or hold. If the FCC determines that a stockholder of the Company has
violated this cross-interest policy, the Company may be unable to obtain from
the FCC one or more authorizations needed to conduct its radio station business
and may be unable to obtain FCC consents for certain future acquisitions.

Programming and Operation. The Communications Act requires broadcasters to serve
the "public interest." The FCC has gradually relaxed or eliminated many of the
more formalized procedures it had developed in the past to promote the broadcast
of certain

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types of programming responsive to the needs of a station's community of
license. A licensee continues to be required, however, to present programming
that is responsive to community problems, needs and interests and to maintain
certain records demonstrating such responsiveness. Complaints from listeners
concerning a station's programming often will be considered by the FCC when it
evaluates the licensee's renewal application, but such complaints may be filed
and considered at any time. Stations also must follow various FCC rules that
regulate, among other things, political advertising, sponsorship identification,
and technical operations (including limits on radio frequency radiation). In
addition, licensees must develop and implement programs designed to promote
equal employment opportunities. The broadcast of obscene and indecent material
and the advertisement of contests and lotteries are regulated by FCC rules, as
well as by state and other federal laws.

Time Brokerage Agreements. In recent years, a number of radio stations,
including certain of the Company's stations, have entered into what commonly are
referred to as "Time Brokerage Agreements," or "TBAs" (these agreements also are
known as "Local Marketing Agreements," or "LMAs"). These agreements may take
various forms. Separately-owned and licensed stations may agree to function
cooperatively in terms of programming, advertising sales, and other matters,
subject to the licensee of each station maintaining independent control over the
programming and other operations of its own station and compliance with the
requirements of antitrust laws. One typical type of TBA is a programming
agreement between two separately-owned radio stations that serve a common
service area, whereby the licensee of one station programs substantial portions
of the broadcast day on the other licensee's station (subject to ultimate
editorial and other controls being exercised by the latter licensee), and sells
advertising time during those program segments. The FCC staff has held that such
agreements do not violate the Communications Act as long as the licensee of the
station that is being substantially programmed by another entity maintains
complete responsibility for, and control over, operations of its broadcast
station and otherwise ensures compliance with applicable FCC rules and policies.
The Phoenix Acquisition and the Cleveland Acquisitions agreements provide that
certain stations being acquired will be operated pursuant to TBAs following
termination of the waiting period under the HSR Act.

A station that brokers more than 15% of the broadcast time, on a weekly basis,
on another station in the same market will be considered to have an attributable
ownership interest in the brokered station for purposes of the FCC's ownership
rules, discussed above. As a result, a broadcast station may not enter into a
TBA that allows it to program more than 15% of the broadcast time, on a weekly
basis, of another local station that it could not own under the FCC's local
multiple ownership rules. FCC rules also prohibit a broadcast licensee from
simulcasting more than 25% of its programming on another station in the same
broadcast service (i.e., AM-AM or FM-FM) where the two stations serve
substantially the same geographic area, whether the licensee owns the stations
or owns and programs the other through a TBA arrangement.

Proposed Changes. The FCC is considering various proposals to modify its
broadcast "attribution" rules. Among the proposals are (i) raising the basic
benchmark for attributing ownership from 5% to 10% of the licensee's voting
stock, (ii) raising the attribution benchmark for certain institutional
investors from 10% to 20%, (iii) limiting the applicability of the single
majority shareholder rule (discussed above) to treat as attributable large stock
interests coupled with other debt or securities and (iv) treating

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non-voting stock as attributable in certain circumstances. The FCC is also
considering changes to its multiple ownership rules to encourage minority
ownership of radio and television broadcast stations.

The FCC has under consideration, and may in the future consider and adopt, new
laws, regulations and policies regarding a wide variety of matters that could,
directly or indirectly, affect the operation, ownership and financial
performance of the Company's radio broadcast stations, result in the loss of
audience share and advertising revenues for the Company's radio broadcast
stations, and affect the ability of the Company to acquire additional radio
broadcast stations or finance such acquisitions. Such matters include: changes
to the license renewal process; the FCC's equal employment opportunity rules and
other matters relating to minority and female involvement in the broadcasting
industry; proposals to change rules relating to political broadcasting;
technical and frequency allocation matters; AM stereo broadcasting; proposals to
permit expanded use of FM translator stations; proposals to restrict or prohibit
the advertising of beer, wine and other alcoholic beverages on radio; changes in
the FCC's cross-interest, multiple ownership and cross-ownership policies;
changes to broadcast technical requirements; proposals to allow telephone
companies to deliver audio and video programming to the home through existing
phone lines; proposals to limit the tax deductibility of advertising expenses by
advertisers; proposals to auction to the highest bidder the right to use the
radio broadcast spectrum, instead of granting FCC licenses and subsequent
license renewals; and proposals to reinstate the "Fairness Doctrine" which
requires a station to present coverage of opposing views in certain
circumstances. It is also possible that Congress may enact additional
legislation that could have a material impact on the operation, ownership and
financial performance of the Company's radio stations.

The FCC has taken initial steps to authorize the use of a new technology, DARS,
to deliver audio programming by satellite. See "-- Competition." The FCC is also
considering various proposals for terrestrial DARS. DARS may provide a medium
for the delivery of multiple new audio programming formats to local and national
audiences. It is not known at this time whether this technology also may be used
in the future by existing radio broadcast stations either on existing or
alternate broadcasting frequencies.

The Company cannot predict what other matters might be considered in the future,
nor can it judge in advance what impact, if any, the implementation of any of
these proposals or changes might have on its business.

Federal Antitrust Laws. The FTC and the DOJ evaluate transactions requiring a
pre-acquisition filing under the HSR Act to determine whether those transactions
should be challenged under the federal antitrust laws. These agencies
(particularly the DOJ) recently have been increasingly active in their review of
radio station acquisitions where an operator proposes to acquire new stations in
its existing markets.

As part of its increased scrutiny of radio station acquisitions, the DOJ has
stated publicly that it believes that TBAs and other similar agreements
customarily entered into in connection with radio station transfers prior to the
expiration of the waiting period under the HSR Act could violate the HSR Act.
Since then, the DOJ has stated publicly that it will apply its new policy
prohibiting TBAs in connection with purchase agreements until the expiration or
termination of the HSR waiting period on a prospective basis.

The DOJ has stated publicly that it has established certain revenue and audience
share concentration benchmarks with respect to radio station acquisitions, above
which a
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transaction may receive additional antitrust scrutiny. However, to date, the DOJ
has also investigated transactions that do not meet or exceed these benchmarks,
and has cleared transactions that do exceed these benchmarks. Although the
Company does not believe that its acquisition strategy as a whole will be
adversely affected in any material respect by antitrust review (including review
under the HSR Act) or by additional divestitures that the Company may have to
make as a result of antitrust review, there can be no assurance that this will
be the case. The Company is currently in discussions with the DOJ relating to
the Petry Acquisition. There can be no assurance that the Company will be able
to consummate the Petry Acquisition in accordance with its terms or at all.

OUTDOOR ADVERTISING

The outdoor advertising industry is subject to governmental regulation at the
federal, state and local level. Federal law, principally the Highway
Beautification Act of 1965, encourages states, by the threat of withholding 10%
of the federal appropriations for the construction and improvement of highways
within such states, to implement legislation to prohibit billboards located
within 660 feet of, or visible from, interstate and primary highways except in
commercial or industrial areas where off-site signage is permitted provided it
meets spacing and size restrictions. All of the states have implemented
regulations at least as restrictive as the Highway Beautification Act, including
the prohibition on the construction of new billboards adjacent to
federally-aided highways and the removal at the owner's expense and without any
compensation of any illegal signs on such highways. The Highway Beautification
Act, and the various state statutes implementing it, require the payment of just
compensation whenever governmental authorities require legally erected and
maintained billboards to be removed from areas adjacent to federally-aided
highways.

The states and local jurisdictions have, in some cases, passed additional and
more restrictive regulations which limit the construction, repair, upgrading,
height, size, location and/or operation of outdoor advertising structures. Such
regulations, often in the form of municipal building, sign or zoning ordinances,
specify minimum standards for the height, size and location of billboards. In
some cases, the construction of new billboards or relocation of existing
billboards is prohibited. Some jurisdictions also have restricted the ability to
enlarge or upgrade existing billboards, such as converting from wood to steel or
from nonilluminated to illuminated structures, and/or restrict the
reconstruction or repair of billboards which are substantially destroyed as a
result of storms or other causes. From time to time, governmental authorities
order the removal of billboards by the exercise of eminent domain. Thus far, the
Company believes it has been able to obtain satisfactory compensation for any of
its structures removed at the direction of governmental authorities, although
there is no assurance that it will be able to continue to do so in the future.

Amortization of billboards has also been adopted in varying forms in certain
jurisdictions. In theory, amortization permits the billboard owner to operate
its billboard as a non-conforming use for a specified period of time until it
has recouped its investment, after which it must remove or otherwise conform its
billboard to the applicable regulations at its own cost without any
compensation. Amortization and other regulations requiring the removal of
billboards without compensation have been subject to vigorous litigation in the
state and federal courts and cases have reached differing conclusions as to the
constitutionality of these regulations. Several municipalities in the Company's
markets currently have amortization ordinances or regulations. Ordinances
requiring the removal of

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a billboard without compensation, whether through amortization or otherwise, are
being challenged in various state and federal courts with conflicting results.
In some cities, amortization ordinances or regulations are not being enforced or
have been held unconstitutional. However, no assurance can be given as to the
effect on the Company of the enforcement of existing laws or regulations, or of
new laws and regulations that may be adopted in the future.

In recent years, there have been efforts to restrict billboard advertising of
certain products, including tobacco and alcohol. Congress has passed no
legislation at the federal level except legislation requiring health hazard
warnings similar to those on cigarette packages and print advertisements. In
1996, the Food and Drug Administration promulgated rules which, among other
things, would limit certain types of outdoor advertising by tobacco companies.
While certain of these regulations have been declared invalid by a lower court
ruling, appeals are likely and there can be no assurance that further
developments resulting in a validation or implementation of these or similar
regulations will not occur. Outdoor advertising of tobacco products also may be
affected by city or state regulations. For example, in 1995, the Court of
Appeals for the Fourth Circuit upheld the validity of a Baltimore city ordinance
restricting the placement of outdoor advertisements of cigarettes and alcohol in
publicly visible locations, such as billboards, signboards and sides of
buildings. Subsequently, the United States Supreme Court declined to review an
appeal of the case. Restrictions similar to the Baltimore ordinance are also
being contemplated or introduced in other states or municipalities around the
country, including New Jersey, New York City and Los Angeles. There can be no
assurance that additional local or state governments will not enact similar
ordinances or statutes to limit outdoor advertising of tobacco in the future in
markets in which the Company operates. Certain states in which the Company
operates have historically prohibited the outdoor advertising of distilled
spirits. In California, transit shelter advertising posters are maintained on
public rights of way, and most of the contracts prohibit tobacco and/or alcohol
advertising. San Francisco has adopted an ordinance banning all tobacco and
alcohol advertising on public property, but has "grandfathered" existing sales
contracts through 2002. For each of the past three years, the California
legislature has considered proposed legislation which would ban, or
substantially limit, all outdoor advertising of tobacco. While that legislation
has not been passed, the proponents have publicly stated they will continue to
attempt to have such proposal enacted. It is uncertain whether additional
legislation of this type will be enacted on the national level or in any of the
markets in which the Company operates.

It also recently has been reported that certain cigarette manufacturers who are
defendants in numerous class action suits throughout the United States have
reached agreement with Attorneys General of various states for an out of court
settlement with respect to such suits that would, among other things, prohibit
outdoor advertising by the tobacco industry. These settlements are subject to
various conditions, and there can be no assurance as to the effect of any such
settlement agreements and potential federal government legislation 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

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increase rates for some period of time. Any such consequence could have a
material adverse effect on the Company.

To date, regulations in the Company's markets have not materially adversely
affected its operations. However, the outdoor advertising industry is heavily
regulated and at various times and in various markets can be expected to be
subject to varying degrees of regulatory pressure affecting the operation of
advertising displays. Accordingly, although the Company's experience to date is
that the regulatory environment can be managed, no assurance can be given that
existing or future laws or regulations will not materially adversely affect the
Company. See "Risk Factors -- Regulation of Outdoor Advertising."

EMPLOYEES

The Company has approximately 5,200 full-time employees and approximately 850
part-time employees. Certain of the Company's employees in New York, Los
Angeles, Chicago, San Francisco, Washington, D.C., Philadelphia, Detroit,
Pittsburgh and Cincinnati (approximately 360 employees) are represented by
unions. The Company believes that it has good relations with its employees and
these unions.

The Company employs several high-profile on-air personalities who have large,
loyal audiences in their respective markets. The Company believes that its
relationships with its on-air talent are valuable, and it generally enters into
employment agreements with these individuals.

PROPERTIES

The Company's corporate headquarters is in Dallas, Texas. The types of
properties required to support each of the Company's existing or to be acquired
radio stations include offices, studios, transmitter sites and antenna sites. A
radio station's studio is generally housed with its office in a downtown or
business district. A station's transmitter sites and antenna sites generally are
located in a manner that provides maximum market coverage.

The studios and offices of the Company's radio stations and its corporate
headquarters are located in leased or owned facilities. The terms of these
leases expire generally in one to ten years. The Company either owns or leases
its transmitter and antenna sites. These leases have expiration dates that range
generally from one to eight years.

The Company does not anticipate any difficulties in renewing those leases that
expire within the next several years or in leasing other space, if required.

Katz operates out of approximately 54 separate locations throughout the United
States.

Martin Media operates out of approximately 19 separate locations throughout the
United States.

No one property is material to the Company's overall operations. The Company
believes that its properties are in good condition and suitable for its
operations. The Company owns substantially all of the equipment used in its
radio broadcasting business.

LEGAL PROCEEDINGS

In July 1998, a stockholder derivative action was commenced in the Delaware
Court of Chancery by a stockholder purporting to act on behalf of Chancellor
Media (the "Chancellor/LIN Stockholder Lawsuit"). The defendants in the case
include Hicks Muse,

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LIN Television and certain of Chancellor Media's directors. The plaintiff
alleges that, among other things, (1) Hicks Muse allegedly caused Chancellor
Media to pay too high of a price for LIN because Hicks Muse had allegedly paid
too high of a price for LIN when affiliates of Hicks Muse acquired it in March
1998, and (2) the transaction therefore allegedly constitutes a breach of
fiduciary duty and a waste of corporate assets by Hicks Muse (which is alleged
to control Chancellor Media) and the directors of Chancellor Media named as
defendants. The plaintiff seeks to enjoin consummation or rescission of the
transaction, compensatory damages, an order requiring that the directors named
as defendants "carry out their fiduciary duties," and attorneys' fees and other
costs.

Although not final, plaintiff, defendants and Chancellor Media have tentatively
agreed to settle the Chancellor/LIN Stockholder Lawsuit. Such settlement is
subject to a number of conditions, including, but not limited to, preparing and
finalizing definitive documentation and approval by the court. Pursuant to this
settlement, (1) Hicks Muse and its affiliates agreed to vote all shares of
Chancellor Media common stock that they control in favor of and opposed to the
approval and adoption of the merger agreement in the same percentage as the
other stockholders of Chancellor Media vote at the special meeting of
stockholders called for that purpose, and (2) legal fees and documented expenses
will be paid to plaintiff's counsel. In connection with settlement discussions,
Chancellor Media and LIN provided counsel for the plaintiff an opportunity to
review and comment on the disclosure in the joint proxy statement/prospectus
relating to the LIN Merger. There can be no assurance that a settlement of the
Chancellor/LIN Stockholder Lawsuit can be reached on these terms or any other
terms.

In September 1998, a stockholder class action complaint was filed in the
Delaware Court of Chancery by a stockholder purporting to act individually and
on behalf of all other persons (other than defendants) who own securities of
Chancellor Media and are similarly situated. The defendants in the case are
named as Chancellor Media, Hicks Muse, Thomas O. Hicks, Jeffrey A. Marcus, James
E. de Castro, Eric C. Neuman, Lawrence D. Stuart, Jr., Steven Dinetz, Thomas J.
Hodson, Perry Lewis, John H. Massey and Vernon E. Jordan, Jr. The plaintiff
alleges breach of fiduciary duties, gross mismanagement, gross negligence or
recklessness, and other matters relating to the defendants' actions in
connection with the proposed Capstar Merger. The plaintiff seeks to certify the
complaint as a class action, enjoin consummation of the Capstar Merger, order
defendants to account to plaintiff and other alleged class members for damages,
and award attorneys' fees and other costs. The Company believes that the lawsuit
is without merit and intends to vigorously defend the action.

The Company is also involved in various other claims and lawsuits which are
generally incidental to its business. The Company is vigorously contesting all
such matters and believes that their ultimate resolution will not have a
material adverse effect on its consolidated financial position or results of
operations.

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MANAGEMENT AND BOARD OF DIRECTORS

The directors and executive officers of Chancellor Media, CMHC and the Company
are:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas O. Hicks........................... 52 Chairman of the Board and Director
Jeffrey A. Marcus......................... 52 President, Chief Executive Officer and
Director
James E. de Castro........................ 46 President of Chancellor Radio Group and
Director
Matthew E. Devine......................... 50 Senior Vice President and Chief
Financial Officer
Eric C. Neuman............................ 54 Senior Vice President -- Strategic
Development
James A. McLaughlin....................... 48 President of Chancellor Outdoor Group
Kenneth J. O'Keefe........................ 44 Executive Vice President -- Operations
Thomas P. McMillin........................ 37 Senior Vice President
Richard A. B. Gleiner..................... 46 Senior Vice President and General
Counsel
Thomas J. Hodson.......................... 55 Director
Perry J. Lewis............................ 60 Director
John H. Massey............................ 59 Director
Lawrence D. Stuart, Jr.................... 54 Director
Steven Dinetz............................. 51 Director
Vernon E. Jordan, Jr...................... 63 Director
J. Otis Winters........................... 66 Director
Michael J. Levitt......................... 40 Director
</TABLE>

THOMAS O. HICKS

Mr. Hicks was elected Chairman of the Board and a director of Chancellor Media,
CMHC and the Company upon the consummation of the Chancellor Merger. He had been
Chairman and a director of Chancellor and CRBC prior to the Chancellor Merger,
since April 1996. Mr. Hicks is Chairman of the Board and Chief Executive Officer
of Hicks Muse, a private investment firm located in Dallas, St. Louis, New York,
Mexico City and London specializing in strategic investments, leveraged
acquisitions and recapitalizations. From 1984 to May 1989, Mr. Hicks was
Co-Chairman of the Board and Co-Chief Executive Officer of Hicks & Haas,
Incorporated, a Dallas based private investment firm. Mr. Hicks serves as a
director of Capstar, LIN Holdings Corp., LIN Television, Sybron International
Corporation, Inc., Cooperative Computing, Inc., International Home Foods, Triton
Energy, D.A.C. Vision Inc. and Olympus Real Estate Corporation.

JEFFREY A. MARCUS

Mr. Marcus became the President and Chief Executive Officer of Chancellor Media,
CMHC and the Company on June 1, 1998, and Mr. Marcus became a director of
Chancellor Media, CMHC and the Company upon consummation of the Chancellor
Merger. Prior to the Chancellor Merger, Mr. Marcus served as a director of
Chancellor and CRBC. Prior to joining the Company on June 1, 1998, Mr. Marcus
served as the

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Chairman and Chief Executive Officer of Marcus Cable Properties, Inc. and Marcus
Cable Company, L.L.C. (collectively "Marcus Cable"), the ninth largest cable
television multiple system operator (MSO) in the United States, which Mr. Marcus
formed in 1990. Mr. Marcus continues to serve as Chairman of Marcus Cable and as
a director of Marcus Cable Properties, Inc. Until November 1988, Mr. Marcus
served as Chairman and Chief Executive Officer of WestMarc Communications, Inc.,
an MSO formed through the merger in 1987 of Marcus Communications, Inc. and
Western TeleCommunications, Inc. Mr. Marcus has more than 29 years experience in
the cable television business. Mr. Marcus is a co-owner of the Texas Rangers
Baseball Club and serves as a director of Brinker International, Inc. and a
director or trustee of several charitable and civic organizations.

JAMES E. DE CASTRO

Mr. de Castro served as Chief Operating Officer of Chancellor Media, CMHC and
the Company from September 22, 1997 to August 19, 1998, and on August 19, 1998,
Mr. de Castro was named President of Chancellor Radio Group. From September 5,
1997 to September 22, 1997, Mr. de Castro served as Co-Chief Operating Officer
of Chancellor Media, CMHC and the Company. Mr. de Castro was elected Co-Chief
Operating Officer and a director of Chancellor Media, CMHC and the Company upon
the consummation of the Chancellor Merger. Mr. de Castro was previously
President of Evergreen since 1993 and Chief Operating Officer and a director of
Evergreen since 1989. From 1987 to 1988, Mr. de Castro held various positions
with H&G Communications, Inc. and predecessor entities. From 1981 to 1989, Mr.
de Castro was general manager of radio stations WLUP-FM and WLUP-AM (now known
as WMVP-AM) in Chicago, and from 1989 to 1992, Mr. de Castro was general manager
of radio station KKBT-FM in Los Angeles.

MATTHEW E. DEVINE

Mr. Devine became Senior Vice President and Chief Financial Officer of
Chancellor Media, CMHC and the Company upon consummation of the Chancellor
Merger. Prior thereto, Mr. Devine had been an Executive Vice President of
Evergreen since 1993, Chief Financial Officer, Treasurer and Secretary of
Evergreen since 1988 and a director of Evergreen from 1989 through the
Chancellor Merger.

ERIC C. NEUMAN

Mr. Neuman became Senior Vice President -- Strategic Development of Chancellor
Media and the Company on July 1, 1998. From September 5, 1997 to May 19, 1998,
Mr. Neuman served as a director of Chancellor Media, CMHC and the Company. Mr.
Neuman became a director of Chancellor Media, CMHC and the Company upon
consummation of the Chancellor Merger. Mr. Neuman previously served as a
director of CBC and CRBC since April 1996. From May 1993 to July 1, 1998, Mr.
Neuman had been an officer of Hicks Muse and was most recently serving as Senior
Vice President. From 1985 to 1993, Mr. Neuman was a Managing General Partner of
Communications Partners, Ltd., a private investment firm specializing in media
and communications businesses. Mr. Neuman currently serves as a director of
Capstar, LIN Holdings Corp. and LIN Television.

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JAMES A. MCLAUGHLIN

Mr. McLaughlin became the President of Chancellor Outdoor Group on August 18,
1998. Mr. McLaughlin most recently served as Chief Executive Officer of
privately-held Triumph Outdoor Holdings, LLC. Prior to forming Triumph, Mr.
McLaughlin served as President and Chief Executive Officer of POA Acquisition
Corporation, the successor to Peterson Outdoor Advertising. Prior to joining
POA, Mr. McLaughlin was the Managing Partner of Turner Outdoor Advertising which
was purchased from Ted Turner in 1983. Mr. McLaughlin began his outdoor
advertising career in 1974 with Creative Displays, holding various management
positions as the company grew to become the fourth largest outdoor advertising
company in the United States.

KENNETH J. O'KEEFE

Mr. O'Keefe became an Executive Vice President of Chancellor Media, CMHC and the
Company upon the consummation of the Chancellor Merger. Mr. O'Keefe had been an
Executive Vice President of Evergreen since February of 1996 and served as a
director of Evergreen from May of 1996 until the consummation of the Chancellor
Merger. Prior to joining Evergreen in 1996, Mr. O'Keefe was a director, Chief
Financial Officer and Executive Vice President of Pyramid Communications, Inc.
from March 1994 until Evergreen's acquisition of Pyramid Communications, Inc. on
January 17, 1996. Mr. O'Keefe served in various capacities with Pyramid
Communications, Inc. or predecessor entities during the five-year period prior
to his joining Evergreen in 1996.

THOMAS P. MCMILLIN

Mr. McMillin became a Senior Vice President of Chancellor Media, CMHC and the
Company on October 1, 1998. Mr. McMillin previously served as Executive Vice
President and Chief Financial Officer of Marcus Cable. Mr. McMillin joined
Marcus Cable in 1994 as Vice President -- Finance & Development. Mr. McMillin
continues to serve as a director of Marcus Cable Properties, Inc. Prior to
joining Marcus Cable, Mr. McMillin served for three years as Vice
President -- Corporate Development for Crown Media, Inc., then a cable
television subsidiary of Hallmark Cards. From 1987 to 1992, Mr. McMillin served
in various financial and corporate development positions, including Vice
President Finance & Acquisitions, with Cencom Cable Associates, Inc. From 1983
to 1987, Mr. McMillin was a member of the audit practice of Arthur Andersen &
Co.

RICHARD A. B. GLEINER

Mr. Gleiner became a Senior Vice President and General Counsel of Chancellor
Media, CMHC and the Company on October 1, 1998. Mr. Gleiner has most recently
served as Senior Vice President, Secretary and General Counsel of Marcus Cable,
with responsibility for overseeing all of the legal affairs of Marcus Cable.
Prior to joining Marcus Cable in 1994, Mr. Gleiner had been of counsel to Dow,
Lohnes & Albertson, New York, New York from 1988 to 1991.

THOMAS J. HODSON

Mr. Hodson became a director of Chancellor Media, CMHC and the Company upon
consummation of the Chancellor Merger. Mr. Hodson had previously served as a
director of Evergreen since 1992. Mr. Hodson is President of TJH Capital, Inc.,
a private investment company. He had been the President and a director of
Columbia Falls

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Aluminum Company from January 1994 to March 1998. He had been a Vice President
of Stephens, Inc. from 1986 through 1993.

PERRY J. LEWIS

Mr. Lewis became a director of Chancellor Media, CMHC and the Company upon
consummation of the Chancellor Merger. Mr. Lewis had previously served as a
director of Evergreen since Evergreen acquired Broadcasting Partners, Inc.
("BPI") in 1995. Mr. Lewis was the Chairman of BPI from its inception in 1988
until its merger with Evergreen, and was Chief Executive Officer of BPI from
1993 to 1995. Mr. Lewis is a founder of Morgan, Lewis, Githens & Ahn, an
investment banking and leveraged buyout firm which was established in 1982. Mr.
Lewis serves as director of Aon Corporation, ITI Technologies, Inc., Gradall
Industries, Inc. and Stuart Entertainment, Inc.

JOHN H. MASSEY

Mr. Massey became a director of Chancellor Media, CMHC and the Company upon
consummation of the Chancellor Merger. Prior to the Chancellor Merger, Mr.
Massey served as a director of Chancellor and CRBC. Until August 2, 1996, Mr.
Massey served as the Chairman of the Board and Chief Executive Officer of Life
Partners Group, Inc., an insurance holding company, having assumed those offices
in October 1994. Prior to joining Life Partners, he served, since 1992, as the
Chairman of the Board of, and currently serves as a director of, FSW Holdings,
Inc. Since 1986, Mr. Massey has served as a director of Gulf-California
Broadcast Company. From 1986 to 1992, he also was President of Gulf-California
Broadcast Company. From 1976 to 1986, Mr. Massey was President of Gulf Broadcast
Company. Mr. Massey currently serves as a director of Central Texas Bankshare
Holdings, Inc., Colorado Investment Holdings, Inc., Hill Bancshares Holdings,
Inc., Bank of The Southwest of Dallas, Texas, Columbus State Bank, Columbine JDS
Systems, Inc., The Paragon Group, Inc., the Brazos Fund Group Inc. and Sunrise
Television Group, Inc.

LAWRENCE D. STUART, JR.

Mr. Stuart became a director of Chancellor Media, CMHC and the Company upon
consummation of the Chancellor Merger. Mr. Stuart previously served as a
director of CBC and CRBC since January 1997. Since October 1995, Mr. Stuart has
served as a Managing Director and Principal of Hicks Muse. Prior to joining
Hicks Muse, from 1990 to 1995 he served as the managing partner of the Dallas
office of the law firm Weil, Gotshal & Manges LLP. Mr. Stuart serves as a
director of Capstar.

STEVEN DINETZ

Mr. Dinetz was elected a director of Chancellor Media, CMHC and the Company upon
the consummation of the Chancellor Merger. From the consummation of the
Chancellor Merger through September 22, 1997, Mr. Dinetz served as Co-Chief
Operating Officer of Chancellor Media, CMHC and the Company. Prior to
consummation of the Chancellor Merger, Mr. Dinetz served as President, Chief
Executive Officer and a director of CBC and CRBC since their formation and prior
thereto was the President and Chief Executive Officer and a director of
Chancellor Communications, a predecessor entity of CBC.

VERNON E. JORDAN, JR.

Mr. Jordan became a director of Chancellor Media, CMHC and the Company on
October 14, 1997. Mr. Jordan currently serves as a senior partner in the
Washington, D.C.
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office of the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. Mr. Jordan
serves as a director of American Express Company, Bankers Trust Company, Bankers
Trust Corporation, Dow Jones & Company, Inc., the Ford Foundation, Howard
University, J.C. Penney Company, Inc., Revlon Group, Revlon, Inc., Ryder System,
Inc., Sara Lee Corporation, Union Carbide Corporation, Xerox Corporation, LBJ
Foundation, National Academy Foundation and the Roy Wilkins Foundation.

J. OTIS WINTERS

Mr. Winters became a director of Chancellor Media, CMHC and the Company on May
19, 1998. Mr. Winters currently serves as the non-executive Chairman for The PWS
Group (formerly Pate, Winters & Stone, Inc.). Mr. Winters was Co-founder,
President and director of Avanti Energy Corporation. Mr. Winters also served as
Executive Vice President and a member of the board of directors of the First
National Bank and Trust Company of Tulsa. Mr. Winters was Executive Vice
President and a member of the board of directors of The Williams Companies,
where he served as Chairman of two major subsidiaries and was responsible for
the corporate administrative department. Mr. Winters also serves as a director
and Chairman of the audit and compensation committee of AMX Corporation,
director and Chairman of the audit committee for Arena Brands, Inc., director
and Chairman of the finance and audit committees for Dynegy, Inc. (formerly NGC
Corporation), director for OmniAmerica, Inc. and director and Chairman of the
executive committee for Walden Residential Properties, Inc.

MICHAEL J. LEVITT

Michael J. Levitt became a director of Chancellor Media, CMHC and the Company on
May 19, 1998. Mr. Levitt is a Managing Director and Principal of Hicks Muse.
Before joining Hicks Muse, Mr. Levitt was a Managing Director and Deputy Head of
Investment Banking with Smith Barney Inc. from 1993 through 1995. From 1986
through 1993, Mr. Levitt was with Morgan Stanley & Co. Incorporated, most
recently as a Managing Director responsible for the New York-based Financial
Entrepreneurs Group. Mr. Levitt also serves as a director of LIN Holdings Corp.,
LIN Television, Capstar, STC Broadcasting, Inc., Atrium Companies, Inc. and
International Home Foods, Inc.

COMPENSATION OF DIRECTORS

Directors who are also officers of Chancellor Media, CMHC and the Company
receive no additional compensation for their services as directors. Effective
following the Chancellor Merger, directors of Chancellor Media, CMHC and the
Company who are not officers receive (i) a fee of $36,000 per annum, (ii) a
$1,000 fee for attendance at meetings or, if applicable, a $500 fee for
attendance at meetings by telephone and (iii) a $2,000 fee for service as
chairman of a board committee, a $1,000 fee for attendance at committee meetings
or, if applicable, a $500 fee for attendance at committee meetings by telephone.
Directors of Chancellor Media, CMHC and the Company are also reimbursed for
travel expenses and other out-of-pocket costs incurred in connection with such
meetings. Additionally, all non-employee directors of Chancellor Media, CMHC and
the Company in office on the day of Chancellor Media's annual stockholders
meeting are entitled to an award of options to purchase 25,000 shares of Common
Stock at an exercise price equal to the fair market value of such shares on the
date of grant.

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<PAGE> 80

COMPENSATION OF EXECUTIVE OFFICERS

Summary Compensation. The following table sets forth all compensation, including
bonuses, stock option awards and other payments, paid or accrued by the Company
for the three fiscal years ending December 31, 1997, to the Company's Chief
Executive Officer and each of the Company's other executive officers serving in
such capacity at the end of the last completed fiscal year whose total annual
salary and bonus exceeded $100,000 during the fiscal year ended December 31,
1997.

SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
---------------------------------------- COMPENSATION
OTHER ------------ SECURITIES
NAME AND ANNUAL RESTRICTED UNDERLYING LTIP
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) STOCK AWARDS OPTIONS PAYOUTS
------------------ ---- -------- ---------- --------------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Scott K. Ginsburg........... 1997 $850,000 $3,615,000 -- -- 500,000 --
Former President 1996 750,000 956,000 -- -- 375,000 --
and Chief 1995 650,000 -- -- -- --
Executive Officer
James E. de Castro.......... 1997 $825,000 $2,581,000 -- -- 425,000 --
Chief Operating 1996 750,000 704,000 -- -- 75,000 --
Officer 1995 650,000 125,000 -- -- 300,000 --
Matthew E. Devine........... 1997 $375,000 $1,205,000 -- -- 262,500 --
Senior Vice 1996 300,000 352,000 -- -- 37,500 --
President, 1995 275,000 63,000 -- -- 150,000 --
Chief Financial
Officer and
Secretary
Kenneth J. O'Keefe.......... 1997 $320,000 $1,205,000 -- -- -- --
Executive Vice 1996 210,000(4) 210,000 -- -- 300,000 --
President- 1995 -- -- -- -- -- --
Operations

NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION(3)
------------------ ---------------
<S> <C>
Scott K. Ginsburg........... $9,101
Former President 9,776
and Chief 7,663
Executive Officer
James E. de Castro.......... 2,630
Chief Operating 2,455
Officer 2,455
Matthew E. Devine........... --
Senior Vice --
President, --
Chief Financial
Officer and
Secretary
Kenneth J. O'Keefe.......... --
Executive Vice --
President- --
Operations
</TABLE>

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

(1) No information is set forth herein regarding Steven Dinetz, who served as
the Company's Co-Chief Operating Officer from September 5, 1997 through
September 22, 1997, as amounts paid by the Company to Mr. Dinetz during 1997
for total annual salary and bonus did not exceed $100,000. On September 22,
1997, as part of the Chancellor Merger, Mr. Dinetz resigned from his
position as Co-Chief Operating Officer of the Company, but retained his
position as a director of the Company. Upon Mr. Dinetz' resignation, the
Company accelerated the exercisability of all of Mr. Dinetz' stock options
previously granted by Chancellor Broadcasting Company. In February 1998, the
Company made certain additional cash payments to Mr. Dinetz. Both the
acceleration of the exercisability of the stock options and the cash payment
were part of Mr. Dinetz' severance package which he elected to receive after
a change in job responsibilities directly related to the Chancellor Merger.

(2) The aggregate annual amount of perquisites and other personal benefits,
securities or property does not exceed $50,000 or 10% of the total of the
annual salary and bonus for the named officer.

(3) Represents payments of term life insurance policies.

(4) Represents compensation for the period beginning March 1, 1996, when Mr.
O'Keefe joined the Company.

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<PAGE> 81

Option Grants in Last Fiscal Year. The following table sets forth information
regarding options to purchase Common Stock granted by the Company to its Chief
Executive Officer and the other executive officers named in the Summary
Compensation Table during the 1997 fiscal year.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------
NUMBER OF
SECURITIES % OF TOTAL GRANT DATE VALUE
UNDERLYING OPTIONS --------------------------
OPTIONS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1)(2) FISCAL YEAR ($/SHARE)(2) DATE $(3)
---- ---------- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Scott K. Ginsburg....... 500,000 8.0% $23.25 9/5/07 $6,155,000
James E. de Castro...... 425,000 6.8% 23.25 9/5/07 5,231,750
Matthew E. Devine....... 262,500 4.2% 23.25 9/5/07 3,231,375
Kenneth J. O'Keefe...... -- -- -- -- --
</TABLE>

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

(1) Represents options to purchase shares of Common Stock granted under the
Company's 1995 Stock Option Plan for Executive Officers and Key Employees
(the "1995 Stock Option Plan"). The options awarded to Mr. Ginsburg, Mr. de
Castro and Mr. Devine during the last fiscal year are exercisable in whole
or part beginning on September 5, 1997, and expire on September 5, 2007. The
options may expire earlier upon the occurrence of certain merger or
consolidation transactions involving the Company. The Company is not
required to issue and deliver any certificate for shares of Common Stock
purchased upon exercise of the option or any portion thereof prior to
fulfillment of certain conditions, including the completion of registration
or qualification of such shares of Common Stock under federal or state
securities laws and the payment to the Company of all amounts required to be
withheld upon exercise of the options under any federal, state or local tax
law. The holder of an option has no rights or privileges of a stockholder in
respect of any shares of Common Stock purchasable upon exercise of the
options unless and until certificates representing such shares shall have
been issued by the Company to such holder. Once exercisable, the options are
exercisable by the holder or, upon the death of such holder, by his personal
representatives or by any person empowered to do so under such holder's will
or under the applicable laws of descent and distribution. The options are
not transferable except by will or by the applicable laws of descent and
distribution or pursuant to a QDRO.

(2) Represents the estimated fair value of Common Stock on September 5, 1997,
the date of grant, as adjusted for the two-for-one stock split of the
Company's Common Stock effected in the form of a stock dividend, paid on
January 12, 1998.

(3) The present value of each grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: dividend yield of 0% for all years; expected volatility of
41.88%; risk-free interest rate of 5.38%, and expected life of seven years.

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<PAGE> 82

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES

The following table sets forth information concerning option exercises in the
year ended December 31, 1997 by the Company's Chief Executive Officer and the
other executive officers named in the Summary Compensation Table, and the value
of each such executive officer's unexercised options at December 31, 1997.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Scott K. Ginsburg....... -- -- 500,000 375,000 7,034,000 9,873,000
James E. de Castro...... 300,000 6,979,000 1,220,000 375,000 34,830,250 9,873,000
Matthew E. Devine....... -- -- 562,500 187,500 14,082,000 4,936,500
Kenneth J. O'Keefe...... -- -- -- 300,000 -- 7,992,000
</TABLE>

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

(1) Based upon a per share price for Common Stock of $37.31. This price
represents the closing price for the Common Stock on the Nasdaq National
Market System on December 31, 1997, as adjusted for the two-for-one stock
split of the Company's Common Stock, effected in the form of a stock
dividend, paid on January 12, 1998.

EMPLOYMENT AGREEMENTS

GINSBURG EMPLOYMENT AGREEMENT

Prior to April 14, 1998, Scott K. Ginsburg served as the President and Chief
Executive Officer of Chancellor Media, CMHC and CMCLA. On September 4, 1997, the
Company entered into a new employment agreement (the "Ginsburg Employment
Agreement") with Mr. Ginsburg, to be effective on the closing date of the
Chancellor Merger. The Ginsburg Employment Agreement, which had a term that
extends through September 5, 2002, provided for an initial annual base salary of
$1,000,000 for the first year of the employment agreement, to be increased each
year by a percentage equal to the percentage change in the consumer price index
during the preceding year. In addition, the Ginsburg Employment Agreement
provided for an annual bonus based upon the financial performance of the Company
in relation to certain annual performance targets which are defined in the
Ginsburg Employment Agreement. The Ginsburg Employment Agreement provided that,
on the closing date of the Chancellor Merger and on each of the first four
anniversaries thereof on which Mr. Ginsburg remained employed by the Company,
Mr. Ginsburg would be granted options to purchase 200,000 shares of Common
Stock. If Mr. Ginsburg's employment was terminated without "cause" (as defined
in the Ginsburg Employment Agreement) or if Mr. Ginsburg terminated his
employment for "good reason" (as defined in the Ginsburg Employment Agreement)
prior to the fifth annual anniversary of the consummation of the Chancellor
Merger, Mr. Ginsburg would receive on such termination date a number of options
equal to 1,000,000 minus the number of options previously granted to Mr.
Ginsburg pursuant to the preceding sentence prior to such date. In addition, in
recognition of Mr. Ginsburg's rights under his prior employment agreement, the
Company granted Mr. Ginsburg an option to acquire an additional 300,000 shares
of Common Stock on the closing date of the Chancellor Merger. The Ginsburg
Employment Agreement provided that all options granted pursuant to the Ginsburg
Employment Agreement would be exercisable for ten years from the date of grant
of the option (notwithstanding any termination of employment), at a price per
share equal to the
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<PAGE> 83

market price for Common Stock at the close of trading on the day immediately
preceding the date of the grant. The Ginsburg Employment Agreement provided
that, in the event of termination of Mr. Ginsburg's employment by the Company
without "cause" or by Mr. Ginsburg with "good reason," the Company would make a
one-time cash payment to Mr. Ginsburg in a gross amount such that the net
payments retained by Mr. Ginsburg shall equal $20,000,000. The Ginsburg
Employment Agreement further provided that, in the event of termination of Mr.
Ginsburg's employment by reason of expiration or non-renewal of the Ginsburg
Employment Agreement, the Company would make a one-time cash payment to Mr.
Ginsburg equal to two times the amount of his annual base salary for the
contract year in which his employment terminates. The Ginsburg Employment
Agreement provided that Mr. Ginsburg would have registration rights with respect
to all Common Stock acquired by Mr. Ginsburg at any time which rights were no
less favorable to Mr. Ginsburg as the registration rights held by Hicks Muse and
its affiliates with respect to the common stock of Chancellor immediately prior
to the consummation of the Chancellor Merger. Under the Ginsburg Employment
Agreement, the Company also agreed to make to Mr. Ginsburg a ten-year unsecured
loan in the amount of $3,500,000 bearing interest at a fixed rate equal to the
applicable Federal long-term rate in effect on the date on which the loan is
made. The terms of the loan require Mr. Ginsburg to repay principal of the loan
in five equal annual installments, commencing on the sixth anniversary of the
date on which the loan is made. As of April 15, 1998, Mr. Ginsburg has borrowed
$3,500,000 under the loan.

On April 14, 1998, Mr. Ginsburg resigned as President and Chief Executive
Officer of Chancellor Media, CMHC and CMCLA, and on April 20, 1998, Mr. Ginsburg
resigned as director of Chancellor Media, CMHC and CMCLA and from all
appointments and positions with their respective subsidiaries. On April 20, 1998
(the "Agreement Date"), the Company entered into a separation and consulting
agreement (the "Ginsburg Separation and Consulting Agreement") with Mr.
Ginsburg. The Ginsburg Separation and Consulting Agreement, provides for (a) a
lump sum severance payment of $20,000,000 net of applicable employee withholding
taxes, which is the same amount Mr. Ginsburg would have been entitled to under
the Ginsburg Employment Agreement based upon a termination of his employment by
him for "good reason" or by the Company "without cause," and (b) a grant to Mr.
Ginsburg of stock options to acquire 800,000 shares of Common Stock of
Chancellor Media, subject to the approval of Chancellor Media's stockholders (at
the 1998 annual meeting of stockholders) of a 1998 Chancellor Media Corporation
Employee Stock Option Plan, which is the same number of stock options to which
Mr. Ginsburg would have been entitled based upon a termination of his employment
by him for "good reason" or by the Company "without cause," except that the
Ginsburg Separation and Consulting Agreement provides that the exercise price
for such stock options is $23.25 per share and shall become exercisable as
follows: (i) options for 266,666 shares shall be exercisable beginning on the
Agreement Date for a period of seven years thereafter, (ii) options for 266,667
shares shall be exercisable beginning one year from the Agreement Date for a
period of six years thereafter, and (iii) options for 266,667 shares shall be
exercisable beginning two years from the Agreement Date for a period of five
years thereafter. Previously granted stock options were unaffected by the
Ginsburg Separation and Consulting Agreement. The Ginsburg Separation and
Consulting Agreement also provides that Chancellor Media, CMHC and CMCLA shall
retain Mr. Ginsburg as a consultant through April 13, 2003, Mr. Ginsburg to be
compensated for such consulting services in an amount equal to $2,500,000 for
each full year of consulting

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<PAGE> 84

services. The Ginsburg Separation and Consulting Agreement further provides for
three-year non-solicitation and non-hire covenants by Mr. Ginsburg, as well as
other mutual releases and other provisions typically found in an employment
termination agreement, but does not provide for a noncompetition agreement from
Mr. Ginsburg.

DE CASTRO EMPLOYMENT AGREEMENT

Effective as of April 17, 1998, Chancellor Media and the Company entered into a
new employment agreement (the "de Castro Employment Agreement") with Mr. de
Castro. The de Castro Employment Agreement, which has a term that extends
through April 17, 2003, provides for an initial annual base salary of $900,000
for the first year of the employment agreement, to be increased each year by a
percentage equal to the percentage change in the consumer price index during the
preceding year. In addition, the de Castro Employment Agreement provides for an
annual bonus based upon a percentage of the amount by which the Company exceeds
an annual performance target which is defined in the de Castro Employment
Agreement. The de Castro Employment Agreement provides that, on the effective
date thereof and on each of the first four anniversaries thereof on which Mr. de
Castro remains employed by the Company, Mr. de Castro shall be granted options
to purchase 160,000 shares of Common Stock. If Mr. de Castro's employment is
terminated without "cause" (as defined in the de Castro Employment Agreement) or
if Mr. de Castro terminates his employment for "good reason" (as defined in the
de Castro Employment Agreement) prior to the fifth annual anniversary of the
effective date of the de Castro Employment Agreement, Mr. de Castro will receive
on such termination date a number of options equal to 800,000 minus the number
of options previously granted to Mr. de Castro pursuant to the preceding
sentence prior to such date. The de Castro Employment Agreement provides (i) for
a signing bonus in the gross amount of $1,000,000, (ii) that the Company shall
make a one-time cash payment to Mr. de Castro in the gross amount of $5,000,000
less applicable employee withholding taxes and (iii) that the Company shall
grant to Mr. de Castro stock options to purchase 800,000 shares of Chancellor
Media Common Stock at a price of $42.125. All options granted pursuant to the de
Castro Employment Agreement will be exercisable for ten years from the date of
grant of the option (notwithstanding any termination of employment). The annual
option grant shall be at a price per share equal to the market price for Common
Stock at the close of trading on the day immediately preceding the date of the
grant. The de Castro Employment Agreement provides that, in the event of
termination of Mr. de Castro's employment by the Company without "cause" or by
Mr. de Castro with "good reason," the Company shall make a one-time cash payment
to Mr. de Castro in a gross amount such that the net payments retained by Mr. de
Castro shall equal $5,000,000 less applicable employee withholding taxes. The de
Castro Employment Agreement further provides that, in the event of termination
of Mr. de Castro's employment by Mr. de Castro for other than "good reason," in
exchange for Mr. de Castro's agreement not to induce any employee of any radio
station owned by the Company to terminate such employment or to become employed
by any other radio station, the Company shall continue to pay Mr. de Castro his
applicable base salary through the fifth anniversary of the effective date of
the de Castro Employment Agreement. In such event, the Company also has the
right, in exchange for the payment at the end of each calendar year through
December 31, 2002, of an annual amount equal to the product of Mr. de Castro's
average bonus multiplied by the fraction of each such calendar year which
precedes the fifth anniversary of the effective date of the de Castro Employment
Agreement, to require that Mr. de Castro not be

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<PAGE> 85

employed by or perform activities on behalf of or have ownership interest in any
radio broadcasting station serving the same market as any radio station owned by
the Company. The de Castro Employment Agreement further provides that if Mr. de
Castro's employment is terminated by reason of expiration or non-renewal of the
de Castro Employment Agreement, the Company shall make a one-time cash payment
to Mr. de Castro equal to two times the amount of his annual base salary for the
contract year in which such employment terminates. The de Castro Employment
Agreement provides that if the Company provides employment related benefits in
an aggregate amount greater than or on more favorable terms as are granted to
any other senior executives (except for benefits and Employment Inducements (as
defined therein) provided to the Chief Executive Officer), Mr. de Castro would
be provided such benefits in substantially comparable amount and/or under
substantially comparable terms, on an aggregate basis.

DEVINE EMPLOYMENT AGREEMENT

In May 1998, the Company entered into a new employment agreement (the "Devine
Employment Agreement") with Mr. Devine. The Devine Employment Agreement, which
has a term that extends through April 17, 2003, provides for an initial annual
base salary of $500,000 for the first year of the employment agreement, to be
increased each year by $25,000. In addition, the Devine Employment Agreement
provides for an annual bonus based upon a percentage of the amount by which the
Company exceeds an annual performance target which is defined in the Devine
Employment Agreement. The Devine Employment Agreement provides that, on the
effective date thereof and on each of the first four anniversaries thereof on
which Mr. Devine remains employed by the Company, Mr. Devine shall be granted
options to purchase 120,000 shares of Common Stock. If Mr. Devine's employment
is terminated without "cause" (as defined in the Devine Employment Agreement) or
if Mr. Devine terminates his employment for "good reason" (as defined in the
Devine Employment Agreement) prior to the fifth annual anniversary of the
effective date of the Devine Employment Agreement, Mr. Devine will receive on
such termination date a number of options equal to 600,000 minus the number of
options previously granted to Mr. Devine pursuant to the preceding sentence
prior to such date. In addition, the Devine Employment Agreement provides (a)
for a signing bonus in the gross amount of $1,000,000, (b) that the Company
shall make a one-time cash payment to Mr. Devine of $2,000,000 less applicable
employee withholding taxes and (c) that the Company shall grant to Mr. Devine
stock options to purchase 600,000 shares of Chancellor Media Common Stock at a
price of $42.125 per share. The Devine Employment Agreement provides that all
options granted pursuant to the Devine Employment Agreement will be exercisable
for ten years from the date of grant of the option (notwithstanding any
termination of employment). The annual option grant shall be at a price per
share equal to the market price for Common Stock at the close of trading on the
day immediately preceding the date of the grant. The Devine Employment Agreement
provides that, in the event of termination of Mr. Devine's employment by the
Company without "cause" or by Mr. Devine with "good reason," the Company shall
make a one-time cash payment to Mr. Devine in a gross amount such that the net
payments retained by Mr. Devine shall equal $2,000,000 less applicable employee
withholding taxes. The Devine Employment Agreement further provides that, in the
event of termination of Mr. Devine's employment by Mr. Devine for other than
"good reason," in exchange for Mr. Devine's agreement not to induce any employee
of any radio station owned by the Company to terminate such employment or to
become employed by any other radio

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<PAGE> 86

station, the Company shall continue to pay Mr. Devine his applicable base salary
through the earlier of the fifth anniversary of the effective date of the Devine
Employment Agreement or the second anniversary of the termination of employment
(the "Cessation Date"). In such event, the Company also has the right, in
exchange for the payment at the end of each calendar year through the year which
includes the Cessation Date of an annual amount equal to the product of Mr.
Devine's average bonus multiplied by the fraction of each such calendar year
which precedes the Cessation Date, to require that Mr. Devine not be employed by
or perform activities on behalf of or have an ownership interest in any radio
broadcasting station serving the same market as any radio station owned by the
Company. The Devine Employment Agreement further provides that if Mr. Devine's
employment is terminated by reason of expiration or non-renewal of the Devine
Employment Agreement, the Company shall make a one-time cash payment to Mr.
Devine equal to two times the amount of his annual base salary for the contract
year in which such employment terminates. The Devine Employment Agreement
provides that if the Company provides employment related benefits in an
aggregate amount greater than or on more favorable terms as are granted to any
other senior executives (except for benefits and Employment Inducements (as
defined therein) provided to the Chief Executive Officer or Chief Operating
Officer), Mr. Devine would be provided such benefits in substantially comparable
amount and/or substantially comparable terms, on an aggregate basis.

O'KEEFE EMPLOYMENT AGREEMENT

In February of 1996, the Company entered into an employment agreement (the
"O'Keefe Employment Agreement") with Mr. O'Keefe that has a term through
February 28, 1999 and provides for an annual base salary beginning at $300,000
in 1996 and increasing incrementally to $350,000 in 1998. The O'Keefe Employment
Agreement provides for Mr. O'Keefe to receive an annual incentive bonus based
upon a percentage of the amount by which the Company exceeds certain annual
performance targets as defined in the agreement. The agreement also provides
that Mr. O'Keefe is eligible for certain options to purchase Common Stock.
Pursuant to the agreement, Mr. O'Keefe was awarded options to purchase 300,000
shares of Common Stock. The stock options vest and become exercisable subject to
Mr. O'Keefe's continued employment by the Company through February 28, 1999.
However, Mr. O'Keefe may be eligible to exercise the options on a pro rata basis
in the event he is terminated prior to February 28, 1999 upon certain events
specified in his employment agreement, including Mr. O'Keefe's death or
disability, a change in control of the Company, termination without cause and a
material breach of the employment agreement by the Company leading to the
resignation of Mr. O'Keefe. The agreement terminates upon the death of Mr.
O'Keefe and may be terminated by the Company upon the disability of Mr. O'Keefe
or for or without "cause" (as defined in the agreement). During the term of the
agreement, Mr. O'Keefe is prohibited from engaging in certain activities
competitive with the business of the Company. However, with the approval of the
Company, Mr. O'Keefe may engage in activities not directly competitive with the
business of the Company as long as such activities do not materially interfere
with Mr. O'Keefe's employment obligations. On March 1, 1997, Evergreen and Mr.
O'Keefe amended the O'Keefe Employment Agreement in order to make certain
provisions of the O'Keefe Employment Agreement comparable to those contained in
Mr. de Castro's and Mr. Devine's former employment agreement.

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<PAGE> 87

On September 4, 1997, the Company amended its employment agreement (the "O'Keefe
Amendment") with Mr. O'Keefe. As a result of the O'Keefe Amendment, the O'Keefe
Employment Agreement is to expire as of December 31, 1997, and the O'Keefe
Amendment is effective on January 1, 1998. The O'Keefe Amendment, which has a
term through December 31, 2000, provides for an initial annual base salary of
$500,000 for the first year of the employment agreement, to be increased each
year by $25,000. In addition, the O'Keefe Amendment provides for an annual bonus
based upon the financial performance of the Company in relation to certain
annual performance targets which are defined in the O'Keefe Amendment. The
O'Keefe Amendment provides that, on January 1, 1998 and 1999, assuming that Mr.
O'Keefe remains employed by the Company on such dates, Mr. O'Keefe shall be
granted options to purchase 100,000 shares of Common Stock. Furthermore, with
respect to the option to purchase 300,000 shares of Common Stock granted under
the O'Keefe Employment Agreement, (i) all such options will become exercisable
on February 28, 1999 if Mr. O'Keefe remains employed by the Company on such
date, (ii) if Mr. O'Keefe's employment is terminated as a result of Mr.
O'Keefe's death or disability or resignation by Mr. O'Keefe following a material
breach of the O'Keefe Amendment by the Company, a prorated portion of such
options will become exercisable and (iii) if Mr. O'Keefe's employment is
terminated without "cause" (as defined in the O'Keefe Amendment) or there is a
"change of control" (as defined in the O'Keefe Amendment), all such options
shall become exercisable. The O'Keefe Amendment provides that all options
described in the O'Keefe Amendment will be exercisable for seven years from the
date of grant of the option, and that all options granted pursuant to the
O'Keefe Amendment will be granted at a price per share equal to the market price
for Common Stock on the date of the grant. The O'Keefe Amendment provides that,
in the event of termination of Mr. O'Keefe's employment by the Company without
"cause," the Company shall pay Mr. O'Keefe his base salary and a prorated annual
bonus and provide health and life insurance coverage until the earlier of the
expiration of the term of the O'Keefe Amendment or the date on which Mr. O'Keefe
becomes employed in a position providing similar compensation.

MARCUS EMPLOYMENT AGREEMENT

The Company entered into an employment agreement (the "Marcus Employment
Agreement") with Jeffrey A. Marcus which is effective as of June 1, 1998. The
Marcus Employment Agreement, which has a term that extends through May 31, 2003,
provides for an initial annual base salary of $1,125,000 for the first year of
the employment agreement, to be increased each year by a percentage equal to the
percentage change in the consumer price index during the preceding year. The
Marcus Employment Agreement provides for a one-time execution bonus in the gross
amount of $1,000,000. In addition, the Marcus Employment Agreement provides for
an annual bonus in an amount to be determined by the Compensation Committee in
its reasonable discretion; provided, however, the annual bonus shall in no event
be less than $2,000,000 nor greater than $4,000,000. The Marcus Employment
Agreement provides that, on the effective date thereof and on each of the four
anniversaries thereof on which Mr. Marcus remains employed by the Company, Mr.
Marcus shall be granted options to purchase 200,000 shares of Common Stock. If
Mr. Marcus' employment is terminated without "cause" (as defined in the Marcus
Employment Agreement) or if Mr. Marcus terminates his employment for "good
reason" (as defined in the Marcus Employment Agreement) prior to the fourth
annual anniversary of the effective date of the Marcus Employment

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<PAGE> 88

Agreement, Mr. Marcus will receive on such termination date a number of options
equal to 1,000,000 minus the number of options previously granted to Mr. Marcus
pursuant to the preceding sentence prior to such date. The Marcus Employment
Agreement provides that all options granted pursuant to the Marcus Employment
Agreement will be exercisable for ten years from the date of grant of such
options (notwithstanding any termination of employment), at a price per share
equal to the market price for Common Stock at the close of trading on the day
immediately preceding the date of the grant. Under the Marcus Employment
Agreement, Mr. Marcus shall also be granted options to purchase 1,250,000 shares
of Common Stock, one-half of which will vest on the date of the grant and
one-half of which will vest on the 18th month anniversary of the date of the
grant, with each option exercisable for ten years from the date of grant of such
options (notwithstanding any termination of employment), at a price of $42.125
per share. The Marcus Employment Agreement provides that, in the event of
termination of Mr. Marcus's employment by the Company without "cause" or by Mr.
Marcus with "good reason," the Company shall make a one-time cash payment to Mr.
Marcus in a gross amount such that the net payments retained by Mr. Marcus
(after payment by the Company of excise taxes imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, with respect to such payment, to the
extent applicable) shall equal $6,250,000.

The Marcus Employment Agreement further provides that, in the event of
termination of Mr. Marcus's employment by Mr. Marcus for other than "good
reason," in exchange for Mr. Marcus's agreement not to induce any employee of
any radio station owned by the Company to terminate such employment or to become
employed by any other radio station, the Company shall continue to pay Mr.
Marcus his applicable base salary through the fifth anniversary of the effective
date thereof. In such event, the Company also has the right, in exchange for the
payment at the end of each calendar year until each calendar year ending
December 31, 2003, of an annual amount equal to the product of Mr. Marcus's
average bonus multiplied by the fraction of each such calendar year which
precedes the fifth anniversary of the effective date of the Marcus Employment
Agreement, to require that Mr. Marcus not be employed by or perform activities
on behalf of or have ownership interest in any radio or television broadcasting
station serving the same market as any radio station owned by the Company, or in
connection with any business enterprise that is directly or indirectly engaged
in any of the business activities in which any business owned by the Company has
significant involvement, subject to certain exceptions. The Marcus Employment
Agreement further provides that if Mr. Marcus's employment is terminated by
reason of expiration or non-renewal of the Marcus Employment Agreement, the
Company shall make a one-time cash payment to Mr. Marcus equal to two times the
amount of his annual base salary for the contract year in which such employment
terminates. The Marcus Employment Agreement also provides that Mr. Marcus shall
be entitled to receive personal security services, to be paid for by the
Company, and certain other customary benefits and perquisites.

MCLAUGHLIN EMPLOYMENT AGREEMENT

On August 18, 1998, the Company entered into an employment agreement with Mr.
McLaughlin (the "McLaughlin Employment Agreement"), that has a term that extends
through August 18, 2003, and provides for an annual base salary of $500,000 for
the first year of the employment agreement, to be increased each year by a
percentage equal to the percentage change in the consumer price index during the
preceding year. The

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McLaughlin Employment Agreement provides for Mr. McLaughlin to receive an annual
bonus as determined by the Compensation Committee, based upon the recommendation
of the Chief Executive Officer. The McLaughlin Employment Agreement also
provides that on the agreement date and on each of the first four anniversaries
thereof on which Mr. McLaughlin remains employed by the Company, Mr. McLaughlin
shall be granted options to purchase 60,000 shares of Common Stock of the
Company. If Mr. McLaughlin's employment is terminated without "cause" (as
defined in the McLaughlin Employment Agreement) or if Mr. McLaughlin terminates
his employment for "good reason" (as defined in the McLaughlin Employment
Agreement) prior to the fifth anniversary of the effective date of the
McLaughlin Employment Agreement, Mr. McLaughlin will receive on such termination
date a number of options equal to 300,000 minus the number of options previously
granted to Mr. McLaughlin pursuant to the preceding sentence prior to such date.
In addition, as an execution bonus, the Company will grant to Mr. McLaughlin
options to purchase 300,000 shares of Common Stock of the Company at a price of
$48.375 per share 25% of which shall vest on the effective date thereof and 25%
of which will vest on each of the three anniversaries of the date of grant. The
Company also paid to Mr. McLaughlin a one-time execution bonus in the gross
amount of $1,000,000. The McLaughlin Employment Agreement provides that all
options granted pursuant to the McLaughlin Employment Agreement will be
exercisable for ten years from the date of grant of the option (notwithstanding
any termination of employment). The annual option grant shall be at a price per
share equal to the market price for Common Stock at the close of trading on the
day immediately preceding the date of the grant. The McLaughlin Employment
Agreement provides that, in the event of termination of Mr. McLaughlin's
employment by the Company without "cause" or by Mr. McLaughlin with "good
reason," the Company shall make a one-time cash payment to Mr. McLaughlin in a
gross amount such that the net payments retained by Mr. McLaughlin (after
payment by the Company of any excise taxes imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, with respect to such payment) shall
equal $1,000,000. The McLaughlin Employment Agreement further provides that, in
the event of termination of Mr. McLaughlin's employment by Mr. McLaughlin for
other than "good reason," in exchange for Mr. McLaughlin's agreement not to
induce any employee of any media company owned by the Company to terminate such
employment or to become employed by any other media company, the Company shall
continue to pay Mr. McLaughlin his applicable base salary though the earlier of
the fifth anniversary of the effective date thereof or the second anniversary of
the termination of employment (the "McLaughlin Cessation Date"). In such event,
the Company also has the right, in exchange for the payment at the end of each
calendar year through the year which includes the McLaughlin Cessation Date of
an annual amount equal to the product of Mr. McLaughlin's average bonus
multiplied by the fraction of each such calendar year which precedes the
McLaughlin Cessation Date, to require that Mr. McLaughlin not be employed by or
perform activities on behalf of or have an ownership interest in any media
company serving the same market as any media company owned by the Company.

NEUMAN EMPLOYMENT AGREEMENT

On June 1, 1998, the Company entered into an employment agreement with Mr.
Neuman, to be effective July 1, 1998 (the "Neuman Employment Agreement"), that
has a term that extends through July 1, 2003, and provides for an annual base
salary of $500,000 for

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the first year of the employment agreement, to be increased each year by
$25,000. The Neuman Employment Agreement provides for Mr. Neuman to receive an
annual bonus as determined by the Compensation Committee, based upon the
recommendation of the Chief Executive Officer; provided, however, that the bonus
shall in no event be less than $500,000 nor greater than $1,500,000. The Neuman
Employment Agreement provides that on the agreement date and on each of the
first four anniversaries of the effective date thereof on which Mr. Neuman
remains employed by the Company, Mr. Neuman shall be granted options to purchase
100,000 shares of Common Stock of the Company. If Mr. Neuman's employment is
terminated without "cause" (as defined in the Neuman Employment Agreement) or if
Mr. Neuman terminates his employment for "good reason" (as defined in the Neuman
Employment Agreement) prior to the fifth anniversary of the effective date of
the Neuman Employment Agreement, Mr. Neuman will receive on such termination
date a number of options equal to 500,000 minus the number of options previously
granted to Mr. Neuman pursuant to the preceding sentence prior to such date. In
addition, as an execution bonus, the Company will grant to Mr. Neuman options to
purchase 300,000 shares of Common Stock of the Company at a price of $42.3125
per share. The Neuman Employment Agreement provides that all options granted
pursuant to the Neuman Employment Agreement will be exercisable for ten years
from the date of grant of the option (notwithstanding any termination of
employment). The annual option grant shall be at a price per share equal to the
market price for Common Stock at the close of trading on the day immediately
preceding the date of the grant. The Neuman Employment Agreement provides that,
in the event of termination of Mr. Neuman's employment by the Company without
"cause" or by Mr. Neuman with "good reason," the Company shall make a one-time
cash payment to Mr. Neuman in a gross amount such that the net payments retained
by Mr. Neuman (after payment by the Company of any excise taxes imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, with respect to
such payment) shall equal $2,000,000. The Neuman Employment Agreement further
provides that, in the event of termination of Mr. Neuman's employment by Mr.
Neuman for other than "good reason," in exchange for Mr. Neuman's agreement not
to induce any employee of any media company owned by the Company to terminate
such employment or to become employed by any other media company, the Company
shall continue to pay Mr. Neuman his applicable base salary through the earlier
of the fifth anniversary of the effective date thereof or the second anniversary
of the termination of employment (the "Neuman Cessation Date"). In such event,
the Company also has the right, in exchange for the payment at the end of each
calendar year through the year which includes the Neuman Cessation Date of an
annual amount equal to the product of Mr. Neuman's average bonus multiplied by
the fraction of each such calendar year which precedes the Neuman Cessation
Date, to require that Mr. Neuman not be employed by or perform activities on
behalf of or have an ownership interest in any media company serving the same
market as any media company owned by the Company. The Neuman Employment
Agreement further provides that if Mr. Neuman's employment is terminated by
reason of expiration or non-renewal of the Neuman Employment Agreement, the
Company shall make a one-time cash payment to Mr. Neuman equal to two times the
amount of his annual base salary for the contract year in which such employment
terminates. The Neuman Employment Agreement provides that if the Company
provides employment related benefits in an aggregate amount greater than or on
more favorable terms as are granted to any other senior executives (except for
benefits and Employment Inducements (as defined therein) provided to the Chief
Executive Officer or Chief

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Operating Officer), Mr. Neuman would be provided such benefits in a
substantially comparable amount and/or under substantially comparable terms, on
an aggregate basis.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

The members of the compensation committee of Chancellor Media, CMHC and the
Company are Messrs. Hicks, Massey, Jordan, Winters and Lewis. Mr. Hicks serves
as chairman of the compensation committee, and also serves as the Chairman of
the Board of Chancellor Media, CMHC and the Company. Mr. Massey previously
served on the compensation committee of CBC, and Mr. Lewis previously served on
the compensation committee of Evergreen.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table lists information concerning the beneficial ownership of the
common stock, $0.01 per value ("Chancellor Media Common Stock"), of Chancellor
Media on November 30, 1998 by (i) each director and executive officer of
Chancellor Media and their affiliates on November 30, 1998, (ii) all directors
and executive officers as a group and (iii) each person known to the Company to
own beneficially more than 5% of the Chancellor Media Common Stock. As of
November 30, 1998, 1,000 shares of the common stock of CMCLA are held
beneficially and of record by CMHC, and 40 shares are held beneficially and of
record by a wholly-owned subsidiary of CMHC. As of November 30, 1998, all of the
common stock of CMHC is held beneficially and of record by Chancellor Media.

<TABLE>
<CAPTION>
NAME OF STOCKHOLDER SHARES PERCENT(1)
- ------------------- ---------- ----------
<S> <C> <C>
Hicks Muse Parties(2)........................ 16,944,371 11.9%
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Putnam Investments, Inc.(3).................. 16,956,556 11.9%
One Post Office Square
Boston, Massachusetts 02109
Janus Capital Corporation(4)................. 14,507,490 10.2%
100 Fillmore Street
Denver, Colorado 80206-4923
Thomas O. Hicks.............................. 16,944,371(5) 11.9%
Jeffrey A. Marcus............................ 1,018,402(6) *
James E. de Castro........................... 2,405,000(7) 1.7%
Matthew E. Devine............................ 1,470,000(8) 1.0%
Eric C. Neuman............................... 406,356(9) *
James A. McLaughlin.......................... 75,000(10) *
Kenneth J. O'Keefe........................... 104,000(11) *
Thomas P. McMillin........................... 54,500(12) *
Richard A.B. Gleiner......................... 40,500(13) *
Thomas J. Hodson............................. 37,500(14) *
Perry J. Lewis............................... 140,715(15) *
Lawrence D. Stuart, Jr....................... 11,292 *
John H. Massey............................... 53,524(16) *
Steven Dinetz................................ 1,443,954(17) *
Vernon E. Jordan, Jr......................... 12,500(18) *
J. Otis Winters.............................. -- *
Michael J. Levitt............................ -- *
All directors and executive officers as a
group(17 persons).......................... 24,217,614(19) 16.2%
</TABLE>

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

* Less than one percent (1%).

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<PAGE> 93

(1) Assumes that 142,724,983 shares of Chancellor Media Common Stock were
issued and outstanding as of November 30, 1998.

(2) Consists of 1,278,969 shares owned of record by Thomas O. Hicks, 346,736
shares owned of record by Mr. Hicks as trustee for certain trusts of which
his children are beneficiaries and 20,816 shares owned of record by Mr.
Hicks as co-trustee of a trust for the benefit of unrelated parties. Also
includes 15,297,850 shares owned of record by three limited partnerships of
which the ultimate general partners are entities controlled by Mr. Hicks or
Hicks Muse. Mr. Hicks is the controlling stockholder of Hicks Muse and
serves as Chairman of the Board, Chief Executive Officer and Secretary of
Hicks Muse. Accordingly, Mr. Hicks may be deemed to be the beneficial owner
of all or a portion of the stock owned of record by such limited
partnerships. John R. Muse, Charles W. Tate, Jack D. Furst, Lawrence D.
Stuart, Jr., Michael J. Levitt, David B. Deniger and Dan H. Blanks are
officers, directors and minority stockholders of Hicks Muse and as such may
be deemed to share with Mr. Hicks the power to vote or dispose of shares
held by such partnerships. Messrs. Hicks, Muse, Tate, Furst, Stuart,
Levitt, Deniger and Blanks disclaim the existence of a group and each of
them disclaims beneficial ownership of shares not owned of record by him.

(3) Based solely upon information contained in such person's filing on
September 18, 1998 of Schedule 13G under the Exchange Act.

(4) Includes 7,747,315 shares owned by Janus Fund, an investment company
registered under the Investment Company Act of 1940, as amended. Based
solely upon information contained in such person's filing on September 10,
1998 of Schedule 13G under the Exchange Act.

(5) Consists of 1,278,969 shares owned of record by Mr. Hicks, 346,736 shares
owned of record by Mr. Hicks as trustee for certain trusts of which his
children are beneficiaries and 20,816 shares owned of record by Mr. Hicks
as co-trustee of a trust for the benefit of unrelated parties. Also
includes 15,297,850 shares owned of record by three limited partnerships of
which the ultimate general partners are entities controlled by Mr. Hicks
and Hicks Muse. Mr. Hicks is the controlling stockholder of Hicks Muse and
serves as Chairman of the Board, Chief Executive Officer and Secretary of
Hicks Muse. Accordingly, Mr. Hicks may be deemed to be the beneficial owner
of all or a portion of the stock owned of record by such limited
partnerships. Mr. Hicks disclaims beneficial ownership of shares not owned
of record by him.

(6) Includes options that are exercisable within 60 days of the date hereof to
purchase 849,242 shares, 825,000 of which are subject to options to be
granted pursuant to the Marcus Employment Agreement.

(7) Consists of options that are exercisable within 60 days of the date hereof
to purchase 2,405,000 shares, 960,000 of which are subject to options to be
granted pursuant to the de Castro Employment Agreement.

(8) Consists of options that are exercisable within 60 days of the date hereof
to purchase 1,470,000 shares, 720,000 of which are subject to options to be
granted pursuant to the Devine Employment Agreement.

(9) Includes options that are exercisable within 60 days of the date hereof to
purchase 400,000 shares to be granted pursuant to the Newman Employment
Agreement.
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<PAGE> 94

(10) Consists of options that are exercisable within 60 days of the date hereof
to purchase 75,000 shares to be granted pursuant to the McLaughlin
Employment Agreement.

(11) Includes options that are exercisable within 60 days of the date hereof to
purchase 100,000 shares.

(12) Includes options that are exercisable within 60 days of the date hereof to
purchase 50,000 shares.

(13) Includes options that are exercisable within 60 days of the date hereof to
purchase 37,500 shares.

(14) Consists of options that are exercisable within 60 days of the date hereof
to purchase 37,500 shares.

(15) Includes options that are exercisable within 60 days of the date hereof to
purchase 37,500 shares.

(16) Consists of options that are exercisable within 60 days of the date hereof
to purchase 36,742 shares and 16,782 shares held by Mr. Massey's wife as
her separate property.

(17) Includes (i) options that are exercisable within 60 days of the date hereof
to purchase 1,310,956 shares, (ii) 1,090 shares held by an individual
retirement account for the benefit of Mr. Dinetz and (iii) 1,000 shares
held by Mr. Dinetz' daughter. Mr. Dinetz disclaims beneficial ownership of
the shares of Chancellor Media Common Stock that are not owned by him of
record.

(18) Consists of options that are exercisable within 60 days of the date hereof
to purchase 12,500 shares.

(19) Includes options to purchase 6,821,940 shares.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company is subject to a financial monitoring and oversight agreement, dated
April 1, 1996, as amended on September 4, 1997 (the "Financial Monitoring and
Oversight Agreement"), with Hicks, Muse & Co. Partners, L.P. ("Hicks Muse
Partners"), an affiliate of Hicks Muse. Pursuant to the Financial Monitoring and
Oversight Agreement, the Company pays to Hicks Muse Partners an annual fee of
not less than $1.0 million, subject to increase or decrease (but not below $1.0
million), based upon changes in the Consumer Price Index. Hicks Muse Partners is
also entitled to reimbursement for any out-of-pocket expenses incurred in
connection with rendering services under the Financial Monitoring and Oversight
Agreement. The Financial Monitoring and Oversight Agreement provides that the
agreement will terminate at such time as Thomas O. Hicks and his affiliates
collectively cease to beneficially own at least two-thirds of the number of
shares of Common Stock beneficially owned by them, collectively, at the
effective time of the Chancellor Merger. The Company and Chancellor paid Hicks
Muse Partners a total of $0.7 million in 1997 pursuant to the Financial
Monitoring and Oversight Agreement of which $0.3 million was paid by the Company
following the Chancellor Merger and which is included in corporate general and
administrative expense in the accompanying consolidated statement of operations.

In connection with the consummation of the Chancellor Merger, a Financial
Advisory Agreement among Chancellor, CRBC and HM2/Management Partners, L.P.
("HM2/Management"), an affiliate of Hicks Muse, was terminated. In consideration
thereof, in lieu of any payments required to be made under the Financial
Advisory Agreement in respect of the transactions contemplated by the Chancellor
Merger, HM2/Management was paid a fee of $10.0 million in cash upon consummation
of the Chancellor Merger which was accounted for as a direct acquisition cost.
As part of the termination of the Financial Advisory Agreement, the Company paid
Hicks Muse Partners $1.5 million for financial advisory services in connection
with the Katz Acquisition which was accounted for as a direct acquisition cost.

Upon the consummation of the Capstar Merger, the Company will become subject to
a Financial Advisory Agreement pursuant to which Hicks Muse Partners will be
entitled to be financial advisor on certain transactions of the Company and its
subsidiaries as follows: (a) on any acquisition, disposition or exchange
transaction (an "M&A Transaction") for which the Company or any such
subsidiaries retain any Financial Advisor (as hereinafter defined), Hicks Muse
Partners shall be entitled to serve as a co-financial advisor on such
transaction and shall have the right to mutually agree with the Company's
indirect parent upon the selection of any such Financial Advisor or Financial
Advisors so retained and, unless mutually agreed to otherwise by Hicks Muse
Partners and the Company's indirect parent, Hicks Muse Partners would be
entitled to receive a "market fee" for its services in connection therewith of
no less than 50% of the aggregate fees paid to all such advisors (including
Hicks Muse Partners), (b) on any M&A Transaction of the Company or any of its
subsidiaries for which a Financial Advisor is not retained by the Company or any
of its subsidiaries but has a transaction value in excess of $500 million, Hicks
Muse Partners would be the exclusive financial advisor of the Company and its
subsidiaries and receive a "market fee" for its services in connection
therewith, and (c) on any underwriting, loan syndication, equity placement or
other financing transaction (a "Financing Transaction") in which the Company or
any of its subsidiaries retain one or more Financial Advisors, Hicks Muse
Partners would have the right to mutually agree with the Company's parent

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<PAGE> 96

on the selection of each such Financial Advisor in connection with such
Financing Transaction. "Financial Advisor" shall mean any investment bank,
commercial bank, underwriter, arranging or syndication agent or other person or
entity that provides investment banking, underwriting, financial advice,
valuation or other similar services with respect to any M&A Transaction or
Financing Transaction; provided, however, that a Financial Advisor shall not
include ordinary business brokers.

Vernon E. Jordan, Jr., a director of the Company, also serves on the board of
directors of Bankers Trust Company and Bankers Trust Corporation. BT Alex. Brown
Incorporated, an affiliate of Bankers Trust Company and Bankers Trust
Corporation, served as an initial purchaser of the Old Notes in the Original
Offering. In addition, affiliates of Bankers Trust Company and Bankers Trust
Corporation have in the past provided a variety of commercial banking,
investment banking and financial advisory services to the Company, and expect to
continue to provide such services to the Company in the future.

Chancellor Media is subject to that certain Amended and Restated Stockholders
Agreement, dated as of February 14, 1996, as amended on September 4, 1997 (the
"Chancellor Stockholders Agreement"), among Chancellor and certain holders of
the Common Stock held by former stockholders of Chancellor, which provides for
certain registration rights for the shares of Common Stock held by such holders.
The Chancellor Stockholders Agreement relates to shares of Common Stock held by
certain affiliates of Hicks Muse.

As part of the Chancellor Merger, the Company has made certain cash payments and
accelerated the vesting of certain stock options previously granted by
Chancellor to Steven Dinetz, a director of the Company. For a description of
these transactions, see "Executive Compensation -- Compensation of Executive
Officers."

The Company has entered into an agreement relating to the Capstar/SFX
Transaction and Chancellor Media has entered into an agreement relating to the
Capstar Merger, each with Capstar, which is affiliated with the Company. In
addition, Chancellor Media has entered into an agreement relating to the LIN
Merger. Affiliates of Hicks Muse have a controlling interest in Capstar and LIN
and a substantial investment in Chancellor Media. For a description of these
transactions, see "Business -- Recent Developments."

Certain radio stations owned by Capstar have engaged Katz to sell national spot
advertising air time, and such stations pay customary commissions to Katz for
such services. Additionally, Capstar's radio stations are affiliated with the
AMFM Radio Networks and receive a portion of advertising revenues generated by
the network.

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THE EXCHANGE OFFER

PURPOSE AND EFFECT

The Old Notes were sold by the Company on November 12, 1998. In connection with
that placement, the Company entered into the Registration Rights Agreement,
which requires that the Company file the Registration Statement under the
Securities Act with respect to the New Notes and, upon the effectiveness of that
Registration Statement, offer to the holders of the Old Notes the opportunity to
exchange their Old Notes for a like principal amount of New Notes, which will be
issued without a restrictive legend and which generally may be reoffered and
resold by the holder without registration under the Securities Act. The
Registration Rights Agreement further provides that the Company must use its
reasonable best efforts to (i) cause the Registration Statement with respect to
the exchange offer to be declared effective within 180 days of the date on which
the Company issued the Old Notes and (ii) consummate the exchange offer on or
before the 225th day following the date on which the Company issued the Old
Notes. Except as provided below, upon the completion of the exchange offer, the
Company's obligations with respect to the registration of the Old Notes and the
New Notes will terminate. A copy of the Registration Rights Agreement has been
filed as an exhibit to the Registration Statement, of which this Prospectus is a
part, and the summary herein of the material provisions thereof does not purport
to be complete and is qualified in its entirety by reference thereto. As a
result of the timely filing and the effectiveness of the Registration Statement,
certain liquidated damages provided for in the Registration Rights Agreement
will not become payable by the Company. Following the completion of the exchange
offer (except as set forth in the paragraph immediately below), holders of Old
Notes not tendered will not have any further registration rights and those Old
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for the Old Notes could be adversely
affected upon consummation of the exchange offer.

In order to participate in the exchange offer, a holder must represent to the
Company and the Guarantors, among other things, that (i) the New Notes acquired
pursuant to the exchange offer are being obtained in the ordinary course of
business of the holder, (ii) the holder is not engaging in and does not intend
to engage in a distribution of the New Notes, (iii) the holder does not have an
arrangement or understanding with any person to participate in the distribution
of the New Notes and (iv) the holder is not an "affiliate," as defined under
Rule 405 promulgated under the Securities Act, of the Company and the
Guarantors. Pursuant to the Registration Rights Agreement if (i) the Company
determines that it is not permitted to effect the exchange offer as contemplated
hereby because of any change in applicable law or Commission policy, or (ii) any
Holder of Transfer Restricted Securities notifies the Company prior to the 20th
day following consummation of the exchange offer (a) that it is prohibited by
law or SEC policy from participating in the exchange offer, (b) that it may not
resell the New Notes acquired by it in the exchange offer to the public without
delivering a prospectus and that this Prospectus is not appropriate or available
for such resales or (c) that it is a broker-dealer and owns Old Notes acquired
directly from the Company or an affiliate of the Company, the Company is
required to file a "shelf" registration statement for a continuous offering
pursuant to Rule 415 under the Securities Act in respect of the Old Notes. For
purposes of the foregoing, "Transfer Restricted Securities" means each Old Note
until (i) the date on which such Note has been exchanged by a person other than
a broker-dealer for a New

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Note in the exchange offer, (ii) following the exchange by a broker-dealer in
the Exchange Offer of an Old Note for a New Note, the date on which such New
Note is sold to a purchaser who receives from such broker-dealer on or prior to
the date of such sale a copy of this Prospectus, (iii) the date on which such
Old Note has been electively registered under the Securities Act and disposed of
in accordance with such "shelf" registration statement or (iv) the date on which
such Old Note is distributed to the public pursuant to Rule 144 under the Act or
may be distributed to the public pursuant to Rule 144(k) under the Act. Other
than as set forth in this paragraph, no holder will have the right to
participate in the "shelf" registration statement nor otherwise require that the
Company register such holder's shares of Old Notes under the Securities Act. See
"-- Procedures for Tendering."

Based on an interpretation by the SEC's staff set forth in no-action letters
issued to third parties unrelated to the Company and the Guarantors, the Company
believes that, with the exceptions set forth below, New Notes issued pursuant to
the exchange offer in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by holders thereof (other than any holder which is an
"affiliate" of the Company or the Guarantors within the meaning of Rule 405
promulgated under the Securities Act, or a broker-dealer who purchased Old Notes
directly from us to resell pursuant to Rule 144A or any other available
exemption promulgated under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the New Notes are acquired in the ordinary course of business of the holder
and the holder does not have an arrangement or understanding with any person to
participate in the distribution of such New Notes. Any holder who tenders in the
exchange offer for the purpose of participating in a distribution of the New
Notes cannot rely on this interpretation by the SEC's staff and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Each broker-dealer that receives
New Notes for its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution."
Broker-dealers who acquired Old Notes directly from us and not as a result of
market-making activities or other trading activities may not rely on the staff's
interpretations discussed above or participate in the exchange offer and must
comply with the prospectus delivery requirements of the Securities Act in order
to sell the Old Notes.

CONSEQUENCES OF FAILURE TO EXCHANGE

Following the completion of the exchange offer (except as set forth in the
second paragraph under "-- Purpose and Effect" above), holders of Old Notes not
tendered will not have any further registration rights and those Old Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Old Notes could be adversely affected
upon completion of the exchange offer if the holder does not participate in the
exchange offer.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus and in
the letter of transmittal, the Company will accept any and all Old Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on
, 1999, or such

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date and time to which we extend the offer. The Company will issue $1,000
principal amount of New Notes in exchange for each $1,000 principal amount of
outstanding Old Notes accepted in the exchange offer. Holders may tender some or
all of their Old Notes pursuant to the exchange offer. However, Old Notes may be
tendered only in integral multiples of $1,000 in principal amount.

The form and terms of the New Notes are substantially the same as the form and
terms of the Old Notes except that the New Notes have been registered under the
Securities Act and will not bear legends restricting their transfer. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the Old
Notes were issued.

As of December 15, 1998, Old Notes representing $750.0 million aggregate
principal amount were outstanding and there was one registered holder, a nominee
of the DTC. This Prospectus, together with the letter of transmittal, is being
sent to such registered holder and to others believed to have beneficial
interests in the Old Notes. The Company intends to conduct the exchange offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder.

The Company shall be deemed to have accepted validly tendered Old Notes when,
as, and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering holders for the
purpose of receiving the New Notes from the Company. If any tendered Old Notes
are not accepted for exchange because of an invalid tender, the occurrence of
certain other events set forth herein or otherwise, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after , 1999, unless the
exchange offer is extended.

Holders who tender Old Notes in the exchange offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes with respect to the exchange of Old Notes pursuant
to the exchange offer. The Company will pay all charges and expenses, other than
certain applicable taxes, in connection with the exchange offer. See "-- Fees
and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The expiration date shall be 5:00 p.m., New York City time, on
, 1999, unless the Company, in its sole discretion, extends the exchange
offer, in which case the expiration date shall mean the latest date and time to
which the exchange offer is extended. In order to extend the exchange offer, the
Company will notify the Exchange Agent and each registered holder of any
extension by oral or written notice prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date. The
Company reserves the right, in its sole discretion, (i) to delay accepting any
Old Notes, to extend the exchange offer or, if any of the conditions set forth
under "-- Conditions to Exchange Offer" shall not have been satisfied, to
terminate the exchange offer, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent, or (ii) to amend the terms of
the exchange offer in any manner. In the event that the Company makes a material
or fundamental change to the terms of the exchange offer, the Company will file
a post-effective amendment to the Registration Statement.

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PROCEDURES FOR TENDERING

Only a holder of Old Notes may tender the Old Notes in the exchange offer.
Except as set forth under "-- Book Entry Transfer," to tender in the exchange
offer a holder must complete, sign, and date the Letter of Transmittal, or a
copy thereof, have the signatures thereon guaranteed if required by the Letter
of Transmittal, and mail or otherwise deliver the Letter of Transmittal or copy
to the Exchange Agent prior to the expiration date. In addition, (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal prior to the expiration date, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old
Notes, if that procedure is available, into the Exchange Agent's account at DTC
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
expiration date or (iii) the holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the letter of
transmittal and other required documents must be received by the Exchange Agent
at the address set forth under "-- Exchange Agent" prior to the expiration date.

The tender by a holder that is not withdrawn before the expiration date will
constitute an agreement between that holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the letter of
transmittal.

THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.

Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company, or other nominee and who wishes to
tender should contact the registered holder promptly and instruct the registered
holder to tender on the beneficial owner's behalf. If the beneficial owner
wishes to tender on the owner's own behalf, the owner must, prior to completing
and executing the letter of transmittal and delivering the owner's Old Notes,
either make appropriate arrangements to register ownership of the Old Notes in
the beneficial owner's name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.

Signatures on a letter of transmittal or a notice of withdrawal, as the case may
be, must be guaranteed by an Eligible Institution (as defined) unless Old Notes
tendered pursuant thereto are tendered (i) by a registered holder who has not
completed the box entitled "Special Registration Instruction" or "Special
Delivery Instructions" on the letter of transmittal or (ii) for the account of
an Eligible Institution. If signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, the guarantee
must be by any eligible guarantor institution that is a member of or participant
in the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").

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<PAGE> 101

If the letter of transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, the Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by the registered holder
as that registered holder's name appears on the Old Notes.

If the letter of transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the letter of
transmittal unless waived by the Company.

All questions as to the validity, form, eligibility (including time of receipt),
acceptance, and withdrawal of tendered Old Notes will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes the Company's acceptance of which would, in
the opinion of counsel for the Company, be unlawful. The Company also reserves
the right to waive any defects, irregularities or conditions of tender as to
particular Old Notes. The Company's interpretation of the terms and conditions
of the exchange offer (including the instructions in the letter of transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Although the Company intends to notify
holders of defects or irregularities with respect to tenders of Old Notes,
neither the Company, the Exchange Agent, nor any other person shall incur any
liability for failure to give such notification. Tenders of Old Notes will not
be deemed to have been made until such defects or irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the letter of transmittal, as soon as practicable
following , 1999, unless the exchange offer is extended.

In addition, the Company reserves the right in its sole discretion to purchase
or make offers for any Old Notes that remain outstanding after the expiration
date or, as set forth under "-- Conditions to the exchange offer," to terminate
the exchange offer and, to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions, or otherwise.
The terms of any such purchases or offers could differ from the terms of the
exchange offer.

By tendering, each holder will represent to the Company and the Guarantors that,
among other things, (i) the New Notes acquired pursuant to the exchange offer
are being obtained in the ordinary course of business of the person receiving
such New Notes, whether or not such person is the registered holder, (ii) the
holder is not engaging in and does not intend to engage in a distribution of
such New Notes, (iii) the holder does not have an arrangement or understanding
with any person to participate in the distribution of such New Notes and (iv)
the holder is not an "affiliate," as defined under Rule 405 of the Securities
Act, of the Company and the Guarantors.

In all cases, issuance of New Notes for Old Notes that are accepted for exchange
pursuant to the exchange offer will be made only after timely receipt by the
Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly

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completed and duly executed letter of transmittal (or, with respect to the DTC
and its participants, electronic instructions in which the tendering holder
acknowledges its receipt of and agreement to be bound by the letter of
transmittal), and all other required documents. If any tendered Old Notes are
not accepted for any reason set forth in the terms and conditions of the
exchange offer or if Old Notes are submitted for a greater principal amount than
the holder desires to exchange, such unaccepted or non-exchanged Old Notes will
be returned without expense to the tendering Holder thereof (or, in the case of
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such nonexchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the exchange offer.

Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes, where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
See "Plan of Distribution."

BOOK-ENTRY TRANSFER

The Exchange Agent will make a request to establish an account with respect to
the Old Notes at the Book-Entry Transfer Facility for purposes of the exchange
offer within two business days after the date of this Prospectus, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the Book-
Entry Transfer Facility, the letter of transmittal or copy thereof, with any
required signature guarantees and any other required documents, must, in any
case other than as set forth in the following paragraph, be transmitted to and
received by the Exchange Agent at the address set forth under "-- Exchange
Agent" on or prior to the expiration date or the guaranteed delivery procedures
described below must be complied with.

DTC's Automated Tender Offer Program ("ATOP") is the only method of processing
exchange offers through DTC. To accept the exchange offer through ATOP,
participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy letter of
transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the letter of transmittal.

GUARANTEED DELIVERY PROCEDURES

If a registered holder of the Old Notes desires to tender such Old Notes and the
Old Notes are not immediately available, or time will not permit such holder's
Old Notes or other required documents to reach the Exchange Agent before the
expiration date, or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if (i) the tender is made through an
Eligible Institution, (ii) prior to the expiration date, the Exchange Agent
receives from such Eligible Institution a properly

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completed and duly executed letter of transmittal (or a facsimile thereof) and
notice of guaranteed delivery, substantially in the form provided by the Company
(by telegram, telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of Old Notes and the amount of Old
Notes tendered, stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange, Inc. ("NYSE") trading days after the
date of execution of the notice of guaranteed delivery, the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, will be deposited by the Eligible Institution
with the Exchange Agent and (iii) the certificates for all physically tendered
Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the
case may be, are received by the Exchange Agent within three NYSE trading days
after the date of execution of the notice of guaranteed delivery.

WITHDRAWAL RIGHTS

Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the expiration date.

For a withdrawal of a tender of Old Notes to be effective, a written or (for DTC
participants) electronic ATOP transmission notice of withdrawal must be received
by the Exchange Agent at its address set forth under "-- Exchange Agent" prior
to 5:00 p.m., New York City time, on the expiration date. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers and principal amount of
such Old Notes), (iii) be signed by the holder in the same manner as the
original signature on the letter of transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee register the transfer of
such Old Notes into the name of the person withdrawing the tender, and (iv)
specify the name in which any such Old Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form, and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the exchange offer. Any Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender, or termination of the
exchange offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures under "-- Procedures for Tendering" at any time on or prior to
the expiration date.

CONDITIONS TO THE EXCHANGE OFFER

Notwithstanding any other provision of the exchange offer, the Company shall not
be required to accept for exchange, or to issue New Notes in exchange for, any
Old Notes and may terminate or amend the exchange offer if at any time before
the acceptance of such Old Notes for exchange or the exchange of the New Notes
for such Old Notes, the Company determines that the exchange offer violates
applicable law, any applicable interpretation of the staff of the Commission or
any order of any governmental agency or court of competent jurisdiction.

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The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.

In addition, the Company will not accept for exchange any Old Notes tendered,
and no New Notes will be issued in exchange for any such Old Notes, if at such
time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended. In any such event the Company is required to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.

EXCHANGE AGENT

All executed letters of transmittal should be directed to the Exchange Agent.
The Bank of New York has been appointed as Exchange Agent for the exchange
offer. Questions, requests for assistance and requests for additional copies of
this Prospectus or of the letter of transmittal should be directed to the
Exchange Agent addressed as follows:

THE BANK OF NEW YORK

<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery:

The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
Attention: Chris Brown New York, New York 10286
Attention: Chris Brown
</TABLE>

By Facsimile:
(Eligible Institutions Only)

(212) 815-6339

For Information or
Confirmation by Telephone:

(212) 815-4997

Originals of all documents sent by facsimile should be sent promptly
by registered or certified mail, by hand or by overnight delivery service.

FEES AND EXPENSES

The Company will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone by
officers and employees of the Company.

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The estimated cash expenses to be incurred in connection with the exchange offer
will be paid by the Company and are estimated in the aggregate to be $700,000,
which includes fees and expenses of the Exchange Agent, accounting, legal,
printing, and related fees and expenses.

TRANSFER TAXES

Holders who tender their Old Notes for exchange will not be obligated to pay any
transfer taxes in connection therewith, except that holders who instruct the
Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the exchange offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.

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<PAGE> 106

DESCRIPTION OF THE NEW NOTES

The New Notes will be issued under an indenture, dated as of November 17, 1998
(the "Indenture"), by and among the Company, the Guarantors named therein and
The Bank of New York, as trustee (the "Trustee"). A copy of the Indenture may be
obtained from the Company upon written request. The following summary of all of
the provisions of the Indenture considered by the Company to be material to a
prospective investor in the New Notes does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act of 1939, as amended (the "TIA"), and to all of the provisions of
the Indenture, including the definitions of certain terms therein, and those
terms made a part of the Indenture by reference to the TIA as in effect on the
date of the Indenture. The definitions of certain terms used in the following
summary are set forth below under "-- Certain Definitions." The Trustee also
serves as the Transfer Agent and Registrar for the common stock and preferred
stock of Chancellor Media. In addition, the Trustee serves as trustee under the
indentures governing the 8 1/8% Notes and the 9% Notes. Finally, the Trustee
serves as a lender and as a co-syndication agent under the Senior Credit
Facility.

The New Notes will be unsecured obligations of the Company and will rank equal
in right of payment to the obligations of the Company under the Senior Credit
Facility and all other Indebtedness of the Company not expressly subordinated to
the Notes. However, because the Notes are unsecured, the Notes will be
effectively subordinated in right of payment to the Company's secured debt,
including the Senior Credit Facility, to the extent of such security. The Senior
Credit Facility is presently secured by, among other things, a pledge of
substantially all of the equity interests held by the Company in its
Subsidiaries. The Notes rank senior in right of payment to the 9 3/8% Notes, the
8 3/4% Notes, the 10 1/2% Notes, the 8 1/8% Notes and the 9% Notes. The
Company's domestic Subsidiaries on the Issue Date, as well as any future
Subsidiaries that guarantee the Company's obligations under the Senior Credit
Facility, will guarantee the Company's obligations under the Indenture on the
basis described under "Guarantees."

The New Notes will be issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
will act as paying agent and registrar for the Notes. The Notes may be presented
for registration or transfer and exchange at the offices of the registrar, which
initially will be the Trustee's principal corporate trust office. The Company
may change any paying agent and registrar without notice to the holders. The
Company will pay principal (and premium, if any) on the Notes at the Trustee's
principal corporate trust office in New York, New York. At the Company's option,
such amounts may be paid at the Trustee's principal corporate trust office or by
check mailed to the registered address of the holders.

PRINCIPAL, MATURITY AND INTEREST

The Notes are limited to $750,000,000 aggregate principal amount and will mature
on November 1, 2008. Interest on the Notes will accrue at the rate of 8% per
annum and will be payable semiannually on each May 1 and November 1, commencing
on May 1, 1999, to the persons who are registered holders at the close of
business on April 15 and October 15 immediately preceding the applicable
interest payment date. Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
Issue Date. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
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OPTIONAL REDEMPTION

The Notes will be redeemable, at the Company's option, in whole at any time or
in part from time to time, upon not less than 30 nor more than 60 days prior
notice mailed by first-class mail to each holder's registered address, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium (as defined below), if any, as of, and accrued and unpaid
interest, if any, to, the date of redemption (the "Redemption Date") (subject to
the right of holders of record on the relevant record date to receive interest
due on the relevant interest payment date in respect of then outstanding Notes).

"Applicable Premium" means, with respect to a Note at any Redemption Date, (a)
the present value of all remaining required interest and principal payments due
on such Note and assuming a redemption date of November 1, 2008, computed using
a discount rate equal to the Treasury Rate (as defined below) plus 50 basis
points minus (b) the then outstanding principal amount of such Note minus (c)
accrued interest paid on the Redemption Date.

"Treasury Rate" means the yield to maturity at the time of computation of United
States Treasury securities with a constant maturity (as compiled and published
in the most recent Federal Reserve Statistical Release H.15 (519) ("Statistical
Release") which has become publicly available at least two business days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to November 1, 2008; provided, however, that if
the period from the Redemption Date to November 1, 2008 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to November 1, 2008 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.

In addition, on or prior to November 1, 2001, the Company may, at its option,
use the net cash proceeds of one or more Public Equity Offerings (as defined) to
redeem the Notes, in part, at a redemption price equal to 108% of the principal
amount thereof plus accrued and unpaid interest thereon to the date of
redemption; provided, however, that after any such redemption the aggregate
principal amount of the Notes outstanding must equal at least 75% of the
aggregate principal amount of the Notes originally issued in the Offering
($562.5 million). In order to effect a redemption with proceeds of a Public
Equity Offering, the Company shall send the redemption notice in the manner
specified in the Indenture not later than 30 days after the consummation of such
Public Equity Offering and effect such redemption not later than 90 days after
the consummation of such Public Equity Offering.

Selection. In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the notice
of redemption relating to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note.

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<PAGE> 108

CHANGE OF CONTROL

The Indenture provides that upon the occurrence of a Change of Control, each
holder may have the right to require that the Company repurchase all or a
portion of such holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof plus accrued interest, if any, to the date of repurchase.

Within 30 days following the date upon which a Change of Control occurs, the
Company must send, by first class mail, a notice to each holder, with a copy to
the Trustee, which notice shall govern the terms of the Change of Control Offer.
Such notice will state, among other things, the purchase date, which must be no
earlier than 30 days nor later than 45 days from the date such notice is mailed,
other than as may be required by law (the "Change of Control Payment Date"). The
Company's failure to make a Change of Control Offer in accordance with this
"Change of Control" covenant, and, upon the making of a Change of Control Offer,
the failure of the Company to pay, on or before the Change of Control Payment
Date, the purchase price for the Notes validly tendered pursuant to the Change
of Control Offer, shall constitute an Event of Default described under clauses
(iii) and (ii), respectively, under "-- Events of Default." Holders electing to
have a Note purchased pursuant to a Change of Control Offer will be required to
surrender the Note, properly endorsed for transfer together with such other
customary documents as the Company may reasonably request, to the paying agent
at the address specified in the notice prior to the close of business on the
business day prior to the Change of Control Payment Date.

The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the purchase of Notes
pursuant to a Change of Control Offer.

This "Change of Control" covenant will not apply in the event of (i) certain
transactions with Permitted Holders (as defined below) and (ii) changes in a
majority of the Board of Directors of Chancellor Media, CMHC or the Company so
long as a majority of each such Board of Directors continues to consist of
Continuing Directors (as defined below). In addition, this covenant is not
intended to afford holders of the Notes protection in the event of certain
highly leveraged transactions, reorganizations, restructurings, mergers and
other similar transactions that might adversely affect the holders of the Notes
but would not constitute a Change of Control. However, the Indenture will
contain limitations on the ability of the Company to incur additional
Indebtedness and to engage in certain mergers, consolidations and sales of
assets, whether or not a Change of Control is involved. See "-- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness," "-- Certain
Covenants -- Limitation on Asset Sales," "-- Certain Covenants -- Limitation on
Asset Swaps" and "-- Certain Covenants -- Merger, Consolidation and Sale of
Assets."

If a Change of Control were to occur, there can be no assurance that the Company
would have sufficient funds to pay the purchase price for all Notes that the
Company might be required to purchase. In the event that the Company were
required to purchase Notes pursuant to a Change of Control Offer, the Company
expects that it would need to seek third-party financing to the extent it does
not have available funds to meet its purchase obligations. However, there can be
no assurance that the Company would be able to obtain such financing on
favorable terms, if at all.
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With respect to the sale of assets, the phrase "all or substantially all" as
used in the Indenture varies according to the facts and circumstances of the
subject transaction, has no clearly established meaning under relevant law and
is subject to judicial interpretation. Accordingly, in certain circumstances
there may be a degree of uncertainty in ascertaining whether a particular
transaction would involve a disposition of "all or substantially all" of the
assets of a person and therefore it may be unclear whether a Change of Control
has occurred and whether the Notes are subject to a Change of Control Offer.

Without the consent of each holder of the Notes affected thereby, after the
mailing of the notice of the Change of Control Offer, no amendment to the
Indenture may, directly or indirectly, affect the Company's obligation to
purchase the Notes or amend, modify or change the obligation of the Company to
consummate a Change of Control Offer or waive any default in the performance
thereof or modify any of the provisions or definitions with respect to any such
offer. In addition, the Trustee may not waive the right of any holder of the
Notes to require the repurchase of his or her Notes upon a Change of Control.

CERTAIN COVENANTS

The Indenture contains, among others, the following covenants.

Limitation on Incurrence of Additional Indebtedness. The Indenture provides that
neither the Company nor any of its Subsidiaries will, directly or indirectly,
create, incur, assume, guarantee, acquire or become liable for, contingently or
otherwise (collectively "incur"), any Indebtedness other than Permitted
Indebtedness. Notwithstanding the foregoing limitations, the Company or any
Subsidiary may incur Indebtedness if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence of such Indebtedness and the
receipt and application of the proceeds thereof, the Company's Leverage Ratio is
less than 7.0 to 1.

Limitation on Restricted Payments. The Indenture provides that neither the
Company nor any of its Subsidiaries will, directly or indirectly, (a) declare or
pay any dividend or make any distribution (other than dividends or distributions
payable in Qualified Capital Stock of the Company) on shares of the Company's
Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to acquire
shares of any class of such Capital Stock, other than the exchange of such
Capital Stock or any warrants, rights or options to acquire shares of any class
of such Capital Stock for Qualified Capital Stock or warrants, rights or options
to acquire Qualified Capital Stock, (c) make any principal payment on, purchase,
defease, redeem, prepay, decrease or otherwise acquire or retire for value,
prior to any scheduled final maturity, scheduled repayment or scheduled sinking
fund payment, any Indebtedness of the Company or its Subsidiaries that is
subordinate or junior in right of payment to the Notes, or (d) make any
Investment (other than Permitted Investments) (each of the foregoing prohibited
actions set forth in clauses (a), (b), (c) and (d) being referred to as a
"Restricted Payment"), if, at the time of such Restricted Payment or immediately
after giving effect thereto, (i) a Default or an Event of Default has occurred
and is continuing, (ii) the Company is not able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
the "Limitation on Incurrence of Additional Indebtedness" covenant, or (iii) the
aggregate amount of Restricted Payments made by the Company on or after the
Merger Date, together with the aggregate amount of Restricted Payments made by
CRBC subsequent to the 9 3/8% Notes Issue Date and

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through September 4, 1997 (the amount expended for such purposes, if other than
in cash, being the fair market value of such property as determined by the
respective Board of Directors in good faith) exceeds the sum of: (A) (x)100% of
the aggregate Consolidated EBITDA of CRBC from the 9 3/8% Notes Issue Date
through September 4, 1997, plus 100% of the aggregate Consolidated EBITDA of the
Company from and after the Merger Date (or, in the event that either such
Consolidated EBITDA shall be a deficit, minus 100% of such deficit), to the most
recent date for which financial information is available to the Company, taken
as one accounting period, less (y) 1.4 times Consolidated Interest Expense for
the same entities and for the same periods, plus (B) 100% of the aggregate net
proceeds, including the fair market value of property other than cash as
determined by the Board of Directors in good faith, received by the Company from
any Person (other than a Subsidiary of the Company) from the issuance and sale
on or subsequent to the Merger Date of Qualified Capital Stock of the Company,
plus 100% of the aggregate net proceeds, including the fair market value of
property other than cash as previously determined by the board of directors of
CRBC in good faith, previously received by CRBC from any Person (other than a
Subsidiary of CRBC) from the issuance and sale on or subsequent to the 9 3/8%
Notes Issue Date of Qualified Capital Stock of CRBC (excluding any net proceeds
from issuances and sales financed directly or indirectly using funds borrowed
from the Company or any Subsidiary of the Company or from CRBC or any Subsidiary
of CRBC, respectively, until and to the extent such borrowing is repaid, but
including the proceeds from the issuance and sale of any securities convertible
into or exchangeable for Qualified Capital Stock to the extent such securities
are so converted or exchanged and including any additional proceeds received by
the Company or CRBC, respectively, upon such conversion or exchange), plus (C)
without duplication of any amount included in clause (iii)(B) above, 100% of the
aggregate net proceeds, including the fair market value of property other than
cash (valued as provided in clause (iii)(B) above), received by the Company as a
capital contribution on or subsequent to the Merger Date, plus 100% of the
aggregate net proceeds, including the fair market value of property other than
cash (valued as provided in clause (iii)(B) above), previously received by CRBC
as a capital contribution on or subsequent to the 9 3/8% Notes Issue Date
(excluding the net proceeds from one or more Public Equity Offerings by
Chancellor Media or CMHC to the extent used to redeem the Notes on or after the
date of the Indenture).

Notwithstanding the foregoing, these provisions do not prohibit: (1) the payment
of any dividend or the making of any distribution within 60 days after the date
of its declaration if the dividend or distribution would have been permitted on
the date of declaration; (2) the acquisition of Capital Stock or warrants,
options or other rights to acquire Capital Stock either (i) solely in exchange
for shares of Qualified Capital Stock or warrants, options or other rights to
acquire Qualified Capital Stock, or (ii) through the application of the net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of the Company) of shares of Qualified Capital Stock or warrants, options or
other rights to acquire Qualified Capital Stock; (3) the acquisition of
Indebtedness of the Company that is subordinate or junior in right of payment to
the Notes, either (i) solely in exchange for shares of Qualified Capital Stock
(or warrants, options or other rights to acquire Qualified Capital Stock) or for
Indebtedness of the Company which is subordinate or junior in right of payment
to the Notes, at least to the extent that the Indebtedness being acquired is
subordinated to the Notes and has a Weighted Average Life to Maturity no less
than that of the Indebtedness being acquired or (ii) through the application of
the net proceeds of a

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substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock (or warrants, options or other
rights to acquire Qualified Capital Stock) or Indebtedness of the Company which
is subordinate or junior in right of payment to the Notes, at least to the
extent that the Indebtedness being acquired is subordinated to the Notes and has
a Weighted Average Life to Maturity no less than that of the Indebtedness being
refinanced; (4) payments by CRBC to fund the operating expenses of Chancellor
Broadcasting from the 9 3/8% Notes Issue Date through September 4, 1997 and by
the Company to fund the operating expenses of CMHC from and after the Merger
Date, in each case in an amount not to exceed $500,000 per annum; (5) payments
by CRBC to Chancellor Broadcasting from the 9 3/8% Notes Issue Date through
September 4, 1997 and by the Company to CMHC from and after the Merger Date,
respectively, in each case to make payments pursuant to (a) the Financial
Monitoring and Oversight Agreements or (b) the Tax Sharing Agreement; (6)
payments by (a) CRBC to repurchase or to enable Chancellor Broadcasting to
repurchase Capital Stock or other securities of Chancellor Broadcasting from
employees of Chancellor Broadcasting or CRBC in each case, from the 9 3/8% Notes
Issue Date through September 4, 1997, and (b) by the Company to repurchase or to
enable CMHC to repurchase Capital Stock or other securities of CMHC from
employees of CMHC or the Company, in each case, after the Merger Date, in an
aggregate amount not to exceed $5,000,000; (7) payments by CRBC to Chancellor
Broadcasting from the 9 3/8% Notes Issue Date through September 4, 1997, or by
the Company to CMHC from and after the Merger Date, in each case, to enable
Chancellor Broadcasting or CMHC, respectively, to redeem or repurchase stock
purchase or similar rights in an aggregate amount not to exceed $500,000; (8)
payments, not to exceed $100,000 in the aggregate, by CRBC to Chancellor
Broadcasting from the 9 3/8% Notes Issue Date through September 4, 1997,
together with payments by the Company to CMHC after the Merger Date, in each
case, to enable Chancellor Broadcasting or CMHC, respectively, to make cash
payments to holders of its Capital Stock in lieu of the issuance of fractional
shares of its Capital Stock; (9) payments made pursuant to any merger,
consolidation or sale of assets effected in accordance with the "Merger,
Consolidation and Sale of Assets" covenant; provided, however, that no such
payment may be made pursuant to this clause and (9) unless, after giving effect
to such transaction (and the incurrence of any Indebtedness in connection
therewith and the use of the proceeds thereof), the Company would be able to
incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant such that after incurring that $1.00 of additional Indebtedness, the
Leverage Ratio would be less than 5.5 to 1; provided, however, that in the case
of clauses (5)(a), (6), (7), (8) and (9), no Default or Event of Default shall
have occurred or be continuing at the time of such payment or as a result
thereof. In determining the aggregate amount of Restricted Payments made by the
Company on or subsequent to the Merger Date and the aggregate amount of
Restricted Payments made by CRBC subsequent to the 9 3/8% Notes Issue Date and
through September 4, 1997, amounts expended pursuant to clauses (1), (2), (3)
(but only to the extent that Indebtedness is acquired in exchange for, or with
the net proceeds from, the issuance of Qualified Capital Stock or warrants,
options or other rights to acquire Qualified Capital Stock), (5)(a), (6), (7),
(8) and (9) (including any amounts previously expended by CRBC pursuant to
clauses (1), (2) (3) (but only to the extent that Indebtedness is acquired in
exchange for, or with the net proceeds from, the issuance of Qualified Capital
Stock or warrants, options or other rights to acquire Qualified Capital

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Stock), (5)(a), (6), (7), (8) and (9) under the 'Limitation on Restricted
Payments' section of the 9 3/8% Indenture) shall be included in such
calculation.

Limitation on Asset Sales. The Indenture provides that neither the Company nor
any of its Subsidiaries will consummate an Asset Sale unless (i) the Company or
the applicable Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value of the assets
sold or otherwise disposed of (as determined in good faith by management of the
Company or, if such Asset Sale involves consideration in excess of $2,500,000 by
the Board of Directors, as evidenced by a board resolution), (ii) at least 75%
of the consideration received by the Company or the Subsidiary, as the case may
be, from such Asset Sale is cash or Cash Equivalents (other than in the case
where the Company is exchanging all or substantially all the assets of one or
more broadcast businesses operated by the Company (including by way of the
transfer of capital stock) for all or substantially all the assets (including by
way of the transfer of capital stock) constituting one or more broadcast
businesses operated by another Person, in which event the foregoing requirement
with respect to the receipt of cash or Cash Equivalents shall not apply) and is
received at the time of such disposition and (iii) upon the consummation of an
Asset Sale, the Company applies, or causes such Subsidiary to apply, such Net
Cash Proceeds within 180 days of receipt thereof either (A) to repay the
principal of the Senior Credit Facility or other Indebtedness ranking equal in
right of payment to the Senior Credit Facility (but not including the Notes)
(and, to the extent repayment of any such Indebtedness relates to principal
under a revolving credit or similar facility, to obtain a corresponding
reduction in the commitments thereunder), (B) to reinvest, or to be
contractually committed to reinvest pursuant to a binding agreement, in
Productive Assets and, in the latter case, to have so reinvested within 360 days
of the date of receipt of such Net Cash Proceeds, or (C) to purchase Notes (pro
rata among the holders of Notes tendered to the Company for purchase, based upon
the aggregate principal amount of the Notes so tendered) tendered to the Company
for purchase at a price equal to 100% of the principal amount thereof, plus
accrued interest thereon to the date of purchase, pursuant to an offer to
purchase made by the Company as set forth below (a "Net Proceeds Offer");
provided however, that if at any time any non-cash consideration received by the
Company or any Subsidiary of the Company, as the case may be, in connection with
any Asset Sale is converted into or sold or otherwise disposed of for cash, then
such conversion or disposition shall be deemed to constitute an Asset Sale
hereunder and the Net Cash Proceeds thereof shall be applied in accordance with
clause (iii) above; provided, further that the Company may defer making a Net
Proceeds Offer until the aggregate Net Cash Proceeds from Asset Sales to be
applied equals or exceeds $5,000,000.

Subject to the deferral right set forth in the final proviso of the preceding
paragraph, each notice of a Net Proceeds Offer will be mailed, by first class
mail, to holders of Notes as shown on the applicable register of holders of
Notes not more than 180 days after the relevant Asset Sale or, in the event the
Company or a Subsidiary has entered into a binding agreement as provided in (B)
above, within 180 days following the termination of such agreement but in no
event later than 360 days after the relevant Asset Sale. Such notice will
specify, among other things, the purchase date (which will be no earlier than 30
days nor later than 45 days from the date such notice is mailed, except as
otherwise required by law) and will otherwise comply with the procedures set
forth in the Indenture. Upon receiving notice of the Net Proceeds Offer, holders
of Notes may elect to tender

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their Notes in whole or in part in integral multiples of $1,000. To the extent
holders properly tender Notes in an amount exceeding the Net Proceeds Offer,
subject to the limitations set forth in the immediately preceding paragraph, the
Company shall select the Notes to be repurchased on a pro rata basis (based upon
the aggregate principal amount of Notes tendered). To the extent that the
aggregate principal amount of Notes tendered pursuant to any Net Proceeds Offer
is less than the amount of Net Cash Proceeds subject to such Net Proceeds Offer,
the Company may use any remaining portion of such Net Cash Proceeds not required
to fund the repurchase of tendered Notes for any purposes otherwise permitted by
the Indenture. Upon the consummation of any Net Proceeds Offer, the amount of
Net Cash Proceeds subject to any future Net Proceeds Offer from the Asset Sales
giving rise to such Net Cash Proceeds shall be deemed to be zero.

The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
pursuant to a Net Proceeds Offer.

Limitation on Asset Swaps. The Indenture provides that the Company will not, and
will not permit any Subsidiary to, engage in any Asset Swaps, unless: (i) at the
time of entering into the agreement to swap assets and immediately after giving
effect to the proposed Asset Swap, no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof; (ii) the
Company would, after giving pro forma effect to the proposed Asset Swap, have
been permitted to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with the "Limitation on Incurrence of
Additional Indebtedness" covenant; (iii) the respective fair market values of
the assets being purchased and sold by the Company or any of its Subsidiaries
(as determined in good faith by the management of the Company or, if such Asset
Swap includes consideration in excess of $2,500,000, by the Board of Directors,
as evidenced by a board resolution) are substantially the same at the time of
entering into the agreement to swap assets; and (iv) at the time of the
consummation of the proposed Asset Swap, the percentage of any decline in the
fair market value (determined as aforesaid) of the asset or assets being
acquired by the Company and its Subsidiaries shall not be significantly greater
than the percentage of any decline in the fair market value (determined as
aforesaid) of the assets being disposed of by the Company, calculated from the
time the agreement to swap assets was entered into; provided, however, that this
covenant shall not apply to any of the transactions of the Company and its
Subsidiaries pending as of the Issue Date.

Limitations on Transactions with Affiliates. The Indenture provides that neither
the Company nor any of its Subsidiaries will, directly or indirectly, enter into
or permit to exist any transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with or
for the benefit of any of its Affiliates (other than transactions between the
Company and a Wholly-Owned Subsidiary of the Company or among Wholly-Owned
Subsidiaries of the Company) (an "Affiliate Transaction"), other than Affiliate
Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction on an arm's-length
basis from a person that is not an Affiliate; provided, however, that for a
transaction or series of related transactions involving value of $1,000,000 or
more, such determination will be made in good faith by a majority of members of
the Board of Directors of the

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Company and by a majority of the disinterested members of the Board of Directors
of the Company, if any; provided, further, that for a transaction or series of
related transactions involving value of $5,000,000 or more, the Board of
Directors of the Company has received an opinion from a nationally recognized
investment banking firm that such Affiliate Transaction is fair, from a
financial point of view, to the Company or such Subsidiary. The foregoing
restrictions will not apply to reasonable and customary directors' fees,
indemnification and similar arrangements and payments thereunder, or to any
obligations of the Company under the Financial Monitoring and Oversight
Agreements, the Tax Sharing Agreement or any employment agreement with any
officer of the Company (provided that each amendment of any of the foregoing
agreements shall be subject to the limitations of this covenant).

Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, create or otherwise cause or permit to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
to (a) pay dividends or make any other distributions on its Capital Stock; (b)
make loans or advances or pay any Indebtedness or other obligation owed to the
Company or any of its Subsidiaries; or (c) transfer any of its property or
assets to the Company, except for such encumbrances or restrictions existing
under or by reason of: (1) applicable law, (2) the Indenture, (3) customary
non-assignment provisions of any lease governing a leasehold interest of the
Company or any Subsidiary, (4) any instrument governing Acquired Indebtedness,
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property or
assets of the Person, so acquired, (5) agreements permitted under the 9 3/8%
Indenture, the 8 3/4% Indenture, the 10 1/2% Indenture, the 8 1/8% Indenture and
the 9% Indenture existing on the Issue Date (including the Credit Agreement and
Senior Credit Facility, as applicable), as such agreements are from time to time
in effect; provided, however, that any amendments or modifications of such
agreements which affect the encumbrances or restrictions of the types subject to
this covenant shall not result in such encumbrances or restrictions being less
favorable to the Company in any material respect, as determined in good faith by
the Board of Directors of the Company, than the provisions as in effect before
giving effect to the respective amendment or modification, (6) an agreement
effecting a refinancing, replacement or substitution of Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clause (2), (4) or
(5) above or any other agreement evidencing Indebtedness permitted under the
Indenture; provided, however, that the provisions relating to such encumbrance
or restriction contained in any such refinancing, replacement or substitution
agreement or any such other agreement are not less favorable to the Company in
all material respects as determined in good faith by the Board of Directors of
the Company than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (2), (4) or (5), or (7)
restrictions on the transfer of assets subject to any Lien permitted under the
Indenture imposed by the holder of such Lien.

Limitation on Preferred Stock of Subsidiaries. The Indenture will provide that
the Company will not permit any of its Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Wholly-Owned Subsidiary of the Company) or
permit any Person (other than the Company or a Wholly-Owned Subsidiary of the
Company) to own any Preferred Stock of a Subsidiary (other than Acquired
Preferred Stock; provided that at the time the issuer of such Acquired Preferred
Stock becomes a Subsidiary of the Company or

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merges with the Company or any of its Subsidiaries, and after giving effect to
such transaction, the Company shall be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant).

Limitation on Liens. The Indenture provides that neither the Company nor any of
its Subsidiaries will create, incur, assume or suffer to exist any Liens upon
any of their respective assets, except for (a) Permitted Liens, (b) Liens to
secure the Senior Credit Facility or any other Indebtedness ranking equal in
right of payment to the Senior Credit Facility or guarantees of the foregoing
permitted under the Indenture, (c) Liens permitted under the 9 3/8% Indenture,
the 8 3/4% Indenture, the 10 1/2% Indenture, the 8 1/8% Indenture and the 9%
Indenture existing on the Issue Date, (d) Liens in favor of the Trustee, and (e)
any Lien to secure the replacement, refunding, extension or renewal, in whole or
in part, of any Indebtedness described in the foregoing clauses; provided that,
to the extent any such clause limits the amount secured or the asset subject to
such Liens, no extension or renewal will increase the assets subject to such
Liens or the amount secured thereby beyond the assets or amounts set forth in
such clauses.

Limitation on Sale and Leaseback Transactions. The Indenture provides that
neither the Company nor any of its Subsidiaries will enter into any Sale and
Leaseback Transaction, except that the Company or any Subsidiary may enter into
a Sale and Leaseback Transaction if, immediately prior thereto, and after giving
effect to such Sale and Leaseback Transaction (the Indebtedness thereunder being
equivalent to the Attributable Value thereof) the Company could incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant.

Guarantees of Certain Indebtedness. The Indenture provides that the Company will
not permit any of its Subsidiaries, directly or indirectly, to incur, guarantee
or secure through the granting of Liens, the payment of any Indebtedness under
the Senior Credit Facility or any refunding or refinancing thereof, in each
case, unless such Subsidiary, the Company and the Trustee execute and deliver a
supplemental indenture pursuant to which such Subsidiary becomes a Guarantor of
the Notes and which evidences such Subsidiary's Guarantee of the Notes, such
Guarantee to be a senior unsecured obligation of such Subsidiary. Neither the
Company nor any such Guarantor shall be required to make a notation on the Notes
or its Guarantee to reflect any such subsequent Guarantee. Nothing in this
covenant shall be construed to permit any Subsidiary of the Company to incur
Indebtedness otherwise prohibited by the "Limitation of Incurrence of Additional
Indebtedness" covenant.

Limitation on Line of Business. The Indenture provides that for so long as any
Notes are outstanding, the Company and its Subsidiaries will engage solely in
the ownership and operation of broadcast businesses or businesses related
thereto, including, without limitation, media representation, sale of
advertising and such other activities as are incidental or similar or related
thereto.

Merger, Consolidation and Sale of Assets. The Indenture provides that the
Company may not, in a single transaction or a series of related transactions,
consolidate with or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, another
Person or adopt a plan of liquidation unless (i) either (A) the Company is the
survivor of such merger or consolidation or (B) the surviving or transferee
Person is a corporation, partnership or trust organized and existing

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under the laws of the United States, any state thereof or the District of
Columbia and such surviving or transferee Person expressly assumes by
supplemental indenture all of the obligations of the Company under the Notes and
the Indenture; (ii) immediately after giving effect to such transaction and the
use of proceeds therefrom (on a pro forma basis, including any Indebtedness
incurred or anticipated to be incurred in connection with such transaction), the
Company or the surviving or transferee Person is able to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
the "Limitation on Incurrence of Additional Indebtedness" covenant; (iii)
immediately after giving effect to such transaction (including any Indebtedness
incurred or anticipated to be incurred in connection with the transaction) no
Default or Event of Default has occurred and is continuing; and (iv) the Company
has delivered to the Trustee an Officers' Certificate and Opinion of Counsel,
each stating that such consolidation, merger or transfer complies with the
Indenture, that the surviving Person agrees by supplemental indenture to be
bound thereby, and that all conditions precedent in the Indenture relating to
such transaction have been satisfied. For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of related transactions) of all or substantially all of the properties
and assets of one or more Subsidiaries, the Capital Stock of which constitutes
all or substantially all of the properties and assets of the Company, will be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company.

GUARANTEES

Each Guarantor will fully and unconditionally guarantee, jointly and severally,
to each holder and the Trustee, the full and prompt payment of principal of and
interest on the Notes, and of all other obligations under the Indenture.

The Indebtedness evidenced by each Guarantee (including the payment of principal
of, premium, if any, and interest on the Notes) will rank equal in right of
payment to the Guarantor's guarantees of the Senior Credit Facility and senior
in right of payment to the Guarantor's guarantees of the 9 3/8% Notes, the
8 3/4% Notes, the 10 1/2% Notes, the 8 1/8% Notes and the 9% Notes. The
Guarantees will be effectively subordinated in right of payment to the secured
Indebtedness of the Guarantors to the extent of such security.

The obligations of each Guarantor are limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor (including, without limitation, any guarantees under the Senior Credit
Facility) and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, result in the obligations of the Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
are entitled to a contribution from each other Guarantor in a pro rata amount
based on the Adjusted Net Assets of each Guarantor.

Each Guarantor may consolidate with or merge into or sell its assets to the
Company or to another Guarantor without limitation. Each Guarantor may
consolidate with or merge into or sell all or substantially all its assets to a
corporation, partnership or trust other than the Company or another Guarantor
(whether or not affiliated with the Guarantor). Upon the sale or disposition of
a Guarantor (or all or substantially all of its assets) to a Person

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(whether or not an Affiliate of such Guarantor) which is not a Subsidiary of the
Company, which is otherwise in compliance with the Indenture, such Guarantor
shall be deemed released from all its obligations under the Indenture and its
Guarantee and such Guarantee shall terminate; provided, however, that any such
termination shall occur only to the extent that all obligations of such
Guarantor under the Credit Agreement or the Senior Credit Facility, as
applicable, and all of its guarantees of, and under all of its pledges of assets
or other security interests which secure, Indebtedness of the Company shall also
terminate upon such release, sale or transfer; provided, further, that the
consideration received by the Company in connection with such sale or other
disposition shall be applied in accordance with the covenant. See "-- Certain
Covenants -- Limitation on Asset Sales."

EVENTS OF DEFAULT

The following events are defined in the Indenture as "Events of Default": (i)
the failure to pay interest on the Notes when the same becomes due and payable
and the Default continues for a period of 30 days; (ii) the failure to pay the
principal on any Notes, when such principal becomes due and payable, at
maturity, upon redemption or otherwise; (iii) a default in the observance or
performance of any other covenant or agreement contained in the Notes or the
Indenture which default continues for a period of 30 days after the Company
receives written notice thereof specifying the default from the Trustee or
holders of at least 25% in aggregate principal amount of outstanding Notes; (iv)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries), whether such Indebtedness
or guarantee now exists or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium or interest on
such Indebtedness prior to the expiration of any grace period provided in such
Indebtedness (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5,000,000 or more; (v) one or more
judgments in an aggregate amount in excess of $5,000,000 (which are not covered
by insurance as to which the insurer has not disclaimed coverage) being rendered
against the Company or any of its Significant Subsidiaries and such judgments
remain undischarged or unstayed for a period of 60 days after such judgment or
judgments become final and non-appealable; and (vi) certain events of
bankruptcy, insolvency or reorganization affecting the Company or any of its
Significant Subsidiaries.

Upon the happening of any Event of Default specified in the Indenture, the
Trustee may, and the Trustee upon the request of holders of 25% in principal
amount of the Notes shall, or the holders of at least 25% in principal amount of
outstanding Notes may, declare the principal of and accrued but unpaid interest,
if any, on all the Notes to be due and payable by notice in writing to the
Company and the Trustee specifying the respective Event of Default and that it
is a "notice of acceleration" (the "Acceleration Notice"), and the same shall
become immediately due and payable. If an Event of Default with respect to
bankruptcy proceedings relating to the Company occurs and is continuing, then
such

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amount will ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of the Notes.

The Indenture provides that, at any time after a declaration of acceleration
with respect to the Notes as described in the preceding paragraph, the holders
of a majority in principal amount of the Notes then outstanding (by notice to
the Trustee) may rescind and cancel such declaration and its consequences if (i)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default have been cured or
waived except nonpayment of principal or interest on the Notes that has become
due solely by such declaration of acceleration, (iii) to the extent the payment
of such interest is lawful, interest (at the same rate specified in the Notes)
on overdue installments of interest and overdue payments of principal which has
become due otherwise than by such declaration of acceleration, has been paid,
(iv) the Company has paid the Trustee its reasonable compensation and reimbursed
the Trustee for its expenses, disbursements and advances and (v) in the event of
the cure or waiver of a Default or Event of Default of the type described in
clause (vi) of the description of Events of Default in the first paragraph
above, the Trustee has received an Officers' Certificate and an Opinion of
Counsel that such Default or Event of Default has been cured or waived. The
holders of a majority in principal amount of the Notes may waive any existing
Default or Event of Default under the Indenture, and its consequences, except a
default in the payment of the principal of or interest on any Notes.

The Company is required to deliver to the Trustee, within 120 days after the end
of the Company's fiscal year, a certificate indicating whether the signing
officers know of any Default or Event of Default that occurred during the
previous year and whether the Company has complied with its obligations under
the Indenture. In addition, the Company will be required to notify the Trustee
of the occurrence and continuation of any Default or Event of Default within
five business days after the Company becomes aware of the same.

Subject to the provisions of the Indenture relating to the duties of the Trustee
in case an Event of Default thereunder should occur and be continuing, the
Trustee will be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of any of the holders of the
Notes unless such holders have offered to the Trustee reasonable indemnity or
security against any loss, liability or expense. Subject to such provision for
security or indemnification and certain limitations contained in the Indenture,
the holders of a majority in principal amount of the outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.

SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE

The Company may terminate its obligations under the Indenture at any time, and
the obligations of the Guarantors with respect thereto shall terminate, by
delivering all outstanding Notes to the Trustee for cancellation and paying all
sums payable by it thereunder. The Company, at its option, (i) will be
discharged from any and all obligations with respect to the Notes, and each
Guarantor will be discharged from any and all obligations with respect to its
Guarantee (except for certain obligations of the Company to register the
transfer or exchange of such Notes, replace stolen, lost or mutilated Notes,
maintain paying agencies and hold moneys for payment in trust) or (ii) need not
comply

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with certain of the restrictive covenants with respect to the Indenture, if the
Company deposits with the Trustee, in trust, U.S. Legal Tender or U.S.
Government Obligations or a combination thereof which, through the payment of
interest thereon and principal in respect thereof in accordance with their
terms, will be sufficient to pay all the principal of and interest on the Notes
on the dates such payments are due in accordance with the terms of such Notes as
well as the Trustee's fees and expenses. To exercise either such option, the
Company is required to deliver to the Trustee (A) an Opinion of Counsel or a
private letter ruling issued to the Company by the IRS to the effect that the
holders of the Notes will not recognize income, gain or loss for federal income
tax purposes as a result of the deposit and related defeasance and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such option had not been exercised
and, in the case of an Opinion of Counsel furnished in connection with a
Discharge pursuant to clause (i) above, accompanied by a private letter ruling
issued to the Company by the IRS to such effect, (B) subject to certain
qualifications, an Opinion of Counsel to the effect that funds so deposited will
not be subject to avoidance under applicable Bankruptcy Law, and (C) an
Officers' Certificate and an Opinion of Counsel to the effect that the Company
has complied with all conditions precedent to the defeasance. Notwithstanding
the foregoing, the Opinion of Counsel required by clause (A) above need not be
delivered if all Notes not therefore delivered to the Trustee for cancellation
(i) have become due and payable, (ii) will become due and payable on the
maturity date within one year, or (iii) are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the Company.

REPORTS TO HOLDERS

The Company will file with the Trustee and provide to the holders of the Notes,
within 15 days after it files them with the SEC, copies of the annual reports
and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the SEC may by rules and regulations prescribe) which
the Company files with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act. In the event the Company is no longer required to furnish such reports to
its securityholders pursuant to the Exchange Act, the Company will cause its
consolidated financial statements, comparable to those which would have been
required to appear in annual or quarterly reports, to be delivered to the
holders of the Notes.

MODIFICATION OF THE INDENTURE

From time to time, the Company and the Trustee, together, without the consent of
the holders of the Notes, may amend or supplement the Indenture for certain
specified purposes, including curing ambiguities, defects or inconsistencies.
Other modifications and amendments of the Indenture may be made with the consent
of the holders of a majority in principal amount of the then outstanding Notes,
except that, without the consent of each holder of the Notes affected thereby,
no amendment may, directly or indirectly: (i) reduce the amount of Notes whose
holders must consent to an amendment; (ii) reduce the rate of or change the time
for payment of interest, including defaulted interest, on any Notes; (iii)
reduce the principal of or change the fixed maturity of any Notes, or change the
date on which any Notes may be subject to redemption or repurchase, or reduce
the redemption or repurchase price therefor; (iv) make any Notes payable in
money other

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than that stated in the Notes; (v) make any change in provisions of the
Indenture protecting the right of each holder of a Note to receive payment of
principal of and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment or permitting holders of a majority in
principal amount of the Notes to waive Defaults or Events of Default; or (vi)
after the Company's obligation to purchase the Notes arises under the Indenture,
amend, modify or change the obligation of the Company to make or consummate a
Change of Control Offer or a Net Proceeds Offer or waive any default in the
performance thereof or modify any of the provisions or definitions with respect
to any such offers.

CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.

"8 1/8% Notes" means the $500 million aggregate principal amount of 8 1/8%
Senior Subordinated Notes due 2007 of the Company, used pursuant to an indenture
dated as of December 22, 1997, as the same may be modified or amended from time
to time and future refinancings thereof.

"8 3/4% Notes" means the $200.0 million aggregate principal amount of 8 3/4%
Senior Subordinated Notes due 2007 of the Company, issued pursuant to an
indenture, dated as of June 24, 1997, as amended, as the same may be modified or
amended from time to time and future refinancings thereof.

"9% Notes" means the $750.0 million aggregate principal amount of 9% Senior
Subordinated Notes due 2008 of the Company, issued pursuant to an indenture,
dated as of September 30, 1998, as the same may be modified or amended from time
to time and future refinancings thereof.

"9 3/8% Notes" means the $200.0 million aggregate principal amount of 9 3/8%
Senior Subordinated Notes due 2004 of the Company, issued pursuant to an
indenture, dated as of February 14, 1996, as amended, as the same may be
modified or amended from time to time and future refinancings thereof.

"9 3/8% Notes Issue Date" means February 14, 1996.

"10 1/2% Notes" means the $100.0 million aggregate principal amount of 10 1/2%
Senior Subordinated Notes due 2007 of the Company, issued pursuant to an amended
and restated indenture, dated as of December 19, 1996 and amended and restated
as of October 28, 1997, as amended, as the same may be modified or amended from
time to time and future refinancings thereof.

"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and not incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Subsidiary of the Company or such
acquisition, merger or consolidation.

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"Acquired Preferred Stock" means Preferred Stock of any Person at the time such
Person becomes a Subsidiary of the Company or at the time it merges or
consolidates with the Company or any of its Subsidiaries and not issued by such
Person in connection with, or in anticipation or contemplation of, such
acquisition, merger or consolidation.

"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of the
amount by which (x) the fair value of the property of such Guarantor exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), but excluding liabilities under the Guarantee
of such Guarantor at such date, and (y) the present fair salable value of the
assets of such Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary of such
Guarantor in respect of the obligations of such Subsidiary under the Guarantee),
excluding debt in respect of the Guarantee, as they become absolute and matured.

"Affiliate" of any Person means any other Person who, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

"Asset Acquisition" means (i) an Investment by the Company or any Subsidiary of
the Company in any other Person pursuant to which such Person shall become a
Subsidiary of the Company or shall be consolidated or merged with the Company or
any Subsidiary of the Company or (ii) the acquisition by the Company or any
Subsidiary of the Company of assets of any Person comprising a division or line
of business of such Person.

"Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer,
lease (other than operating leases entered into in the ordinary course of
business), assignment or other transfer for value by the Company or any of its
Subsidiaries (excluding any Sale and Leaseback Transaction or any pledge of
assets or stock by the Company or any of its Subsidiaries) to any Person other
than the Company or a Wholly-Owned Subsidiary of the Company of (i) any Capital
Stock of any Subsidiary of the Company or (ii) any other property or assets of
the Company or any Subsidiary of the Company other than in the ordinary course
of business; provided, however, that for purposes of the "Limitation on Asset
Sales" covenant, Asset Sales shall not include (a) a transaction or series of
related transactions for which the Company or its Subsidiaries receive aggregate
consideration of less than $500,000, (b) transactions permitted under the
"Limitation on Asset Swaps" covenant, (c) transactions permitted under the
"Merger, Consolidation and Sale of Assets" covenant or (d) any Contract Buy Out.

"Asset Swap" means the execution of a definitive agreement, subject only to FCC
approval and other customary closing conditions, that the Company in good faith
believes will be satisfied, for a substantially concurrent purchase and sale, or
exchange, of Productive Assets between the Company or any of its Subsidiaries
and another Person or group of affiliated Persons; provided that any amendment
to or waiver of any closing condition which individually or in the aggregate is
material to the Asset Swap shall be deemed to be a new Asset Swap.

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"Attributable Value" in respect of a sale and leaseback arrangement of any
property means, as at the time of determination, the greater of (i) the fair
market value of the property subject to such arrangement (as determined in good
faith by the Board of Directors of the Company) or (ii) the present value
(discounted at the interest rate borne by the Notes, compounded annually) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such arrangement.

"Capitalized Lease Obligation" means, as to any Person, the obligation of such
Person to pay rent or other amounts under a lease to which such Person is a
party that is required to be classified and accounted for as a capital lease
obligation under GAAP and, for purposes of this definition, the amount of such
obligation at any date shall be the capitalized amount of such obligation at
such date, determined in accordance with GAAP.

"Capital Stock" means (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated) of capital stock, including each class of common stock and Preferred
Stock of such Person and (ii) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.

"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Corporation or at least P-1 from Moody's
Investors Service, Inc.; (iv) certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a foreign bank
having at the date of acquisition thereof combined capital and surplus of not
less than $200,000,000; (v) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (i) through (v)
above.

"Chancellor Broadcasting" means Chancellor Broadcasting Company, a Delaware
corporation that was merged with and into Evergreen Mezzanine Holdings
Corporation, a Delaware corporation, on the Merger Date.

"Chancellor Media" means Chancellor Media Corporation, a Delaware corporation
formerly known as Evergreen Media Corporation, and its successors.

"Change of Control" means the occurrence of one or more of the following events:
(i) any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group")

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(whether or not otherwise in compliance with the provisions of the Indenture),
other than to Hicks Muse or any of its Affiliates, officers and directors (the
"Permitted Holders"); or (ii) a majority of the Board of Directors of Chancellor
Media, CMHC or the Company shall consist of Persons who are not Continuing
Directors; or (iii) the acquisition by any Person or Group (other than the
Permitted Holders) of the power, directly or indirectly, to vote or direct the
voting of securities having more than 50% of the ordinary voting power for the
election of directors of Chancellor Media, CMHC or the Company.

"CMHC" means Chancellor Mezzanine Holdings Corporation, a Delaware corporation
formerly known as Evergreen Mezzanine Holdings Corporation, and its successors.

"Commodity Agreement" means any commodity futures contract, commodity option or
other similar agreement or arrangement entered into by the Company or any of its
Subsidiaries designed to protect the Company or any of its Subsidiaries against
fluctuations in the price of commodities actually used in the ordinary course of
business of the Company and its Subsidiaries.

"Consolidated EBITDA" means, with respect to any Person, for any period, the sum
(without duplication) of (i) Consolidated Net Income and (ii) to the extent
Consolidated Net Income has been reduced thereby, (A) all income taxes of such
Person and its Subsidiaries paid or accrued in accordance with GAAP for such
period (other than income taxes attributable to extraordinary or nonrecurring
gains or losses), (B) Consolidated Interest Expense and (C) Consolidated
Non-Cash Charges, all as determined on a consolidated basis for such Person and
its Subsidiaries in conformity with GAAP.

"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication, the sum of (i) the interest expense of such Person
and its Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount, (b) the net cost under Interest Swap Obligations (including any
amortization of discounts), (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed with
respect to letters of credit, bankers' acceptance financing or similar
facilities, and (e) all accrued interest and (ii) the interest component of
Capitalized Lease Obligations paid or accrued by such person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.

"Consolidated Net Income" of any Person means, for any period, the aggregate net
income (or loss) of such Person and its Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom, without duplication, (a) gains and losses from
Asset Sales (without regard to the $500,000 limitation set forth in the
definition thereof) or abandonments or reserves relating thereto and the related
tax effects, (b) items classified as extraordinary or nonrecurring gains and
losses, and the related tax effects according to GAAP, (c) the net income (or
loss) of any Person acquired in a pooling of interests transaction accrued prior
to the date it becomes a Subsidiary of such first referred to Person or is
merged or consolidated with it or any of its Subsidiaries, (d) the net income of
any Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by contract,
operation of law or otherwise and (e) the net income of any Person, other than a
Subsidiary, except to the extent of the lesser of (x) dividends or distributions
paid to such first referred to Person or its Subsidiary by such Person and (y)
the net income of such

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Person (but in no event less than zero), and the net loss of such Person shall
be included only to the extent of the aggregate Investment of the first referred
to Person or a consolidated Subsidiary of such Person.

"Consolidated Non-Cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Subsidiaries reducing Consolidated Net Income of such Person
and its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
or nonrecurring item).

"Continuing Director" means, as of the date of determination, any Person who (i)
was a member of the Board of Directors of Chancellor Media, CMHC or the Company
on the date of the Indenture, (ii) was nominated for election or elected to the
Board of Directors of Chancellor Media, CMHC or the Company with the affirmative
vote of a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election, or (iii) is a
representative of a Permitted Holder.

"Contract Buy Out" means the involuntary disposition or termination (including,
without limitation, pursuant to a buy out) of a contract between a media
representation company and a client station.

"CRBC" means Chancellor Radio Broadcasting Company, a Delaware corporation that
was merged with and into CMCLA on the Merger Date.

"Credit Agreement" means the Credit Agreement, dated on or about February 14,
1996, among Chancellor Broadcasting, CRBC, the lenders thereto and Bankers Trust
Company as managing agent, as such agreement may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including by way of adding Subsidiaries of
CRBC as additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.

"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.

"Default" means an event or condition the occurrence of which is, or with the
lapse of time or the giving of notice or both would be, an Event of Default.

"Disqualified Capital Stock" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof (except, in each case,
upon the occurrence of a Change of Control), in whole or in part, on or prior to
the final maturity date of the Notes.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

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"Financial Monitoring and Oversight Agreements" means the Financial Monitoring
and Oversight Agreement among Hicks, Muse & Co. Partners, L.P., CRBC and
Chancellor Broadcasting, as in effect on the 9 3/8% Notes Issue Date, and the
Financial Advisory Agreement among HM2/Management Partners, L.P., CRBC and
Chancellor Broadcasting, as in effect on the 9 3/8% Notes Issue Date, or as each
is amended in connection with the merger of Chancellor Broadcasting, CRBC,
Chancellor Media, CMHC and the Company on the Merger Date.

"GAAP" means generally accepted accounting principles as in effect in the United
States of America as of the Issue Date.

"Guarantors" mean (i) initially, all of the Company's subsidiaries on the Issue
Date except Katz International Limited, Katz Television Sales Limited, Katz
Radio Sales Limited, National Cable Communications, L.P., WOYE, Inc., WNZT,
Inc., WRPC, Inc., WLDI, Inc., WIO, Inc., Codena Esterlotempo, Inc., WOQI, Inc.,
Puerto Rican American Broadcasting, Inc. and WOQI (FM), Inc. and (ii) each of
the Company's Subsidiaries that, subsequent to the Issue Date, executes a
supplemental indenture in which such Subsidiary agrees to be bound by the terms
of the Indenture as a Guarantor; provided that any Person constituting a
Guarantor as described above shall cease to constitute a Guarantor when its
respective Guarantee is released in accordance with the terms thereof.

"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated.

"Indebtedness" means with respect to any Person, without duplication, any
liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting Capitalized
Lease Obligations, (iv) incurred or assumed as the deferred purchase price of
property, or pursuant to conditional sale obligations and title retention
agreements (but excluding trade accounts payable arising in the ordinary course
of business), (v) for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) for Indebtedness of
others guaranteed by such Person, (vii) for Interest Swap Obligations, Commodity
Agreements and Currency Agreements and (viii) for Indebtedness of any other
Person of the type referred to in clauses (i) through (vii) which are secured by
any Lien on any property or asset of such first referred to Person, the amount
of such Indebtedness being deemed to be the lesser of the value of such property
or asset or the amount of the Indebtedness so secured. The amount of
Indebtedness of any Person at any date shall be the outstanding principal amount
of all unconditional obligations described above, as such amount would be
reflected on a balance sheet prepared in accordance with GAAP, and the maximum
liability at such date of such Person for any contingent obligations described
above.

"Interest Swap Obligations" means the obligations of any Person under any
interest rate protection agreement, interest rate future, interest rate option,
interest rate swap, interest rate cap or other interest rate hedge or
arrangement.

"Investment" means (i) any transfer or delivery of cash, stock or other property
of value in exchange for Indebtedness, stock or other security or ownership
interest in any Person by way of loan, advance, capital contribution, guarantee
or otherwise and (ii) an investment deemed to have been made by the Company at
the time any entity which was a Subsidiary of the Company ceases to be such a
Subsidiary in an amount equal to the value of the loans and advances made, and
any remaining ownership interest in, such entity immediately following such
entity ceasing to be a Subsidiary of the Company. The amount

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of any non-cash Investment shall be the fair market value of such Investment, as
determined conclusively in good faith by management of the Company unless the
fair market value of such Investment exceeds $1.0 million, in which case the
fair market value shall be determined conclusively in good faith by the Board of
Directors of the Company at the time such Investment is made.

"Issue Date" means the date of original issuance of the Old Notes.

"Leverage Ratio" shall mean, as to any Person, the ratio of (i) the sum of the
aggregate outstanding amount of Indebtedness of such Person and its Subsidiaries
as of the date of calculation on a consolidated basis in accordance with GAAP to
(ii) the Consolidated EBITDA of such Person for the four full fiscal quarters
(the "Four Quarter Period") ending on or prior to the date of determination.

For purposes of this definition, the aggregate outstanding principal amount of
Indebtedness of the Person and its Subsidiaries for which such calculation is
made shall be determined on a pro forma basis as if the Indebtedness giving rise
to the need to perform such calculation had been incurred and the proceeds
therefrom had been applied, and all other transactions in respect of which such
Indebtedness is being incurred had occurred, on the last day of the Four Quarter
Period. In addition to the foregoing, for purposes of this definition,
"Consolidated EBITDA" shall be calculated on a pro forma basis after giving
effect to (i) the incurrence of the Indebtedness of such Person and its
Subsidiaries (and the application of the proceeds therefrom) giving rise to the
need to make such calculation and any incurrence (and the application of the
proceeds therefrom) or repayment of other Indebtedness, other than the
incurrence or repayment of Indebtedness pursuant to working capital facilities,
at any time subsequent to the beginning of the Four Quarter Period and on or
prior to the date of determination, as if such incurrence (and the application
of the proceeds thereof), or the repayment, as the case may be, occurred on the
first day of the Four Quarter Period and (ii) any Asset Sales or Asset
Acquisitions (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of such Person or one of its
Subsidiaries (including any Person who becomes a Subsidiary as a result of such
Asset Acquisition) incurring, assuming or otherwise becoming liable for
Indebtedness) at any time on or subsequent to the first day of the Four Quarter
Period and on or prior to the date of determination, as if such Asset Sale or
Asset Acquisition (including the incurrence, assumption or liability for any
such Indebtedness and also including any Consolidated EBITDA associated with
such Asset Acquisition) occurred on the first day of the Four Quarter Period.
Furthermore, in calculating "Consolidated Interest Expense" for purposes of the
calculation of "Consolidated EBITDA," (i) interest on Indebtedness determined on
a fluctuating basis as of the date of determination (including Indebtedness
actually incurred on the date of the transaction giving rise to the need to
calculate the Leverage Ratio) and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness as in effect on the date of
determination and (ii) notwithstanding (i) above, interest determined on a
fluctuating basis, to the extent such interest is covered by Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.

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"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).

"Merger Date" means September 5, 1997.

"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the
form of cash or Cash Equivalents (including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents)
received by the Company or any of its Subsidiaries from such Asset Sale net of
(i) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions, recording fees, title insurance premiums, appraisers fees
and costs reasonably incurred in preparation of any asset or property for sale),
(ii) taxes paid or reasonably estimated to be payable (calculated based on the
combined state, federal and foreign statutory tax rates applicable to the
Company or the Subsidiary engaged in such Asset Sale) and (iii) repayment of
Indebtedness secured by assets subject to such Asset Sale; provided that if the
instrument or agreement governing such Asset Sale requires the transferor to
maintain a portion of the purchase price in escrow (whether as a reserve for
adjustment of the purchase price or otherwise) or to indemnify the transferee
for specified liabilities in a maximum specified amount, the portion of the cash
or Cash Equivalents that is actually placed in escrow or segregated and set
aside by the transferor for such indemnification obligation shall not be deemed
to be Net Cash Proceeds until the escrow terminates or the transferor ceases to
segregate and set aside such funds, in whole or in part, and then only to the
extent of the proceeds released from escrow to the transferor or that are no
longer segregated and set aside by the transferor.

"Obligations" means all obligations for principal, premium, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing, or otherwise relating to, any Indebtedness.

"Permitted Indebtedness" means, without duplication, (i) the Notes; (ii) the
Guarantees; (iii) Indebtedness of the Company incurred pursuant to the Credit
Agreement in an aggregate principal amount at any time outstanding not to exceed
the sum of the aggregate commitments pursuant to the Credit Agreement as
initially in effect on the 9 3/8% Notes Issue Date; (iv) the 9 3/8% Notes, the
8 3/4% Notes, the 10 1/2% Notes, the 8 1/8% Notes and the 9% Notes and
Guarantees thereof; (v) Interest Swap Obligations; provided that such Interest
Swap Obligations are entered into to protect the Company from fluctuations in
interest rates of its Indebtedness; (vi) additional Indebtedness of the Company
or any of its Subsidiaries not to exceed $10,000,000 in principal amount
outstanding at any time (which amount may, but need not, be incurred under the
Senior Credit Facility); (vii) Refinancing Indebtedness; (viii) Indebtedness
owed by the Company to any Wholly-Owned Subsidiary or by any Subsidiary to the
Company or any Wholly-Owned Subsidiary of the Company; and (ix) guarantees by
Subsidiaries of any Indebtedness permitted to be incurred pursuant to the
Indenture.

"Permitted Investments" means (i) Investments by the Company or any Subsidiary
to acquire the stock or assets of any Person (or Indebtedness of such Person
acquired in connection with a transaction in which such Person becomes a
Subsidiary of the Company) engaged in the broadcast business or businesses
reasonably related thereto,

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including, without limitation, media representation, sale of advertising and
such other activities as are incidental or similar or related thereto; provided
that if any such Investment or series of related Investments involves an
Investment by the Company in excess of $5,000,000, the Company is able, at the
time of such Investment and immediately after giving effect thereto, to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant, (ii) Investments received by the Company or its Subsidiaries as
consideration for a sale of assets, including an Asset Sale effected in
compliance with the "Limitation on Asset Sales" covenant, (iii) Investments by
the Company or any Wholly-Owned Subsidiary of the Company in any Wholly-Owned
Subsidiary of the Company (whether existing on the Issue Date or created
thereafter) or any Person that after such Investments, and as a result thereof,
becomes a Wholly-Owned Subsidiary of the Company and Investments in the Company
by any Wholly-Owned Subsidiary of the Company, (iv) cash and Cash Equivalents,
(v) Investments in securities of trade creditors, wholesalers or customers
received pursuant to any plan of reorganization or similar arrangement and (vi)
additional Investments in an aggregate amount not to exceed $2,500,000 at any
time outstanding.

"Permitted Liens" means (i) Liens for taxes, assessments and governmental
charges to the extent not required to be paid under the Indenture, (ii)
statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen or other like Liens to the extent not required to be paid
under the Indenture, (iii) pledges or deposits to secure lease obligations or
nondelinquent obligations under workers' compensation, unemployment insurance or
similar legislation, (iv) Liens to secure the performance of public statutory
obligations that are not delinquent, performance bonds or other obligations of a
like nature (other than for borrowed money), in each case incurred in the
ordinary course of business, (v) easements, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
incurred in the ordinary course of business not interfering in any material
respect with the business of the Company or its Subsidiaries, (vi) Liens upon
specific items of inventory or other goods and proceeds of any Person securing
such Person's obligations in respect of letters of credit or bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods in the ordinary
course of business, (vii) judgment and attachment Liens not giving rise to an
Event of Default, (viii) leases or subleases granted to others in the ordinary
course of business consistent with past practice not interfering in any material
respect with the business of the Company or its Subsidiaries, (ix) any interest
or title of a lessor in the property subject to any lease, whether characterized
as capitalized or operating other than any such interest or title resulting from
or arising out of a default by the Company or its Subsidiaries of its
obligations under such lease and (x) Liens arising from filing UCC financing
statements for precautionary purposes in connection with true leases of personal
property that are otherwise permitted under the Indenture and under which the
Company or any of its Subsidiaries is a lessee.

"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.

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"Preferred Stock" of any Person means any Capital Stock of such Person that has
preferential rights to any other Capital Stock of such Person with respect to
dividends or redemptions or upon liquidation.

"Productive Assets" means assets of a kind used or usable by the Company and its
Subsidiaries in broadcast businesses or businesses reasonably related thereto,
including, without limitation, media representation, sale of advertising and
such other activities as are incidental or similar or related thereto, and
specifically includes assets acquired through Asset Acquisitions.

"Public Equity Offering" means an underwritten, fully registered public offering
of Capital Stock (other than Disqualified Capital Stock) of the Company,
Chancellor Media, CMHC or upon the consummation of the Capstar Merger, Capstar
Broadcasting Corporation, or any of their respective successors, pursuant to an
effective registration statement filed with the Commission in accordance with
the Securities Act, the gross proceeds of which are at least $150 million;
provided, however, that in the case of a Public Equity Offering by Chancellor
Media, CMHC or upon the consummation of the Capstar Merger, Capstar Broadcasting
Corporation, or any of their respective successors, the issuer of the public
equity must contribute to the capital of the Company an amount sufficient to
redeem the 9 3/8% Notes, 8 3/4% Notes, 10 1/2% Notes, 8 1/8% Notes, 9% Notes and
Notes, if any, called for redemption in accordance with the terms thereof.

"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.

"Refinancing Indebtedness" means any refinancing by the Company of Indebtedness
of the Company or any of its Subsidiaries incurred in accordance with the
"Limitation on Incurrence of Additional Indebtedness" covenant (other than
pursuant to clause (iii) or (iv) of the definition of Permitted Indebtedness)
that does not (i) result in an increase in the aggregate principal amount of
Indebtedness (such principal amount to include, for purposes of this definition,
any premiums, penalties or accrued interest paid with the proceeds of the
Refinancing Indebtedness) of such Person or (ii) create Indebtedness with (A) a
Weighted Average Life to Maturity that is less than the Weighted Average Life to
Maturity of the Indebtedness being refinanced or (B) a final maturity earlier
than the final maturity of the Indebtedness being refinanced.

"Sale and Leaseback Transaction" means any direct or indirect arrangement with
any Person or to which any such Person is a party, providing for the leasing to
the Company or a Subsidiary of any property, whether owned by the Company or any
Subsidiary at the Issue Date or later acquired, which has been or is to be sold
or transferred by the Company or such Subsidiary to such Person or to any other
Person from whom funds have been or are to be advanced by such Person on the
security of such property.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

"Senior Credit Facility" means the Second Amended and Restated Loan Agreement,
dated April 25, 1997, as amended from time to time, among the Company, the
lenders from time to time named party thereto, Toronto Dominion (Texas), Inc.,
Bankers Trust Company, The Bank of New York, NationsBank of Texas, N.A. and
Union Bank of California, as managing agents, Toronto Dominion Securities (USA),
Inc., as arranging agent, and Toronto Dominion (Texas), Inc., as administrative
agent for the lenders,

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together with the related documents thereto (including, without limitation, any
guarantee agreements, stock pledge agreements and other security documents), in
each case, as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including by way of adding Subsidiaries of the Company
as additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.

"Significant Subsidiary" means for any Person each Subsidiary of such Person
which (i) for the most recent fiscal year of such Person accounted for more than
5% of the consolidated net income of such Person or (ii) as at the end of such
fiscal year, was the owner of more than 5% of the consolidated assets of such
Person.

"Subsidiary," with respect to any Person, means (i) any corporation of which the
outstanding Capital Stock having at least a majority of the votes entitled to be
cast in the election of directors under ordinary circumstances shall at the time
be owned, directly or indirectly, by such Person or (ii) any other Person of
which at least a majority of the voting interest under ordinary circumstances is
at the time, directly or indirectly, owned by such Person. Notwithstanding
anything in the Indenture to the contrary, all references to the Company and its
consolidated Subsidiaries or to financial information prepared on a consolidated
basis in accordance with GAAP shall be deemed to include the Company and its
Subsidiaries as to which financial statements are prepared on a combined basis
in accordance with GAAP and to financial information prepared on such a combined
basis. Notwithstanding anything in the Indenture to the contrary, an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary for purposes of
the Indenture.

"Tax Sharing Agreement" means the Tax Sharing Agreement between CRBC and
Chancellor Broadcasting, as in effect on the 9 3/8% Notes Issue Date.

"Unrestricted Subsidiary" means a Subsidiary of the Company created after the
9 3/8% Notes Issue Date and so designated by a resolution adopted by the Board
of Directors of the Company, provided that (a) neither the Company nor any of
its other Subsidiaries (other than Unrestricted Subsidiaries) (1) provides any
credit support for any Indebtedness of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness) or (2) is
directly or indirectly liable for any Indebtedness of such Subsidiary, (b) the
creditors with respect to Indebtedness for borrowed money of such Subsidiary,
having a principal amount in excess of $5,000,000, have agreed in writing that
they have no recourse, direct or indirect, to the Company or any other
Subsidiary of the Company (other than Unrestricted Subsidiaries), including,
without limitation, recourse with respect to the payment of principal of or
interest on any Indebtedness of such Subsidiary and (c) at the time of
designation of such Subsidiary such Subsidiary has no property or assets (other
than de minimis assets resulting from the initial capitalization of such
Subsidiary). Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by the filing with the Trustee of a certified copy
of the resolution of the Company's Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions. Until otherwise designated by the Board
of Directors of the Company, National Cable Communications, L.P., a Delaware
limited partnership, shall be an Unrestricted Subsidiary.

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"Weighted Average Life to Maturity" means, when applied to any Indebtedness at
any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

BOOK-ENTRY; DELIVERY AND FORM

Except as set forth below, the New Notes initially will be represented by one or
more permanent global certificates in definitive, fully registered form (the
"Global Certificate"). The Global Certificate will be deposited with, or on
behalf of, DTC and registered in the name of a nominee of DTC.

The Global Certificate. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Certificate, DTC or its
custodian will credit, on its internal system, the aggregate principal amount of
New Notes of the individual beneficial interests represented by such global
securities to the respective accounts of persons who have accounts with such
depositary and (ii) ownership of beneficial interests in the Global Certificate
will be shown on, and the transfer of such ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Ownership of beneficial interests in the
Global Certificate will be limited to persons who have accounts with DTC
("participants") or persons who hold interests through participants.

So long as DTC, or its nominee, is the registered owner or holder of the New
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the New Notes represented by such Global Certificate for all
purposes. No beneficial owner of an interest in the Global Certificate will be
able to transfer that interest except in accordance with DTC's procedures, in
addition to those procedures provided for in the Indenture.

Payments of the principal of, premium, if any, and interest on the Global
Certificate will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. None of the Company, the Trustee nor the Paying Agent
and Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Certificate or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interest.

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The Company expects that DTC, or its nominee, upon receipt of any payment of
principal, premium, if any, and interest in respect of the Global Certificate,
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the Global
Certificate as shown on the records of DTC or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in the
Global Certificate held through such participants will be governed by standing
instructions and customary practice, as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.

Transfers between participants in DTC will be effected in the ordinary way in
accordance with DTC rules and will be settled in clearinghouse funds. If a
holder requires physical delivery of a Certificated Security for any reason,
including to sell New Notes to persons in states that require physical delivery
of the Certificate, or to pledge such securities, such holder must transfer its
interest in the Global Certificate, in accordance with the normal procedures of
DTC and with the procedures set forth in the Indenture.

DTC has advised the Company that it will take any action permitted to be taken
by a holder of New Notes (including the presentation of New Notes for exchange
as described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Certificate are credited and only in
respect of such New Notes as to which such participant or participants has or
have given such direction.

DTC has advised the Company as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificate among participants of DTC, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
obligations under the rules and procedures governing their operations.

Certificated Securities. If DTC is at any time unwilling or unable to continue
as a depositary for the Global Certificate and a successor depositary is not
appointed by the Company within 90 days, Certificated Securities will be issued
in exchange for the Global Certificate.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

SENIOR CREDIT FACILITY

On April 25, 1997, the Company closed its Second Amended and Restated Loan
Agreement (as amended from time to time, the "Senior Credit Facility") with TD
Securities (USA) Inc. as arranging agent, The Bank of New York and Bankers Trust
Company, as co-syndication agents, NationsBank of Texas, N.A. and Union Bank of
California, as co-documentation agents, Toronto Dominion (Texas), Inc., as
administrative agent (the "Administrative Agent"), and the financial
institutions party thereto (the "Lenders"). The Senior Credit Facility initially
provided for a maximum commitment of $1.75 billion, and upon consummation of the
Chancellor Merger, the aggregate commitment under the Senior Credit Facility was
increased to $2.50 billion. Loans under the Senior Credit Facility consist of
(i) a $900.0 million term loan facility (the "Term Loan Facility") and (ii) a
$1.60 billion revolving loan facility (the "Revolving Loan Facility" and,
collectively with the Term Loan Facility, the "Loans").

The following description of certain provisions of the Senior Credit Facility
does not purport to be complete and is qualified in its entirety by reference to
the full text of the Senior Credit Facility, a copy of which is available from
the Company on request.

TERM LOAN FACILITY

The Term Loan Facility matures on June 30, 2005. The Term Loan Facility requires
scheduled annual reductions of the principal balance of the Term Loan Facility
outstanding on June 30, 2000, payable quarterly in equal quarterly amounts,
commencing on September 30, 2000 in the following percentages: (i) from 9/30/00
through and including 6/30/01, 15.00%; (ii) from 9/30/01 through and including
6/30/02, 20.00%; (iii) from 9/30/02 through and including 6/30/03, 20.00%; (iv)
from 9/30/03 through and including 6/30/04, 20.00%; and (v) from 9/30/04 through
and including 6/30/05, 25.00%. Mandatory or optional prepayments made by the
Company against the Term Loan Facility will not affect the reduction percentages
set forth above.

REVOLVING LOAN FACILITY

The Revolving Loan Facility matures on June 30, 2005. The Revolving Loan
Facility requires scheduled annual reductions of the Revolving Loan Commitment
(as defined in the Senior Credit Facility) as of June 30, 2000, payable
quarterly in equal quarterly amounts, commencing on September 30, 2000 in the
following percentages: (i) from 9/30/00 through and including 6/30/01, 15.00%;
(ii) from 9/30/01 through and including 6/30/02, 20.00%; (iii) from 9/30/02
through and including 6/30/03, 20.00%; (iv) from 9/30/03 through and including
6/30/04, 20.00%; and (v) from 9/30/04 through and including 6/30/05, 25.00%.
Voluntary reductions of the Revolving Loan Commitment made by the Company shall
not affect the reduction percentages set forth above.

ADDITIONAL FACILITY INDEBTEDNESS

The Company has the ability to incur additional indebtedness ("Additional
Facility Indebtedness") in a principal amount not to exceed $250.0 million from
one or more of

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the Lenders or any other institution acceptable to the Administrative Agent that
agrees to extend such credit, provided that certain conditions under the Senior
Credit Facility are complied with. As of the date hereof, the Company has not
requested, and no Lender has issued, any commitment to extend such Additional
Facility Indebtedness to the Company.

INTEREST RATE

The Loans bear interest at a rate equal to, at the Company's option, (i) the
Prime Rate (as defined in the Senior Credit Facility) in effect from time to
time plus the Applicable Margin (as defined) (a "Prime Rate Loan") or (ii) the
Eurodollar Rate (as defined in the Senior Credit Facility) as determined by the
Administrative Agent for the respective interest period plus the Applicable
Margin (a "Eurodollar Loan"). The Applicable Margin is calculated based on the
Company's Total Leverage Ratio (as defined in the Senior Credit Facility)
according to the table set forth below:

<TABLE>
<CAPTION>
PRIME RATE EURODOLLAR RATE
APPLICABLE APPLICABLE
TOTAL LEVERAGE RATIO MARGIN MARGIN
-------------------- ---------- ---------------
<S> <C> <C>
Greater than 6.75...................................... 1.625% 2.625%
Greater than 6.50 but less than or equal to 6.75....... 1.375% 2.375%
Greater than 6.00 but less than or equal to 6.50....... 1.125% 2.125%
Greater than 5.50 but less than or equal to 6.00....... 0.750% 1.750%
Greater than 5.00 but less than or equal to 5.50....... 0.375% 1.375%
Greater than 4.50 but less than or equal to 5.00....... 0.250% 1.250%
Greater than 4.00 but less than or equal to 4.50....... 0.125% 1.125%
Less than or equal to 4.00............................. 0.000% 1.000%
</TABLE>

FEES

The Company is required to pay commitment fees on the aggregate unused amount of
the Available Revolving Loan Commitment (as defined in the Senior Credit
Facility) based on the Total Leverage Ratio for the most recent fiscal quarter
end. If the Total Leverage Ratio is greater than or equal to 5.50, the
corresponding commitment fee is 0.375%; if the Total Leverage Ratio is less than
5.50, the corresponding commitment fee is 0.250%. The Administrative Agent will
also receive such other customary fees as have been separately agreed upon with
the Company. The Company also is required to pay fees for outstanding letters of
credit drawn under the Senior Credit Facility at a rate per annum on the amount
of the Letter of Credit Obligations (as defined in the Senior Credit Facility)
equal to the Applicable Margin for Eurodollar Loans plus an issuing bank fee of
$2,000 for issuing, amending or renewing any letter of credit.

SECURITY AND GUARANTEES

The Senior Credit Facility is secured by (i) a pledge of all capital stock owned
by CMCLA and its subsidiaries, (ii) a pledge of all capital stock of CMCLA,
(iii) a non-recourse pledge of all capital stock of CMHC owned by Chancellor
Media, (iv) a pledge of all debt and equity securities of persons engaged in any
Non-Core Business (as defined in the Senior Credit Facility) purchased by the
Company, (v) a collateral assignment of
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all partnership interests held by the subsidiaries of CMCLA, (vi) a collateral
assignment of all trust interests held by the subsidiaries of CMCLA, (vii) a
collateral assignment of all limited liability company interests held by CMCLA,
(viii) a downstream guarantee provided by CMHC and its wholly owned subsidiary
and (ix) upstream guarantees provided by the subsidiaries of CMCLA.

COVENANTS

The Senior Credit Facility contains customary restrictive covenants, which,
among other things and with certain exceptions, limit the ability of the Company
to incur additional indebtedness and liens in connection therewith, enter into
certain transactions with affiliates, pay dividends, consolidate, merge or
effect certain asset sales, issue additional stock, effect an asset swap, make
acquisitions and make capital expenditures and enter new lines of business.

Under the Senior Credit Facility, the Company is required to maintain specified
financial ratios, based on its Senior Leverage Ratio and Total Leverage Ratio
(in each case, as defined in the Senior Credit Facility), for specified periods
of time. Under the Senior Credit Facility, the Company must not exceed the
following ratios during the following periods of time:

<TABLE>
<CAPTION>
PERIOD ENDING SENIOR LEVERAGE RATIO TOTAL LEVERAGE RATIO
------------- --------------------- --------------------
<S> <C> <C>
1/1/98 through 12/31/99................... 6.00 to 1.00 7.00 to 1.00
1/1/00 through 12/31/00................... 5.50 to 1.00 6.00 to 1.00
1/1/01 through 12/31/01................... 3.75 to 1.00 5.25 to 1.00
1/1/02 and thereafter..................... 3.50 to 1.00 5.25 to 1.00
</TABLE>

Under the Senior Credit Facility, the Company may not, as of the end of any
fiscal quarter, allow its ratio of the sum of Operating Cash Flow plus the
Available Revolving Commitment (in each case, as defined in the Senior Credit
Facility) during the last fiscal four-quarter period to Pro Forma Fixed Changes
(as defined in the Senior Credit Facility) for the four-quarter period beginning
on the day following that fiscal quarter end, to be less than 1.05 to 1.00.

Under the Senior Credit Facility, the Company also is required to comply with
certain other financial tests, such as a specified ratio of Operating Cash Flow
to Cash Interest Expense (as each such term is defined in the Senior Credit
Facility).

USE OF PROCEEDS

The Senior Credit Facility requires that the Net Proceeds from any Permitted
Asset Sale (in each case, as defined in the Senior Credit Facility) be applied,
at the Company's election, to the Term Loan Facility or the Revolving Loan
Facility or any combination thereof. In the alternative, the Company may elect
to make an acquisition with the Net Proceeds, so long as the Company has entered
into a contract for such acquisition within 12 months from the date of such
Permitted Asset Sale and has concluded the purchase with 18 months from the date
of such Permitted Asset Sale. In addition, 50% of Net Proceeds from any
Subordinated Indebtedness issued by the Company, other than the assumption or
refinancing of the 9 3/8% Notes and the 8 3/4% Notes, may be applied, at the

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Company's election, to the Term Loan Facility or the Revolving Loan Facility or
any combination thereof. To the extent that the Company elects to apply any
amounts described in this paragraph to the Revolving Loan Facility, the
commitments under such facility will not be permanently reduced and will be
available for subsequent borrowing by the Company.

EVENTS OF DEFAULT

The Senior Credit Facility contains customary events of default, including (i)
the default in the payment of any interest, reimbursement amounts with respect
to letters of credit, or fees or other amounts payable to the Lenders (other
than principal) when due which is not cured within five days from the date that
such payment was due, (ii) the default in the payment of any principal amount
when due, (iii) the default in the performance or observance of certain
representations, warranties, covenants and agreements contained in the Senior
Credit Facility, (iv) a Senior Credit Facility Change of Control (as defined
below), (v) the entry of an order for relief, winding-up or liquidation under
Title 11 of the United States Code or similar federal or state laws against
Chancellor Media, CMHC or the Company, (vi) the voluntary commencement by the
Company of bankruptcy proceedings under Title 11 of the United States Code or
similar federal or state laws, or the commencement of involuntary bankruptcy
proceedings against the Company, which are not diligently contested or which
continue undismissed for a period of 45 consecutive days, (vii) the entry of a
judgment against the Company which, individually or when aggregated with other
such judgments, exceeds $10 million, (viii) the failure to satisfy certain
minimum employee benefit funding standards, (ix) the acceleration of the
maturity of (a) Subordinated Indebtedness of the Company or (b) any other
indebtedness of the Company in an aggregate principal amount exceeding $3
million, (x) any event which would permit the acceleration of such subordinated
indebtedness or such other indebtedness which has not been cured or waived in
writing within any applicable cure period, (xi) any event which does not permit
acceleration of such Subordinated Indebtedness or such other indebtedness but
requires the Company to purchase or acquire such Subordinated Indebtedness or
such other indebtedness, (xii) any material default under any Interest Hedge
Agreement (as defined in the Senior Credit Facility) with a notional principal
amount of $6 million or more, (xii) the issuance by the FCC of a revocation
order based on alleged alien ownership of the Company, (xiii) the final,
non-appealable termination or revocation of any material FCC license or failure
to renew any such license, (xiv) the failure of any security document or note
under the Senior Credit Facility to be in effect, or (xv) the breach by CMHC of
the guarantee or stock pledge made by it pursuant to the Senior Credit Facility.

A "Senior Credit Facility Change of Control" will be deemed to have occurred
under the Senior Credit Facility if (i) any Person (as defined in the Senior
Credit Facility), other than Scott K. Ginsburg, Matthew Devine, Kenneth J.
O'Keefe, James de Castro and Hicks Muse and its affiliates, shall individually
or collectively control more than 51% on a fully diluted basis of the voting
power of Chancellor Media or (ii) CMHC shall, directly or indirectly, cease to
own all of the issued and outstanding common stock of CMCLA.

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<PAGE> 137

9 3/8% NOTES

The 9 3/8% Notes mature on October 1, 2004. Interest on the 9 3/8% Notes accrues
at the rate of 9 3/8% per annum and is payable semiannually. The 9 3/8% Notes
are unsecured obligations of the Company, ranking subordinate in right of
payment to all Senior Debt (as defined in the indenture governing the 9 3/8%
Notes (the "9 3/8% Indenture")) of the Company, including the Notes, and pari
passu with the 8 3/4% Notes, the 10 1/2% Notes, the 8 1/8% Notes and the 9%
Notes.

Substantially all of the Company's subsidiaries fully and unconditionally
guarantee the full and prompt payment of principal of all interest on the 9 3/8%
Notes, and of all other obligations under the 9 3/8% Indenture. The indebtedness
evidenced by each such guarantee is subordinated to each Guarantor's Senior
Debt, including the Guarantees, on the same terms as the 9 3/8% Notes are
subordinated to the Company's Senior Debt.

The 9 3/8% Notes are redeemable, at the Company's option, in whole at any time
or in part from time to time, on and after February 1, 2000, at the following
redemption prices (expressed as percentages of the principal amount) if redeemed
during the twelve month period commencing on February 1 of the year set forth
below, plus, in each case, accrued and unpaid interest thereon to the date of
redemption:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000........................................................ 104.688%
2001........................................................ 103.125
2002........................................................ 101.563
2003 and thereafter......................................... 100.000
</TABLE>

In addition, on or prior to January 31, 1999, the Company may redeem the 9 3/8%
Notes with the net cash proceeds of one or more Public Equity Offerings (as
defined in the 9 3/8% Indenture) at a redemption price of 108.203% or 107.031%
of the principal amount thereof, plus, in each case, accrued and unpaid interest
to the redemption date, during the respective 12-month periods commencing on
February 1, 1997 and 1998; provided, however, that after any such redemption at
least 75% of the aggregate principal amount of the 9 3/8% Notes originally
issued must be outstanding. The Company's ability to optionally redeem the
9 3/8% Notes are subject to restrictions contained in the Senior Credit
Facility, which limits the amount of debt subordinate to the indebtedness under
the Senior Credit Facility that may be redeemed by the Company.

Under the 9 3/8% Indenture, in the event of a change of control (as defined in
the 9 3/8% Indenture) of the Company, each holder of 9 3/8% Notes will have the
right to require the Company to repurchase, in whole or in part, such holder's
9 3/8% Notes at a purchase price equal to 101% of their principal amount, plus
accrued and unpaid interest, if any to the date of repurchase.

The 9 3/8% Indenture contains certain restrictive covenants which, among other
things, impose limitations (subject to certain exceptions) on the Company with
respect to (i) the payment of dividends or other distributions on capital stock
and the purchase, redemption or retirement for value of shares of capital stock
as any warrants, options or other rights for shares of capital stock; (ii) the
incurrence of additional indebtedness; (iii) the incurrence of subsidiary
indebtedness; (iv) the repayment of redemption of subordinated indebtedness

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<PAGE> 138

other than in accordance with its scheduled repayment; (v) sales of assets by
the Company; (vi) asset swaps; (vii) transactions with stockholders and
affiliates; (viii) the restriction of certain payments by subsidiaries to their
respective parents; (ix) the creation of liens on the assets of the Company or
its subsidiaries; (x) the incurrence of indebtedness senior to the 9 3/8% Notes
and subordinate to other indebtedness of the Company; (xi) investments by the
Company or its subsidiaries; (xii) the issuance of preferred stock by any of the
Company's subsidiaries; (xiii) sales and leasebacks by the Company or its
subsidiaries; (xiv) the guarantee of indebtedness; (xv) the conduct of business
other than the ownership and operation of radio broadcast stations and
businesses reasonably related thereto; and (xvi) the merger or sale of all or
substantially all the assets of the Company. Upon the happening of certain
events of default specified in the 9 3/8% Indenture, the trustee for the 9 3/8%
Notes may, and the trustee upon the request of holders of 25% in principal
amount then outstanding of the 9 3/8% Notes shall, or the holders of at least
25% in principal amount of outstanding 9 3/8% Notes may, declare the principal
amount then outstanding of and accrued but unpaid interest, if any, on all of
such 9 3/8% Notes to be due and payable. Upon the happening of certain other
events of default specified in the 9 3/8% Notes Indenture, the unpaid principal
of and accrued but unpaid interest on all outstanding 9 3/8% Notes will
automatically become due and payable without any action by the trustee or the
holders of the 9 3/8% Notes.

The Company may terminate its obligations under the 9 3/8% Indenture at any
time, and the obligations of the Guarantors with respect thereto shall
terminate, by delivering all outstanding 9 3/8% Notes of the appropriate series
to the appropriate trustee for cancellation and paying all sums payable by it
thereunder. The Company, at its option, (i) will be discharged from any and all
obligations with respect to the 9 3/8% Notes delivered, and the guarantor will
be discharged from any and all obligations with respect to its guarantee of such
9 3/8% Notes, (except for certain obligations of the Company to register the
transfer or exchange of such 9 3/8% Notes, replace stolen, lost or mutilated
9 3/8% Notes, maintain paying agencies and hold moneys for payment in trust) or
(ii) need not comply with certain of the restrictive covenants with respect to
the 9 3/8% Indenture, in each case, if the Company, in addition to satisfying
certain other obligations, deposits with the appropriate trustee, in trust, U.S.
legal tender or U.S. Government Obligations (in each case, as defined in the
9 3/8% Indenture) or a combination thereof which, through the payment of
interest thereon and principal in respect thereof in accordance with their
terms, will be sufficient to pay all the principal of and interest on 9 3/8%
Notes to be defeased on the dates such payments are due in accordance with the
terms of 9 3/8% Notes as well as the trustee's fees and expenses.

8 3/4% NOTES

The 8 3/4% Notes mature on June 15, 2007. Interest on the 8 3/4% Notes accrues
at the rate of 8 3/4% per annum and is payable semiannually. The 8 3/4% Notes
are unsecured obligations of the Company, ranking subordinate in right of
payment to all Senior Debt (as defined in the indenture governing the 8 3/4%
Notes (the "8 3/4% Indenture")) of the Company, including the Notes, and pari
passu with the 9 3/8% Notes, the 10 1/2% Notes, the 8 1/8% Notes and the 9%
Notes.

Substantially all of the Company's subsidiaries fully and unconditionally
guarantee the full and prompt payment of principal of all interest on the 8 3/4%
Notes, and of all other obligations under the 8 3/4% Indenture. The indebtedness
evidenced by each such guarantee
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<PAGE> 139

is subordinated to each Guarantor's Senior Debt, including the Guarantees, on
the same terms as the 8 3/4% Notes are subordinated to the Company's Senior
Debt.

The 8 3/4% Notes are redeemable, at the Company's option, in whole at any time
or in part from time to time, on and after June 15, 2002, at the following
redemption prices (expressed as percentages of the principal amount) if redeemed
during the twelve month period commencing on June 15 of the year set forth
below, plus, in each case, accrued and unpaid interest thereon to the date of
redemption:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002........................................................ 104.375%
2003........................................................ 102.917
2004........................................................ 101.458
2005 and thereafter......................................... 100.000
</TABLE>

In addition, on or prior to June 15, 2000, the Company may redeem the 8 3/4%
Notes with the net cash proceeds of one or more Public Equity Offerings (as
defined in the 8 3/4% Indenture) at a redemption price of 108.75% of the
principal amount thereof, plus accrued and unpaid interest to the redemption
date; provided, however, that after any such redemption at least 75% of the
aggregate principal amount of the 8 3/4% Notes originally issued must be
outstanding. The Company's ability to optionally redeem the 8 3/4% Notes are
subject to restrictions contained in the Senior Credit Facility, which limits
the amount of debt subordinate to the indebtedness under the Senior Credit
Facility that may be redeemed by the Company.

Under the 8 3/4% Indenture, in the event of a change of control (as defined in
the 8 3/4% Indenture) of the Company, each holder of 8 3/4% Notes will have the
right to require the Company to repurchase, in whole or in part, such holder's
8 3/4% Notes at a purchase price equal to 101% of their principal amount, plus
accrued and unpaid interest, if any to the date of repurchase.

The 8 3/4% Indenture contains certain restrictive covenants which, among other
things, impose limitations (subject to certain exceptions) on the Company with
respect to (i) the payment of dividends or other distributions on capital stock
and the purchase, redemption or retirement for value of shares of capital stock
as any warrants, options or other rights for shares of capital stock; (ii) the
incurrence of additional indebtedness; (iii) the incurrence of subsidiary
indebtedness; (iv) the repayment or redemption of subordinated indebtedness
other than in accordance with its scheduled repayment; (v) sales of assets by
the Company; (vi) asset swaps; (vii) transactions with stockholders and
affiliates; (viii) the restriction of certain payments by subsidiaries to their
respective parents; (ix) the creation of liens on the assets of the Company or
its subsidiaries; (x) the incurrence of indebtedness senior to the 8 3/4% Notes
and subordinate to other indebtedness of the Company; (xi) investments by the
Company or its subsidiaries; (xii) the issuance of preferred stock by any of the
Company's subsidiaries; (xiii) sales and leasebacks by the Company or its
subsidiaries; (xiv) the guarantee of indebtedness; (xv) the conduct of business
other than the ownership and operation of radio broadcast stations and
businesses reasonably related thereto; and (xvi) the merger or sale of all or
substantially all the assets of the Company. Upon the happening of certain
events of default specified in the 8 3/4% Indenture, the trustee for the 8 3/4%
Notes may, and the trustee upon the request of holders of 25% in principal
amount then outstanding of the 8 3/4% Notes shall, or the holders of at

133
<PAGE> 140

least 25% in principal amount of outstanding 8 3/4% Notes may, declare the
principal amount then outstanding of and accrued but unpaid interest, if any, on
all of such 8 3/4% Notes to be due and payable. Upon the happening of certain
other events of default specified in the 8 3/4% Indenture, the unpaid principal
of and accrued but unpaid interest on all outstanding 8 3/4% Notes will
automatically become due and payable without any action by the trustee or the
holders of the 8 3/4% Notes.

The Company may terminate its obligations under the 8 3/4% Indenture at any
time, and the obligations of the Guarantors with respect thereto shall
terminate, by delivering all outstanding 8 3/4% Notes of the appropriate series
to the appropriate trustee for cancellation and paying all sums payable by it
thereunder. The Company, at its option, (i) will be discharged from any and all
obligations with respect to the 8 3/4% Notes delivered, and the guarantor will
be discharged from any and all obligations with respect to its guarantee of such
8 3/4% Notes, (except for certain obligations of the Company to register the
transfer or exchange of such 8 3/4% Notes, replace stolen, lost or mutilated
8 3/4% Notes, maintain paying agencies and hold moneys for payment in trust) or
(ii) need not comply with certain of the restrictive covenants with respect to
the 8 3/4% Indenture, in each case, if the Company, in addition to satisfying
certain other obligations, deposits with the appropriate trustee, in trust, U.S.
legal tender or U.S. Government Obligations (in each case, as defined in the
8 3/4% Indenture) or a combination thereof which, through the payment of
interest thereon and principal in respect thereof in accordance with their
terms, will be sufficient to pay all the principal of and interest on 8 3/4%
Notes to be defeased on the dates such payments are due in accordance with the
terms of 8 3/4% Notes as well as the trustee's fees and expenses.

10 1/2% NOTES

The 10 1/2% Notes mature on January 15, 2007. Interest on the 10 1/2% Notes
accrues at the rate of 10 1/2% per annum and is payable semiannually. The
10 1/2% Notes are unsecured obligations of the Company, ranking subordinate in
right of payment to all Senior Debt (as defined in the indenture governing the
10 1/2% Notes (the "10 1/2% Indenture")) of the Company, including the Notes,
and pari passu with the 9 3/8% Notes, the 8 3/4% Notes, the 8 1/8% Notes and the
9% Notes.

Substantially all of the Company's subsidiaries fully and unconditionally
guarantee the full and prompt payment of principal of all interest on the
10 1/2% Notes, and of all other obligations under the 10 1/2% Indenture. The
indebtedness evidenced by each such guarantee is subordinated to each
Guarantor's Senior Debt, including the Guarantees, on the same terms as the
10 1/2% Notes are subordinated to the Company's Senior Debt.

Except as described in the immediately following paragraph, the 10 1/2% Notes
may not be redeemed at the option of the Company prior to January 15, 2002.
During the twelve month period beginning January 15 of the years indicated
below, the 10 1/2% Notes are redeemable at the option of the Company, in whole
or in part, on at least 30 but not more than 60 days' notice to each holder of
10 1/2% Notes to be redeemed, at the redemption prices (expressed as percentages
of the principal amount) set forth below, plus any

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<PAGE> 141

accrued and unpaid interest and Liquidated Damages (as defined in the 10 1/2%
Indenture), if any, to the applicable date of redemption.

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002........................................................ 105.250%
2003........................................................ 103.938
2004........................................................ 102.625
2005........................................................ 101.313
2006 and thereafter......................................... 100.000
</TABLE>

In addition, on or prior to January 15, 2000, the Company may redeem the 10 1/2%
Notes with the net cash proceeds of one or more offerings of Equity Interests
(as defined in the 10 1/2% Indenture) at a redemption price of 109.5% of the
principal amount thereof, plus accrued and unpaid interest to the redemption
date; provided, however, that after any such redemption at least 65% of the
aggregate principal amount of the 10 1/2% Notes originally issued must be
outstanding. The Company's ability to optionally redeem the 10 1/2% Notes are
subject to restrictions contained in the Senior Credit Facility, which limits
the amount of debt subordinate to the indebtedness under the Senior Credit
Facility that may be redeemed by the Company.

Under the 10 1/2% Indenture, in the event of a change of control (as defined in
the 10 1/2% Indenture) of the Company, the Company shall be obligated to make an
offer to repurchase all outstanding 10 1/2% Notes at a purchase price equal to
101% of their principal amount, plus accrued and unpaid interest, if any to the
date of repurchase.

The 10 1/2% Indenture contains certain restrictive covenants which, among other
things, impose limitations (subject to certain exceptions) on the Company with
respect to (i) the payment of dividends or other distributions on capital stock
and the purchase, redemption or retirement for value of shares of capital stock
as any warrants, options or other rights for shares of capital stock; (ii) the
incurrence of additional indebtedness; (iii) the incurrence of subsidiary
indebtedness; (iv) the repayment or redemption of subordinated indebtedness
other than in accordance with its scheduled repayment; (v) sales of assets by
the Company; (vi) asset swaps; (vii) transactions with stockholders and
affiliates; (viii) the restriction of certain payments by subsidiaries to their
respective parents; (ix) the creation of liens on the assets of the Company or
its subsidiaries; (x) the incurrence of indebtedness senior to the 10 1/2% Notes
and subordinate to other indebtedness of the Company; (xi) investments by the
Company or its subsidiaries; (xii) the issuance of preferred stock by any of the
Company's subsidiaries; (xiii) sales and leasebacks by the Company or its
subsidiaries; (xiv) the guarantee of indebtedness; (xv) the conduct of business
other than the ownership and operation of broadcast businesses or businesses
related thereto, including media representation and sale of advertising; and
(xvi) the merger or sale of all or substantially all the assets of the Company.
Upon the happening of certain events of default specified in the 10 1/2%
Indenture, the trustee for the 10 1/2% Notes may, and the trustee upon the
request of holders of 25% in principal amount then outstanding of the 10 1/2%
Notes shall, or the holders of at least 25% in principal amount of outstanding
10 1/2% Notes may, declare the principal amount then outstanding of and accrued
but unpaid interest, if any, on all of such 10 1/2% Notes to be due and payable.
Upon the happening of certain other events of default specified in the 10 1/2%
Indenture, the

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<PAGE> 142

unpaid principal of and accrued but unpaid interest on all outstanding 10 1/2%
Notes will automatically become due and payable without any action by the
trustee or the holders of the 10 1/2% Notes.

The Company may terminate its obligations under the 10 1/2% Indenture at any
time, and the obligations of the Guarantors with respect thereto shall
terminate, by delivering all outstanding 10 1/2% Notes of the appropriate series
to the appropriate trustee for cancellation and paying all sums payable by it
thereunder. The Company, at its option, (i) will be discharged from any and all
obligations with respect to the 10 1/2% Notes delivered, and the guarantor will
be discharged from any and all obligations with respect to its guarantee of such
10 1/2% Notes, (except for certain obligations of the Company to register the
transfer or exchange of such 10 1/2% Notes, replace stolen, lost or mutilated
10 1/2% Notes, maintain paying agencies and hold moneys for payment in trust) or
(ii) need not comply with certain of the restrictive covenants with respect to
the 10 1/2% Indenture, in each case, if the Company, in addition to satisfying
certain other obligations, deposits with the appropriate trustee, in trust, U.S.
cash or Government Securities (as defined in the 10 1/2% Indenture) or a
combination thereof which, through the payment of interest thereon and principal
in respect thereof in accordance with their terms, will be sufficient to pay all
the principal of and interest on 10 1/2% Notes to be defeased on the dates such
payments are due in accordance with the terms of 10 1/2% Notes as well as the
trustee's fees and expenses.

8 1/8% NOTES

The 8 1/8% Notes mature on December 15, 2007. Interest on the 8 1/8% Notes
accrues at the rate of 8 1/8% per annum and is payable semiannually. The 8 1/8%
Notes are unsecured obligations of the Company, ranking subordinate in right of
payment to all Senior Debt (as defined in the indenture governing the 8 1/8%
Notes (the "8 1/8% Indenture")) of the Company, including the Notes, and pari
passu with the 9 3/8% Notes, the 10 1/2% Notes, the 8 3/4% Notes and the 9%
Notes.

Substantially all of the Company's subsidiaries fully and unconditionally
guarantee the full and prompt payment of principal of all interest on the 8 1/8%
Notes, and of all other obligations under the 8 1/8% Indenture. The indebtedness
evidenced by each such guarantee is subordinated to each Guarantor's Senior
Debt, including the Guarantees, on the same terms as the 8 1/8% Notes are
subordinated to the Company's Senior Debt.

The 8 1/8% Notes are redeemable, at the Company's option, in whole at any time
or in part from time to time, on and after December 15, 2002, at the following
redemption prices (expressed as percentages of the principal amount) if redeemed
during the twelve month period commencing on December 15 of the year set forth
below, plus, in each case, accrued and unpaid interest thereon to the date of
redemption:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2002........................................................ 104.063%
2003........................................................ 102.708
2004........................................................ 101.354
2005 and thereafter......................................... 100.000
</TABLE>

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<PAGE> 143

In addition, on or prior to December 15, 2000, the Company may redeem the 8 1/8%
Notes with the net cash proceeds of one or more Public Equity Offerings (as
defined in the 8 1/8% Indenture) at a redemption price of 108.125% of the
principal amount thereof, plus accrued and unpaid interest to the redemption
date; provided, however, that after any such redemption at least 75% of the
aggregate principal amount of the 8 1/8% Notes originally issued must be
outstanding. The Company's ability to optionally redeem the 8 1/8% Notes are
subject to restrictions contained in the Senior Credit Facility, which limits
the amount of debt subordinate to the indebtedness under the Senior Credit
Facility that may be redeemed by the Company.

Under the 8 1/8% Indenture, in the event of a change of control (as defined in
the 8 1/8% Indenture) of the Company, (i) the Company will have the option, at
any time on or prior to December 15, 2000, to redeem the 8 1/8% Notes, in whole
but not in part, at a redemption price equal to 100% of the principal amount
thereof plus the Applicable Premium (as defined in the 8 1/8% Indenture),
together with accrued and unpaid interest, if any, to the date of redemption,
and (ii) if the Company does not so redeem the 8 1/8% Notes or if such change of
control occurs after December 15, 2000, each holder of 8 1/8% Notes will have
the right to require the Company to repurchase, in whole or in part, such
holder's 8 1/8% Notes at a purchase price equal to 101% of their principal
amount, plus accrued and unpaid interest, if any, to the date of repurchase.

The 8 1/8% Indenture contains certain restrictive covenants which, among other
things, impose limitations (subject to certain exceptions) on the Company with
respect to (i) the payment of dividends or other distributions on capital stock
and the purchase, redemption or retirement for value of shares of capital stock
as any warrants, options or other rights for shares of capital stock; (ii) the
incurrence of additional indebtedness; (iii) the incurrence of subsidiary
indebtedness; (iv) the repayment or redemption of subordinated indebtedness
other than in accordance with its scheduled repayment; (v) sales of assets by
the Company; (vi) asset swaps; (vii) transactions with stockholders and
affiliates; (viii) the restriction of certain payments by subsidiaries to their
respective parents; (ix) the creation of liens on the assets of the Company or
its subsidiaries; (x) the incurrence of indebtedness senior to the 8 1/8% Notes
and subordinate to other indebtedness of the Company; (xi) investments by the
Company or its subsidiaries; (xii) the issuance of preferred stock by any of the
Company's subsidiaries; (xiii) sales and leasebacks by the Company or its
subsidiaries; (xiv) the guarantee of indebtedness; (xv) the conduct of business
other than the ownership and operation of broadcast businesses or businesses
reasonably related thereto; and (xvi) the merger or sale of all or substantially
all the assets of the Company. Upon the happening of certain events of default
specified in the 8 1/8% Indenture, the trustee for the 8 1/8% Notes may, and the
trustee upon the request of holders of 25% in principal amount then outstanding
of the 8 1/8% Notes shall, or the holders of at least 25% in principal amount of
outstanding 8 1/8% Notes may, declare the principal amount then outstanding of
and accrued but unpaid interest, if any, on all of such 8 1/8% Notes to be due
and payable. Upon the happening of certain other events of default specified in
the 8 1/8% Indenture, the unpaid principal of and accrued but unpaid interest on
all outstanding 8 1/8% Notes will automatically become due and payable without
any action by the trustee or the holders of the 8 1/8% Notes.

The Company may terminate its obligations under the 8 1/8% Indenture at any
time, and the obligations of the guarantors with respect thereto shall
terminate, by delivering all

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<PAGE> 144

outstanding 8 1/8% Notes of the appropriate series to the appropriate trustee
for cancellation and paying all sums payable by it thereunder. The Company, at
its option, (i) will be discharged from any and all obligations with respect to
the 8 1/8% Notes delivered, and the guarantor will be discharged from any and
all obligations with respect to its guarantee of such 8 1/8% Notes, (except for
certain obligations of the Company to register the transfer or exchange of such
8 1/8% Notes, replace stolen, lost or mutilated 8 1/8% Notes, maintain paying
agencies and hold moneys for payment in trust) or (ii) need not comply with
certain of the restrictive covenants with respect to the 8 1/8% Indenture, in
each case, if the Company, in addition to satisfying certain other obligations,
deposits with the appropriate trustee, in trust, U.S. legal tender or U.S.
Government Obligations (in each case, as defined in the 8 1/8% Indenture) or a
combination thereof which, through the payment of interest thereon and principal
in respect thereof in accordance with their terms, will be sufficient to pay all
the principal of and interest on 8 1/8% Notes to be defeased on the dates such
payments are due in accordance with the terms of 8 1/8% Notes as well as the
trustee's fees and expenses.

9% NOTES

The 9% Notes mature on October 1, 2008. Interest on the 9% Notes accrues at the
rate of 9% per annum and is payable semiannually. The 9% Notes are unsecured
obligations of the Company, ranking subordinate in right of payment to all
Senior Debt (as defined in the indenture governing the 9% Notes (the "9%
Indenture")) of the Company, including the Notes, and pari passu with the 9 3/8%
Notes, the 10 1/2% Notes, the 8 3/4% Notes and the 8 1/8% Notes.

Substantially all of the Company's subsidiaries fully and unconditionally
guarantee the full and prompt payment of principal of all interest on the 9%
Notes, and of all other obligations under the 9% Indenture. The indebtedness
evidenced by each such guarantee is subordinated to each Guarantor's Senior
Debt, including the Guarantees, on the same terms as the 9% Notes are
subordinated to the Company's Senior Debt.

The 9% Notes are redeemable, at the Company's option, in whole at any time or in
part from time to time, on and after October 1, 2003, at the following
redemption prices (expressed as percentages of the principal amount) if redeemed
during the twelve month period commencing on October 1 of the years set forth
below, plus, in each case, accrued and unpaid interest thereon to the date of
redemption:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003................................................ 106.50%
2004................................................ 105.50%
2005................................................ 104.50%
2006................................................ 103.50%
2007................................................ 102.00%
2008................................................ 100.00%
</TABLE>

In addition, on or prior to October 1, 2000, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings (as defined) to
redeem the Notes, in part, at a redemption price equal to 109% of the principal
amount thereof plus accrued and unpaid interest to the date of redemption;
provided, however, that after any such redemption thereon the aggregate
principal amount of the 9% Notes outstanding must

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<PAGE> 145

equal at least 75% of the aggregate principal amount of the Notes originally
issued. The Company's ability to optionally redeem the 9% Notes are subject to
restrictions contained in the Senior Credit Facility, which limits the amount of
debt subordinate to the indebtedness under the Senior Credit Facility that may
be redeemed by the Company.

Under the 9% Indenture, in the event of a change of control (as defined in the
9% Indenture) of the Company, (i) the Company will have the option, at any time
on or prior to October 1, 2000, to redeem the 9% Notes, in whole but not in
part, at a redemption price equal to 100% of the principal amount thereof plus
the Applicable Premium (as defined in the 9% Indenture), together with accrued
and unpaid interest, if any, to the date of redemption, and (ii) if the Company
does not so redeem the 9% Notes or if such change of control occurs after
October 1, 2000, each holder of 9% Notes will have the right to require the
Company to repurchase, in whole or in part, such holder's 9% Notes at a purchase
price equal to 101% of their principal amount, plus accrued and unpaid interest,
if any, to the date of repurchase.

The 9% Indenture contains certain restrictive covenants which, among other
things, impose limitations (subject to certain exceptions) on the Company with
respect to (i) the payment of dividends or other distributions on capital stock
and the purchase, redemption or retirement for value of shares of capital stock
as any warrants, options or other rights for shares of capital stock; (ii) the
incurrence of additional indebtedness; (iii) the incurrence of subsidiary
indebtedness; (iv) the repayment or redemption of subordinated indebtedness
other than in accordance with its scheduled repayment; (v) sales of assets by
the Company; (vi) asset swaps; (vii) transactions with stockholders and
affiliates; (viii) the restriction of certain payments by subsidiaries to their
respective parents; (ix) the creation of liens on the assets of the Company or
its subsidiaries; (x) the incurrence of indebtedness senior to the 9% Notes and
subordinate to other indebtedness of the Company; (xi) investments by the
Company or its subsidiaries; (xii) the issuance of preferred stock by any of the
Company's subsidiaries; (xiii) sales and leasebacks by the Company or its
subsidiaries; (xiv) the guarantee of indebtedness; (xv) the conduct of business
other than the ownership and operation of broadcast businesses or businesses
reasonably related thereto; and (xvi) the merger or sale of all or substantially
all the assets of the Company. Upon the happening of certain events of default
specified in the 9% Indenture, the trustee for the 9% Notes may, and the trustee
upon the request of holders of 25% in principal amount then outstanding of the
9% Notes shall, or the holders of at least 25% in principal amount of
outstanding 9% Notes may, declare the principal amount then outstanding of and
accrued but unpaid interest, if any, on all of such 9% Notes to be due and
payable. Upon the happening of certain other events of default specified in the
9% Indenture, the unpaid principal of and accrued but unpaid interest on all
outstanding 9% Notes will automatically become due and payable without any
action by the trustee or the holders of the 9% Notes.

The Company may terminate its obligations under the 9% Indenture at any time,
and the obligations of the guarantors with respect thereto shall terminate, by
delivering all outstanding 9% Notes of the appropriate series to the appropriate
trustee for cancellation and paying all sums payable by it thereunder. The
Company, at its option, (i) will be discharged from any and all obligations with
respect to the 9% Notes delivered, and the guarantor will be discharged from any
and all obligations with respect to its guarantee of such 9% Notes, (except for
certain obligations of the Company to register the transfer or

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<PAGE> 146

exchange of such 9% Notes, replace stolen, lost or mutilated 9% Notes, maintain
paying agencies and hold moneys for payment in trust) or (ii) need not comply
with certain of the restrictive covenants with respect to the 9% Indenture, in
each case, if the Company, in addition to satisfying certain other obligations,
deposits with the appropriate trustee, in trust, U.S. legal tender or U.S.
Government Obligations (in each case, as defined in the 9% Indenture) or a
combination thereof which, through the payment of interest thereon and principal
in respect thereof in accordance with their terms, will be sufficient to pay all
the principal of and interest on 9% Notes to be defeased on the dates such
payments are due in accordance with the terms of 9% Notes as well as the
trustee's fees and expenses.

6% EXCHANGE DEBENTURES

For a description of the 6% Convertible Subordinated Exchange Debentures due
2012 issuable by Chancellor Media from time to time upon exchange of the $3.00
Convertible Preferred Stock, see "Description of Capital Stock -- Chancellor
Media -- $3.00 Convertible Exchangeable Preferred Stock -- Exchange."

DESCRIPTION OF CAPITAL STOCK

CHANCELLOR MEDIA

COMMON STOCK

Chancellor Media's authorized common stock consists of 200,000,000 shares of
Common Stock, par value $0.01 per share (the "Common Stock"), approximately
142,724,983 of which were issued and outstanding as of November 30, 1998 and
75,000,000 shares of Class A Common Stock, par value $0.01 per share (the "Class
A Common Stock"), none of which were issued and outstanding as of November 30,
1998.

The shares of Common Stock currently outstanding are validly issued, fully paid
and nonassessable.

It is not contemplated that any shares of Class A Common Stock will be issued at
any time. The Amended and Restated Certificate of Incorporation of Chancellor
Media (the "Chancellor Media Certificate") provides that the issuance of any
shares of Class A Common Stock will require the unanimous affirmative vote of
the Board of Directors of Chancellor Media.

Dividends

Holders of shares of Common Stock and Class A Common Stock are entitled to
receive such dividends as may be declared by the Board of Directors of
Chancellor Media out of funds legally available for such purpose. The Senior
Credit Facility and the certificates of designation governing the $3.00
Convertible Preferred Stock and the 7% Convertible Preferred Stock each directly
restrict, and the 9 3/8% Indenture, the 8 3/4% Indenture, the 10 1/2% Indenture,
the 8 1/8% Indenture and the 9% Indenture each indirectly restrict, and,
assuming completion of the Offering, the Notes Indenture will indirectly
restrict, Chancellor Media's ability to pay cash dividends on the Common Stock
and Class A Common Stock.

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<PAGE> 147

Chancellor Media has not declared or paid any dividends on the Common Stock and
Class A Common Stock in the past, and it is not anticipated that Chancellor
Media will pay any cash dividends on the Common Stock and Class A Common Stock
in the foreseeable future.

Voting Rights

Holders of shares of Common Stock and Class A Common Stock, each voting as a
separate class, shall be entitled to vote on all matters submitted to a vote of
the stockholders, except as otherwise provided by law. Each share of Common
Stock and Class A Common Stock is entitled to one vote per share. Holders of
Common Stock and Class A Common Stock are not entitled to cumulative votes in
the election of directors.

Under Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares of any class of capital stock of Chancellor Media is required
to approve any amendment to the Chancellor Media Certificate that would increase
or decrease the aggregate number of authorized shares of any class, increase or
decrease the par value of the shares of any class, or modify or change the
powers, preferences or special rights of the shares of any class so as to affect
such class adversely.

Liquidation Rights

Upon liquidation, dissolution, or winding-up of Chancellor Media, the holders of
Common Stock and Class A Common Stock are entitled to share ratably in all
assets available for distribution after payment in full of creditors and the
holders of preferred stock of Chancellor Media.

Transfer Agent

The Bank of New York serves as the Transfer Agent and Registrar for the Common
Stock.

Alien Ownership

The Chancellor Media Certificate restricts the ownership and voting of
Chancellor Media's capital stock, including its Common Stock, in accordance with
the Communications Act and the rules of the FCC, to prohibit ownership of more
than 25% of Chancellor Media's outstanding capital stock (or control of more
than 25% of the voting power it represents) by or for the account of aliens,
foreign governments, or non-U.S. corporations or corporations otherwise subject
to control by such persons or entities. The Chancellor Media Certificate also
prohibits any transfer of Chancellor Media's capital stock that would cause
Chancellor Media to violate this prohibition. In addition, the Chancellor Media
Certificate authorizes the Board of Directors of Chancellor Media to adopt such
provisions as its deems necessary to enforce these prohibitions.

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<PAGE> 148

Other Provisions

The holders of Common Stock and Class A Common Stock are not entitled to
preemptive or similar rights. The shares of Common Stock are not subject to
redemption or a sinking fund.

No single shareholder of Chancellor Media holds more than 50.0% of the combined
voting power of Chancellor Media. See "Risk Factors -- Control of the Company."
As a result, a holder of an "attributable" interest in Chancellor Media may
violate the FCC's multiple ownership rules or cross interest rules if such
holder also has an "attributable" interest (or, in some cases, a "meaningful"
nonattributable interest) in other television or radio stations, or in daily
newspapers, depending on the number and location of those radio or television
stations or daily newspapers. Such a stockholder may also be restricted in the
companies in which such stockholder may invest. See "Business -- Federal
Regulation of Radio Broadcasting Industry -- Ownership Matters."

$3.00 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK

Dividends

Holders of $3.00 Convertible Preferred Stock are entitled to receive, when, as
and if declared by the Board of Directors out of legally available funds, cash
dividends at an annual rate of $3.00 per share, payable quarterly in arrears on
March 15, June 15, September 15 and December 15 of each year (each a "Dividend
Payment Date"), beginning September 15, 1997. Dividends will accrue and be
cumulative from the most recent date to which dividends have been paid or, if
none have been paid, from the date of first issuance of the $3.00 Convertible
Preferred Stock and will be payable to holders of record on the March 1, June 1,
September 1 and December 1 immediately preceding the relevant Dividend Payment
Date. No interest, or sum of money in lieu of interest, will be payable in
respect of any accrued and unpaid dividends.

The $3.00 Convertible Preferred Stock has priority as to dividends over the
Common Stock and any other series or class of the Company's stock that ranks
junior to the $3.00 Convertible Preferred Stock as to dividends. Notwithstanding
the foregoing, the $3.00 Convertible Preferred Stock shall rank junior as to
dividends and rights upon a liquidation, dissolution or winding-up of the
Company to any and all classes or series of capital stock (other than Common
Stock) of the Company, whether currently issued or issued in the future, that
does not by its terms expressly provide that it ranks on a parity with or junior
to the $3.00 Convertible Preferred Stock as to dividends and rights upon a
liquidation, dissolution or winding-up of the Company.

Liquidation Rights

Upon liquidation, dissolution or winding-up of Chancellor Media, subject to the
payment in full, or until provision has been made for the payment in full, of
all claims of creditors of Chancellor Media, holders of $3.00 Convertible
Preferred Stock are entitled to receive the liquidation preference of $50.00 per
share, plus an amount equal to any accrued and unpaid dividends, whether or not
declared, to the payment date, before any payment or distribution is made to the
holders of Common Stock or any other series or class of stock

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<PAGE> 149

hereafter issued that ranks junior as to liquidation rights to the $3.00
Convertible Preferred Stock.

Voting Rights

The holders of $3.00 Convertible Preferred Stock have no voting rights except as
described below or as required by law. In exercising any voting rights, each
outstanding share of $3.00 Convertible Preferred Stock will be entitled to one
vote, although shares held by Chancellor Media or any entity controlled by
Chancellor Media will have no voting rights.

Whenever dividends on the $3.00 Convertible Preferred Stock are in arrears in an
aggregate amount equal to at least six quarterly dividends (whether or not
consecutive), the size of Chancellor Media's board of directors will be
increased by two, and the holders of $3.00 Convertible Preferred Stock, will be
entitled to elect two additional directors to the Board of Directors at, subject
to certain limitations, any annual meeting of stockholders at which directors
are to be elected held during the period when the dividends remain in arrears
or, under certain circumstances, at a special meeting of stockholders. These
voting rights will terminate when all dividends in arrears and for the current
quarterly period have been paid in full or declared and set apart for payment.
The term of office of the additional directors so elected will terminate
immediately upon that payment or provision for payment.

Under Delaware law, holders of the $3.00 Convertible Preferred Stock will be
entitled to vote as a class upon a proposed amendment to the Chancellor Media
Certificate, whether or not entitled to vote thereon by the Chancellor Media
Certificate, if the amendment would increase or decrease the aggregate number of
authorized shares of such class, increase or decrease the par value of the
shares of such class, or alter or change the powers, preferences, or special
rights of the shares of such class so as to affect them adversely.

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<PAGE> 150

Optional Redemption

The $3.00 Convertible Preferred Stock may not be redeemed prior to June 16,
1999. Thereafter, the $3.00 Convertible Preferred Stock may be redeemed by
Chancellor Media, at its option, in whole or in part at any time, if redeemed
during the 12-month period beginning June 15 of any year specified below (June
16 in the case of 1999) at the following redemption prices (expressed as
percentages of the liquidation preference thereof):

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1999........................................................ 104.80%
2000........................................................ 104.20
2001........................................................ 103.60
2002........................................................ 103.00
2003........................................................ 102.40
2004........................................................ 101.80
2005........................................................ 101.20
2006........................................................ 100.60
2007 and thereafter......................................... 100.00
</TABLE>

plus in each case accrued and unpaid dividends, whether or not declared, to the
redemption date.

The foregoing is subject to the proviso that on or prior to June 15, 2000 the
$3.00 Convertible Preferred Stock may not be redeemed at the option of
Chancellor Media unless the closing price of Chancellor Media's Common Stock has
equalled or exceeded 150% of the conversion price at such time for at least 20
out of any 30 consecutive trading days ending within 15 days before the notice
of redemption is first mailed.

Conversion Rights

Each holder of $3.00 Convertible Preferred Stock will have the right at any time
at the holder's option to convert any and all shares of $3.00 Convertible
Preferred Stock into Common Stock at a conversion price (subject to adjustment
as described below) of $50.00 per share of underlying Common Stock (equivalent
to a conversion rate of 1.00 share of Common Stock per share of $3.00
Convertible Preferred Stock). If the $3.00 Convertible Preferred Stock is called
for redemption, the conversion right will terminate at the close of business on
the redemption date fixed by the Board of Directors.

Change of Control. If there occurs a Change of Control (as defined in the
certificate of designation for the $3.00 Convertible Preferred Stock) with
respect to Chancellor Media, then shares of the $3.00 Convertible Preferred
Stock may be converted, at the option of the holder thereof at any time from the
date of such Change of Control until the expiration of 45 days after the date of
a note by the Company to all holders of the $3.00 Convertible Preferred Stock of
the occurrence of the Change of Control, into the number of shares of Common
Stock determined by dividing (i) the redemption price for the $3.00 Convertible
Preferred Stock (see "-- Optional Redemption") in effect on the date of the
Change of Control by (ii) the adjusted conversion price.

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<PAGE> 151

Exchange

Shares of $3.00 Convertible Preferred Stock will be exchangeable at the option
of Chancellor Media, in whole but not in part, on any March 15, June 15,
September 15 or December 15, commencing September 15, 2000, through the issuance
of Chancellor Media's 6% Subordinated Exchange Debentures due 2012 (the "6%
Exchange Debentures") in redemption of and in exchange for shares of $3.00
Convertible Preferred Stock, provided certain conditions are met. Holders of the
$3.00 Convertible Preferred Stock will be entitled to receive 6% Exchange
Debentures at the rate of $50.00 principal amount of 6% Exchange Debentures for
each share of $3.00 Convertible Preferred Stock.

7% CONVERTIBLE PREFERRED STOCK

Dividends

Holders of 7% Convertible Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors of Chancellor Media out of legally
available funds, cash dividends at an annual rate equal to 7% of the liquidation
preference per share, payable quarterly.

The 7% Convertible Preferred Stock has priority as to dividends over the Common
Stock and Class A Common Stock of Chancellor Media and any other series or class
of Chancellor Media's stock that ranks junior to the 7% Convertible Preferred
Stock as to dividends (the "Junior Dividend Stock"). Notwithstanding the
foregoing, the 7% Convertible Preferred Stock shall rank junior as to dividends,
redemption payments and rights upon a liquidation, dissolution or winding-up of
Chancellor Media to any and all classes or series of capital stock (other than
common stock) of Chancellor Media, issued in the future, that does not by its
terms expressly provide that it ranks on a parity with or junior to the 7%
Convertible Preferred Stock as to dividends and rights upon a liquidation,
dissolution or winding-up of Chancellor Media.

No dividend (other than dividends payable solely in common stock, any Junior
Dividend Stock or warrants or other rights to acquire such common stock or
Junior Dividend Stock) may be paid or declared and set apart for payment on, and
no purchase, redemption or other acquisition shall be made by Chancellor Media
of, the Common Stock of Chancellor Media or Junior Dividend Stock unless all
accrued and unpaid dividends on the 7% Convertible Preferred Stock, including
the full dividend for the then-current quarterly dividend period, shall have
been paid or declared and set apart for payment without interest.

Except as provided below, Chancellor Media may not pay dividends on any class or
series of stock issued in the future having parity with the 7% Convertible
Preferred Stock as to dividends ("Parity Dividend Stock") unless it has paid or
declared and set apart for payment or contemporaneously pays or declares and
sets apart for payment all accrued and unpaid dividends for all prior dividend
payment periods on the 7% Convertible Preferred Stock. In addition, except as
provided below, Chancellor Media may not pay dividends on the 7% Convertible
Preferred Stock unless it has paid or declared and set apart for payment or
contemporaneously pays or declares and sets apart for payment all accrued and
unpaid dividends for all prior dividend payment periods on the Parity Dividend
Stock. Whenever all accrued dividends in respect of prior dividend payment
periods are not paid in full on 7% Convertible Preferred Stock and on any Parity
Dividend Stock, all dividends

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<PAGE> 152

declared on the 7% Convertible Preferred Stock and the Parity Dividend Stock
will be declared and made pro rata so that the amount of dividends declared on
the 7% Convertible Preferred Stock and the Parity Dividend Stock will bear the
same ratio that accrued and unpaid dividends in respect of prior dividend
payment periods on the 7% Convertible Preferred Stock and the Parity Dividend
Stock bear to each other. The $3.00 Convertible Preferred Stock constitutes
"Parity Dividend Stock" for purposes of the 7% Convertible Preferred Stock.

Chancellor Media may not purchase any shares of the 7% Convertible Preferred
Stock or any Parity Dividend Stock (except for consideration payable in common
stock or Junior Dividend Stock) or redeem fewer than all the shares of the 7%
Convertible Preferred Stock and Parity Dividend Stock then outstanding if
Chancellor Media has failed to pay any accrued dividend on the 7% Convertible
Preferred Stock or on any Parity Dividend Stock on a stated payment date.
Notwithstanding the foregoing, in such event, Chancellor Media may purchase or
redeem fewer than all the shares of the 7% Convertible Preferred Stock and
Parity Dividend Stock if such repurchase or redemption is made pro rata so that
the amounts purchased or redeemed bear to each other the same ratio that the
required redemption payments on the shares of the 7% Convertible Preferred Stock
and any Parity Dividend Stock then outstanding bear to each other.

If Chancellor Media issues any series or class of stock that ranks senior as to
dividends to the 7% Convertible Preferred Stock ("Senior Dividend Stock") and
fails to pay or declare and set apart for payment accrued and unpaid dividends
on any Senior Dividend Stock (except to the extent allowed by the terms of the
Senior Dividend Stock), Chancellor Media may not pay or declare and set apart
for payment any dividend on the 7% Convertible Preferred Stock unless and until
all accrued and unpaid dividends on the Senior Dividend Stock, including the
full dividends for the then current dividend period, have been paid or declared
and set apart for payment without interest.

Liquidation Rights

In the case of the voluntary or involuntary liquidation, dissolution or winding
up of Chancellor Media, subject to the payment in full, or until provision has
been made for the payment in full, of all claims of creditors of Chancellor
Media, holders of 7% Convertible Preferred Stock are entitled to receive the
liquidation preference of the 7% Convertible Preferred Stock, plus an amount
equal to any accrued and unpaid dividends, whether or not declared, to the
payment date, before any payment or distribution is made to the holders of
common stock or any other series or class of stock issued in the future that
ranks junior as to liquidation rights to the 7% Convertible Preferred Stock
("Junior Liquidation Stock"). Holders of 7% Convertible Preferred Stock will not
be entitled to receive the liquidation preference of their shares until the
liquidation preference of any other series or class of stock that ranks senior
as to liquidation rights to the 7% Convertible Preferred Stock ("Senior
Liquidation Stock"), if any, and any creditors of Chancellor Media have been
paid in full. The holders of 7% Convertible Preferred Stock and any series or
class of stock that ranks on a parity as to liquidation rights with the 7%
Convertible Preferred Stock ("Parity Liquidation Stock") are entitled to share
ratably, in accordance with the respective preferential amounts payable on their
stock, in any distribution (after payment of the liquidation preference on any
Senior Liquidation Stock) that is not sufficient to pay in full the aggregate
liquidation preference on both the 7%

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<PAGE> 153

Convertible Preferred Stock and on any Parity Liquidation Stock. The $3.00
Convertible Preferred Stock constitutes "Parity Liquidation Stock" for purposes
of the 7% Convertible Preferred Stock.

Voting Rights

The holders of 7% Convertible Preferred Stock have no voting rights except as
described below or as required by law.

Whenever dividends on the 7% Convertible Preferred Stock are in arrears in
aggregate amount equal to at least six quarterly dividends (whether or not
consecutive), the size of Chancellor Media's Board of Directors will be
increased by two, and the holders of 7% Convertible Preferred Stock, voting
separately as a class together with holders of any Parity Dividend Stock of
Chancellor Media then having voting rights, will be entitled to elect two
additional directors to the Board of Directors of Chancellor Media at, subject
to certain limitations, any annual meeting of stockholders at which directors
are to be elected held during the period when the dividends remain in arrears
or, under certain circumstances, at a special meeting of stockholders. These
voting rights will terminate when all dividends in arrears and for the current
quarterly period have been paid in full or declared and set apart for payment.
The term of office of the additional directors so elected will terminate
immediately upon that payment or provision for payment.

In addition, so long as any 7% Convertible Preferred Stock is outstanding,
Chancellor Media may not, without the affirmative vote or consent of the holders
of at least 66 2/3% of all outstanding shares of 7% Convertible Preferred Stock
and outstanding Parity Dividend Stock, voting as a single class (i) amend, alter
or repeal (by merger or otherwise) any provision of the certificate of
designation for the 7% Convertible Preferred Stock, the Chancellor Media
Certificate or the bylaws of Chancellor Media so as to affect adversely the
relative rights, preferences, qualifications, limitations of restrictions of the
7% Convertible Preferred Stock or (ii) effect any reclassification of the 7%
Convertible Preferred Stock.

Change of Control

The certificate of designation for the 7% Convertible Preferred Stock provides
that, upon the occurrence of a change of control (as defined in such certificate
of designation), each holder will have the right to require that Chancellor
Media purchase all or a portion of such holder's 7% Convertible Preferred Stock
in cash at a purchase price equal to 101% of the liquidation preference thereof,
plus, without duplication, all accumulated and unpaid dividends per share to the
date of repurchase. If the repurchase of the 7% Preferred Stock would violate or
constitute a default under the Senior Credit Facility or other indebtedness of
Chancellor Media, then, pursuant to the certificate of designation for the 7%
Convertible Preferred Stock, Chancellor Media will either (A) repay in full all
such indebtedness or (B) obtain the requisite consents, if any, under such
indebtedness required to permit the repurchase of the 7% Convertible Preferred
Stock.

Redemption at Option of Chancellor Media

The 7% Convertible Preferred Stock may not be redeemed prior to January 19,
2000. Thereafter, the 7% Convertible Preferred Stock may be redeemed by
Chancellor Media, at
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<PAGE> 154

its option (subject to contractual and other restrictions with respect thereto,
including limitations under the Senior Credit Facility, the 9 3/8% Indenture,
the 8 3/4% Indenture, the 10 1/2% Indenture, and, assuming completion of the
Offering, the Indenture, and to the legal availability of funds therefor), in
whole or in part at any time, if redeemed during the 12-month period beginning
January 15 (January 19 in the case of 2000), of any year specified below at the
following redemption prices (expressed as percentages of the liquidation
preference thereof):

<TABLE>
<CAPTION>
YEAR DIVIDEND
---- --------
<S> <C>
2000........................................................ 104.90%
2001........................................................ 104.20
2002........................................................ 103.50
2003........................................................ 102.80
2004........................................................ 102.10
2005........................................................ 101.40
2006........................................................ 100.70
2007 and thereafter......................................... 100.00
</TABLE>

plus in each case accrued and unpaid dividends, whether or not declared, to the
redemption date.

Conversion Rights

Each holder of 7% Convertible Preferred Stock will have the right, at the
holder's option, to convert any or all shares of 7% Convertible Preferred Stock
into Common Stock at any time at a conversion price (subject to adjustment) of
$36.19 per share of underlying Common Stock. If the 7% Convertible Preferred
Stock is called for redemption, the conversion right, with respect to the called
shares of 7% Convertible Preferred Stock, will terminate at the close of
business on the redemption date fixed by the Board of Directors of Chancellor
Media.

CMCLA

The authorized capital stock of CMCLA as of November 30, 1998 consists of 1,040
shares of common stock, par value $.01 per share, 1,000 of which are owned of
record and beneficially by CMHC and 40 of which are owned of record and
beneficially by a subsidiary of CMHC, and 10,000,000 shares of preferred stock,
par value $.01 per share, none of which shares are issued and outstanding.

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<PAGE> 155

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of the material federal income tax considerations
relevant to the exchange of Old Notes for New Notes. The discussion is based
upon the Internal Revenue Code of 1986, as amended, Treasury regulations,
Internal Revenue Service rulings and pronouncements, and judicial decisions now
in effect, all of which are subject to change at any time by legislative,
judicial or administrative action. Any such changes may be applied retroactively
in a manner that could adversely affect a holder of the New Notes. The
description does not consider the effect of any applicable foreign, state, local
or other tax laws or estate or gift tax considerations.

EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.

EXCHANGE OF OLD NOTES FOR NEW NOTES

The exchange of Old Notes for New Notes pursuant to the exchange offer should
not constitute a sale or an exchange for federal income tax purposes. The holder
will have a basis for the New Notes equal to the basis of the Old Notes and the
holder's holding period for the New Notes will include the period during which
the Old Notes were held. Accordingly, such exchange should have no federal
income tax consequences to holders of Old Notes.

PLAN OF DISTRIBUTION

Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes pursuant to the exchange offer, where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
consummation of the exchange offer, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until , 1999, all dealers effecting
transactions in the New Notes may be required to deliver a Prospectus.

The Company and the Guarantors will not receive any proceeds from any sale of
New Notes by broker-dealers. New Notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such methods
of resale, at market prices prevailing at the time of resale, at prices related
to such prevailing market prices or negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells

149
<PAGE> 156

New Notes that were received by it for its own account pursuant to the exchange
offer and any broker or dealer that participates in a distribution of such New
Notes may be deemed to be an "underwriter" within the meaning of the Securities
Act, and any profit on any such resale of New Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

For a period of 180 days after the Registration Statement is declared effective,
the Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal or otherwise. The Company has agreed
to pay all expenses incident to the Exchange Offer (including the expenses of
one counsel for the holders of the Notes) other than commissions or concessions
of any broker-dealers and will indemnify holders of the Old Notes (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.

LEGAL MATTERS

The validity of the New Notes offered hereby will be passed upon for the Company
by Weil, Gotshal & Manges LLP, Dallas, Texas and New York, New York.

EXPERTS

The consolidated financial statements of Chancellor Media Corporation of Los
Angeles and Subsidiaries as of December 31, 1997 and for the year then ended
included in this Registration Statement, have been included herein in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of that firm as experts in accounting and auditing.

The consolidated financial statements of Chancellor Media Corporation of Los
Angeles and subsidiaries, the combined financial statements of WMZQ Inc. and
Viacom Broadcasting East Inc., the combined financial statements of Riverside
Broadcasting Co., Inc. and WAXQ Inc., the financial statements of WLIT Inc., the
combined financial statements of KYSR Inc. and KIBB Inc. and the financial
statements of WDAS-AM/FM (station owned and operated by Beasley FM Acquisition
Corp.), included herein have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, to the extent and for the periods indicated in
their reports thereon. Such financial statements have been included herein in
reliance upon the reports of KPMG Peat Marwick LLP included herein and upon the
authority of said firm as experts in accounting and auditing.

The consolidated financial statements of Chancellor Radio Broadcasting Company
and Subsidiaries as of December 31, 1996 and 1995 and for each of the three
years in the period ended December 31, 1996 included in this Registration
Statement, have been included herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.

150
<PAGE> 157

The combined financial statements of Colfax Communications, Inc. Radio Group as
of December 31, 1996, 1995, and 1994 and for each of the three years in the
period ended December 31, 1996, included in this Prospectus, have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.

The financial statements of the Outdoor Advertising Division of Whiteco
Industries, Inc. included in this Registration Statement have been audited by
BDO Seidman, LLP, independent certified public accountants, to the extent and
for the periods set forth in their report appearing elsewhere in the
Registration Statement, and are included in reliance upon such report given upon
the authority of said firm as experts in auditing and accounting.

151
<PAGE> 158

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES

PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma condensed combined financial statements of
Chancellor Media Corporation of Los Angeles ("CMCLA" and, together with its
subsidiaries, the "Company") are presented using the purchase method of
accounting for all acquisitions and reflect the combination of consolidated
historical financial data of the Company and each of the companies acquired in
the transactions completed by the Company during 1997 and 1998 and the
elimination of the consolidated historical data of the stations disposed in the
transactions completed by the Company during 1997 and 1998 (the "Completed
Transactions"). The unaudited pro forma condensed combined balance sheet data at
September 30, 1998 presents adjustments for the Completed Transactions, the
offering of $750,000,000 aggregate principal amount of 8% Senior Notes due 2008
which was completed on November 17, 1998 (the "8% Senior Notes Offering")and the
Pending Transactions (excluding the Petry Acquisition and the Pegasus
Acquisition), as if each such transaction had occurred at September 30, 1998.
The unaudited pro forma condensed combined statement of operations data for the
twelve months ended December 31, 1997 and the nine months ended September 30,
1998 presents adjustments for the Completed Transactions, financing transactions
undertaken by the Company and CRBC during 1997, the 1998 Financing Transactions
and the Pending Transactions (excluding the Petry Acquisition and the Pegasus
Acquisition), as if each such transaction occurred on January 1, 1997. The Petry
Acquisition, the Pegasus Acquisition, the Kasem Acquisition and the Other
Outdoor Acquisitions are excluded from the pro forma information included in
this Prospectus for a number of reasons including: (a) uncertainties regarding
on what terms, and in some areas, whether such transactions will be consummated,
(b) whether such acquisition will be consummated by the Company or another
stand-alone entity formed by Chancellor Media, or (c) the availability of
appropriate financial information. In the opinion of management of the Company,
such information is not material to such pro forma presentations, either
individually or in the aggregate.

The purchase method of accounting has been used in the preparation of the
unaudited pro forma condensed combined financial statements. Under this method
of accounting, the aggregate purchase price is allocated to assets acquired and
liabilities assumed based on their estimated fair values. For purposes of the
unaudited pro forma condensed combined financial statements, the purchase prices
of the assets acquired in the Completed Transactions have been allocated based
primarily on information furnished by management of the acquired or to be
acquired assets. The final allocation of the respective purchase prices of the
assets acquired in the Completed Transactions are determined a reasonable time
after consummation of such transactions and are based on a complete evaluation
of the assets acquired and liabilities assumed. Accordingly, the information
presented herein may differ from the final purchase price allocation; however,
such allocations are not expected to differ materially from the preliminary
amounts.

In the opinion of the Company's management, all adjustments have been made
that are necessary to present fairly the pro forma data.

The unaudited pro forma condensed combined financial statements should be
read in conjunction with the respective financial statements and related notes
thereto of the Company which have previously been reported. The unaudited pro
forma condensed combined financial statements are presented for illustrative
purposes only and are not necessarily indicative of the results of operations or
financial position that would have been achieved had the transactions reflected
therein been consummated as of the dates indicated, or of the results of
operations or financial positions for any future periods or dates.

P-1
<PAGE> 159

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES

UNAUDITED PRO FORMA BALANCE SHEET
AT SEPTEMBER 30, 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA COMPANY PRO FORMA
ADJUSTMENTS AS ADJUSTED ADJUSTMENTS
COMPANY FOR THE FOR THE FOR THE
HISTORICAL COMPLETED COMPLETED PENDING COMPANY
AT 9/30/98 TRANSACTIONS TRANSACTIONS TRANSACTIONS(3) PRO FORMA
---------- ------------ ------------ --------------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets.................................... $ 376,797 $ 29,180(1) $ 405,977 $ 11,006 $ 416,983
Note receivable from affiliate.................... 150,000 -- 150,000 (150,000) --
Property and equipment, net....................... 299,906 88,664(1) 388,570 12,150 400,720
Intangible assets, net............................ 4,916,533 973,231(1) 5,889,764 878,750 6,768,514
Other assets...................................... 162,142 27,164(1) 203,306 203,306
(6,000)(1)
20,000(2)
---------- ---------- ---------- --------- ----------
Total assets.............................. $5,905,378 $1,132,239 $7,037,617 $ 751,906 $7,789,523
========== ========== ========== ========= ==========

LIABILITIES AND STOCKHOLDER'S EQUITY:
LIABILITIES:
Current liabilities............................... $ 177,472 $ 4,959(1) $ 182,431 $ 129 $ 182,560
Long-term debt.................................... 3,018,000 1,107,280(1) 4,145,280 699,127 4,844,407
750,000(2)
(730,000)(2)
Deferred tax liabilities.......................... 312,731 312,731 42,223 354,954
Other liabilities................................. 60,403 60,403 834 61,237
---------- ---------- ---------- --------- ----------
Total liabilities......................... 3,568,606 1,132,239 4,700,845 742,313 5,443,158

STOCKHOLDER'S EQUITY:
Common stock...................................... 1 -- 1 -- 1
Additional paid in capital........................ 2,654,273 -- 2,654,273 -- 2,654,273
Accumulated deficit............................... (317,502) -- (317,502) 9,593 (307,909)
---------- ---------- ---------- --------- ----------
Total stockholder's equity................ 2,336,772 -- 2,336,772 9,593 2,346,365
---------- ---------- ---------- --------- ----------
Total liabilities and stockholder's
equity.................................. $5,905,378 $1,132,239 $7,037,617 $ 751,906 $7,789,523
========== ========== ========== ========= ==========
</TABLE>

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements

P-2
<PAGE> 160

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS COMPANY AS
COMPLETED FOR THE ADJUSTED FOR PENDING
COMPANY TRANSACTIONS COMPLETED COMPLETED TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997 HISTORICAL HISTORICAL(4) TRANSACTIONS TRANSACTIONS HISTORICAL(16)
---------------------------- ---------- ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Gross revenues...................................... $663,804 $732,122 $ (17,651)(5) $1,377,432 $ 92,994
(843)(6)
Less: agency commissions............................ (81,726) (68,623) -- (150,349) (11,425)
-------- -------- --------- ---------- --------
Net revenues........................................ 582,078 663,499 (18,494) 1,227,083 81,569
Operating expenses excluding depreciation and
amortization...................................... 316,248 386,650 (14,395)(5) 688,503 45,174
Depreciation and amortization....................... 185,982 74,227 (2,677)(5) 457,714 7,829
200,182(7) --
Corporate general and administrative................ 21,442 23,392 (1,842)(9) 42,992 481
Merger expense...................................... -- 6,124 (6,124)(10) -- --
Restructuring charge................................ -- 15,958 -- 15,958 --
Stock option compensation........................... -- 3,083 -- 3,083 --
Profit participation fee............................ -- 2,322 (2,322)(11) --
-------- -------- --------- ---------- --------
Operating income (loss)............................. 58,406 151,743 (191,316) 18,833 28,085
Interest expense.................................... 85,017 88,372 (579)(5) 329,683 724
156,873(12)
Interest income..................................... (1,922) (753) -- (2,675) (513)
Gain on disposition of assets....................... (18,380) -- -- (18,380) --
Other (income) expense.............................. 383 (242) 885(13) 1,026 (1,357)
-------- -------- --------- ---------- --------
Income (loss) before income taxes................... (6,692) 64,366 (348,495) (290,821) 29,231
Income tax expense (benefit)........................ 7,802 18,700 (130,120)(14) (103,618) 1,825
-------- -------- --------- ---------- --------
Net income (loss)................................... (14,494) 45,666 (218,375) (187,203) 27,406
Preferred stock dividends........................... 12,901 27,321 (40,222)(15) -- --
-------- -------- --------- ---------- --------
Income (loss) attributable to common stock.......... $(27,395) $ 18,345 $(178,153) $ (187,203) $ 27,406
======== ======== ========= ========== ========
Broadcast cash flow............................... $265,830 $276,849 $ (4,099) $ 538,580 $ 36,395
======== ======== ========= ========== ========

<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE
PENDING COMPANY
YEAR ENDED DECEMBER 31, 1997 TRANSACTIONS PRO FORMA
---------------------------- ------------ ----------
<S> <C> <C>
Gross revenues...................................... $ -- $1,470,426
Less: agency commissions............................ -- (161,774)
--------- ----------
Net revenues........................................ -- 1,308,652
Operating expenses excluding depreciation and
amortization...................................... -- 733,677
Depreciation and amortization....................... 52,653(17) 518,196
--
Corporate general and administrative................ -- 43,473
Merger expense...................................... -- --
Restructuring charge................................ -- 15,958
Stock option compensation........................... -- 3,083
Profit participation fee............................ --
--------- ----------
Operating income (loss)............................. (52,653) (5,735)
Interest expense.................................... 48,221(18) 378,628
--
Interest income..................................... -- (3,188)
Gain on disposition of assets....................... -- (18,380)
Other (income) expense.............................. -- (331)
--------- ----------
Income (loss) before income taxes................... (100,874) (362,464)
Income tax expense (benefit)........................ (30,492)(19) (132,285)
--------- ----------
Net income (loss)................................... (70,382) (230,179)
Preferred stock dividends........................... -- --
--------- ----------
Income (loss) attributable to common stock.......... $ (70,382) $ (230,179)
========= ==========
Broadcast cash flow............................... $ -- $ 574,975
========= ==========
</TABLE>

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements

P-3
<PAGE> 161

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS COMPANY AS ADJUSTMENTS
COMPLETED FOR THE ADJUSTED FOR PENDING FOR THE
COMPANY TRANSACTIONS COMPLETED COMPLETED TRANSACTIONS PENDING
NINE MONTHS ENDED SEPTEMBER 30, 1998 HISTORICAL HISTORICAL(4) TRANSACTIONS TRANSACTIONS HISTORICAL(16) TRANSACTIONS
- ------------------------------------ ---------- ------------- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues..................... $1,015,562 $177,971 $ -- $1,193,533 $49,769 $ --
Less: agency commissions........... (116,466) (17,293) -- (133,759) (6,301) --
---------- -------- --------- ---------- ------- --------
Net revenues....................... 899,096 160,678 -- 1,059,774 43,468 --
Operating expenses excluding
depreciation and amortization.... 491,924 79,348 -- 571,272 19,182 --
Depreciation and amortization...... 311,644 26,887 53,354(7) 391,885 3,054 40,403(17)
Corporate general and
administrative................... 25,188 6,545 (570)(8) 31,163 --
Executive severance charge......... 59,475 -- -- 59,475 -- --
Profit participation fee........... -- 1,756 (1,756)(11) --
---------- -------- --------- ---------- ------- --------
Operating income (loss)............ 10,865 46,142 (51,028) 5,979 21,232 (40,403)
Interest expense................... 145,992 12,896 88,374(12) 247,262 435 36,274(18)
Interest income.................... (10,283) (311) -- (10,594) (45) --
Gain on disposition of
representation contracts......... (29,767) -- -- (29,767) -- --
Other (income) expense............. (3,559) 4,615 428(13) 1,484 873 --
---------- -------- --------- ---------- ------- --------
Income (loss) before income taxes... (91,518) 28,942 (139,830) (202,406) 19,969 (76,677)
Income tax expense (benefit)....... (15,380) -- (55,735)(14) (71,115) 1,271 (24,021)(19)
---------- -------- --------- ---------- ------- --------
Net income (loss).................. (76,138) 28,942 (84,095) (131,291) 18,698 (52,656)
Preferred stock dividends.......... 17,601 -- (17,601)(15) -- -- --
---------- -------- --------- ---------- ------- --------
Income (loss) attributable to common
stock............................ $ (93,739) $ 28,942 $ (66,494) $ (131,291) $18,698 $(52,656)
========== ======== ========= ========== ======= ========
Broadcast cash flow.............. $ 407,172 $ 81,330 $ -- $ 488,502 $24,286 $ --
========== ======== ========= ========== ======= ========

COMPANY
NINE MONTHS ENDED SEPTEMBER 30, 1998 PRO FORMA
- ------------------------------------ ----------
<S> <C>
Gross revenues..................... $1,243,302
Less: agency commissions........... (140,060)
----------
Net revenues....................... 1,103,242
Operating expenses excluding
depreciation and amortization.... 590,454
Depreciation and amortization...... 435,342
Corporate general and
administrative................... 31,163
Executive severance charge......... 59,475
Profit participation fee........... --
----------
Operating income (loss)............ (13,192)
Interest expense................... 283,971
Interest income.................... (10,639)
Gain on disposition of
representation contracts......... (29,767)
Other (income) expense............. 2,357
----------
Income (loss) before income taxes... (259,114)
Income tax expense (benefit)....... (93,865)
----------
Net income (loss).................. (165,249)
Preferred stock dividends.......... --
----------
Income (loss) attributable to common
stock............................ $ (165,249)
==========
Broadcast cash flow.............. $ 512,788
==========
</TABLE>

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements

P-4
<PAGE> 162

ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE COMPLETED TRANSACTIONS

(1) Reflects the Completed Transactions that were completed after September 30,
1998 as follows:

<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION FINANCING
------------------------------------------------------------------------ -----------------------
PROPERTY AND INTANGIBLE DECREASE INCREASE IN
COMPLETED PURCHASE CURRENT EQUIPMENT, ASSETS, OTHER CURRENT IN OTHER LONG-TERM
TRANSACTIONS PRICE ASSETS NET(a) NET(b) ASSETS LIABILITIES ASSETS DEBT
------------ ---------- ------- ------------ ---------- ------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Z Spanish Acquisition(c)..... $ 25,000 $ -- $ -- $ -- $25,000 $ -- $ -- $ 25,000
Primedia Acquisition(d)...... 74,770 -- 4,323 70,447 -- -- -- 74,770
Kunz Option(e)............... 39,289 -- 9,822 29,467 -- -- 6,000 33,289
Whiteco Acquisition(f)....... 974,221 29,180 74,519 873,317 2,164 (4,959) -- 974,221
---------- ------- ------- -------- ------- ------- ------ ----------
$1,113,280 $29,180 $88,664 $973,231 $27,164 $(4,959) $6,000 $1,107,280
========== ======= ======= ======== ======= ======= ====== ==========
</TABLE>

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

(a) The Company has assumed that the historical balances of net property and
equipment acquired approximate fair value for the preliminary allocation of
the purchase price. Such amounts are based on information provided by
management of the respective companies acquired in the Completed
Transactions.

(b) The Company, on a preliminary basis, has allocated the intangible assets of
the radio acquisitions to broadcast licenses with an estimated average life
of 15 years and has allocated the intangible assets of the outdoor
acquisitions to goodwill and customer contract value with estimated average
lives of 40 years and five years, respectively. The amounts allocated to
net intangible assets are preliminary and are based upon historical
information from prior radio and outdoor acquisitions.

(c) On October 9, 1998, the Company acquired approximately a 22.4% non-voting
equity interest in Z-Spanish Media Corporation ("Z Spanish Media") for
$25,000 in cash (the "Z Spanish Acquisition"). Z Spanish Media, which is
headquartered in Sacramento, California, is the owner and operator of 22
Hispanic format radio stations in California, Texas, Arizona and Illinois.

(d) On October 23, 1998, the Company acquired Primedia Broadcast Group, Inc.
("Primedia") and certain of its affiliates, which own and operate eight FM
stations in Puerto Rico, for approximately $76,050 in cash less working
capital deficit of $1,280 plus various other direct acquisition costs (the
"Primedia Acquisition").

(e) On November 13, 1998, the Company acquired approximately 1,000 display
faces from Kunz & Company for $33,289 in cash plus various other direct
acquisition costs (the "Kunz Option"). Martin had previously paid $6,000 in
cash to Kunz & Company on July 31, 1997. Martin began operating these 1,000
display faces under a management agreement effective July 31, 1997.

(f) On December 1, 1998, the Company acquired the assets of the Outdoor
Advertising division of Whiteco Industries, Inc., an outdoor advertising
company with over 22,000 billboards and outdoor displays in 34 states, for
$930,000 in cash plus working capital of $24,221 subject to certain
adjustments and various other direct acquisition costs of approximately
$20,000.

(2) Reflects the proceeds of approximately $730,000 received on November 17,
1998 from the issuance of $750,000 of 8% Senior Notes due 2008 (the "8%
Senior Notes"), net of deferred debt issuance costs of $20,000 (the "8%
Senior Notes Offering"). The net proceeds from the 8% Senior Notes Offering
will be used to reduce bank borrowings under the revolving credit portion of
the Senior Credit Facility and the excess proceeds will be invested in
short-term investment grade securities.

P-5
<PAGE> 163

ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE PENDING TRANSACTIONS

(3) Reflects the Pending Transactions as follows:
<TABLE>
<CAPTION>

PURCHASE PRICE ALLOCATION
-------------------------------------------------------------
PURCHASE/ PROPERTY AND INTANGIBLE
(SALES) CURRENT EQUIPMENT, ASSETS, CURRENT
PENDING TRANSACTIONS PRICE ASSETS NET(a) NET(b) LIABILITIES
-------------------- --------- ------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Capstar/SFX Acquisition(e)....... $494,250 $ -- $10,415 $483,835 $ --
Cleveland Acquisitions(f)........ 285,877 11,006 2,114 309,547 (129)
Chicago Disposition(g)........... (21,000) -- (2,167) (2,844) --
Phoenix Acquisition(h)........... 90,000 -- 1,788 88,212 --
-------- ------- ------- -------- -----
Total...................... $849,127 $11,006 $12,150 $878,750 $(129)
======== ======= ======= ======== =====

<CAPTION>
FINANCING
-------------------------
PURCHASE PRICE ALLOCATION DECREASE INCREASE
------------------------------------------ IN NOTES (DECREASE)
DEFERRED RECEIVABLE IN
TAX OTHER ACCUMULATED FROM LONG-TERM
PENDING TRANSACTIONS LIABILITIES(c) LIABILITIES DEFICIT(d) AFFILIATE DEBT
-------------------- -------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Capstar/SFX Acquisition(e)....... $ -- $ -- $ -- $150,000 $344,250
Cleveland Acquisitions(f)........ (35,827) (834) -- -- 285,877
Chicago Disposition(g)........... (6,396) -- (9,593) -- (21,000)
Phoenix Acquisition(h)........... -- -- -- -- 90,000
-------- ----- ------- -------- --------
Total...................... $(42,223) $(834) $(9,593) $150,000 $699,127
======== ===== ======= ======== ========
</TABLE>

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

(a) The Company has assumed that historical balances of net property and
equipment to be acquired approximate fair value for the preliminary
allocation of the purchase price. Such amounts are based primarily on
information provided by management of the respective companies to be
acquired in the Pending Transactions.

(b) The Company, on a preliminary basis, has allocated the intangible assets of
the radio acquisitions to broadcast licenses with an estimated average life
of 15 years. The amounts allocated to net intangible assets are preliminary
and are based upon historical information from prior radio acquisitions.

(d) Reflects the gain on sale, net of tax, upon consummation of the
transaction.

(e) On February 20, 1998, the Company entered into an agreement to acquire from
Capstar KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and
KQUE-FM in Houston, KPLN-FM and KYXY-FM in San Diego and WDRV-FM, WJJJ-FM,
WXDX-FM and WDVE-FM in Pittsburgh (collectively, the "Capstar/SFX
Stations") for an aggregate purchase price of approximately $637,500 in a
series of purchases and exchanges over a period of three years (the
"Capstar/SFX Transaction"). The Capstar/SFX Stations were acquired by
Capstar as part of Capstar's acquisition of SFX on May 29, 1998. On May 29,
1998, the Company completed the Houston Exchange (as defined) and began
operating the remaining ten Capstar/SFX Stations under time brokerage
agreements. The Company also provided a loan to Capstar in the principal
amount of $150,000 (the "Capstar Loan") as part of the Capstar/SFX
Transaction. A portion of the Capstar Loan will be prepaid by Capstar in
connection with the Company's acquisition of, and the proceeds of such
prepayment would be used by the Company as a portion of the purchase price
for, each Capstar/SFX Station. The purchase price for the remaining ten
Capstar/SFX Stations will be approximately $494,250. The Company is
currently assessing whether the terms of the Capstar/SFX Transaction will
be modified upon the consummation of the Capstar Merger by Chancellor
Media.

(f) On August 11, 1998, the Company entered into an agreement to acquire four
FM and two AM radio stations in Cleveland for an aggregate purchase price
of approximately $275,000 in cash plus working capital of $10,877 plus
various other direct acquisition costs (the "Cleveland Acquisitions"). The
Cleveland Acquisitions consist of the purchase by the Company of (i)
WDOK-FM and WRMR-AM from Independent Group Limited Partnership, (ii)
WZAK-FM from Zapis Communications, (iii) Zebra Broadcasting Corporation
which owns WZJM-FM and WJMO-AM and (iv) Wincom Broadcasting Corporation
which owns WQAL-FM (the "Wincom Acquisition"). The Company began operating
WQAL-FM under a time brokerage agreement effective October 1, 1998. The
consummation of each of the Cleveland Acquisitions (other than the Wincom
Acquisition) is contingent upon the consummation of each of the other
Cleveland Acquisitions (other than the Wincom Acquisition). The Company
began operating WQAL-FM under a time brokerage agreement effective October
1, 1998.

P-6
<PAGE> 164

(g) On August 20, 1998, the Company entered into an agreement to sell WMVP-AM
in Chicago to ABC, Inc. for $21,000 in cash (the "Chicago Disposition").
The Company entered into a time brokerage agreement to sell substantially
all of the broadcast time of WMVP-AM effective September 10, 1998.

(h) On September 15, 1998, the Company entered into an agreement to acquire
KKFR-FM and KFYI-AM in Phoenix from The Broadcast Group, Inc. for $90,000
in cash plus various other direct acquisition costs (the "Phoenix
Acquisition"). The Company began operating KKFR-FM and KFYI-AM under a time
brokerage agreement effective November 5, 1998.

P-7
<PAGE> 165

ADJUSTMENTS TO UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS RELATED TO
THE COMPLETED TRANSACTIONS

(4) The detail of the historical financial data of the companies acquired or
disposed of in the Completed Transactions for the year ended December 31,
1997 and for the nine months ended September 30, 1998 has been obtained from
the historical financial statements of the respective companies and is
summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS
------------------------------------------------------------------------------------------------------------
CRBC AS
EVERGREEN ADJUSTED FOR
WUSL-FM VIACOM COMPLETED KDGE-FM KATZ
WDAS-FM/AM WIOQ-FM ACQUISITION CRBC KZPS-FM ACQUISITION GANNETT
YEAR ENDED HISTORICAL HISTORICAL HISTORICAL TRANSACTIONS HISTORICAL HISTORICAL HISTORICAL
DECEMBER 31, 1997 1/1 - 5/1(a) 1/1 - 5/15(b) 1/1 - 7/2(c) 1/1 - 9/5(d) 1/1 - 7/31(e) 1/1 - 10/28(f) 1/1 - 12/29(g)
- ----------------- ------------ ------------- ------------ ------------ ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues....... $5,028 $7,088 $38,972 $241,481 $7,616 $144,886 $61,057
Less: agency
commissions......... (680) (829) (5,470) (30,754) (929) -- (8,052)
------ ------ ------- -------- ------ -------- -------
Net revenues......... 4,348 6,259 33,502 210,727 6,687 144,886 53,005
Operating expenses
excluding
depreciation and
amortization........ 2,533 3,649 14,936 119,328 5,293 109,341 26,303
Depreciation and
amortization........ 875 -- 2,279 30,505 280 141 1,736
Corporate general and
administrative...... 172 141 682 7,226 -- 8,105
Merger expense....... -- -- -- 6,124 -- -- --
Restructuring
charge.............. -- -- -- -- -- 15,958 --
Stock option
compensation........ -- -- -- 3,083 -- -- --
Profit participation
fee................. -- -- -- -- -- -- --
------ ------ ------- -------- ------ -------- -------
Operating income
(loss).............. 768 2,469 15,605 44,461 1,114 11,341 24,966
Interest expense..... 19 990 -- 49,812 -- 18,310 --
Interest income...... (21) -- -- (218) -- (170) --
Other (income)
expense............. 884 -- -- (584) 12 -- (375)
------ ------ ------- -------- ------ -------- -------
Income (loss) before
income taxes........ (114) 1,479 15,605 (4,549) 1,102 (6,799) 25,341
Income tax expense
(benefit)........... -- -- 5,892 1,180 -- 1,912 10,127
------ ------ ------- -------- ------ -------- -------
Net income (loss).... (114) 1,479 9,713 (5,729) 1,102 (8,711) 15,214
Preferred stock
dividends........... -- -- -- 27,321 -- -- --
------ ------ ------- -------- ------ -------- -------
Income (loss)
attributable to
common stock........ $ (114) $1,479 $ 9,713 $(33,050) $1,102 $ (8,711) $15,214
====== ====== ======= ======== ====== ======== =======
Broadcast cash
flow................ $1,815 $2,610 $18,566 $ 91,399 $1,394 $ 35,545 $26,702
====== ====== ======= ======== ====== ======== =======

<CAPTION>
ACQUISITIONS
--------------------------------------------------------------------------------------------------
MARTIN AS
ADJUSTED FOR
KBIG-FM COMPLETED PRIMEDIA
KXPK-FM KLDE-FM MARTIN ACQUISITION
YEAR ENDED HISTORICAL WBIX-FM KODA-FM WWDC-FM/AM TRANSACTIONS HISTORICAL
DECEMBER 31, 1997 1/1 - 8/31(h) 1/1 - 10/10(i) 1/1 - 12/31(j) 1/1 - 12/31(k) 1/1 - 12/31(l) 1/1 - 12/31(m)
- ----------------- ------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues....... $3,460 $33,125 $20,869 $11,416 $84,882 $15,732
Less: agency
commissions......... (458) (4,636) (2,889) (1,430) (8,983) (3,482)
------ ------- ------- ------- ------- -------
Net revenues......... 3,002 28,489 17,980 9,986 75,899 12,250
Operating expenses
excluding
depreciation and
amortization........ 2,816 18,277 7,535 5,597 38,836 7,986
Depreciation and
amortization........ 198 -- 1,848 90 25,326 2,916
Corporate general and
administrative...... 1,080 --
Merger expense....... -- -- -- -- -- --
Restructuring
charge.............. -- -- -- -- -- --
Stock option
compensation........ -- -- -- -- -- --
Profit participation
fee................. -- -- -- -- -- --
------ ------- ------- ------- ------- -------
Operating income
(loss).............. (12) 10,212 8,597 4,299 10,657 1,348
Interest expense..... -- -- -- 123 17,013 2,102
Interest income...... -- -- -- (36) (293) (25)
Other (income)
expense............. (81) -- -- (98) 1,767 66
------ ------- ------- ------- ------- -------
Income (loss) before
income taxes........ 69 10,212 8,597 4,310 (7,830) (795)
Income tax expense
(benefit)........... -- -- -- -- -- (53)
------ ------- ------- ------- ------- -------
Net income (loss).... 69 10,212 8,597 4,310 (7,830) (742)
Preferred stock
dividends........... -- -- -- -- -- --
------ ------- ------- ------- ------- -------
Income (loss)
attributable to
common stock........ $ 69 $10,212 $ 8,597 $ 4,310 $(7,830) $ (742)
====== ======= ======= ======= ======= =======
Broadcast cash
flow................ $ 186 $10,212 $10,445 $ 4,389 $37,063 $ 4,264
====== ======= ======= ======= ======= =======

WHITECO
ACQUISITION
YEAR ENDED HISTORICAL
DECEMBER 31, 1997 1/1-12/31(n)
- ----------------- --------------
<S> <C>
Gross revenues....... $126,801
Less: agency
commissions......... (8,703)
--------
Net revenues......... 118,098
Operating expenses
excluding
depreciation and
amortization........ 63,984
Depreciation and
amortization........ 11,525
Corporate general and
administrative...... 6,074
Merger expense....... --
Restructuring
charge.............. --
Stock option
compensation........ --
Profit participation
fee................. 2,322
--------
Operating income
(loss).............. 34,193
Interest expense..... 4
Interest income...... --
Other (income)
expense............. (1,833)
--------
Income (loss) before
income taxes........ 36,022
Income tax expense
(benefit)........... --
--------
Net income (loss).... 36,022
Preferred stock
dividends........... --
--------
Income (loss)
attributable to
common stock........ $ 36,022
========
Broadcast cash
flow................ $ 54,114
========
</TABLE>

P-8
<PAGE> 166
<TABLE>
<CAPTION>
DISPOSITIONS
--------------------------------------------------------------------------------------------

WPEG-FM SAN
WBAV-FM/AM FRANCISCO
WRFX-FM WPNT-FM FREQUENCY
WFNZ-FM WNKS-FM HISTORICAL WEJM-FM/AM WJZW-FM HISTORICAL
HISTORICAL HISTORICAL 5/30 - HISTORICAL HISTORICAL 1/1 -
1/1 - 5/15(b) 1/1 - 5/15(o) 6/19(p) 1/1 - 8/26(q) 1/1 - 7/7(r) 7/7(s)
------------- ------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.................... $(7,788) $(1,332) $(567) $(1,279) $(4,137) $(1,370)
Less: agency commissions.......... 1,029 142 93 135 567 178
------- ------- ----- ------- ------- -------
Net revenues...................... (6,759) (1,190) (474) (1,144) (3,570) (1,192)
Operating expenses excluding
depreciation and amortization.... (3,569) (994) (285) (1,276) (2,161) (1,738)
Depreciation and amortization..... -- (212) (279) (305) (315) (84)
Corporate general and
administrative................... -- -- -- -- (70) --
Merger expense.................... -- -- -- -- -- --
Restructuring charge.............. -- -- -- -- -- --
Stock option compensation......... -- -- -- -- -- --
Profit participation fee.......... -- -- -- -- -- --
------- ------- ----- ------- ------- -------
Operating income (loss)........... (3,190) 16 90 437 (1,024) 630
Interest expense.................. -- -- -- -- -- --
Interest income................... -- -- -- -- -- --
Other (income) expense............ -- -- -- -- -- --
------- ------- ----- ------- ------- -------
Income (loss) before income
taxes............................ (3,190) 16 90 437 (1,024) 630
Income tax benefit................ -- -- -- -- (260) --
------- ------- ----- ------- ------- -------
Net income (loss)................. (3,190) 16 90 437 (764) 630
Preferred stock dividends......... -- -- -- -- -- --
------- ------- ----- ------- ------- -------
Income (loss) attributable to
common stock..................... $(3,190) $ 16 $ 90 $ 437 $ (764) $ 630
======= ======= ===== ======= ======= =======
Broadcast cash flow............... $(3,190) $ (196) $(189) $ 132 $(1,409) $ 546
======= ======= ===== ======= ======= =======

<CAPTION>
DISPOSITIONS
-------------------------------------------------------------------------------

WBZS-AM
WZHF-AM BONNEVILLE
KDFC-FM KDFC-AM WLUP-FM OPTION WFLN-FM
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
1/1 - 1/31(t) 1/1 - 8/13(u) 1/1 - 7/14(e) 1/1 - 10/1(i) 1/1 - 4/30(v)
------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Gross revenues.................... $(278) $(1,091) $(6,928) $(31,429) $(1,298)
Less: agency commissions.......... 26 23 935 3,951 134
----- ------- ------- -------- -------
Net revenues...................... (252) (1,068) (5,993) (27,478) (1,164)
Operating expenses excluding
depreciation and amortization.... (224) (665) (5,642) (14,434) (728)
Depreciation and amortization..... -- (54) (1,443) -- (800)
Corporate general and
administrative................... -- (18) -- -- --
Merger expense.................... -- -- -- -- --
Restructuring charge.............. -- -- -- -- --
Stock option compensation......... -- -- -- -- --
Profit participation fee.......... -- -- -- -- --
----- ------- ------- -------- -------
Operating income (loss)........... (28) (331) 1,092 (13,044) 364
Interest expense.................. -- -- -- (1) --
Interest income................... -- -- -- 10 --
Other (income) expense............ -- -- -- -- --
----- ------- ------- -------- -------
Income (loss) before income
taxes............................ (28) (331) 1,092 (13,053) 364
Income tax benefit................ -- (98) -- -- --
----- ------- ------- -------- -------
Net income (loss)................. (28) (233) 1,092 (13,053) 364
Preferred stock dividends......... -- -- -- -- --
----- ------- ------- -------- -------
Income (loss) attributable to
common stock..................... $ (28) $ (233) $ 1,092 $(13,053) $ 364
===== ======= ======= ======== =======
Broadcast cash flow............... $ (28) $ (403) $ (351) $(13,044) $ (436)
===== ======= ======= ======== =======

<CAPTION>
DISPOSITIONS
---------------
WBAB-FM
WBLI-FM
WGBB-AM
WHFM-FM
HISTORICAL COMPLETED
1/1 - TRANSACTIONS
12/31(w) HISTORICAL
--------------- ------------
<S> <C> <C>
Gross revenues.................... $(12,794) $732,122
Less: agency commissions.......... 1,459 (68,623)
-------- --------
Net revenues...................... (11,335) 663,499
Operating expenses excluding
depreciation and amortization.... (8,048) 386,650
Depreciation and amortization..... -- 74,227
Corporate general and
administrative................... -- 23,392
Merger expense.................... -- 6,124
Restructuring charge.............. -- 15,958
Stock option compensation......... -- 3,083
Profit participation fee.......... -- 2,322
-------- --------
Operating income (loss)........... (3,287) 151,743
Interest expense.................. -- 88,372
Interest income................... -- (753)
Other (income) expense............ -- (242)
-------- --------
Income (loss) before income
taxes............................ (3,287) 64,366
Income tax benefit................ -- 18,700
-------- --------
Net income (loss)................. (3,287) 45,666
Preferred stock dividends......... -- 27,321
-------- --------
Income (loss) attributable to
common stock..................... $ (3,287) $ 18,345
======== ========
Broadcast cash flow............... $ (3,287) $276,849
======== ========
</TABLE>

P-9
<PAGE> 167

<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
-------------------------------------------------------------------- ------------
MARTIN AS WBAB-FM
ADJUSTED FOR WBLI-FM
COMPLETED PRIMEDIA WHITECO WGBB-AM
NINE MONTHS KODA-FM WWDC-FM/AM MARTIN ACQUISITION ACQUISITION WHFM-FM COMPLETED
ENDED HISTORICAL HISTORICAL TRANSACTIONS HISTORICAL HISTORICAL HISTORICAL TRANSACTIONS
SEPTEMBER 30, 1998 1/1-5/29(j) 1/1-6/1(k) 1/1-7/31(l) 1/1-9/30(m) 1/1-9/30(n) 1/1-5/29(w) HISTORICAL
- --------------------- ----------- ---------- ------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues....... $ 9,132 $4,273 $54,186 $11,749 $103,694 $(5,063) $177,971
Less: agency
commissions........ (1,250) (528) (5,768) (3,070) (7,191) 514 (17,293)
------- ------ ------- ------- -------- ------- --------
Net revenues......... 7,882 3,745 48,418 8,679 96,503 (4,549) 160,678
Operating expenses
excluding
depreciation and
amortization....... 2,771 2,158 23,171 4,954 49,625 (3,331) 79,348
Depreciation and
amortization....... 841 45 15,083 2,158 8,760 -- 26,887
Corporate general and
administrative..... -- -- 1,035 317 5,193 -- 6,545
Profit participation
fee................ -- -- -- -- 1,756 -- 1,756
------- ------ ------- ------- -------- ------- --------
Operating income
(loss)............. 4,270 1,542 9,129 1,250 31,169 (1,218) 46,142
Interest expense..... -- 62 11,057 1,679 98 -- 12,896
Interest income...... -- (18) (261) -- (32) -- (311)
Other expense
(income)........... -- (49) 5,461 23 (820) -- 4,615
------- ------ ------- ------- -------- ------- --------
Net income (loss).... $ 4,270 $1,547 $(7,128) $ (452) $ 31,923 $(1,218) $ 28,942
======= ====== ======= ======= ======== ======= ========
Broadcast cash
flow............... $ 5,111 $1,587 $25,247 $ 3,725 $ 46,878 $(1,218) $ 81,330
======= ====== ======= ======= ======== ======= ========
</TABLE>

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

(a) On May 1, 1997, the Company acquired, in the Beasley Acquisition,
WDAS-FM/AM in Philadelphia for $103,000 in cash.

(b) On May 15, 1997, the Company exchanged, in the EZ Exchange, 5 of its 6
stations in the Charlotte market (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM)
for WUSL-FM and WIOQ-FM in Philadelphia.

(c) On July 2, 1997, the Company acquired, in the Evergreen Viacom Acquisition,
WLTW-FM and WAXQ-FM in New York and WMZQ-FM, WJZW-FM, WZHF-AM, and WBZS-AM
in Washington, D.C. for approximately $612,388 in cash including various
other direct acquisition costs. The Evergreen Viacom Acquisition was
financed with (i) bank borrowings under the Senior Credit Facility (as
defined) of $552,559; (ii) $53,750 in escrow funds paid by the Company on
February 19, 1997 and (iii) $6,079 financed through working capital. In
June 1997, Chancellor Media issued 5,990,000 shares of $3.00 Convertible
Exchangeable Preferred Stock (the "$3.00 Convertible Preferred Stock") for
net proceeds of approximately $287,800 which were contributed to the
Company by Evergreen and used to repay borrowings under the Senior Credit
Facility and subsequently were reborrowed on July 2, 1997 as part of the
financing of the Evergreen Viacom Acquisition. On July 7, 1997, the Company
sold WJZW-FM in Washington, D.C. to affiliates of Capital Cities/ABC Radio
for $68,000 in cash. The assets of WJZW-FM, as well as the assets of
WZHF-AM and WBZS-AM, which were sold on August 13, 1997, were accounted for
as assets held for sale in connection with the purchase price allocation of
the Viacom Acquisition and no gain or loss was recognized by the Company
upon consummation of the sales (see 4(r) and 4(u)).

(d) On September 5, 1997, pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of February 19, 1997 and amended and restated on
July 31, 1997 (the "Chancellor Merger Agreement"), among Chancellor
Broadcasting Company ("Chancellor"), CRBC, Evergreen Media Corpora-

P-10
<PAGE> 168

tion ("Evergreen"), Evergreen Mezzanine Holdings Corporation ("EMHC") and
Evergreen Media Corporation of Los Angeles ("EMCLA"), (i) Chancellor was
merged with and into EMHC, a direct, wholly-owned subsidiary of Evergreen,
with EMHC remaining as the surviving corporation and (ii) CRBC was merged
with and into EMCLA, a direct, wholly-owned subsidiary of EMHC, with EMCLA
remaining as the surviving corporation (collectively, the "Chancellor
Merger"). Upon consummation of the Chancellor Merger, Evergreen was renamed
Chancellor Media Corporation, EMHC was renamed Chancellor Mezzanine
Holdings Corporation ("CMHC") and the Company was renamed Chancellor Media
Corporation of Los Angeles ("CMCLA"). Consummation of the Chancellor Merger
added 52 radio stations (36 FM and 16 AM) to the Company's portfolio of
stations, including 13 stations in markets in which the Company previously
operated. The total purchase price allocated to net assets acquired was
approximately $1,998,383 which included (i) the conversion of each
outstanding share of Chancellor Common Stock into 0.9091 shares of
Chancellor Media Common Stock, resulting in the issuance of 34,617,460
shares of Chancellor Media Common Stock at $15.50 per share, (ii) the
assumption of long-term debt of CRBC of $949,000 which included $549,000 of
borrowings outstanding under the CRBC senior credit facility, $200,000 of
CRBC's 9 3/8% Senior Subordinated Notes due 2004 and $200,000 of CRBC's
8 3/4% Senior Subordinated Notes due 2007, (iii) the issuance of 2,117,629
shares of the Company's 12% Exchangeable Preferred Stock (the "12%
Preferred Stock") in exchange for CRBC's substantially identical securities
with a fair value of $215,570 including accrued and unpaid dividends of
$3,807, (iv) the issuance of 1,000,000 shares of the Company's 12 1/4%
Series A Senior Cumulative Exchangeable Preferred Stock (the "12 1/4%
Preferred Stock") in exchange for CRBC's substantially identical securities
with a fair value of $120,217 including accrued and unpaid dividends of
$772, (v) the issuance of 2,200,000 shares of Chancellor Media's 7%
Convertible Preferred Stock (the "7% Convertible Preferred Stock") in
exchange for Chancellor's substantially identical securities with a fair
value of $111,048 including accrued and unpaid dividends of $1,048, (vi)
the assumption of stock options issued to Chancellor stock option holders
with a fair value of $34,977 and (vii) estimated acquisition costs of
$31,000.

P-11
<PAGE> 169

CRBC's historical condensed combined statement of operations for the year
ended December 31, 1997 and pro forma adjustments related to the
transactions completed by CRBC prior to the Chancellor Merger (the
"Completed Chancellor Transactions") is summarized below:

<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------- ------------- PRO FORMA
CHANCELLOR ADJUSTMENTS CRBC AS
VIACOM FOR THE ADJUSTED FOR
CRBC COLFAX ACQUISITION WDRQ-FM COMPLETED COMPLETED
HISTORICAL HISTORICAL HISTORICAL HISTORICAL CHANCELLOR CHANCELLOR
YEAR ENDED DECEMBER 31, 1997 1/1-9/5 1/1-1/23(i) 1/1-7/2(ii) 1/1-8/11(iii) TRANSACTIONS TRANSACTIONS
---------------------------- ---------- ----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues...................... $215,018 $3,183 $29,214 $(2,395) $ (3,539)(iv) $241,481
Less: agency commissions............ (26,575) (384) (4,046) 251 -- (30,754)
-------- ------ ------- ------- -------- --------
Net revenues........................ 188,443 2,799 25,168 (2,144) (3,539) 210,727
Operating expenses excluding
depreciation and amortization..... 110,548 1,872 13,326 (1,986) (4,432)(iv) 119,328
Depreciation and amortization....... 23,919 -- 2,370 (186) 4,484(v) 30,505
(82)(vi)
Corporate general and
administrative.................... 7,102 -- 520 (42) (354)(vii) 7,226
Merger expense...................... 6,124 -- -- -- -- 6,124
Stock option compensation........... 3,083 -- -- -- -- 3,083
-------- ------ ------- ------- -------- --------
Operating income (loss)............. 37,667 927 8,952 70 (3,155) 44,461
Interest expense.................... 37,978 -- 3,178 -- 8,656 (viii 49,812
Interest income..................... (218) -- -- -- -- (218)
Other income........................ (584) -- -- -- -- (584)
-------- ------ ------- ------- -------- --------
Income (loss) before income taxes... 491 927 5,774 70 (11,811) (4,549)
Income tax expense (benefit)........ 2,196 -- 1,558 18 (2,592)(ix) 1,180
-------- ------ ------- ------- -------- --------
Net income (loss)................... (1,705) 927 4,216 52 (9,219) (5,729)
Preferred stock dividends........... 25,817 -- -- -- 1,504(x) 27,321
-------- ------ ------- ------- -------- --------
Income (loss) attributable to common
stock............................. $(27,522) $ 927 $ 4,216 $ 52 $(10,723) $(33,050)
======== ====== ======= ======= ======== ========
Broadcast cash flow................. $ 77,895 $ 927 $11,842 $ (158) $ 893 $ 91,399
======== ====== ======= ======= ======== ========
</TABLE>

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

(i) On January 23, 1997, CRBC acquired, in the Colfax Acquisition, Colfax
Communications, a radio broadcasting company, with 12 radio stations (8 FM
and 4 AM) located in 4 markets (Minneapolis-St. Paul, Phoenix, Washington,
D.C. and Milwaukee markets). The total purchase price, including
acquisition costs, allocated to net assets acquired was approximately
$383,700. The Colfax Acquisition was financed through (i) a private
placement by CRBC of $200,000 of 12% Exchangeable Preferred Stock for net
proceeds of $191,817; (ii) a private placement by Chancellor of $110,000 of
7% Convertible Preferred Stock for net proceeds of $105,546; (iii)
additional bank borrowings under CRBC's previous senior credit agreement of
$65,937 and (iv) $20,400 in escrow funds. On March 31, 1997, CRBC sold
WMIL-FM and WOKY-AM in Milwaukee for $41,253 in cash. The assets of WMIL-FM
and WOKY-AM are classified as assets held for sale in connection with the
purchase price allocation of the Colfax Acquisition. Accordingly, WMIL-FM
and WOKY-AM net income of approximately $41 for the period January 23, 1997
through March 31, 1997 has been excluded from the Colfax historical
condensed statement of operations for the year ended December 31, 1997.

(ii) On July 2, 1997, CRBC acquired, in the Chancellor Viacom Acquisition,
KIBB-FM and KYSR-FM in Los Angeles, WLIT-FM in Chicago and WDRQ-FM in
Detroit for approximately $500,789 in cash including various other direct
acquisition costs. The Chancellor Viacom Acquisition was financed with (i)
bank borrowings of $273,159 under CRBC's restated senior credit agreement,
dated July 2, 1997 (the "CRBC Restated Credit Agreement"); (ii) borrowings
under an interim loan of Chancellor (the "Chancellor Broadcasting/Viacom
Interim Financing") of $168,300 which were contributed to CRBC by
Chancellor; (iii) escrow funds of $53,750 paid by CRBC on February 19, 1997
and (iv) $5,580 financed through working capital. The assets of WDRQ-FM in
Detroit are classified as assets held for sale in connection with the
purchase price allocation of the Chancellor Viacom Acquisition (see (iii)
below).

P-12
<PAGE> 170

(iii)On August 11, 1997, CRBC sold, in the ABC/Detroit Disposition, WDRQ-FM in
Detroit for $37,000 in cash. The assets of WDRQ-FM were classified as
assets held for sale in connection with the purchase price allocation of
the Chancellor Viacom Acquisition (see 4(d)(ii)). Accordingly, WDRQ-FM net
income for the period July 2, 1997 to August 11, 1997 has been excluded
from CRBC's historical condensed statement of operations.

(iv) Reflects the elimination of time brokerage agreement fees received and paid
by CRBC as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 MARKET PERIOD REVENUE EXPENSE
---------------------------- ------ ------ ------- -------
<S> <C> <C> <C> <C>
WWWW-FM/WDFN-AM(1)...................... Detroit 1/1-1/31 $ (235) $ (16)
WOMX-FM, WXXL-FM, WJHM-FM(2)............ Orlando 1/1-2/13 -- (911)
WEAT-FM/AM, WOLL-FM(2).................. West Palm Beach 1/1-3/28 (593) (304)
WAPE-FM, WFYV-FM(3)..................... Jacksonville 1/1-9/5 (2,711) (490)
WBAB-FM, WBLI-FM, WGBB-AM, WHFM-FM(3)... Long Island 1/1-9/5 -- (2,711)
------- -------
Total adjustment for decrease in
gross revenues and expenses...... $(3,539) $(4,432)
======= =======
</TABLE>

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

(1)On January 31, 1997, CRBC sold WWWW-FM and WDFN-AM in Detroit to the
Company for $30,000 in cash. Prior to the completion of the sale, CRBC
had entered into a joint sales agreement effective February 14, 1996
and a time brokerage agreement effective April 1, 1996 to sell
substantially all of the broadcast time of WWWW-FM and WDFN-AM to the
Company pending the completion of the sale.

(2)On February 13, 1997, CRBC acquired, in the Omni Acquisition,
substantially all of the assets and assumed certain liabilities of the
OmniAmerica Group including WOMX-FM, WXXL-FM and WJHM-FM in Orlando,
WEAT-FM/AM and WOLL-FM in West Palm Beach, Florida and WAPE-FM AND
WFYV-FM in Jacksonville. The total purchase price, including
acquisition costs, allocated to net assets acquired was approximately
$181,046. Prior to the consummation of the Omni Acquisition, CRBC had
entered into an agreement to operate the stations under a time
brokerage agreement effective July 1, 1996. Additionally, prior to the
consummation of CRBC's exchange of WEAT-FM/AM and WOLL-FM in West Palm
Beach for KSTE-FM in Sacramento and $33,000 in cash on March 28, 1997,
CRBC entered into time brokerage agreements to sell substantially all
of the broadcast time of WEAT-FM/AM and WOLL-FM in West Palm Beach and
WAPE-FM and WFYV-FM in Jacksonville effective July 1, 1996.

(3)On July 1, 1996, CRBC entered into an agreement to exchange, in the SFX
Exchange, WAPE-FM and WFYV-FM in Jacksonville, Florida, and $11,000 in
cash to SFX for WBAB-FM, WBLI-FM, WGBB-AM, and WHFM-FM in Long Island.
CRBC entered into time brokerage agreements to operate WBAB-FM,
WBLI-FM, WGBB-AM, and WHFM-FM effective July 1, 1996 and entered into
time brokerage agreements to sell substantially all of the broadcast
time of WAPE-FM and WFYV-FM effective July 1, 1996. On November 6,
1997, the DOJ filed suit against the Company seeking to enjoin under
the HSR Act the acquisition of the four Long Island properties under
the SFX Exchange. On March 30, 1998, the Company and SFX entered into a
Consent Decree under which the Company and SFX agreed that the SFX
Exchange would not be consummated and that the time brokerage
agreements under which the Company operated the Long Island properties
would be terminated as soon as possible but no later than August 1,
1998. On May 29, 1998, the Company's time brokerage agreements
regarding the Long Island properties were terminated as part of the
Capstar Transaction (as defined). Furthermore, on May 29, 1998, the
Company exchanged WAPE-FM and WFYV-FM in Jacksonville plus $90,250 in
cash to Capstar in return for KODA-FM in Houston.

P-13
<PAGE> 171

(v) Reflects incremental amortization related to the Completed Chancellor
Transactions and is based on the following allocation to intangible assets:

<TABLE>
<CAPTION>
COMPLETED CHANCELLOR INCREMENTAL HISTORICAL ADJUSTMENT
TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1997 PERIOD ASSETS, NET EXPENSE(1) EXPENSE INCREASE
---------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Omni...................................... 1/1-2/13 $171,837 $ 525 $ -- $ 525
Colfax.................................... 1/1-1/23 317,894 508 -- 508
KSTE-FM................................... 1/1-3/28 (32,475) (198) -- (198)
Chancellor Viacom Acquisition............. 1/1-7/2 451,690 5,709 2,060 3,649
-------- ------ ------ ------
Total............................. $908,946 $6,544 $2,060 $4,484
======== ====== ====== ======
</TABLE>

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

(1) Intangible assets were amortized on a straight-line basis over an
estimated average 40 year life by CRBC. In connection with purchase
accounting for the Chancellor Merger, intangible assets are amortized
over an estimated average life of 15 years in accordance with the
Company's accounting policies and procedures.

Historical depreciation expense of the Completed Chancellor Transactions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation and amortization may differ based upon final purchase price
allocations.

(vi) Reflects the elimination of disposed stations' historical depreciation and
amortization expense of $82 for the year ended December 31, 1997
(WWWW-FM/WDFN-AM for the period of January 1, 1997 to January 31, 1997)
recognized by CRBC during the time brokerage agreement holding period.

(vii)Reflects the elimination of duplicate corporate expenses of $354 for the
year ended December 31, 1997 related to the Completed Chancellor
Transactions.

(viii)
Reflects the adjustment to interest expense in connection with the
consummation of the Completed Chancellor Transactions, the issuance by CRBC
of its 12 1/4% Series A Senior Cumulative Exchangeable Preferred Stock, the
refinancing of CRBC's previous senior credit agreement on January 23, 1997
and the offering on June 24, 1997 by CRBC of $200.0 million aggregate
principal amount of its 8 3/4% Senior Notes due 2007 (the "8 3/4% Notes"):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
Additional bank borrowings related to:
Completed Chancellor Acquisitions......................... $558,892
Completed Chancellor Dispositions......................... (104,253)
New Loan Fees............................................. 6,873
--------
Total additional bank borrowings............................ $461,512
========
Interest expense on additional bank borrowings at 7.5%...... $ 11,376
Less: historical interest expense of the stations acquired
in the Completed Chancellor Transactions.................. (3,178)
--------
Net increase in interest expense............................ 8,198
Reduction in interest expense on bank debt related to the
application of net proceeds of the following at 7.5%:
CRBC 8 3/4% Notes proceeds of $194,083 for the period
January 1, 1997 to June 24, 1997.......................... (7,036)
</TABLE>

P-14
<PAGE> 172

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
Reduction in interest expense resulting from the redemption
of CRBC's 12.5% Senior Subordinated Notes of $60,000 on
June 5, 1997.............................................. (3,229)
Interest expense on $70,133 additional bank borrowings at
7.5% related to the redemption of CRBC's 12.5% Senior
Subordinated Notes on June 5, 1997........................ 2,265
Interest expense on $200,000 8 3/4% Notes issued June 24,
1997...................................................... 8,458
--------
Total adjustment for net increase in interest expense....... $ 8,656
========
</TABLE>

(ix) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.

(x) Reflects incremental dividends and accretion of $1,504 on the 12%
Exchangeable Preferred Stock for the period January 1, 1997 to January 23,
1997.

(e) On July 14, 1997, the Company completed the disposition of WLUP-FM in
Chicago to Bonneville for net proceeds of $80,000 which were held by a
qualified intermediary pending the completion of the deferred exchange of
WLUP-FM for KZPS-FM and KDGE-FM in Dallas. On October 7, 1997, the Company
applied the net proceeds from the disposition of WLUP-FM of $80,000 in
cash, plus an additional $3,500 and various other direct acquisition costs,
in a deferred exchange of WLUP-FM for KZPS-FM and KDGE-FM in Dallas. The
exchange was accounted for as a like-kind exchange and no gain or loss was
recognized upon consummation of the transaction. The Company had previously
operated KZPS-FM and KDGE-FM under time brokerage agreements effective
August 1, 1997.

(f) On October 28, 1997, the Company and Chancellor Media acquired Katz Media
Group, Inc. ("KMG"), a full-service media representation firm, in a tender
offer transaction for a total purchase price of approximately $379,101 (the
"Katz Acquisition") which included (i) the conversion of each outstanding
share of KMG Common Stock into the right to receive $11.00 in cash,
resulting in total cash payments of $149,601, (ii) the assumption of
long-term debt of KMG and its subsidiaries of $222,000 which included
$122,000 of borrowings outstanding under the KMG senior credit facility and
$100,000 of the 10 1/2% Notes and (iii) estimated acquisition costs of
$7,500.

(g) On December 29, 1997, the Company acquired, in the Gannett Acquisition, 5
radio stations in 3 major markets from P&S, including WGCI-FM/AM in
Chicago, KHKS-FM in Dallas, and KKBQ-FM/AM in Houston for $340,000 in cash.

(h) On January 30, 1998, the Company acquired, in the Denver Acquisition,
KXPK-FM in Denver from Ever Green Wireless LLC for $26,000 in cash
(including $1,650 paid by Chancellor in escrow). The Company had previously
been operating KXPK-FM under a time brokerage agreement since September 1,
1997.

(i) On April 3, 1998, the Company exchanged WTOP-FM in Washington, KZLA-FM in
Los Angeles and WGMS-FM in Washington plus $57,000 in cash for Bonneville's
stations WBIX-FM in New York, KLDE-FM in Houston and KBIG-FM in Los Angeles
(the "Bonneville Option"). The Company had previously paid $3,000 in cash
to Bonneville on August 6, 1997. The Company had previously entered into
time brokerage agreements to operate KLDE-FM and KBIG-FM effective October
1, 1997 and WBIX-FM effective October 10, 1997 and had entered into time
brokerage agreements to sell substantially all of the broadcast time of
WTOP-AM, KZLA-FM and WGMS-FM effective October 1, 1997.

(j) On February 20, 1998, the Company entered into an agreement to acquire from
Capstar Broadcasting Corporation (together with its subsidiaries,
"Capstar") KTXQ-FM and KBFB-FM in Dallas/ Ft. Worth, KODA-FM, KKRW-FM and
KQUE-AM in Houston, KPLN-FM and KYXY-FM in San Diego and WVTY-FM, WJJJ-FM,
WXDX-FM and WDVE-FM in Pittsburgh (collectively, the "Capstar/SFX
Stations") for an aggregate purchase price of approximately $637,500 in a
series of purchases and exchanges over a period of three years (the
"Capstar/SFX Transaction"). The Capstar/

P-15
<PAGE> 173

SFX Stations were acquired by Capstar as part of Capstar's acquisition of
SFX on May 29, 1998. On May 29, 1998, as part of the Capstar/SFX
Transaction, the Company exchanged WAPE-FM and WFYV-FM in Jacksonville
(valued for purposes of the Capstar/SFX Transaction at $53,000) plus
$90,250 in cash to Capstar in return for KODA-FM in Houston (the "Houston
Exchange"). CRBC entered into a time brokerage agreement to sell
substantially all of the broadcast time of WAPE-FM and WFYV-FM effective
July 1, 1996 (see 4 (d) (iv) (3)). Therefore, the results of operations of
WAPE-FM and WFYV-FM are not included in the Company's historical condensed
statements of operations for the year ended December 31, 1997 and the nine
months ended September 30, 1998.

(k) On June 1, 1998, the Company acquired WWDC-FM/AM in Washington, D.C. from
Capitol Broadcasting Company and its affiliates for $74,062 in cash
(including $2,062 for the purchase of the stations' accounts receivable)
plus various other direct acquisition costs, of which $4,000 was previously
paid by the Company as escrow funds (the "Capitol Broadcasting
Acquisition").

(l) On July 31, 1998, the Company acquired Martin Media and certain affiliated
companies ("Martin"), an outdoor advertising company with over 14,500
billboards and outdoor displays in 12 states serving 23 markets, for
$591,674 in cash plus working capital of $19,443 subject to certain
adjustments and direct acquisition costs of approximately $10,000.

Martin's historical condensed combined statements of operations for the
year ended December 31, 1997 and the nine months ended September 30, 1998
and pro forma adjustments related to the significant transactions completed
by Martin prior to the Martin Acquisition (the "Completed Martin
Transactions") are summarized below. The pro forma adjustments for the
Martin Acquisition do not reflect certain acquisitions of assets by Martin
with an aggregate purchase price of approximately $17,000 which, in the
opinion of the Company's management is not material to such pro forma
presentations either individually or in the aggregate.

P-16
<PAGE> 174
<TABLE>
<CAPTION>

LAS VEGAS NEWMAN
MARTIN KUNZ CONNELL OUTDOOR OUTDOOR POA
ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITION
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
YEAR ENDED DECEMBER 31, 1997 1/1-12/31 1/1-7/31(i) 1/1-12/23(ii) 1/1-12/31(iii) 1/1-12/31(iv) 1/1-12/31(v)
---------------------------- ----------- ------------ ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues.................... $70,044 $5,569 $3,459 $1,840 $2,400 $1,570
Less: agency commissions.......... (7,894) -- (413) (181) (180) (315)
------- ------ ------ ------ ------ ------
Net revenues...................... 62,150 5,569 3,046 1,659 2,220 1,255
Operating expenses excluding
depreciation and amortization... 31,196 2,318 1,553 1,353 1,628 788
Depreciation and amortization..... 12,084 281 518 30 279 --
Corporate general and
administrative.................. 2,334 80 91 -- -- --
------- ------ ------ ------ ------ ------
Operating income (loss)........... 16,536 2,890 884 276 313 467
Interest expense.................. 10,507 -- -- -- 243 --
Interest income................... (293) -- -- -- -- --
Other expense..................... 1,737 -- -- -- 30 --
------- ------ ------ ------ ------ ------
Net income (loss)................. $ 4,585 $2,890 $ 884 $ 276 $ 40 $ 467
======= ====== ====== ====== ====== ======
Broadcast cash flow............. $30,954 $3,251 $1,493 $ 306 $ 592 $ 467
======= ====== ====== ====== ====== ======

<CAPTION>
PRO FORMA
ADJUSTMENTS MARTIN AS
FOR THE ADJUSTED
COMPLETED FOR COMPLETED
MARTIN MARTIN
YEAR ENDED DECEMBER 31, 1997 TRANSACTIONS TRANSACTIONS
---------------------------- ------------- -------------
<S> <C> <C>
Gross revenues.................... $ -- $84,882
Less: agency commissions.......... -- (8,983)
--------- -------
Net revenues...................... -- 75,899
Operating expenses excluding
depreciation and amortization... -- 38,836
Depreciation and amortization..... 12,134(vi) 25,326
Corporate general and
administrative.................. (1,425)(vii) 1,080
--------- -------
Operating income (loss)........... (10,709) 10,657
Interest expense.................. 6,263(viii) 17,013
Interest income................... -- (293)
Other expense..................... -- 1,767
--------- -------
Net income (loss)................. $ (16,972) $(7,830)
========= =======
Broadcast cash flow............. $ -- $37,063
========= =======
</TABLE>

P-17
<PAGE> 175

<TABLE>
<CAPTION>
PRO FORMA MARTIN AS
ADJUSTMENTS ADJUSTED
MARTIN POA FOR THE FOR
ACQUISITION ACQUISITION COMPLETED COMPLETED
HISTORICAL HISTORICAL MARTIN MARTIN
NINE MONTHS ENDED SEPTEMBER 30, 1998 1/1-7/31 1/1-7/9(v) TRANSACTIONS TRANSACTIONS
------------------------------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Gross revenues................................ $53,285 $ 901 $ -- $54,186
Less: agency commissions...................... (5,612) (156) -- (5,768)
------- ----- ------- -------
Net revenues.................................. 47,673 745 -- 48,418
Operating expenses excluding depreciation and
amortization................................ 22,671 500 -- 23,171
Depreciation and amortization................. 14,694 88 301(vi) 15,083
Corporate general and administrative.......... 3,030 -- (1,995)(vii) 1,035
------- ----- ------- -------
Operating income.............................. 7,278 157 1,694 9,129
Interest expense.............................. 10,781 1 275(viii) 11,057
Interest income............................... (261) -- -- (261)
Other expense................................. 5,448 13 -- 5,461
------- ----- ------- -------
Net income(loss).............................. $(8,690) $ 143 $ 1,419 $(7,128)
======= ===== ======= =======
Broadcast cash flow........................... $25,002 $ 245 $ -- $25,247
======= ===== ======= =======
</TABLE>

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

(i) On July 31, 1997, Martin acquired approximately 500 display faces of the
Kunz Outdoor Advertising division from Kunz & Company, an outdoor
advertising company with approximately 1,500 billboards and outdoor
displays in five markets, for $20,500 in cash plus various other direct
acquisition costs (the "Kunz Acquisition").

(ii) On December 23, 1997, Martin acquired Connell Outdoor Advertising Co., an
outdoor advertising company with 88 billboards and outdoor displays in the
Las Vegas market, for $30,000 in cash plus various other direct acquisition
costs (the "Connell Acquisition").

(iii)On January 2, 1998, Martin acquired Las Vegas Outdoor Advertising, Inc., an
outdoor advertising company with 90 billboards and outdoor displays in the
Las Vegas market, for $16,800 in cash plus various other direct acquisition
costs (the "Las Vegas Outdoor Acquisition").

(iv) On January 2, 1998, Martin acquired Newman Outdoor of Texas, Inc., an
outdoor advertising company with over 1,200 billboards and outdoor displays
in three markets, for $12,500 in cash plus various other direct acquisition
costs (the "Newman Acquisition").

(v) On July 9, 1998, Martin acquired POA, an outdoor advertising company with
over 1,240 billboards and outdoor displays in the Pittsburgh market, for
$5,867 in cash plus various other direct acquisition costs (the "POA
Acquisition").

(vi) Reflects incremental amortization related to the Completed Martin
Transactions and is based on the following allocation to intangible assets:

<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1997 PERIOD ASSETS, NET EXPENSE(1) EXPENSE INCREASE
- ---------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Kunz Acquisition................. 1/1-7/31 $17,260 $ 2,014 $ 42 $ 1,972
Connell Acquisition.............. 1/1-12/23 25,650 5,030 373 4,657
Las Vegas Outdoor Acquisition.... 1/1-12/31 14,408 2,882 -- 2,882
Newman Acquisition............... 1/1-12/31 10,249 2,050 -- 2,050
POA Acquisition.................. 1/1-12/31 2,867 573 -- 573
------- ------- ---- -------
Total.................. $70,434 $12,549 $415 $12,134
======= ======= ==== =======
</TABLE>

P-18
<PAGE> 176

<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
NINE MONTHS ENDED SEPTEMBER 30, 1998 PERIOD ASSETS, NET EXPENSE(1) EXPENSE INCREASE
- ------------------------------------ ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
POA Acquisition.................... 1/1-7/9 $ 2,867 $301 $ -- $301
======= ==== ==== ====
</TABLE>

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

(1) Intangible assets were amortized on a straight-line basis over an
estimated average 5 year life by Martin.

Historical depreciation expense of the Completed Martin Transactions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation and amortization may differ based upon final purchase price
allocations.

(vii)On July 31, 1997, Martin paid $6,000 to Kunz & Company for an option to
purchase approximately 1,000 display faces from its Kunz Outdoor
Advertising division for $33,289 in cash plus various other direct
acquisition costs. Martin began operating these 1,000 display faces under a
management agreement effective July 31, 1997. Pursuant to the management
agreement, Martin paid a management fee of $285 per month to Kunz &
Company. Reflects the elimination of management fees paid by Martin to Kunz
& Company of $1,425 for the year ended December 31, 1997 and $1,995 for the
period January 1, 1998 through July 31, 1998.

(viii)
Reflects the adjustment to interest expense in connection with the
consummation of the Completed Martin Transactions:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------- -------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Martin Acquisitions........................... $85,667 $35,167
------- -------
Interest expense on additional bank borrowings at 8.5%.... $ 6,506 $ 276
Less: historical interest expense of the companies
acquired in the Completed Martin Transactions........... (243) (1)
------- -------
Net increase in interest expense.......................... $ 6,263 $ 275
======= =======
</TABLE>

(m) On October 23, 1998, the Company acquired Primedia Broadcast Group, Inc.
("Primedia") and certain of its affiliates, which own and operate eight FM
stations in Puerto Rico, for approximately $76,050 in cash less working
capital deficit of $1,280 plus various other direct acquisition costs (the
"Primedia Acquisition").

(n) On December 1, 1998, the Company acquired the assets of the Outdoor
Advertising division of Whiteco Industries, Inc., an outdoor advertising
company with over 22,000 billboards and outdoor displays in 34 states, for
$930,000 in cash plus working capital of $24,221 subject to certain
adjustments and various other direct acquisition costs of approximately
$20,000.

(o) On May 15, 1997, the Company sold, in the EZ Sale, WNKS-FM in Charlotte for
$10,000 in cash.

(p) On May 30, 1997, the Company acquired, in the Century Acquisition, WPNT-FM
in Chicago for $75,750 in cash (including $2,000 for the purchase of the
station's accounts receivable) of which $5,500 was paid as escrow funds in
July 1996. On June 19, 1997, the Company sold, in the Bonneville/WPNT
Disposition, WPNT-FM in Chicago for $75,000 in cash and recognized a gain
of $500.

(q) On June 3, 1997, the Company sold, in the Crawford Disposition, WEJM-FM in
Chicago for $14,750 in cash. On August 26, 1997, the Company sold, in the
Douglas Chicago Disposition, WEJM-AM in Chicago for $7,500 in cash.

(r) On July 7, 1997, the Company sold, in the ABC/Washington Disposition,
WJZW-FM in Washington for $68,000 in cash. The assets of WJZW-FM were
classified as assets held for sale in connection with the purchase price
allocation of the Evergreen Viacom Acquisition (see 4(c)). Accordingly,

P-19
<PAGE> 177

WJZW-FM net income for the period July 2, 1997 to July 7, 1997 has been
excluded from the Company's historical condensed statement of operations.

(s) On July 7, 1997, the Company sold, in the San Francisco Frequency
Disposition, the San Francisco 107.7 MHz FM dial position and transmission
facility and the call letters from CRBC's KSAN-FM in San Francisco for
$44,000 in cash.

(t) On January 31, 1997, the Company acquired, in the KKSF/KDFC Acquisition,
KKSF-FM and KDFC-FM/AM in San Francisco for $115,000 in cash. The Company
had previously been operating KKSF-FM and KDFC-FM/AM under a time brokerage
agreement since November 1, 1996. On July 21, 1997, the Company sold, in
the Bonneville/KDFC Disposition, KDFC-FM in San Francisco for $50,000 in
cash. The assets of KDFC-FM were classified as assets held for sale in
connection with the purchase price allocation of the acquisition of
KKSF-FM/KDFC-FM/AM. Accordingly, KDFC-FM net income of approximately $791
for the period February 1, 1997 through July 21, 1997 has been excluded
from the Company's historical condensed statement of operations. Therefore,
the KDFC-FM condensed statement of operations includes the results of
operations for January 1, 1997 through January 31, 1997 (the time brokerage
agreement holding period in 1997) for the year ended December 31, 1997.

(u) On August 13, 1997, the Company sold, in the Douglas AM Dispositions,
WBZS-AM and WZHF-AM in Washington (acquired as part of the Evergreen Viacom
Acquisition -- see 4(c)) and KDFC-AM in San Francisco for $18,000 in the
form of a promissory note. The assets of WBZS-AM and WZHF-AM were
classified as assets held for sale in connection with the purchase price
allocation of the Evergreen Viacom Acquisition (see 4(c)). Accordingly,
WBZS-AM and WZHF-AM net income for the period July 2, 1997 to August 13,
1997 has been excluded from the Company's historical condensed statement of
operations.

(v) On April 13, 1998, the Company and Secret entered into a settlement
agreement regarding WFLN-FM in Philadelphia. Previously in August 1996, the
Company and Secret had entered into an agreement under which the Company
would acquire WFLN-FM from Secret for $37,750 in cash. In April 1997, the
Company entered into an agreement to sell WFLN-FM to Greater Media for
$41,800 in cash. On July 16, 1997, Secret purported to terminate the sale
of WFLN-FM to the Company. The Company subsequently brought suit against
Secret to enforce its rights to acquire WFLN-FM. Pursuant to a court
settlement entered in August 1997 and the settlement agreement between the
Company and Secret entered on April 13, 1998, (i) Secret sold WFLN-FM
directly to Greater Media for $37,750, (ii) Greater Media deposited $4,050
(the difference between the Company's proposed acquisition price for
WFLN-FM from Secret and the Company's proposed sale price for WFLN-FM to
Greater Media) with the court and (iii) the Company received $3,500 of such
amount deposited by Greater Media with the court, plus interest earned
during the period which the court held such amounts (the "WFLN
Settlement"), and Secret received the balance of such amounts.

(w) CRBC began operating WBAB-FM, WBLI-FM, WGBB-AM and WHFM-FM in Long Island
under a time brokerage agreement effective July 1, 1996 (see 4(d)(iv)(3)).
On May 29, 1998, as part of the Capstar/SFX Transaction, the Company's time
brokerage agreements regarding the Long Island properties were terminated.
The results of operations of WBAB-FM, WBLI-FM, WGBB-AM and WHFM-FM in Long
Island are included in CRBC's historical condensed statement of operations
for January 1, 1997 through September 5, 1997 and in the Company's
historical condensed statement of operations for September 6, 1997 through
December 31, 1997. Additionally, the Company's historical condensed
statement of operations for the nine months ended September 30, 1998
includes the results of operations of WBAB-FM, WBLI-FM, WGBB-AM and WHFM-FM
in Long Island for January 1, 1998 through May 29, 1998.

(5) Reflects the elimination of intercompany transactions between the Company
and Katz for the year ended December 31, 1997.

P-20
<PAGE> 178

(6) Reflects the elimination of time brokerage agreement fees received by the
Company as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 MARKET PERIOD REVENUE
- ---------------------------- ------ ------ -------
<S> <C> <C> <C>
KZLA-FM...................................... Los Angeles 10/1-12/31 $(567)
WTOP-AM...................................... Washington, D.C. 10/1-12/31 (276)
-----
$(843)
=====
</TABLE>

(7) Reflects incremental amortization related to the Completed Transactions and
is based on the following allocation to intangible assets:

<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1997 PERIOD(I) ASSETS, NET EXPENSE(i) EXPENSE INCREASE
---------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
WWWW-FM/WDFN-AM.................. 1/1-1/31 $ 26,590 $ 148 $ -- $ 148
KKSF-FM(ii)...................... 1/1-1/31 58,698 326 -- 326
WJLB-FM/WMXD-FM.................. 1/1-3/31 165,559 2,759 -- 2,759
WWRC-AM.......................... 1/1-4/2 16,808 286 -- 286
WDAS-FM/AM....................... 1/1-4/30 98,185 2,182 820 1,362
Evergreen Viacom
Acquisition(iii)............... 1/1-7/2 515,654 17,379 793 16,586
Chancellor Merger(iv)............ 1/1-9/5 2,178,137 98,823 23,638 75,185
Chicago/Dallas Exchange.......... 1/1-10/7 (613) (31) -- (31)
Katz Acquisition(v).............. 1/1-10/28 354,058 10,267 7,616 2,651
Gannett Acquisition.............. 1/1-12/29 334,892 22,264 1,228 21,036
Denver Acquisition............... 1/1-12/31 24,589 1,639 268 1,371
Bonneville Option................ 1/1-12/31 62,504 4,167 -- 4,167
KODA-FM.......................... 1/1-12/31 93,294 6,220 1,441 4,779
WWDC-FM/AM....................... 1/1-12/31 64,338 4,289 -- 4,289
Martin Acquisition(vi)........... 1/1-12/31 564,370 30,577 12,650 17,927
Primedia Acquisition............. 1/1-12/31 70,447 4,696 2,248 2,448
Kunz Option(vi).................. 1/1-12/31 29,467 1,665 -- 1,665
Whiteco Acquisition(vi).......... 1/1-12/31 873,317 49,342 6,114 43,228
---------- -------- ------- --------
Total................... $5,530,294 $256,998 $56,816 $200,182
========== ======== ======= ========
</TABLE>

<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
NINE MONTHS ENDED SEPTEMBER 30, 1998 PERIOD(i) ASSETS, NET EXPENSE(i) EXPENSE INCREASE
- ------------------------------------ ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Denver Acquisition................ 1/1-1/30 $ 24,589 $ 137 $ -- $ 137
Bonneville Option................. 1/1-4/3 62,504 1,076 -- 1,076
KODA-FM........................... 1/1-5/29 93,294 2,574 656 1,918
WWDC-FM/AM........................ 1/1-6/1 64,338 1,799 -- 1,799
Martin Acquisition(vi)............ 1/1-7/31 564,370 17,836 4,904 12,932
Primedia Acquisition.............. 1/1-9/30 70,447 3,522 1,620 1,902
Kunz Option(vi)................... 1/1-9/30 29,467 1,249 -- 1,249
Whiteco Acquisition(vi)........... 1/1-9/30 873,317 37,007 4,666 32,341
---------- ------- ------- -------
Total.................... $1,782,326 $65,200 $11,846 $53,354
========== ======= ======= =======
</TABLE>

(i) Intangible assets are amortized on a straight-line basis over an estimated
average 15 year life (except for the Katz Acquisition, the Martin
Acquisition, the Kunz Option and the Whiteco Acquisition -- see (v) and
(vi) below). The incremental amortization period represents the period of
the year that the station was not owned by the Company.

(ii) Intangible assets for KKSF-FM excludes (1) $50,000 of the purchase price
allocated to KDFC-FM which has been classified as assets held for sale, (2)
$1,500 to be reimbursed by the buyers of KDFC-FM for costs incurred in
connection with relocating KKSF and (3) $4,802 of the purchase price
allocated to KDFC-AM which was sold, in the Douglas AM Dispositions, on
August 13, 1997.

(iii)Intangible assets for the Evergreen Viacom Acquisition of $515,654 excludes
(1) $67,231 of the purchase price allocated to WJZW-FM which was sold in
the ABC/Washington Disposition on July 7,

P-21
<PAGE> 179

1997 and (2) $12,148 of the purchase price allocated to WZHF-AM and WBZS-AM
which were sold in the Douglas AM Dispositions on August 13, 1997.

(iv) Intangible assets for the Chancellor Merger of $2,178,137 includes $293,548
resulting from the recognition of deferred tax liabilities.

(v) Intangible assets for the Katz Acquisition of $354,058 consist of goodwill
of $249,058 and representation contract value of $105,000 with estimated
average lives of 40 years and 17 years, respectively.

(vi) Intangible assets for the Martin Acquisition, the Kunz Option and the
Whiteco Acquisition of $564,370, $29,467 and $873,317, respectively,
consist of goodwill, customer contact value and non-compete agreements with
estimated average lives of 40 years, 5 years and 5 years, respectively.

Historical depreciation expense of the Completed Transactions is assumed to
approximate depreciation expense on a pro forma basis. Actual depreciation
and amortization may differ based upon final purchase price allocations.

(8) Reflects the elimination of management fees paid by the Company to Kunz &
Company of $570 for the period August 1, 1998 through September 30, 1998 in
connection with the Kunz Option.

(9) Reflects the elimination of duplicate corporate expenses of $1,842 for the
year ended December 31, 1997 related to the Completed Transactions.

(10) Reflects the elimination of merger expenses of $6,124 for the year ended
December 31, 1997 incurred by CRBC in connection with the Chancellor
Merger.

(11) Reflects the elimination of the profit participation fee paid by Whiteco to
Metro Management Associates of $2,322 and $1,756 for the year ended
December 31, 1997 and the nine months ended September 30, 1998,
respectively.

(12) Reflects the adjustment to interest expense in connection with the
consummation of the Completed Transactions, the amendment and restatement
of the Company's senior credit agreement on April 25, 1997 (the "Senior
Credit Facility"), Chancellor Media's $3.00 Convertible Preferred Stock
Offering completed on June 16, 1997, the offering by the Company of the
8 1/8% Notes on December 22, 1997, Chancellor Media's 1998 Equity Offering
completed on March 13, 1998, the repurchase of the Company's 12% Exchange
Debentures on June 10, 1998, the repurchase of the Company's 12 1/4%
Exchange Debentures on August 19, 1998, the Company's offering of the 9%
Notes on September 30, 1998 and the Company's offering of the 8% Senior
Notes on November 17, 1998:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions................................. $3,494,948 $1,967,889
Completed Dispositions................................. (349,250) --
Chancellor Merger(a)................................... 164,000 --
Katz Acquisition(b).................................... 157,101 --
New Loan Fees.......................................... 10,473 --
---------- ----------
Total additional bank borrowings......................... $3,477,272 $1,967,889
========== ==========
Interest expense at 7.0%................................. $ 197,936 $ 89,122
Less: historical interest expense related to completed
station acquisitions and dispositions.................. (20,251) (12,896)
---------- ----------
Net increase in interest expense......................... 177,685 76,226
</TABLE>

P-22
<PAGE> 180

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Reduction in interest expense on bank debt related to the
application of net proceeds of the following at 7.0%:
$3.00 Convertible Preferred Stock Offering proceeds
contributed to the Company of $287,808 for the
period January 1, 1997 to June 16, 1997............. (9,290) --
8 1/8% Notes proceeds of $485,000 for the period
January 1, 1997 to December 22, 1997 to December 22,
1997................................................ (33,196) --
Chancellor Media's 1998 Equity Offering proceeds
contributed to the Company and used to reduce bank
borrowings by $673,000 for the year ended December
31, 1997............................................ (47,110) (9,553)
9% Notes proceeds of $730,000 for the year ended
December 31, 1997 and the nine months ended
September 30, 1998.................................. (51,100) (38,325)
8% Notes proceeds of $730,000 for the year ended
December 31, 1997 and the nine months ended
September 30, 1998.................................. (51,100) (38,325)
Interest expense on the Company's $500,000 8 1/8% Notes
issued December 22, 1997............................... 39,722 --
Interest expense on borrowings to finance the repurchase
of the Company's 12% Exchange Debentures on June 10,
1998................................................... 18,200 8,089
Interest expense on borrowings to finance the repurchase
of the Company's 12 1/4% Exchange Debentures on August
19, 1998............................................... 9,949 6,329
Interest expense on the Company's $750,000 9% Notes
issued September 30, 1998.............................. 67,500 50,625
Interest expense on the Company's $750,000 8% Senior
Notes issued November 17, 1998......................... 60,000 45,000
Reduction in interest expense related to the application
of the 7.0% interest rate to the Company's bank debt
prior to the refinancing of the Senior Credit Facility,
to CRBC's bank debt prior to consummation of the
Chancellor Merger and to KMG's bank debt prior to
consummation of the Katz Acquisition................... (24,387) (11,692)
---------- ----------
Total adjustment for net decrease in interest expense.... $ 156,873 $ 88,374
========== ==========
</TABLE>

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

(a) The Company incurred additional bank borrowings of $133,000 to
distribute to CMHC to retire outstanding borrowings under the
Chancellor Broadcasting/Viacom Interim Financing and $31,000 to finance
estimated acquisition costs related to the Chancellor Merger.

(b) The Company incurred additional bank borrowings of $149,601 to finance
the payment of $11.00 in cash for each outstanding share of Katz Common
Stock and $7,500 to finance estimated acquisition costs related to the
Katz Acquisition.

(13) On October 9, 1998, the Company acquired approximately a 22.4% non-voting
equity interest in Z Spanish Media Corporation ("Z Spanish Media") for
$25,000 in cash (the "Z Spanish Acquisition"). Z Spanish Media, which is
headquartered in Sacramento, California, is the owner and operator of 22
Hispanic format radio stations in California, Texas, Arizona and Illinois.
The Z Spanish Acquisition is accounted for on the equity method.
Accordingly, approximately 22.4% of the net loss of Z Spanish of $3,952 and
$1,911 for the year ended December 31, 1997 and for the nine months ended
September 30, 1998, respectively, is recorded as Other Expense.

P-23
<PAGE> 181

(14) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.

(15) Reflects the elimination of preferred stock dividends and accretion on the
12% Preferred Stock and the 12 1/4% Preferred Stock of $40,222 and $16,702
for the year ended December 31, 1997 and the nine months ended September
30, 1998, respectively, in connection with the exchange of the 12%
Preferred Stock and 12 1/4% Preferred Stock into 12% Debentures and 12 1/4%
Debentures, respectively, and the subsequent repurchase of all the 12%
Debentures and 12 1/4% Debentures.

ADJUSTMENTS TO UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS RELATED TO
THE PENDING TRANSACTIONS

(16) The detail of the historical financial data of the companies to be acquired
in the Pending Transactions for the year ended December 31, 1997 and the
nine months ended September 30, 1998 has been obtained from the historical
financial statements of the respective companies and is summarized below:

<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------------------------------ --------------
CAPSTAR/SFX CLEVELAND PHOENIX CHICAGO
TRANSACTION ACQUISITIONS ACQUISITION DISPOSITION PENDING
HISTORICAL HISTORICAL HISTORICAL HISTORICAL TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997 1/1 - 12/31(a) 1/1 - 12/31(b) 1/1 - 12/31(c) 1/1 - 12/31(d) HISTORICAL
---------------------------- -------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Gross revenues................................. $60,701 $33,728 $13,796 $(15,231) $ 92,994
Less: agency commissions....................... (7,657) (4,102) (1,656) 1,990 (11,425)
------- ------- ------- -------- --------
Net revenues................................... 53,044 29,626 12,140 (13,241) 81,569
Operating expenses excluding depreciation and
amortization................................. 37,857 16,433 7,132 (16,248) 45,174
Depreciation and amortization.................. 7,564 673 184 (592) 7,829
Corporate general and administrative........... -- 481 -- -- 481
------- ------- ------- -------- --------
Operating income............................... 7,623 12,039 4,824 3,599 28,085
Interest expense............................... 10 714 -- -- 724
Interest income................................ -- (513) -- -- (513)
Other (income) expense......................... -- (1,357) -- -- (1,357)
------- ------- ------- -------- --------
Income (loss) before income taxes.............. 7,613 13,195 4,824 3,599 29,231
Income tax expense............................. -- 75 1,750 -- 1,825
------- ------- ------- -------- --------
Net income (loss).............................. $ 7,613 $13,120 $ 3,074 $ 3,599 $ 27,406
======= ======= ======= ======== ========
Broadcast cash flow............................ $15,187 $13,193 $ 5,008 $ 3,007 $ 36,395
======= ======= ======= ======== ========
</TABLE>

P-24
<PAGE> 182

<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------------------------- -------------
CAPSTAR/SFX CLEVELAND PHOENIX CHICAGO
TRANSACTION ACQUISITIONS ACQUISITION DISPOSITION PENDING
HISTORICAL HISTORICAL HISTORICAL HISTORICAL TRANSACTIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998 1/1 - 5/29(a) 1/1 - 9/30(b) 1/1 - 9/30(c) 1/1 - 8/20(d) HISTORICAL
------------------------------------ ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Gross revenues..................................... $23,382 $27,008 $10,310 $(10,931) $49,769
Less: agency commissions........................... (2,866) (3,539) (1,117) 1,221 (6,301)
------- ------- ------- -------- -------
Net revenues....................................... 20,516 23,469 9,193 (9,710) 43,468
Operating expenses excluding depreciation and
amortization..................................... 14,269 12,696 5,243 (13,026) 19,182
Depreciation and amortization...................... 3,101 174 146 (367) 3,054
------- ------- ------- -------- -------
Operating income (loss)............................ 3,146 10,599 3,804 3,683 21,232
Interest expense................................... 4 156 275 -- 435
Interest income.................................... 1 (46) -- -- (45)
Other (income) expense............................. -- 873 -- -- 873
------- ------- ------- -------- -------
Income (loss) before income taxes.................. 3,141 9,616 3,529 3,683 19,969
Income tax expense................................. -- -- 1,271 -- 1,271
------- ------- ------- -------- -------
Net income (loss).................................. $ 3,141 $ 9,616 $ 2,258 $ 3,683 $18,698
======= ======= ======= ======== =======
Broadcast cash flow................................ $ 6,247 $10,773 $ 3,950 $ 3,316 $24,286
======= ======= ======= ======== =======
</TABLE>

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

(a) On February 20, 1998, the Company entered into an agreement to acquire from
Capstar KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and
KQUE-FM in Houston, KPLN-FM and KYXY-FM in San Diego and WDRV-FM, WJJJ-FM,
WXDX-FM and WDVE-FM in Pittsburgh (collectively, the "Capstar/SFX
Stations") for an aggregate purchase price of approximately $637,500 in a
series of purchases and exchanges over a period of three years (the
"Capstar/SFX Transaction"). The Capstar/SFX Stations were acquired by
Capstar as part of Capstar's acquisition of SFX on May 29, 1998. On May 29,
1998, the Company completed the Houston Exchange (defined above) and began
operating the remaining ten Capstar/SFX Stations under time brokerage
agreements. The Company also provided a loan to Capstar in the principal
amount of $150,000 (the "Capstar Loan") as part of the Capstar/SFX
Transaction. A portion of the Capstar Loan will be prepaid in connection
with the Company's acquisition of, and the proceeds of such prepayment
would be used by the Company as a portion of the purchase price for, each
Capstar/SFX Station. The Company is currently assessing whether the terms
of the Capstar/SFX Transaction will be modified upon the consummation of
the Capstar Merger by Chancellor Media. The purchase price for the
remaining ten Capstar/SFX Stations will be approximately $494,250.

(b) On August 11, 1998, the Company entered into an agreement to acquire four
FM and two AM radio stations in Cleveland for an aggregate purchase price
of approximately $275,000 in cash plus working capital of $10,877 plus
various other direct acquisition costs (the "Cleveland Acquisitions"). The
Cleveland Acquisitions consist of the purchase by the Company of (i)
WDOK-FM and WRMR-AM from Independent Group Limited Partnership, (ii)
WZAK-FM from Zapis Communications, (iii) Zebra Broadcasting Corporation
which owns WZJM-FM and WJMO-AM and (iv) Wincom Broadcasting Corporation
which owns WQAL-FM (the "Wincom Acquisition"). The consummation of each of
the Cleveland Acquisitions (other than the Wincom Acquisition) is
contingent upon the consummation of each of the other Cleveland
Acquisitions (other than the Wincom Acquisition). The Company began
operating WQAL-FM under a time brokerage agreement effective October 1,
1998.

(c) On September 15, 1998, the Company entered into an agreement to acquire
KKFR-FM and KFYI-AM in Phoenix from The Broadcast Group, Inc. for $90,000
in cash plus various other direct acquisition costs (the "Phoenix
Acquisition"). The Company began operating KKFR-FM and KFYI-AM under a time
brokerage agreement effective November 5, 1998.

(d) On August 20, 1998, the Company entered into an agreement to sell WMVP-AM
in Chicago to ABC, Inc. for $21,000 in cash (the "Chicago Disposition").
The Company entered into a time

P-25
<PAGE> 183

brokerage agreement to sell substantially all of the broadcast time of
WMVP-AM effective September 10, 1998.

(17) Reflects incremental amortization related to the assets acquired in the
Pending Transactions and is based on the allocation of the total
consideration as follows:

<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1997 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
- ---------------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Capstar/SFX Transaction................. 1/1-12/31 $483,835 $32,256 $5,874 $26,382
Cleveland Acquisitions.................. 1/1-12/31 309,547 20,636 292 20,344
Chicago Disposition..................... 1/1-12/31 (2,844) (190) (339) 149
Phoenix Acquisition..................... 1/1-12/31 88,212 5,881 103 5,778
-------- ------- ------ -------
Total........................... $878,750 $58,583 $5,930 $52,653
======== ======= ====== =======
</TABLE>

<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
NINE MONTHS ENDED SEPTEMBER 30, 1998 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
- ------------------------------------ ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Capstar/SFX Transaction................ 1/1-9/30 $483,835 $24,192 $3,627 $20,565
Cleveland Acquisitions................. 1/1-9/30 309,547 15,477 19 15,458
Chicago Disposition.................... 1/1-9/30 (2,844) (142) (189) 47
Phoenix Acquisition.................... 1/1-9/30 88,212 4,411 78 4,333
-------- ------- ------ -------
Total.......................... $878,750 $43,938 $3,535 $40,403
======== ======= ====== =======
</TABLE>

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

(i)Intangible assets are amortized on a straight-line basis over an
estimated average 15 year life. The incremental amortization period
represents the period of the year that the company was not owned by the
Company.

Historical depreciation expense of the Pending Transactions is assumed to
approximate depreciation expense on a pro forma basis. Actual depreciation
and amortization may differ based upon final purchase price allocations.

(18) Reflects the adjustment to interest expense in connection with the
consummation of the Pending Transactions:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Additional bank borrowings related to:
Pending Acquisitions................................... $720,214 $720,214
Pending Dispositions................................... (21,000) (21,000)
-------- --------
Total additional bank borrowings....................... $699,214 $699,214
======== ========
Interest expense at 7.0%............................... $ 48,945 $ 36,708
Less: historical interest expense related to completed
station acquisitions and dispositions.................. (724) (434)
-------- --------
Total adjustment for net increase in interest expense.... $ 48,221 $ 36,274
======== ========
</TABLE>

(19) Reflects the income tax benefit related to pro forma adjustments. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.

P-26
<PAGE> 184

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
Report of Independent Accountants......................... F-3
Independent Auditors' Report.............................. F-4
Consolidated Balance Sheets as of December 31, 1996 and
1997................................................... F-5
Consolidated Statements of Operations for the years ended
December 31, 1995, 1996 and 1997....................... F-6
Consolidated Statements of Stockholder's Equity for the
years ended December 31, 1995, 1996 and 1997........... F-7
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997....................... F-8
Notes to Consolidated Financial Statements................ F-9
Report of Independent Accountants......................... F-31
Schedule II -- Valuation and Qualifying Accounts.......... F-32

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets as of December 31,
1997 and September 30, 1998............................ F-33
Unaudited Consolidated Statements of Operations for the
three and nine months ended September 30, 1997 and
1998................................................... F-34
Unaudited Consolidated Statements of Cash Flows for the
nine months ended September 30, 1997 and 1998.......... F-35
Notes to Unaudited Consolidated Financial Statements...... F-36

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES
Report of Independent Accountants......................... F-47
Consolidated Balance Sheets as of December 31, 1995 and
1996................................................... F-48
Consolidated Statements of Operations for the years ended
December 31, 1994, 1995 and 1996....................... F-49
Consolidated Statements of Changes in Common Stockholder's
Equity for the years ended December 31, 1994, 1995 and
1996................................................... F-50
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996....................... F-51
Notes to Consolidated Financial Statements................ F-52
Unaudited Consolidated Balance Sheets as of December 31,
1996 and June 30, 1997................................. F-68
Unaudited Consolidated Statements of Operations for the
three and six months ended June 30, 1996 and 1997...... F-69
Unaudited Consolidated Statements of Changes in
Stockholder's Equity for the six months ended June 30,
1997................................................... F-70
Unaudited Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1997................ F-71
Notes to Unaudited Consolidated Financial Statements...... F-72

RIVERSIDE BROADCASTING CO., INC. AND WAXQ INC.
Independent Auditors' Report.............................. F-78
Combined Balance Sheets as of December 31, 1995 and 1996
and June 30, 1997 (unaudited).......................... F-79
Combined Statements of Earnings for the years ended
December 31, 1994, 1995 and 1996 and the six months
ended June 30, 1996 and 1997 (unaudited)............... F-80
Combined Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996 and the six months
ended June 30, 1996 and 1997 (unaudited)............... F-81
Notes to Combined Financial Statements.................... F-82

WMZQ INC. AND VIACOM BROADCASTING EAST INC.:
Independent Auditors' Report.............................. F-87
Combined Balance Sheets as of December 31, 1995 and 1996
and June 30, 1997 (unaudited).......................... F-88
</TABLE>

F-1
<PAGE> 185

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Combined Statements of Earnings for the years ended
December 31, 1994, 1995 and 1996 and the six months
ended June 30, 1996 and 1997 (unaudited)............... F-89
Combined Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996 and the six months
ended June 30, 1996 and 1997 (unaudited)............... F-90
Notes to Combined Financial Statements.................... F-91

WDAS-AM/FM (STATION OWNED AND OPERATED BY BEASLEY FM
ACQUISITION CORP.):
Independent Auditors' Report.............................. F-96
Balance Sheets as of December 31, 1996 and March 31, 1997
(unaudited)............................................ F-97
Statements of Earnings and Station Equity for the year
ended December 31, 1996 and the three months ended
March 31, 1996 and 1997 (unaudited).................... F-98
Statements of Cash Flows for the year ended December 31,
1996 and the three months ended March 31, 1996 and 1997
(unaudited)............................................ F-99
Notes to Financial Statements............................. F-100

KYSR INC. AND KIBB INC.:
Independent Auditors' Report.............................. F-104
Combined Balance Sheets as of December 31, 1995 and 1996
and June 30, 1997 (unaudited).......................... F-105
Combined Statements of Operations for the years ended
December 31, 1994, 1995 and 1996 and the six months
ended June 30, 1996 and 1997 (unaudited)............... F-106
Combined Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996 and the six months
ended June 30, 1996 and 1997 (unaudited)............... F-107
Notes to Combined Financial Statements.................... F-108

WLIT INC.:
Independent Auditors' Report.............................. F-113
Balance Sheets as of December 31, 1995 and 1996 and June
30, 1997 (unaudited)................................... F-114
Statements of Earnings for the years ended December 31,
1994, 1995 and 1996 and the six months ended June 30,
1996 and 1997 (unaudited).............................. F-115
Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996 and the six months ended June 30,
1996 and 1997 (unaudited).............................. F-116
Notes to Financial Statements............................. F-117

COLFAX COMMUNICATIONS, INC. RADIO GROUP
Report of Independent Public Accountants.................. F-122
Combined Balance Sheets as of December 31, 1996, 1995, and
1994................................................... F-123
Combined Statements of Income for the years ended December
31, 1996, 1995, and 1994............................... F-124
Combined Statements of Changes in Partners' Equity for the
years ended December 31, 1996, 1995, and 1994.......... F-125
Combined Statements of Cash Flows for the years ended
December 31, 1996, 1995, and 1994...................... F-126
Notes to Combined Financial Statements.................... F-127

OUTDOOR ADVERTISING DIVISION OF WHITECO INDUSTRIES, INC.
Independent Auditors' Report.............................. F-133
Balance Sheets as of December 31, 1996 and 1997 and
September 30, 1998 (unaudited)......................... F-134
Statements of Income for the years ended December 31,
1995, 1996, 1997 and the nine months ended September
30, 1997 and 1998 (unaudited).......................... F-135
Statements of Cash Flows for the years ended December 31,
1995, 1996, 1997 and the nine months ended September
30, 1997 and 1998 (unaudited).......................... F-136
Notes to Financial Statements............................. F-137
</TABLE>

F-2
<PAGE> 186

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
Chancellor Media Corporation of Los Angeles:

We have audited the accompanying consolidated balance sheet of Chancellor
Media Corporation of Los Angeles and subsidiaries (collectively, the "Company")
as of December 31, 1997, and the related consolidated statements of operations,
stockholder's equity and cash flows for the year ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 1997, and the consolidated results of its
operations and its cash flows for the year ended December 31, 1997 in conformity
with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Dallas, Texas
February 10, 1998, except for notes 2(b)
paragraphs 1 and 3-5 as to which the date
is February 20, 1998 and 9(a) as to
which the date is March 13, 1998

F-3
<PAGE> 187

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Chancellor Media Corporation of Los Angeles:

We have audited the accompanying consolidated balance sheet of Chancellor
Media Corporation of Los Angeles (formerly Evergreen Media Corporation of Los
Angeles) and subsidiaries as of December 31, 1996, and the related consolidated
statements of operations, stockholder's equity and cash flows for the years
ended December 31, 1995 and 1996. In connection with our audits of the
consolidated financial statements, we have also audited the financial statement
schedule as of and for the years ended December 31, 1995 and 1996. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Chancellor
Media Corporation of Los Angeles and subsidiaries as of December 31, 1996, and
the results of their operations and their cash flows for the years ended
December 31, 1995 and 1996 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

KPMG PEAT MARWICK LLP

Dallas, Texas
January 31, 1997

F-4
<PAGE> 188

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 3,060 $ 16,584
Accounts receivable, less allowance for doubtful accounts
of $2,292 in 1996 and $12,651 in 1997.................. 85,159 239,869
Other current assets (note 3)............................. 6,352 27,208
---------- ----------
Total current assets.............................. 94,571 283,661
Property and equipment, net (note 4)........................ 48,193 159,797
Intangible assets, net (note 5)............................. 853,643 4,404,443
Other assets, net (note 3).................................. 24,552 113,576
---------- ----------
$1,020,959 $4,961,477
========== ==========

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Accounts payable and accrued expenses (note 6)............ $ 26,650 $ 171,017
Current portion of long-term debt (note 7)................ 26,500 --
---------- ----------
Total current liabilities......................... 53,150 171,017
Long-term debt, excluding current portion (note 7).......... 331,500 2,573,000
Deferred tax liabilities (note 11).......................... 86,098 361,640
Other liabilities........................................... 800 44,405
---------- ----------
Total liabilities................................. 471,548 3,150,062
---------- ----------
Redeemable preferred stock (note 8):
Redeemable senior cumulative exchangeable preferred stock
of subsidiary, par value $.01 per share; 1,000,000
shares authorized, issued and outstanding in 1997;
liquidation preference of $121,274..................... -- 119,445
Redeemable cumulative exchangeable preferred stock of
subsidiary, par value $.01 per share; 3,600,000 shares
authorized and 2,117,629 shares issued and outstanding
in 1997; liquidation preference of $223,519............ -- 211,763
Stockholder's equity (note 9):
Common stock, $.01 par value. Authorized 1,040 shares;
issued and outstanding 1,000 shares in 1996 and 1,040
shares in 1997......................................... 1 1
Paid-in capital........................................... 662,922 1,637,628
Accumulated deficit....................................... (113,512) (157,422)
---------- ----------
Total stockholder's equity........................ 549,411 1,480,207
---------- ----------
Commitments and contingencies (notes 2, 7 and 12)...........
$1,020,959 $4,961,477
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 189

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Gross revenues.............................................. $186,365 $337,405 $663,804
Less agency commissions................................... 23,434 43,555 81,726
-------- -------- --------
Net revenues........................................... 162,931 293,850 582,078
-------- -------- --------
Operating expenses:
Station operating expenses excluding depreciation and
amortization........................................... 97,674 174,344 316,248
Depreciation and amortization............................. 47,005 93,749 185,982
Corporate general and administrative...................... 4,475 7,797 21,442
-------- -------- --------
Operating expenses..................................... 149,154 275,890 523,672
-------- -------- --------
Operating income....................................... 13,777 17,960 58,406
-------- -------- --------
Nonoperating (income) expenses:
Interest expense.......................................... 19,199 37,527 85,017
Interest income........................................... (55) (477) (1,922)
Gain on disposition of assets (note 2).................... -- -- (18,380)
Other expense, net........................................ 291 -- 383
-------- -------- --------
Nonoperating expenses, net............................. (19,435) (37,050) (65,098)
-------- -------- --------
Loss before income taxes and extraordinary item........ (5,658) (19,090) (6,692)
Income tax expense (benefit) (note 11)...................... 192 (2,896) 7,802
-------- -------- --------
Loss before extraordinary item......................... (5,850) (16,194) (14,494)
Extraordinary item -- loss on extinguishment of debt, net of
income tax benefit (note 7)............................... -- -- 4,350
-------- -------- --------
Net loss............................................... (5,850) (16,194) (18,844)
Preferred stock dividends (note 8).......................... -- -- 12,901
-------- -------- --------
Net loss attributable to common stock.................. $ (5,850) $(16,194) $(31,745)
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 190

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
--------------- PAID-IN ACCUMULATED STOCKHOLDER'S
AMOUNT SHARES CAPITAL DEFICIT EQUITY
------ ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1994................. $1 1,000 $ 195,170 $ (82,818) $ 112,353
Net capital contributed by Parent............. -- -- 202,904 -- 202,904
Dividend to Parent............................ -- -- -- (4,830) (4,830)
Net loss...................................... -- -- -- (5,850) (5,850)
-- ----- ---------- --------- ----------
Balances at December 31, 1995................. 1 1,000 398,074 (93,498) 304,577
Net capital contributed by Parent............. -- -- 264,848 -- 264,848
Dividend to Parent............................ -- -- -- (3,820) (3,820)
Net loss...................................... -- -- -- (16,194) (16,194)
-- ----- ---------- --------- ----------
Balances at December 31, 1996................. 1 1,000 662,922 (113,512) 549,411
Net capital contributed by Parent............. -- -- 974,706 -- 974,706
Dividend to Parent............................ -- -- -- (12,165) (12,165)
Issuance of common stock in connection with
the Katz Acquisition........................ -- 40 -- -- --
Net loss...................................... -- -- -- (31,745) (31,745)
-- ----- ---------- --------- ----------
Balances at December 31, 1997................. $1 1,040 $1,637,628 $(157,422) $1,480,207
== ===== ========== ========= ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE> 191

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (5,850) $ (16,194) $ (18,844)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation........................................... 5,508 7,707 14,918
Amortization of goodwill, intangible assets and other
assets............................................... 41,497 86,042 171,064
Provision for doubtful accounts........................ 904 2,179 5,174
Deferred income tax benefit............................ (479) (4,353) (3,829)
Gain on disposition of assets.......................... -- -- (18,380)
Loss on extinguishment of debt, net of income tax
benefit.............................................. -- -- 4,350
Changes in certain assets and liabilities, net of
effects of acquisitions:
Accounts receivable.................................. (6,628) (28,146) (29,977)
Other current assets................................. 724 (2,804) 733
Accounts payable and accrued expenses................ 3,711 3,991 20,004
Other assets......................................... (184) (354) (4,283)
Other liabilities.................................... 490 (587) (1,416)
--------- --------- -----------
Net cash provided by operating activities......... 39,693 47,481 139,514
--------- --------- -----------
Cash flows from investing activities:
Acquisitions, net of cash acquired........................ (188,004) (457,764) (1,631,505)
Escrow deposits on pending acquisitions................... -- (17,000) (4,655)
Proceeds from sale of assets.............................. -- 32,000 269,250
Payments made on purchases of representation contracts.... -- -- (31,456)
Payments received on sales of station representation
contracts.............................................. -- -- 9,296
Capital expenditures...................................... (2,642) (6,543) (11,666)
Other..................................................... (1,466) (12,631) (22,273)
--------- --------- -----------
Net cash used by investing activities............. (192,112) (461,938) (1,423,009)
--------- --------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 186,000 447,750 2,945,250
Principal payments on long-term debt...................... (159,000) (290,750) (1,901,250)
Cash contributed by parent................................ 132,766 264,938 293,158
Dividends to parent....................................... (4,830) (3,820) (14,572)
Payments for debt issuance costs.......................... (303) (3,941) (25,567)
Redemption of preferred stock............................. -- (90) --
--------- --------- -----------
Net cash provided by financing activities......... 154,633 414,087 1,297,019
--------- --------- -----------
Increase (decrease) in cash and cash equivalents............ 2,214 (370) 13,524
Cash and cash equivalents at beginning of year.............. 1,216 3,430 3,060
--------- --------- -----------
Cash and cash equivalents at end of year.................... $ 3,430 $ 3,060 $ 16,584
========= ========= ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-8
<PAGE> 192

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of Business

Chancellor Media Corporation of Los Angeles (formerly known as Evergreen
Media Corporation of Los Angeles) ("CMCLA"), a wholly-owned subsidiary of
Chancellor Media Corporation ("Chancellor Media"), and its subsidiaries
(collectively, the "Company") own and operate commercial radio stations in
various geographical regions across the United States. The Company's station
portfolio as of December 31, 1997 included 96 stations (68 FM and 28 AM)
comprising a total of 11 station clusters of four or five FM stations
("superduopolies") in seven of the 12 largest radio markets -- Los Angeles, New
York, Chicago, San Francisco, Philadelphia, Washington, D.C. and Detroit -- and
in four other large markets -- Denver, Minneapolis/St. Paul, Phoenix and
Orlando. The Company also owns Katz Media Group, Inc. ("KMG" and, together with
its operating subsidiaries, "Katz"), a full-service media representation firm
that sells national spot advertising time for its clients in the television,
radio and cable industries.

(b) Principles of Consolidation

The consolidated financial statements include the accounts of CMCLA and its
subsidiaries all of which are wholly owned. Significant intercompany balances
and transactions have been eliminated in consolidation.

Property and equipment are stated at cost. Depreciation of property and
equipment is computed using the straight-line method over the estimated useful
lives of the assets. Repair and maintenance costs are charged to expense when
incurred.

(d) Intangible Assets

Intangible assets consist primarily of broadcast licenses, goodwill,
representation contracts and other identifiable intangible assets. Intangible
assets resulting from acquisitions are valued based upon estimated fair values.
The Company amortizes such intangible assets using the straight-line method over
estimated useful lives ranging from 1 to 40 years. The Company continually
evaluates the propriety of the carrying amount of goodwill and other intangible
assets as well as the amortization period to determine whether current events or
circumstances warrant adjustments to the carrying value and/or revised estimates
of useful lives. This evaluation consists of the projection of undiscounted
operating income before depreciation, amortization, nonrecurring charges and
interest over the remaining amortization periods of the related intangible
assets. The projections are based on a historical trend line of actual results
since the acquisitions of the respective stations adjusted for expected changes
in operating results. To the extent such projections indicate that undiscounted
operating income is not expected to be adequate to recover the carrying amounts
of the related intangible assets, such carrying amounts are written down by
charges to expense. At this time, the Company believes that no significant
impairment of goodwill and other intangible assets has occurred and that no
reduction of the estimated useful lives is warranted.

(e) Debt Issuance Costs

The costs related to the issuance of debt are capitalized and amortized to
expense over the lives of the related debt. During the years ended December 31,
1995, 1996 and 1997, the Company recognized amortization of debt issuance costs
of $631, $1,113 and $1,337, respectively, which amounts are included in
amortization expense in the accompanying consolidated statements of operations.

F-9
<PAGE> 193
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(f) Barter Transactions

The Company trades commercial air time for goods and services used
principally for promotional, sales and other business activities. An asset and
liability is recorded at the fair market value of the goods or services
received. Barter revenue is recorded and the liability relieved when commercials
are broadcast and barter expense is recorded and the asset relieved when goods
or services are received or used. Barter amounts are not significant to the
Company's consolidated financial statements.

(g) Income Taxes

Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable earnings. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount more likely than not to be
realized. Income tax expense is the total of tax payable for the period and the
change during the period in deferred tax assets and liabilities which impacted
operations.

(h) Revenue Recognition

Revenue is derived primarily from the sale of radio advertising time to
local and national advertisers and from commissions on sales of advertising time
for radio and television stations and cable television systems under
representation contracts by the Company's media representation firm, Katz.
Revenue is recognized as advertisements are broadcast.

Fees received or paid pursuant to various time brokerage agreements are
recognized as gross revenues or amortized to expense, respectively, over the
term of the agreement using the straight-line method.

(i) Representation Contracts

Representation contracts typically may be terminated by either party upon
written notice one year after receipt of such notice. In accordance with
industry practice, in lieu of termination, an arrangement is typically made for
the purchase of such contracts by the successor representation firm. Under such
arrangements, the purchase price paid by the successor representation firm is
based upon the historic commission income projected over the remaining contract
period, including the evergreen notice period, plus 2 months.

Income resulting from the disposition of representation contracts is
recognized as other revenue over the remaining life of the contracts sold. Other
revenue on the disposition of representation contracts included in gross revenue
in the accompanying consolidated statement of operations was $153 for the year
ended December 31, 1997. Costs of obtaining representation contracts are
deferred and amortized over the related period of benefit. Amortization of costs
of obtaining representation contracts included in depreciation and amortization
in the accompanying consolidated statement of operations was $380 for the year
ended December 31, 1997.

(j) Statements of Cash Flows

For purposes of the statements of cash flows, the Company considers
temporary cash investments purchased with original maturities of three months or
less to be cash equivalents.

The Company paid approximately $19,134, $37,042 and $84,610 for interest in
1995, 1996 and 1997, respectively. The Company paid approximately $733 and
$11,079 for income taxes in 1996 and 1997, respectively.

F-10
<PAGE> 194
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(k) Derivative Financial Instruments

The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
well-defined interest rate risks related to interest on the Company's
outstanding debt.

As interest rates change under interest rate swap and cap agreements, the
differential to be paid or received is recognized as an adjustment to interest
expense. The Company is not exposed to credit loss as its interest rate swap
agreements are with the participating banks under the Company's senior credit
facility.

(l) Omission of Per Share Information

Net loss per share is not presented as such information is not meaningful.
All of the issued and outstanding shares of the Company's common stock have been
owned, directly or indirectly, by Chancellor Media during the three-year period
ended December 31, 1997.

(m) Disclosure of Certain Significant Risks and Uncertainties

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

In the opinion of management, credit risk with respect to trade receivables
is limited due to the large number of diversified customers and the geographic
diversification of the Company's customer base. The Company performs ongoing
credit evaluations of its customers and believes that adequate allowances for
any uncollectible trade receivables are maintained. At December 31, 1995, 1996
and 1997, no receivable from any customer exceeded 5% of stockholders' equity
and no customer accounted for more than 10% of net revenues in 1995, 1996 or
1997.

(n) Stock Option Plan

The Company does not have any stock compensation plans under which it
grants stock awards to employees. Chancellor Media grants stock options to the
Company's officers and other key employees on behalf of the Company.

Prior to January 1, 1996, Chancellor Media accounted for its stock option
plans in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price. SFAS No. 123, Accounting for Stock-Based Compensation, permits
entities to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant or continue to apply the provisions of
APB Opinion No. 25 and provide pro forma net income and pro forma earnings per
share disclosures for employee stock option grants made in 1995 and future years
as if the fair-value-based method defined in SFAS No. 123 had been applied.
Chancellor Media has elected to continue to apply the provisions of APB Opinion
No. 25 and provide the pro forma disclosures of SFAS No. 123.

(o) Recently Issued Accounting Principles

The Company adopted the provisions of SFAS No. 129, Disclosures of
Information about Capital Structure, effective for the year ended December 31,
1997. This Statement consolidates existing pronouncements on required
disclosures about a company's capital structure including a brief discussion of
rights and

F-11
<PAGE> 195
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

privileges for securities outstanding. The adoption of this Statement had no
material effect on the Company's consolidated financial statements.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
Reporting Comprehensive Income. This Statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. SFAS No. 130 is effective for
financial statement periods beginning after December 15, 1997. Management does
not anticipate that this Statement will have a significant effect on the
Company's consolidated financial statements.

(p) Reclassifications

Certain reclassifications have been made to prior years' consolidated
financial statements to conform to the current year presentation.

(2) ACQUISITIONS AND DISPOSITIONS

(a) Completed Transactions

In May 1995, the Company acquired Broadcasting Partners, Inc. ("BPI"), a
publicly traded radio broadcasting company with seven FM and four AM radio
stations, eight of which are in the nation's ten largest radio markets (the "BPI
Acquisition"). The BPI Acquisition was effected through the merger of a
wholly-owned subsidiary of the Company with and into BPI, with BPI surviving the
merger as a wholly-owned subsidiary of the Company. The BPI Acquisition included
the conversion of each outstanding share of BPI common stock into the right to
receive $12.00 in cash and .69 shares of Chancellor Media's Common Stock,
resulting in total cash payments of $94,813 and the issuance of 11,222,018
shares of Chancellor Media's Common Stock valued at $6.25 per share. In
addition, the Company retired existing BPI debt of $81,926 and incurred various
other direct acquisition costs. The total purchase price, including closing
costs, allocated to net assets acquired was approximately $258,634.

On January 17, 1996, the Company acquired Pyramid Communications, Inc.
("Pyramid"), a radio broadcasting company with nine FM and three AM radio
stations in five radio markets (Chicago, Philadelphia, Boston, Charlotte and
Buffalo) (the "Pyramid Acquisition"). The Pyramid Acquisition was effected
through the merger of a wholly-owned subsidiary of the Company with and into
Pyramid, with Pyramid surviving the merger as a wholly-owned subsidiary of the
Company. The total purchase price, including closing costs, allocated to net
assets acquired was approximately $316,343 in cash.

On May 3, 1996, the Company acquired WKLB-FM in Boston from Fairbanks
Communications for $34,000 in cash plus various other direct acquisition costs.
On November 26, 1996, the Company exchanged WKLB-FM in Boston (now known as
WROR-FM) for WGAY-FM in Washington, D.C. The exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction. The Company had previously been operating WGAY-FM under a time
brokerage agreement and selling substantially all of the broadcast time of
WKLB-FM under a time brokerage agreement, in each case since June 17, 1996,
pending completion of the exchange.

F-12
<PAGE> 196
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On July 19, 1996, the Company sold WHTT-FM and WHTT-AM in Buffalo to
Mercury Radio for $19,500 in cash, and on August 1, 1996, the Company sold
WSJZ-FM in Buffalo to American Radio Systems for $12,500 in cash (collectively,
the "Buffalo Stations"). The assets of the Buffalo Stations were classified as
assets held for sale in the Pyramid Acquisition and no gain or loss was
recognized by the Company upon consummation of the sales. The combined net
income of the Buffalo stations of approximately $733 has been excluded from the
consolidated statement of operations for the year ended December 31, 1996. The
excess of the proceeds over the carrying amounts at the dates of sale
approximated $2,561 (including interest costs during the holding period of
approximately $1,169) and has been accounted for as an adjustment to the
original purchase price of the Pyramid Acquisition. The Company had previously
entered into time brokerage agreements (effective April 15, 1996 for WSJZ-FM and
April 25, 1996 for WHTT-FM and WHTT-AM) to sell substantially all of the
broadcast time of these stations pending completion of the sales.

On August 14, 1996, the Company acquired KYLD-FM in San Francisco from
Crescent Communications for $44,000 in cash plus various other direct
acquisition costs. The Company had previously been operating KYLD-FM under a
time brokerage agreement since May 1, 1996.

On October 18, 1996, the Company acquired WEDR-FM in Miami from affiliates
of the Rivers Group for $65,000 in cash plus various other direct acquisition
costs.

On January 31, 1997, the Company acquired WWWW-FM and WDFN-AM in Detroit
from affiliates of Chancellor Radio Broadcasting Company ("CRBC") for $30,000 in
cash plus various other direct acquisition costs. The Company had previously
provided certain sales and promotional functions to WWWW-FM and WDFN-AM under a
joint sales agreement since February 14, 1996 and subsequently operated the
stations under a time brokerage agreement since April 1, 1996.

On January 31, 1997, the Company acquired KKSF-FM and KDFC-FM/AM in San
Francisco from affiliates of the Brown Organization for $115,000 in cash plus
various other direct acquisition costs. The Company had previously been
operating KKSF-FM and KDFC-FM/AM under a time brokerage agreement since November
1, 1996. On July 21, 1997, the Company sold KDFC-FM to Bonneville International
Corporation ("Bonneville") for $50,000 in cash. The assets of KDFC-FM were
classified as assets held for sale in connection with the purchase price
allocation of the acquisition of KKSF-FM and KDFC-FM/AM and no gain or loss was
recognized by the Company upon consummation of the sale. The combined net income
of KDFC-FM of approximately $934 has been excluded from the consolidated
statement of operations for the year ended December 31, 1997. The excess of the
proceeds over the carrying amount at the date of sale approximated $739
(including interest costs during the holding period of approximately $1,750) and
has been accounted for as an adjustment to the original purchase price of the
acquisition of KKSF-FM and KDFC-FM/AM.

On April 1, 1997, the Company acquired WJLB-FM and WMXD-FM in Detroit from
Secret Communications, L.P. ("Secret") for $168,000 in cash plus various other
direct acquisition costs. The Company had previously been operating WJLB-FM and
WMXD-FM under time brokerage agreements since September 1, 1996.

On April 3, 1997, the Company exchanged WQRS-FM in Detroit (which the
Company acquired on April 3, 1997 from Secret for $32,000 in cash plus various
other direct acquisition costs), to affiliates of Greater Media Radio, Inc. in
return for WWRC-AM in Washington, D.C. and $9,500 in cash. The exchange was
accounted for as a like-kind exchange and no gain or loss was recognized upon
consummation of the transaction. The net purchase price to the Company of
WWRC-AM was therefore $22,500. The Company had previously been operating WWRC-AM
under a time brokerage agreement since June 17, 1996.

On May 1, 1997, the Company acquired WDAS-FM/AM in Philadelphia from
affiliates of Beasley FM Acquisition Corporation for $103,000 in cash plus
various other direct acquisition costs.

F-13
<PAGE> 197
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On May 15, 1997, the Company exchanged five of its six stations in
Charlotte, North Carolina (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM) for two FM
stations in Philadelphia (WIOQ-FM and WUSL-FM) owned by EZ Communications, Inc.
("EZ") in Philadelphia (the "Charlotte Exchange"), and also sold the Company's
sixth radio station in Charlotte, WNKS-FM, to EZ for $10,000 in cash and
recognized a gain of $3,536. The Charlotte Exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction.

On May 30, 1997, the Company acquired WPNT-FM in Chicago from affiliates of
Century Broadcasting Company for $75,740 in cash (including $1,990 for the
purchase of the station's accounts receivable) plus various other direct
acquisition costs. On June 19, 1997, the Company sold WPNT-FM in Chicago to
Bonneville for $75,000 in cash and recognized a gain of $529.

On June 3, 1997, the Company sold WEJM-FM in Chicago to affiliates of
Crawford Broadcasting for $14,750 in cash and recognized a gain of $9,258.

On July 2, 1997, the Company acquired WLTW-FM and WAXQ-FM in New York and
WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in Washington, D.C. from Viacom
International, Inc. ("Viacom") for approximately $612,388 in cash including
various other direct acquisition costs (the "Viacom Acquisition"). The Viacom
Acquisition was financed with (i) bank borrowings under the Senior Credit
Facility (as defined) of $552,559; (ii) $53,750 in escrow funds paid by the
Company on February 19, 1997 and (iii) $6,079 financed through working capital.
In June 1997, Chancellor Media issued 5,990,000 shares of $3.00 Convertible
Exchangeable Preferred Stock for net proceeds of $287,808 which were contributed
to the Company by Chancellor Media and used to repay borrowings under the Senior
Credit Facility and subsequently were reborrowed on July 2, 1997 as part of the
financing of the Viacom Acquisition. On July 7, 1997, the Company sold WJZW-FM
in Washington, D.C. to affiliates of Capital Cities/ABC Radio for $68,000 in
cash. The assets of WJZW-FM, as well as the assets of WZHF-AM and WBZS-AM, which
were sold on August 13, 1997, were accounted for as assets held for sale in
connection with the purchase price allocation of the Viacom Acquisition and no
gain or loss was recognized by the Company upon consummation of the sales. The
combined net income of WJZW-FM, WZHF-AM and WBZS-AM of approximately $153 has
been excluded from the consolidated statement of operations for the year ended
December 31, 1997. The excess of the carrying amounts over the proceeds at the
dates of sale approximated $894 and has been accounted for as an adjustment to
the original purchase price of the Viacom Acquisition.

On July 7, 1997, the Company sold the Federal Communications Commission
("FCC") authorizations and certain transmission equipment previously used in the
operation of KYLD-FM in San Francisco to Susquehanna Radio Corporation
("Susquehanna") for $44,000 in cash and recognized a gain of $1,726.
Simultaneously therewith, CRBC sold the call letters "KSAN-FM" (which CRBC
previously used in San Francisco) to Susquehanna. On July 7, 1997, the Company
and CRBC entered into a time brokerage agreement to enable the Company to
operate KYLD-FM on the frequency previously assigned to KSAN-FM, and on July 7,
1997, CRBC changed the call letters of KSAN-FM to KYLD-FM. Upon the consummation
of the Chancellor Merger (as defined herein), the Company changed the format of
the new KYLD-FM to the format previously operated on the old KYLD-FM.

On July 14, 1997, the Company completed the disposition of WLUP-FM in
Chicago to Bonneville for net proceeds of $80,000 which were held by a qualified
intermediary pending the completion of the deferred exchange of WLUP-FM for
KZPS-FM and KDGE-FM in Dallas. On October 7, 1997, the Company applied the net
proceeds from the disposition of WLUP-FM of $80,000 in cash, plus an additional
$3,500 and various other direct acquisition costs, in a deferred exchange of
WLUP-FM for KZPS-FM and KDGE-FM in Dallas. The exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction. The Company had previously operated KZPS-FM and KDGE-FM under time
brokerage agreements effective August 1, 1997.

F-14
<PAGE> 198
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On July 21, 1997, the Company entered into a time brokerage agreement with
CRBC whereby the Company began managing certain limited functions of CRBC's
stations KBGG-FM, KNEW-AM and KABL-FM in San Francisco pending the consummation
of the Chancellor Merger (as defined herein), which occurred on September 5,
1997.

On August 13, 1997, the Company sold WBZS-AM and WZHF-AM in Washington,
D.C. (acquired as part of the Viacom Acquisition) and KDFC-AM in San Francisco
to affiliates of Douglas Broadcasting ("Douglas") for $18,000 in the form of a
promissory note. The promissory note bears interest at 7 3/4%, with a balloon
principal payment due four years after closing. At closing, Douglas was required
to post a $1,000 letter of credit for the benefit of the Company that will
remain outstanding until all amounts due under the promissory note are paid.

On August 27, 1997, the Company sold WEJM-AM in Chicago to Douglas for
$7,500 in cash and recognized a gain of $3,331.

On September 5, 1997, pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of February 19, 1997 and amended and restated on July
31, 1997 (the "Chancellor Merger Agreement"), among Chancellor Broadcasting
Company ("Chancellor"), CRBC, Evergreen Media Corporation ("Evergreen"),
Evergreen Mezzanine Holdings Corporation ("EMHC") and Evergreen Media
Corporation of Los Angeles ("EMCLA"), (i) Chancellor was merged (the "Parent
Merger") with and into EMHC, a direct, wholly-owned subsidiary of Evergreen,
with EMHC remaining as the surviving corporation and (ii) CRBC was merged (the
"Subsidiary Merger") with and into EMCLA, a direct, wholly-owned subsidiary of
EMHC, with EMCLA remaining as the surviving corporation (collectively, the
"Chancellor Merger"). Upon consummation of the Parent Merger, Evergreen was
renamed Chancellor Media Corporation and EMHC was renamed Chancellor Mezzanine
Holdings Corporation ("CMHC"). Upon consummation of the Subsidiary Merger, the
Company was renamed Chancellor Media Corporation of Los Angeles . Consummation
of the Chancellor Merger added 52 radio stations (36 FM and 16 AM) to the
Company's portfolio of stations, including 13 stations in markets in which the
Company previously operated. The total purchase price allocated to net assets
acquired was approximately $1,998,383 which included (i) the conversion of each
outstanding share of Chancellor Common Stock into 0.9091 shares of Chancellor
Media Common Stock, resulting in the issuance of 34,617,460 shares of Chancellor
Media Common Stock at $15.50 per share, (ii) the assumption of long-term debt of
CRBC of $949,000 which included $549,000 of borrowings outstanding under the
CRBC senior credit facility, $200,000 of CRBC's 9 3/8% Senior Subordinated Notes
due 2004 and $200,000 of CRBC's 8 3/4% Senior Subordinated Notes due 2007 (iii)
the issuance of 2,117,629 shares of the Company's 12% Exchangeable Preferred
Stock in exchange for CRBC's substantially identical securities with a fair
value of $215,570 including accrued and unpaid dividends of $3,807, (iv) the
issuance of 1,000,000 shares of the Company's 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock in exchange for CRBC's substantially identical
securities with a fair value of $120,217 including accrued and unpaid dividends
of $772, (v) the issuance of 2,200,000 shares of Chancellor Media's 7%
Convertible Preferred Stock in exchange for Chancellor's substantially identical
securities with a fair value of $111,048 including accrued and unpaid dividends
of $1,048, (vi) the assumption of stock options issued to Chancellor stock
option holders with a fair value of $34,977 and (vii) estimated acquisition
costs of $31,000.

On October 28, 1997, the Company acquired Katz Media Group, Inc. ("KMG") a
full-service media representation firm, in a tender offer transaction for a
total purchase price of approximately $379,101 (the "Katz Acquisition") which
included (i) the conversion of each outstanding share of KMG Common Stock into
the right to receive $11.00 in cash, resulting in total cash payments of
$149,601, (ii) the assumption of long-term debt of KMG of $222,000 which
included $122,000 of borrowings outstanding under the KMG senior credit facility
and $100,000 of 10 1/2% Senior Subordinated Notes due 2007 of Katz Media
Corporation (a subsidiary of KMG) and (iii) estimated acquisition costs of
$7,500.

F-15
<PAGE> 199
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On December 29, 1997, the Company acquired five radio stations from Pacific
and Southern Company, Inc., a subsidiary of Gannett Co., Inc., consisting of
WGCI-FM/AM in Chicago for $140,000, KKBQ-FM/AM in Houston for $110,000 and
KHKS-FM in Dallas for $90,000, for an aggregate purchase price of $340,000 in
cash plus various other direct acquisition costs.

On January 30, 1998, the Company acquired KXPK-FM in Denver from Ever Green
Wireless LLC (which is unrelated to the Company) for $26,000 in cash plus
various other direct acquisition costs, of which $1,655 was previously paid by
CRBC as escrow funds and are classified as other assets at December 31, 1997.
The Company had previously been operating KXPK-FM under a time brokerage
agreement since September 1, 1997.

The acquisitions discussed above were accounted for as purchases.
Accordingly, the accompanying consolidated financial statements include the
results of operations of the acquired entities from the dates of acquisition.

A summary of the net assets acquired follows:

<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- ----------
<S> <C> <C> <C>
Working capital, including cash of $492 in 1995,
$1,011 in 1996 and $9,724 in 1997................. $ 12,012 $ 11,218 $ 66,805
Property and equipment.............................. 11,684 11,519 118,371
Assets held for sale (note 2)....................... -- 32,000 131,000
Intangible assets................................... 264,650 465,824 3,823,746
Other assets........................................ -- -- 26,742
Deferred tax liability.............................. (29,712) (61,218) (279,371)
Other liabilities................................... -- -- (39,681)
-------- -------- ----------
$258,634 $459,343 $3,847,612
======== ======== ==========
</TABLE>

The pro forma consolidated condensed results of operations data for 1996
and 1997, as if the 1996 and 1997 acquisitions and dispositions discussed above,
the 8 1/8% Notes offering described in note 7(f) and the amendment and
restatement of the Senior Credit Facility described in note 7(a) occurred at
January 1, 1996, follow:

<TABLE>
<CAPTION>
UNAUDITED
----------------------
1996 1997
--------- ----------
<S> <C> <C>
Net revenues................................................ $ 882,054 $1,002,784
Net loss.................................................... (216,229) (149,683)
</TABLE>

The pro forma results are not necessarily indicative of what would have
occurred if the transactions had been in effect for the entire periods
presented.

(b) Pending Transactions

On July 1, 1996, CRBC entered into an agreement with SFX Broadcasting, Inc.
("SFX") pursuant to which CRBC agreed to exchange WAPE-FM and WFYV-FM in
Jacksonville and $11,000 in cash to SFX in return for WBAB-FM, WBLI-FM, WHFM-FM
and WGBB-AM in Nassau/Suffolk (Long Island) (the "SFX Exchange"). The Company
currently operates WBAB-FM, WBLI-FM, WHFM-FM and WGBB-FM pursuant to a time
brokerage agreement effective July 1, 1996 and SFX currently operates WAPE-FM
and WFYV-FM pursuant to a time brokerage agreement effective July 1, 1996. On
November 6, 1997, the Antitrust Division of the United States Department of
Justice (the "DOJ") filed suit against the Company seeking to enjoin, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR

F-16
<PAGE> 200
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Act"), the Company's acquisition of the four Long Island properties from SFX. If
the Company is unable to acquire the four Long Island properties, the SFX
Exchange will not be consummated. Furthermore, under the terms of the Capstar
Transaction (as defined below), upon consummation of Capstar Broadcasting
Corporation's pending acquisition of SFX, the SFX Exchange would be terminated.

On August 6, 1997, the Company paid $3,000 to Bonneville for an option to
exchange WTOP-AM in Washington, KZLA-FM in Los Angeles and WGMS-FM in Washington
and $57,000 in cash for Bonneville's stations WBIX-FM in New York, KLDE-FM in
Houston and KBIG-FM in Los Angeles (the "Bonneville Option"). The Bonneville
Option was exercised on October 1, 1997, and definitive exchange documentation
is presently being negotiated. The Company has entered into time brokerage
agreements to operate KLDE-FM and KBIG-FM effective October 1, 1997 and WBIX-FM
effective October 10, 1997 and has entered into time brokerage agreements to
sell substantially all of the broadcast time of WTOP-AM, KZLA-FM and WGMS-FM
effective October 1, 1997.

On February 17, 1998, the Company entered into an agreement to acquire
WWDC-FM/AM in Washington, D.C. from Capitol Broadcasting Company and its
affiliates for $72,000 in cash (including $4,000 paid by the Company in escrow
on February 18, 1998), plus an amount equal to the value assigned to certain
accounts receivable for the stations (the "Capitol Broadcasting Acquisition").
Consummation of the Capitol Broadcasting Acquisition is conditioned, among other
things, on the consummation of the exchanges of the Company's Washington, D.C.
stations that are subject to the Bonneville Option.

On February 20, 1998, the Company entered into an agreement to acquire from
Capstar Broadcasting Corporation (together with its subsidiaries, "Capstar")
KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and KQUE-AM in
Houston, KPLN-FM and KYXY-FM in San Diego and WVTY-FM, WJJJ-FM, WXDX-FM and
WDVE-FM in Pittsburgh (collectively, the "Capstar/SFX Stations") for an
aggregate purchase price of approximately $637,500 (the "Capstar Transaction").
The Capstar/SFX Stations are presently owned by SFX, and are expected to be
acquired by Capstar as part of Capstar's pending acquisition of SFX (the
"Capstar/SFX Acquisition"). The Capstar/SFX Stations would be acquired by the
Company in a series of purchases and exchanges over a period of three years, and
would be operated by the Company under time brokerage agreements immediately
upon the consummation of the Capstar/SFX Acquisition until acquired by the
Company. As part of the Capstar Transaction, the SFX Exchange would, upon
consummation of the Capstar/SFX Acquisition, be terminated and the Company would
exchange WAPE-FM and WFYV-FM in Jacksonville (valued for purposes of the Capstar
Transaction at $53,000) plus $90,250 in cash for Capstar/SFX Station KODA-FM in
Houston. The Company would pay approximately $494,250 for the remaining ten
Capstar/SFX Stations. As part of the Capstar Transaction, the Company would, at
the consummation of the Capstar/SFX Acquisition, provide a subordinated loan to
Capstar in the principal amount of $250,000 (the "Capstar Loan"). The Capstar
Loan would bear interest at the rate of 12% per annum (subject to increase in
certain circumstances), and would be secured by a senior pledge of common stock
of Capstar's direct subsidiaries and SFX and a senior guarantee by one of
Capstar's direct subsidiaries. A portion of the Capstar Loan would be prepaid by
Capstar in connection with the Company's acquisition of, and the proceeds of
such prepayment would be used by the Company as a portion of the purchase price
for, each Capstar/SFX Station. The Company's obligation to provide the Capstar
Loan is conditioned, among other things, on Capstar's receipt of at least
$650,000 in equity investments that are subordinate to the Capstar Loan between
January 1, 1998 and the consummation of the Capstar/SFX Acquisition. Hicks,
Muse, Tate & Furst, Incorporated ("Hicks Muse"), which is a substantial
shareholder of the Company (see note 14), controls Capstar, and certain
directors of the Company are directors and/or executive officers of Capstar
and/or Hicks Muse.

Consummation of each of the transactions discussed above is subject to
various conditions, including approval from the FCC and the expiration or early
termination of any waiting period required under the HSR Act. Except with
respect to the SFX Exchange, which the Company expects will be terminated in
connection

F-17
<PAGE> 201
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

with the Capstar Transaction, the Company believes that such conditions will be
satisfied in the ordinary course, but there can be no assurance that this will
be the case.

Escrow funds of $4,655 paid by the Company in connection with the
acquisition of KXPK-FM in Denver on January 30, 1998 and the Bonneville Option
have been classified as other assets in the accompanying balance sheet at
December 31, 1997.

(3) OTHER ASSETS

Other current assets consist of the following at December 31, 1996 and
1997:

<TABLE>
<CAPTION>
1996 1997
------ -------
<S> <C> <C>
Representation contracts receivable......................... $ -- $16,462
Prepaid expenses and other.................................. 6,352 10,746
------ -------
$6,352 $27,208
====== =======
</TABLE>

Other assets consist of the following at December 31, 1996 and 1997:

<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Deferred costs on purchases of representation contracts,
less accumulated amortization of $380 in 1997............. $ -- $ 35,411
Deferred debt issuance costs, less accumulated amortization
of $1,794 in 1996 and $943 in 1997........................ 7,086 24,624
Notes receivable (note 2)................................... -- 18,000
Representation contracts receivable......................... -- 12,187
Escrow deposits............................................. 17,000 4,655
Other....................................................... 466 18,699
------- --------
$24,552 $113,576
======= ========
</TABLE>

(4) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1996 and
1997:

<TABLE>
<CAPTION>
ESTIMATED USEFUL LIFE 1996 1997
--------------------- ------- --------
<S> <C> <C> <C>
Broadcast and other equipment.................. 3-15 years $47,937 $115,440
Buildings and improvements..................... 3-20 years 11,735 24,308
Furniture and fixtures......................... 5-7 years 8,392 29,659
Land........................................... -- 7,379 23,122
------- --------
75,443 192,529
Less accumulated depreciation.................. 27,250 32,732
------- --------
$48,193 $159,797
======= ========
</TABLE>

F-18
<PAGE> 202
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(5) INTANGIBLE ASSETS

Intangible assets consist of the following at December 31, 1996 and 1997:

<TABLE>
<CAPTION>
ESTIMATED USEFUL LIFE 1996 1997
--------------------- ---------- ----------
<S> <C> <C> <C>
Broadcast licenses......................... 15-40 $ 498,766 $3,507,547
Goodwill................................... 15-40 131,775 717,576
Representation contracts................... 17 -- 105,000
Other intangibles.......................... 1-40 397,062 386,272
---------- ----------
1,027,603 4,716,395
Less accumulated amortization.............. 173,960 311,952
---------- ----------
$ 853,643 $4,404,443
========== ==========
</TABLE>

In addition to broadcast licenses, goodwill and representation contracts,
categories of other intangible assets include: (i) premium advertising revenue
base (the value of the higher radio advertising revenues in certain of the
Company's markets as compared to other markets of similar population); (ii)
advertising client base (the value of the well-established advertising base in
place at the time of acquisition of certain stations); (iii) talent contracts
(the value of employment contracts between certain stations and their key
employees); (iv) fixed asset delivery premium (the benefit expected from the
Company's ability to operate fully constructed and operational stations from the
date of acquisition), and (v) premium audience growth pattern (the value of
expected above-average population growth in a given market).

(6) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following at December
31, 1996 and 1997:

<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Accounts payable............................................ $17,746 $ 83,738
Accrued payroll............................................. 7,262 31,349
Representation contracts payable............................ -- 21,680
Accrued interest............................................ 1,642 18,130
Accrued dividends........................................... -- 16,120
------- --------
$26,650 $171,017
======= ========
</TABLE>

(7) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1996 and 1997:

<TABLE>
<CAPTION>
1996 1997
-------- ----------
<S> <C> <C>
Senior Credit Facility(a)................................... $348,000 $1,573,000
Senior Notes(b)............................................. 10,000 --
9 3/8% Notes(c)............................................. -- 200,000
8 3/4% Notes(d)............................................. -- 200,000
10 1/2% Notes(e)............................................ -- 100,000
8 1/8% Notes(f)............................................. -- 500,000
-------- ----------
Total long-term debt.............................. 358,000 2,573,000
Less current portion........................................ 26,500 --
-------- ----------
$331,500 $2,573,000
======== ==========
</TABLE>

F-19
<PAGE> 203
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(a) Senior Credit Facility

On April 25, 1997, the Company entered into a loan agreement which amended
and restated its prior senior credit facility. Under the amended and restated
agreement, as amended on June 26, 1997, August 7, 1997, October 28, 1997 and
February 10, 1998 (as amended, the "Senior Credit Facility"), the Company
established a $1,250,000 revolving facility (the "Revolving Loan Facility") and
a $500,000 term loan facility (the "Term Loan Facility"). Upon consummation of
the Chancellor Merger, the aggregate commitments under the Revolving Loan
Facility and the Term Loan Facility were increased to $1,600,000 and $900,000,
respectively. In connection with the amendment and restatement of the Senior
Credit Facility, the Company wrote off the unamortized balance of deferred debt
issuance costs of $4,350 (net of a tax benefit of $2,343) as an extraordinary
charge.

Borrowings under the Senior Credit Facility bear interest at a rate based,
at the option of the Company, on the participating banks' prime rate or
Eurodollar rate, plus an incremental rate. Without giving effect to the interest
rate swap and cap agreements described below, the interest rate on the $900,000
outstanding under the Term Loan at December 31, 1997 was 7.09% on a blended
basis, based on Eurodollar rates, and the interest rate on the $665,000 and
$8,000 of advances outstanding under the Revolving Loan were 7.06% on a blended
basis and 8.63% at December 31, 1997, based on the Eurodollar and prime rates,
respectively. The Company pays fees ranging from 0.25% to 0.375% per annum on
the aggregate unused portion of the loan commitment based upon the leverage
ratio for the most recent quarter end, in addition to an annual agent's fee.

Pursuant to the Senior Credit Facility, the Company is required to enter
into interest hedging agreements that result in fixing or placing a cap on the
Company's floating rate debt so that no less than 50% of the principal amount of
total debt outstanding has a fixed or capped rate. At December 31, 1997,
interest rate swap agreements covering a notional balance of $1,325,000 were
outstanding. These outstanding swap agreements mature from 1998 through 1999 and
require the Company to pay fixed rates of 4.96% to 6.63% while the counterparty
pays a floating rate based on the three-month London Interbank Borrowing Offered
Rate ("LIBOR"). During the years ended December 31, 1995, 1996 and 1997, the
Company recognized charges (income) under its interest rate swap agreements of
$(275), $111 and $2,913, respectively. Because the interest rate swap agreements
are with banks that are lenders under the Senior Credit Facility, the Company is
not exposed to credit loss.

The Term Loan Facility is payable in quarterly installments commencing on
September 30, 2000 and ending June 30, 2005. The Revolving Loan Facility
requires scheduled annual reductions of the commitment amount, payable in
quarterly installments commencing on September 30, 2000 and ending on June 30,
2005. The capital stock of the Company's subsidiaries is pledged to secure the
performance of the Company's obligations under the Senior Credit Facility, and
each of the Company's subsidiaries have guaranteed those obligations.

(b) Senior Notes

The Company issued $20,000 of senior notes (the "Senior Notes") in 1989.
The Senior Notes bear interest at 11.59% per annum payable quarterly and
principal is payable in equal quarterly installments of $1,000 through May 1999.
In connection with the amendment and restatement of the Senior Credit Facility,
on April 25, 1997, the Company repaid all amounts outstanding under the Senior
Notes.

Upon consummation of the Chancellor Merger, on September 5, 1997, the
Company assumed CRBC's $200,000 aggregate principal amount of 9 3/8% Senior
Subordinated Notes due 2004 (the "9 3/8% Notes"). Interest on the 9 3/8% Notes
is payable semiannually, commencing on April 1, 1996. The 9 3/8% Notes mature on

F-20
<PAGE> 204
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

October 1, 2004 and are redeemable, in whole or in part, at the option of the
Company on or after February 1, 2000, at redemption prices ranging from 104.688%
at February 1, 2000 and declining to 100% on or after February 1, 2003, plus in
each case accrued and unpaid interest. In addition, on or prior to January 31,
1999, the Company may redeem up to 25% of the original aggregate principal
amount of the 9 3/8% Notes at a redemption price of 107.031% plus accrued and
unpaid interest with the net proceeds of one or more public equity offerings of
CMHC or the Company. Upon the occurrence of a change in control (as defined in
the indenture governing the 9 3/8% Notes), the holders of the 9 3/8% Notes have
the right to require the Company to repurchase all or any part of the 9 3/8%
Notes at a purchase price equal to 101% plus accrued and unpaid interest.

(d) 8 3/4% Notes

Upon consummation of the Chancellor Merger, on September 5, 1997, the
Company assumed CRBC's $200,000 aggregate principal amount of 8 3/4% Senior
Subordinated Notes due 2007 (the "8 3/4% Notes"). Interest on the 8 3/4% Notes
is payable semiannually, commencing on December 15, 1997. The 8 3/4% Notes
mature on June 15, 2007 and are redeemable, in whole or in part, at the option
of the Company on or after June 15, 2002, at redemption prices ranging from
104.375% at June 15, 2002 and declining to 100% on or after June 15, 2005, plus
in each case accrued and unpaid interest. In addition, prior to June 15, 2000,
the Company may redeem up to 25% of the original aggregate principal amount of
the 8 3/4% Notes at a redemption price of 108.75% plus accrued and unpaid
interest with the net proceeds of one or more public equity offerings of CMHC or
the Company. Upon the occurrence of a change in control (as defined in the
indenture governing the 8 3/4% Notes) on or prior to June 15, 2000, the 8 3/4%
Notes may be redeemed as a whole at the option of the Company at a redemption
price of 100% plus the Applicable Premium (as defined in the indenture governing
the 8 3/4% Notes) and accrued and unpaid interest. Upon the occurrence of a
change in control after June 15, 2000, the holders of the 8 3/4% Notes have the
right to require the Company to repurchase all or any part of the 8 3/4% Notes
at a purchase price equal to 101% plus accrued and unpaid interest.

(e) 10 1/2% Notes

Upon consummation of the Katz Acquisition, on October 28, 1997, the Company
assumed Katz Media Corporation's $100,000 aggregate principal amount of 10 1/2%
Senior Subordinated Notes due 2007 (the "10 1/2% Notes"). Interest on the
10 1/2% Notes is payable semiannually, commencing on July 15, 1997. The 10 1/2%
Notes mature on January 15, 2007 and are redeemable, in whole or in part, at the
option of the Company on or after January 15, 2002, at redemption prices ranging
from 105.25% at January 15, 2002 and declining to 100% on or after January 15,
2006, plus in each case accrued and unpaid interest. In addition, prior to
January 15, 2000, the Company may redeem up to 35% of the original aggregate
principal amount of the 10 1/2% Notes at a redemption price of 109.5% plus
accrued and unpaid interest with the net proceeds of one or more offerings of
equity interests of Chancellor Media, CMHC or the Company. Upon the occurrence
of a change in control (as defined in the indenture governing the 10 1/2%
Notes), the holders of the 10 1/2% Notes have the right to require the Company
to repurchase all or any part of the 10 1/2% Notes at a purchase price equal to
101% plus accrued and unpaid interest.

(f) 8 1/8% Notes

On December 22, 1997, the Company issued $500,000 aggregate principal
amount of 8 1/8% Senior Subordinated Notes due 2007 (the "8 1/8% Notes") for
estimated net proceeds of $485,000. Interest on the 8 1/8% Notes is payable
semiannually, commencing on June 15, 1998. The 8 1/8% Notes mature on December
15, 2007 and are redeemable, in whole or in part, at the option of the Company
on or after December 15, 2002, at redemption prices ranging from 104.063% at
December 15, 2002 and declining to 100% on or after December 15, 2005, plus in
each case accrued and unpaid interest. In addition, prior to December 15, 2000,
the Company may redeem up to 35% of the original aggregate principal amount of
the 8 1/8% Notes at a
F-21
<PAGE> 205
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

redemption price of 108.125% plus accrued and unpaid interest with the net
proceeds of one or more public equity offerings of Chancellor Media, CMHC or the
Company. Also, upon the occurrence of a change in control (as defined in the
indenture governing the 8 1/8% Notes), the 8 1/8% Notes may be redeemed as a
whole at the option of the Company at a redemption price of 100% plus the
Applicable Premium (as defined in the indenture governing the 8 1/8% Notes) and
accrued and unpaid interest. Upon the occurrence of a change in control after
December 15, 2000, the holders of the 8 1/8% Notes have the right to require the
Company to repurchase all or any part of the 8 1/8% Notes at a purchase price
equal to 101% plus accrued and unpaid interest.

(g) Summarized Financial Information of Subsidiary Guarantors

The 9 3/8% Notes, the 8 3/4% Notes, the 10 1/2% Notes and the 8 1/8% Notes
(collectively, the "Notes") are unsecured obligations of the Company,
subordinated in right of payment to all existing and any future senior
indebtedness of the Company. The Notes are fully and unconditionally guaranteed,
on a joint and several basis, by all of the Company's direct and indirect
subsidiaries other than certain inconsequential subsidiaries (the "Subsidiary
Guarantors"). The Subsidiary Guarantors are wholly-owned subsidiaries of the
Company. Summarized financial information of the Subsidiary Guarantors as of
December 31, 1997 and for the year ended December 31, 1997 is presented below.
Separate financial statements and other disclosures concerning the Subsidiary
Guarantors are not presented because management has determined that they are not
material to investors. There are no significant restrictions on distributions
from each of the Subsidiary Guarantors to the Company.

<TABLE>
<CAPTION>
1997
---------
<S> <C>
Current assets.............................................. 223,913
Noncurrent assets........................................... 987,028
Current liabilities......................................... 89,362
Noncurrent liabilities...................................... 1,130,105

Net revenues................................................ 495,485
Operating income............................................ 58,354
Net loss.................................................... (17,721)
</TABLE>

(h) Other

The Senior Credit Facility and the indentures governing the Notes contain
customary restrictive covenants, which, among other things and with certain
exceptions, limit the ability of the Company and its subsidiaries to incur
additional indebtedness and liens in connection therewith, enter into certain
transactions with affiliates, pay dividends, consolidate, merge or effect
certain asset sales, issue additional stock, effect an asset swap and make
acquisitions. The Company is required under the Senior Credit Facility to
maintain specified financial ratios, including leverage, cash flow and debt
service coverage ratios (as defined).

A summary of the future maturities of long-term debt at December 31, 1997
follows:

<TABLE>
<S> <C>
1998........................................................ $ --
1999........................................................ --
2000........................................................ 67,500
2001........................................................ 157,500
2002........................................................ 180,000
Thereafter.................................................. 2,168,000
</TABLE>

F-22
<PAGE> 206
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(8) REDEEMABLE PREFERRED STOCK

(a) 12 1/4% Preferred Stock

Upon consummation of the Chancellor Merger, on September 5, 1997, the
Company issued 1,000,000 shares of 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock (the "12 1/4% Preferred Stock") in exchange for
CRBC's substantially identical securities with a fair value of $120,217
including accrued and unpaid dividends of $772. The liquidation preference of
each share of 12 1/4% Preferred Stock is $119.445 plus accrued and unpaid
dividends of $1,829 at December 31, 1997. The dividend rate on the 12 1/4%
Preferred Stock is 12.25% per annum of the liquidation preference and is payable
quarterly. If any dividend payable on any dividend payment date on or before
February 15, 2001 is not declared or paid in full in cash on such dividend
payment date, the amount not paid on such dividend payment date will be added to
the liquidation preference of the 12 1/4% Preferred Stock and will be deemed
paid in full and will not accumulate. The 12 1/4% Preferred Stock is redeemable
in whole or in part, at the option of the Company on or after February 15, 2001,
at redemption prices ranging from 106.125% at February 15, 2001 and declining to
100.0% of the liquidation preference on or after February 15, 2006, plus in each
case accrued and unpaid dividends. In addition, prior to February 15, 1999, the
Company may redeem up to 25% of the shares of 12 1/4% Preferred Stock originally
issued at a redemption price of 109.8% of the liquidation preference plus
accrued and unpaid dividends with the net proceeds of one or more public equity
offerings of the Company. The Company is required, subject to certain
conditions, to redeem all of the 12 1/4% Preferred Stock outstanding on February
15, 2008, at a redemption price of 100% of the liquidation preference, plus
accrued and unpaid dividends. The 12 1/4% Preferred Stock is exchangeable,
subject to certain conditions, at the option of the Company, in whole but not in
part, for 12 1/4% Subordinated Exchange Debentures due 2008 (the "12 1/4%
Exchange Debentures") at a rate of $1.00 principal amount of 12 1/4% Exchange
Debentures for each $1.00 in liquidation preference of 12 1/4% Preferred Stock.
Upon the occurrence of a change in control (as defined in the certificate of
designation governing the 12 1/4% Preferred Stock), the holders of the 12 1/4%
Preferred Stock have the right to require the Company to repurchase all or any
part of the 12 1/4% Preferred Stock at a price of 101% of the liquidation
preference plus accrued and unpaid dividends. The 12 1/4% Preferred Stock is
senior in liquidation preference to the Common Stock of the Company and to the
12% Preferred Stock.

(b) 12% Preferred Stock

Upon consummation of the Chancellor Merger, on September 5, 1997, the
Company issued 2,117,629 shares of 12% Exchangeable Preferred Stock (the "12%
Preferred Stock") in exchange for CRBC's substantially identical securities with
a fair value of $215,570 including accrued and unpaid dividends of $3,807. The
liquidation preference of each share of 12% Preferred Stock is $100.00 plus
accrued and unpaid dividends of $11,756 at December 31, 1997. The dividend rate
on the 12% Preferred Stock is 12% per annum of the liquidation preference and is
payable semi-annually. Dividends may be paid, at the Company's option, on any
dividend payment date occurring on or prior to January 15, 2002 either in cash
or in additional shares of 12% Preferred Stock. The 12% Preferred Stock is
redeemable in whole or in part, at the option of the Company, on or after
January 15, 2002, at redemption prices ranging from 106% at January 15, 2002 and
declining to 100% of the liquidation preference on or after January 15, 2007,
plus in each case accrued and unpaid dividends. In addition, prior to January
15, 2000, the Company may redeem all but $150,000 of the aggregate liquidation
preference of 12% Preferred Stock at a redemption price of 112% of the
liquidation preference plus accrued and unpaid dividends with the net proceeds
of one or more public equity offerings of the Company. The Company is required,
subject to certain conditions, to redeem all of the 12% Preferred Stock
outstanding on January 15, 2009, at a redemption price of 100% of the
liquidation preference, plus accrued and unpaid dividends. The 12% Preferred
Stock is exchangeable, subject to certain conditions, at the option of the
Company, in whole but not in part, for 12% Subordinated Exchange Debentures due
2009 (the "12% Exchange Debentures") at a rate of $1.00 principal amount of 12%
Exchange Debentures for each $1.00 in liquidation preference of 12% Preferred
Stock. Upon the occurrence of a change in control (as defined in

F-23
<PAGE> 207
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the certificate of designation governing the 12% Preferred Stock), the holders
of the 12% Preferred Stock have the right to require the Company to repurchase
all or any part of the 12% Preferred Stock at a price of 101% of the liquidation
preference plus accrued and unpaid dividends. In addition, upon the occurrence
of a change in control, the Company may redeem the 12% Preferred Stock in whole
but not in part at a redemption price of 112% of the liquidation preference plus
accrued and unpaid dividends. The 12% Preferred Stock is senior in liquidation
preference to the Common Stock of the Company and is subordinate to the 12 1/4%
Preferred Stock.

(9) STOCKHOLDER'S EQUITY

(a) On March 13, 1998, Chancellor Media completed a secondary public
offering of 21,850,000 shares of its Common Stock (the "1998 Offering"). The net
proceeds from the 1998 Offering of approximately $995.1 million were contributed
to the Company by Chancellor Media.

(b) Stock Options

Chancellor Media has established the 1992, 1993 and 1995 Key Employee Stock
Option Plans (the "Employee Option Plans") which provide for the issuance of
stock options to officers and other key employees of the Company and its
subsidiaries. The Employee Option Plans make available for issuance an aggregate
of 7,215,000 shares of Common Stock. Options issued under the Employee Option
Plans have varying vesting periods as provided in separate stock option
agreements and generally carry an expiration date of ten years subsequent to the
date of issuance. Options issued under the 1993 and 1995 Employee Option Plans
are required to have exercise prices equal to or in excess of the fair market
value of Chancellor Media Common Stock on the date of issuance.

In May 1995, Chancellor Media also established the Stock Option Plan for
Non-Employee Directors (the "Director Plan") which provides for the issuance of
stock options to non-employee directors of the Company. The Director Plan makes
available for issuance an aggregate of 450,000 shares of Chancellor Media Common
Stock. Options issued under the Director Plan have exercise prices equal to the
fair market value of Chancellor Media Common Stock on the date of issuance, vest
over a three year period and have an expiration date of ten years subsequent to
the date of issuance.

In connection with the BPI Acquisition, Chancellor Media assumed
outstanding options to purchase 310,276 shares of Chancellor Media Common Stock
(the "BPI Options"). The BPI Options vested and became exercisable on May 12,
1996 and have an expiration date of ten years subsequent to the original date of
issuance by BPI.

In connection with the Chancellor Merger, Chancellor Media assumed
outstanding options to purchase 3,526,112 shares of Chancellor Media Common
Stock (the "Chancellor Options") with a fair value of $34,977. The Chancellor
Options have varying vesting periods as provided in separate stock option
agreements and generally carry an expiration date of ten years subsequent to the
original date of issuance by Chancellor.

The total options available for grant were 3,679,500 and 1,115,894 at
December 31, 1996 and 1997, respectively.

Chancellor Media applies APB Opinion No. 25 in accounting for its Employee
Option Plans and, accordingly, no compensation cost has been recognized for its
stock options in the consolidated financial statements. Had Chancellor Media
determined compensation cost based on the fair value at the grant date for

F-24
<PAGE> 208
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

its stock options under SFAS No. 123, the Company's net loss would have been
increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
Net loss:
As reported.......................................... $(5,850) $(16,194) $(31,745)
Pro forma............................................ (8,787) (20,969) (36,650)
</TABLE>

Pro forma net loss reflects only options granted in 1995, 1996 and 1997.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the pro forma net loss amounts presented
above because compensation cost is reflected over the options' vesting period of
one year and compensation cost for options granted prior to 1995 is not
considered.

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants: expected volatility of 44.5% for 1995 and 1996 and
41.9% for 1997; risk-free interest rate of 6.0% for 1995 and 1996 and 5.4% for
1997; dividend yield of 0% and expected lives ranging from three to seven years
for 1995, 1996 and 1997.

Following is a summary of activity in the employee option plans and
agreements discussed above for the years ended December 31, 1995, 1996 and 1997:

<TABLE>
<CAPTION>
1995 1996 1997
-------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
year.......................... 1,956,000 $ 1.55 2,579,748 $ 3.46 3,559,984 $ 5.97
Granted......................... 516,000 10.08 1,174,500 11.56 2,773,590 22.89
Assumed in acquisitions......... 310,276 4.85 -- -- 3,526,112 9.29
Exercised....................... (51,000) 0.65 (166,806) 4.27 (994,526) 5.43
Canceled........................ (151,528) 4.30 (27,458) 4.96 (38,464) 19.46
--------- ------ --------- ------ --------- ------
Outstanding at end of year...... 2,579,748 $ 3.46 3,559,984 $ 5.97 8,826,696 $12.98
========= ====== ========= ====== ========= ======
Options exercisable at year
end........................... 1,890,000 1,935,484 5,687,960
========= ========= =========
Weighted average fair value of
options granted during the
year.......................... 4.27 4.88 10.25
========= ========= =========
</TABLE>

The following table summarizes information about stock options outstanding
at December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------- -------------------------
NUMBER WEIGHTED WEIGHTED NUMBER WEIGHTED
OUTSTANDING AT AVERAGE AVERAGE EXERCISABLE AT AVERAGE
RANGE OF DECEMBER 31, REMAINING EXERCISE DECEMBER 31, EXERCISE
EXERCISE PRICES 1997 CONTRACTUAL LIFE PRICE 1997 PRICE
--------------- -------------- ---------------- -------- -------------- --------
<S> <C> <C> <C> <C> <C>
$0.01........................... 1,000,000 5.3 years $ 0.01 1,000,000 $ 0.01
$4.13 to 6.17................... 2,186,056 7.2 years 4.58 2,039,692 4.60
$10.67 to 15.81................. 2,378,562 8.3 years 11.49 983,624 11.63
$17.05 to 23.75................. 2,769,078 9.5 years 21.38 1,464,644 22.50
$26.38 to 31.63................. 493,000 9.8 years 28.32 200,000 27.50
--------- ------ --------- ------
8,826,696 12.98 5,687,960 10.44
========= ====== ========= ======
</TABLE>

F-25
<PAGE> 209
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(10) EMPLOYEE BENEFIT PLANS

(a) 401(k) Plan

The Company offers substantially all of its employees voluntary
participation in a 401(k) Plan. The Company may make discretionary contributions
to the plan; however, no such contributions were made by the Company during
1995, 1996 or 1997.

(b) Katz Savings and Profit Sharing Plan

Katz has a defined contribution retirement plan, The Katz Media Group
Savings and Profit Sharing Plan (the "Katz Plan"). The Katz Plan covers
substantially all employees of Katz with greater than six months of service. The
Katz Plan permits Katz to match a percentage of a participant's contribution up
to a stated maximum percentage of an employee's salary. Cash contributions
included in to operating expenses approximated $200 for the year ended December
31, 1997. Effective January 1, 1998, the Company elected to discontinue cash
contributions under the matching provision of the Katz Plan. The Company intends
to merge the Katz Plan into the Company's 401(k) Plan during 1998.

Prior to the Company's acquisition of Katz on October 28, 1997, Katz
provided for certain medical, dental and life insurance benefits for employees
who retire beginning at age 55 with a minimum of 15 years of service and for
employees who retire at age 65 with a minimum of 10 years of service. The
Company will continue providing this coverage only for retirees and
beneficiaries currently receiving coverage and those active employees who have,
or will have attained by December 31, 1998, the age and service necessary to
receive coverage.

The accumulated post retirement benefit obligation ("APBO") consists of
$703 for retirees and $337 for active employees fully eligible for benefits for
a total APBO of $1,040 at December 31, 1997. As of December 31, 1997, Katz and
its subsidiaries have not funded any portion of the accumulated postretirement
benefit obligation. The net periodic postretirement benefit cost consists of
interest cost on the APBO of $11 for the year ended December 31, 1997. The APBO
was determined using an assumed discount rate of 6.5% and a health care cost
trend rate of 5% per annum for all future years. The effect of a 1% increase in
the health care cost trend rate would increase the APBO by $368 and would
increase the service and interest cost components of the net periodic
postretirement benefit cost by $24.

(11) INCOME TAXES

Income tax expense (benefit) from continuing operations consists of the
following:

<TABLE>
<CAPTION>
1995 1996 1997
----- ------- -------
<S> <C> <C> <C>
Current tax expense:
Federal............................................... $ 246 $ 485 $ 6,840
State................................................. 425 972 4,791
----- ------- -------
Total current tax expense............................... 671 1,457 11,631
Deferred benefit........................................ (479) (4,353) (3,829)
----- ------- -------
Total income tax expense (benefit)...................... $ 192 $(2,896) $ 7,802
===== ======= =======
</TABLE>

During 1997, the Company incurred an extraordinary loss on extinguishment
of debt. The tax benefit related to the extraordinary loss is approximately
$2,343. This tax benefit, which reduces current taxes payable, is separately
allocated to the extraordinary item.

F-26
<PAGE> 210
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Total income tax expense (benefit) differed from the amount computed by
applying the U.S. federal statutory income tax rate of 35% to loss from
continuing operations for the years ended December 31, 1995, 1996 and 1997 as a
result of the following:

<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Computed "expected" tax benefit....................... $(1,980) $(6,682) $(2,342)
Amortization of goodwill.............................. 788 2,477 5,744
Net operating loss carryforwards for which no tax
benefit was recognized.............................. 923 -- --
State income taxes, net of federal benefit............ 276 632 2,533
Other, net............................................ 185 677 1,867
------- ------- -------
$ 192 $(2,896) $ 7,802
======= ======= =======
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1996 and
1997 are presented below:

<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss and credit carryforwards............... $ 13,519 $ 38,552
Accrued compensation primarily relating to stock
options................................................ 1,687 1,720
Differences in book and tax bases related to media
representation contracts............................... -- 39,908
Differences in book and tax bases of lease liabilities.... -- 4,727
Other..................................................... 1,215 3,147
--------- ---------
Total deferred tax assets......................... 16,421 88,054
--------- ---------
Deferred tax liabilities:
Property and equipment and intangibles, primarily
resulting from difference in bases from BPI, Pyramid,
Chancellor Merger and Katz acquisitions................ (101,761) (445,992)
Other..................................................... (758) (3,702)
--------- ---------
Total deferred tax liabilities.................... (102,519) (449,694)
--------- ---------
Net deferred tax liability........................ $ (86,098) $(361,640)
========= =========
</TABLE>

Deferred tax assets and liabilities are computed by applying the U.S.
federal and state income tax rate in effect to the gross amounts of temporary
differences and other tax attributes, such as net operating loss carryforwards.

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. The Company expects the
deferred tax assets at December 31, 1997 to be realized as a result of the
reversal during the carryforward period of existing taxable temporary
differences giving rise to deferred tax liabilities and the generation of
taxable income in the carryforward period.

At December 31, 1997, the Company has net operating loss carryforwards
available to offset future taxable income of approximately $85,000, expiring
from 1998 to 2012 and has alternative minimum tax credit carryforwards of
approximately $3,600 that do not expire. All of the net operating loss and tax
credit

F-27
<PAGE> 211
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

carryforwards at December 31, 1997 are subject to annual use limitations under
tax rules governing changes of ownership.

(12) COMMITMENTS AND CONTINGENCIES

The Company has noncancelable operating leases, primarily for office space.
These leases generally contain renewal options for periods ranging from one to
ten years and require the Company to pay all executory costs such as maintenance
and insurance. Rental expense for operating leases (excluding those with lease
terms of one month or less that were not renewed) was approximately $3,073,
$5,462 and $10,913 during 1995, 1996 and 1997, respectively. Future minimum
lease payments under noncancelable operating leases (with initial or remaining
lease terms in excess of one year) as of December 31, 1997 are as follows:

<TABLE>
<S> <C>
Year ending December 31:
1998...................................................... 30,784
1999...................................................... 28,644
2000...................................................... 26,533
2001...................................................... 25,188
2002...................................................... 23,506
Thereafter................................................ 156,335
</TABLE>

In August 1993, the Company terminated an agreement with Sagittarius
Broadcasting Company (an affiliate of Infinity Broadcasting Corporation) and One
Twelve, Inc. (collectively, the "Claimants" or the "Plaintiffs") pursuant to
which programming featuring radio personality Howard Stern was broadcast on
radio station WLUP-AM (now WMVP-AM) in Chicago. The Claimants allege that
termination of the agreement was wrongful and have sued the Company in the
Supreme Court of the State of New York, County of New York (the "Court"). The
agreement required payments to the Claimants in the amount of $2.6 million plus
five percent of advertising revenues generated by the programming over the
three-year term of the agreement. A total of approximately $680,000 was paid to
the Claimants pursuant to the agreement prior to termination. Claimants'
complaint alleged claims for breach of contract, indemnification, breach of
fiduciary duty and fraud. Claimants' aggregate prayer for relief totaled $45.0
million. On July 12, 1994, the Court granted the Company's motion to dismiss
Claimants' claims for fraud and breach of fiduciary duty. On June 6, 1995, the
Court denied the Claimants' motion for summary judgment on their contract and
indemnification claims and this order has been affirmed on appeal. On May 17,
1996, after the close of discovery, the Company filed a motion for summary
judgment, seeking the dismissal of the remaining claims in the original
complaint. On July 1, 1996, Claimants moved for leave to amend their complaint
in order to add claims for breach of the covenant of good faith and fair
dealing, tortious interference with business advantage and prima facia tort. In
the proposed amended complaint, Claimants seek compensatory and punitive damages
in excess of $25.0 million. On March 13, 1997, the Court denied the Company's
motion for summary judgment, allowed Claimants' request to amend the complaint
to add a claim for breach of the covenant of good faith and fair dealing and
denied Claimants' request to amend the complaint to add claims for tortious
interference with business advantage and prima facia tort. On April 25, 1997,
the Company filed a notice of appeal of the denial of the Company's motion for
summary judgment. In October 1997, the N.Y. State Supreme Court, Appellate
Division, granted a portion of the appeal seeking to strike certain damages
sought, but otherwise affirmed the denial of the motion for summary judgement
and sent the case back to the trial court for trial. The Company believes that
it acted within its rights in terminating the agreement.

F-28
<PAGE> 212
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(13) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1996 and 1997. The fair
value of a financial instrument is defined as the amount at which the instrument
could be exchanged in a current transaction between willing parties.

<TABLE>
<CAPTION>
1996 1997
------------------- -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Interest rate swaps................................. $ -- $ 199 $ -- $ 3,919
Long-term debt -- Senior Credit Facility............ 348,000 348,000 1,573,000 1,573,000
Long-term debt -- Senior Notes...................... 10,000 10,572 -- --
Long-term debt -- 9 3/8% Notes...................... -- -- 200,000 209,000
Long-term debt -- 8 3/4% Notes...................... -- -- 200,000 205,000
Long-term debt -- 10 1/2% Notes..................... -- -- 100,000 110,000
Long-term debt -- 8 1/8% Notes...................... -- -- 500,000 500,000
Redeemable preferred stock -- 12 1/4% Preferred
Stock............................................. -- -- 119,444 133,000
Redeemable preferred stock -- 12% Preferred Stock... -- -- 211,764 239,821
</TABLE>

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:

Cash and cash equivalents, accounts receivable and accounts
payable: The carrying amount of these assets and liabilities approximates
fair value because of the short maturity of these instruments.

Interest rate swaps: The fair value of the interest rate swap and cap
contracts is estimated by obtaining quotations from brokers. The fair value
is an estimate of the amounts that the Company would (receive) pay at the
reporting date if the contracts were transferred to other parties or
canceled by the broker.

Long-term debt: The fair values of the Company's 9 3/8% Notes, 8 3/4%
Notes, 10 1/2% Notes and 8 1/8% Notes are based on December 31, 1997 quoted
market prices. As amounts outstanding under the Company's Senior Credit
Facility agreements bear interest at current market rates, their carrying
amounts approximate fair market value.

Redeemable preferred stock: The fair values of the Company's 12 1/4%
Preferred Stock and 12% Preferred Stock are based on December 31, 1997
quoted market prices.

(14) RELATED PARTY TRANSACTIONS

As of December 31, 1997, Thomas O. Hicks and affiliates of Hicks Muse
beneficially owned an aggregate 18,727,028 shares of Common Stock of Chancellor
Media. Mr. Hicks was elected Chairman of the Board and a director of the Company
upon consummation of the Chancellor Merger.

The Company is subject to a financial monitoring and oversight agreement,
dated April 1, 1996, as amended on September 4, 1997, (the "Financial Monitoring
and Oversight Agreement") with Hicks, Muse & Co. Partners, L.P. ("Hicks Muse
Partners"), an affiliate of Hicks Muse. Pursuant thereto, the Company pays to
Hicks Muse Partners an annual fee of not less than $1,000 , subject to increase
or decrease (but not below $1,000), based upon changes in the Consumer Price
Index. Hicks Muse Partners is also entitled to reimbursement for any
out-of-pocket expenses incurred in connection with rendering services under the
Financial Monitoring and Oversight Agreement. The Financial Monitoring and
Oversight Agreement provides that the agreement will terminate at such time as
Thomas O. Hicks and his affiliates collectively cease to beneficially own at
least two-thirds of the number of shares of Chancellor Media Common Stock
beneficially owned by them, collectively. The Company paid Hicks Muse Partners
$333 in 1997 pursuant to the Financial

F-29
<PAGE> 213
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Monitoring and Oversight Agreement which is included in corporate general and
administrative expense in the accompanying consolidated statement of operations.

In connection with the consummation of the Chancellor Merger, a Financial
Advisory Agreement among Chancellor, CRBC and HM2/Management Partners, L.P.
("HM2/Management"), an affiliate of Hicks Muse, was terminated. In consideration
thereof, in lieu of any payments required to be made under the Financial
Advisory Agreement in respect of the transactions contemplated by the Chancellor
Merger, HM2/Management was paid a fee of $10,000 in cash upon consummation of
the Chancellor Merger which was accounted for as a direct acquisition cost.
Notwithstanding the termination of the Financial Advisory Agreement, the Company
paid Hicks Muse Partners $1,500 for financial advisory services in connection
with the Katz Acquisition which was accounted for as a direct acquisition cost.

Vernon E. Jordan, Jr., a director of the Company, also serves on the board
of directors of Bankers Trust Company and Bankers Trust New York Corporation.
Affiliates of Bankers Trust Company and Bankers Trust New York Corporation have
provided a variety of commercial banking, investment banking and financial
advisory services to the Company, and expect to continue to provide such
services to the Company in the future.

(15) SEGMENT DATA

The Company operated in two principal business segments -- radio
broadcasting and media representation -- in 1997. The Company's radio
broadcasting segment included a portfolio of 96 stations (68 FM and 28 AM) for
which the Company owned at December 31, 1997 in 21 large markets, including each
of the nation's 12 largest radio revenue markets. The Company entered into the
media representation segment with the acquisition of Katz on October 28, 1997.
Katz is a full-service media representation firm serving multiple types of
electronic media, with leading market share in the representation of radio and
television stations and cable television systems. Katz is retained on an
exclusive basis by radio stations, television stations and cable television
systems in over 200 designated market areas throughout the United States,
including at least one radio or television station in each of the 50 largest
designated market areas, to sell national spot advertising air time. The media
representation segment data for 1997 includes the results of operations of Katz
from the date of acquisition.

<TABLE>
<CAPTION>
DEPRECIATION
NET OPERATING AND IDENTIFIABLE CAPITAL
1997 REVENUES INCOME AMORTIZATION ASSETS EXPENDITURES
---- -------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Radio broadcasting....................... $548,856 $52,219 $182,314 $4,465,526 $11,430
Media representation..................... 33,222 6,187 3,668 495,951 436
-------- ------- -------- ---------- -------
Total.......................... $582,078 $58,406 $185,982 $4,961,477 $11,866
======== ======= ======== ========== =======
</TABLE>

(16) QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
1996:
Net revenues....................................... $ 53,371 $ 72,991 $ 78,768 $ 88,720
Operating income (loss)............................ (8,223) 7,062 9,351 9,770
Net income (loss) attributable to common stock..... (14,273) (2,222) (793) 1,094
1997:
Net revenues....................................... $ 81,897 $106,364 $145,022 $248,795
Operating income................................... 568 16,968 15,002 25,868
Income (loss) before extraordinary item............ (6,011) 9,870 (3,221) (15,132)
Net income (loss) attributable to common stock..... (6,011) 5,520 (6,000) (25,254)
</TABLE>

F-30
<PAGE> 214

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Chancellor Media Corporation of Los Angeles:

Our report on the consolidated financial statements of Chancellor Media
Corporation of Los Angeles and subsidiaries is included in this Registration
Statement. In connection with our audit of such financial statements, we have
also audited the related financial statement schedule of Chancellor Media
Corporation of Los Angeles and subsidiaries as of and for the year ended
December 31, 1997 included herein.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.

COOPERS & LYBRAND L.L.P.

Dallas, Texas
February 10, 1998, except for notes 2(b)
paragraphs 1 and 3-5 as to which the date
is February 20, 1998 and 9(a) as to
which the date is March 13, 1998

F-31
<PAGE> 215

SCHEDULE II

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS WRITEOFFS OF PERIOD
----------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1997...... $ 2,292 5,174 7,049(1) 1,864 $12,651
======= ===== ======= ===== =======
Year ended December 31, 1996...... $ 2,000 2,179 156(1) 2,043 $ 2,292
======= ===== ======= ===== =======
Year ended December 31, 1995...... $ 835 904 1,644(1) 1,383 $ 2,000
======= ===== ======= ===== =======
Deferred tax asset valuation
allowance:
Year ended December 31, 1997...... $ -- -- -- -- $ --
======= ===== ======= ===== =======
Year ended December 31, 1996...... $ -- -- -- -- $ --
======= ===== ======= ===== =======
Year ended December 31, 1995...... $14,458 -- (14,458) -- $ --
======= ===== ======= ===== =======
</TABLE>

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

(1) Additions (deductions) result from the application of purchase accounting
relating to the BPI Acquisition in 1995, the Pyramid Acquisition in 1996
and the Chancellor Merger, the Viacom Acquisition and the Katz Acquisition
in 1997.

F-32
<PAGE> 216

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 16,584 $ 13,063
Accounts receivable, less allowance for doubtful accounts
of $12,651 in 1997 and $13,002 in 1998................. 239,869 321,391
Other current assets...................................... 27,208 42,343
---------- ----------
Total current assets.............................. 283,661 376,797
Note receivable from affiliate.............................. -- 150,000
Property and equipment, net................................. 159,797 299,906
Intangible assets, net...................................... 4,404,443 4,916,533
Other assets, net........................................... 113,576 162,142
---------- ----------
$4,961,477 $5,905,378
========== ==========

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Accounts payable and accrued expenses..................... $ 171,017 $ 177,472
Long-term debt.............................................. 2,573,000 3,018,000
Deferred tax liabilities.................................... 361,640 312,731
Other liabilities........................................... 44,405 60,403
---------- ----------
Total liabilities................................. 3,150,062 3,568,606
---------- ----------
Redeemable preferred stock:
Redeemable senior cumulative exchangeable preferred stock
of subsidiary, par value $.01 per share; 1,000,000
shares authorized, issued and outstanding; liquidation
preference of $121,274 in 1997......................... 119,445 --
Redeemable cumulative exchangeable preferred stock of
subsidiary, par value $.01 per share; 3,600,000 shares
authorized and 2,117,629 shares issued and outstanding;
liquidation preference of $223,519 in 1997............. 211,763 --
Stockholder's equity:
Common stock, $.01 par value, 1,040 shares authorized,
issued and outstanding................................. 1 1
Paid-in capital............................................. 1,637,628 2,654,273
Accumulated deficit......................................... (157,422) (317,502)
---------- ----------
Total stockholder's equity........................ 1,480,207 2,336,772
---------- ----------
$4,961,477 $5,905,378
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements

F-33
<PAGE> 217

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1997 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Gross revenues............................... $166,817 $389,551 $382,994 $1,015,562
Less agency commissions.................... (21,795) (45,722) (49,711) (116,466)
-------- -------- -------- ----------
Net revenues....................... 145,022 343,829 333,283 899,096
Operating expenses:
Operating expenses, excluding depreciation
and amortization........................ 73,551 175,062 184,713 491,924
Depreciation and amortization.............. 50,474 118,584 104,386 311,644
Corporate general and administrative....... 5,995 10,109 11,646 25,188
Executive severance charge................. -- -- -- 59,475
-------- -------- -------- ----------
Operating expenses................. 130,020 303,755 300,745 888,231
-------- -------- -------- ----------
Operating income................... 15,002 40,074 32,538 10,865
-------- -------- -------- ----------
Other (income) expense:
Interest expense, net...................... 22,295 48,624 45,036 135,709
Gain on disposition of representation
contracts............................... -- (18,497) -- (29,767)
Other income............................... (5,057) -- (18,380) (3,559)
-------- -------- -------- ----------
Other (income) expense............. 17,238 30,127 26,656 102,383
-------- -------- -------- ----------
Income (loss) before income taxes
and extraordinary item........... (2,236) 9,947 5,882 (91,518)
Income tax expense (benefit)................. 985 1,548 5,244 (15,380)
-------- -------- -------- ----------
Income (loss) before extraordinary
item............................. (3,221) 8,399 638 (76,138)
Extraordinary loss, net of income tax
benefit.................................... -- 15,224 4,350 47,089
-------- -------- -------- ----------
Net loss........................... (3,221) (6,825) (3,712) (123,227)
Preferred stock dividends.................... 2,779 899 2,779 17,601
-------- -------- -------- ----------
Net loss attributable to common
stock............................ $ (6,000) $ (7,724) $ (6,491) $ (140,828)
======== ======== ======== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-34
<PAGE> 218

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (3,712) $ (123,227)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation........................................... 9,091 18,632
Amortization of goodwill, intangible assets and other
assets............................................... 95,295 293,012
Executive severance charge -- stock option
compensation......................................... -- 16,000
Provisions for doubtful accounts....................... 3,409 4,573
Deferred income tax expense (benefit).................. 5,244 (15,380)
Gain on disposition of representation contracts........ -- (29,767)
Gain on disposition of assets.......................... (18,380) --
Loss on extinguishment of debt......................... 4,350 47,089
Other.................................................. -- (1,893)
Changes in certain assets and liabilities, net of
effects of acquisitions:
Accounts receivable.................................. (15,171) (73,528)
Other current assets................................. 4,481 (10,283)
Accounts payable and accrued expenses................ 8,445 12,737
Other assets......................................... 54 (4,114)
Other liabilities.................................... 197 12,608
----------- -----------
Net cash provided by operating activities......... 93,303 146,459
----------- -----------
Cash flows from investing activities:
Acquisitions, net of cash acquired........................ (2,083,701) (905,264)
Escrow deposits on pending acquisitions................... (10,005) --
Payments made on purchases of representation contracts.... -- (25,724)
Proceeds from sale of representation contracts............ -- 20,283
Proceeds from sale of assets.............................. 269,250 --
Issuance of note receivable from affiliate................ -- (150,000)
Capital expenditures...................................... (6,436) (21,684)
Other..................................................... (20,914) (39,750)
----------- -----------
Net cash used by investing activities............. (1,851,806) (1,122,139)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 2,105,000 1,973,000
Principal payments on long-term debt...................... (606,000) (1,528,000)
Cash contributed by parent................................ 288,898 1,000,645
Repurchase of 12% and 12 1/4% Exchange Debentures......... -- (403,213)
Dividends on preferred stock.............................. -- (31,183)
Dividend to parent........................................ (5,748) (19,253)
Payments for debt issuance costs.......................... (10,567) (19,837)
Other..................................................... (158) --
----------- -----------
Net cash provided by financing activities......... 1,771,425 972,159
----------- -----------
Increase (decrease) in cash and cash equivalents............ 12,922 (3,521)
Cash and cash equivalents at beginning of period............ 3,060 16,584
----------- -----------
Cash and cash equivalents at end of period.................. $ 15,982 $ 13,063
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-35
<PAGE> 219

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position, results of operations and
cash flows of Chancellor Media Corporation of Los Angeles and its subsidiaries
(collectively, "CMCLA") for the periods presented. Chancellor Media Corporation
of Los Angeles is an indirect, wholly owned subsidiary of Chancellor Media
Corporation ("Chancellor Media").

Interim periods are not necessarily indicative of results to be expected
for the year. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in CMCLA's Annual Report on Form 10-K for the year ended December 31,
1997.

The consolidated financial statements include the accounts of CMCLA and its
subsidiaries, all of which are wholly-owned. All significant intercompany
balances and transactions have been eliminated in consolidation.

CMCLA adopted SFAS No. 130, Reporting Comprehensive Income, effective
January 1, 1998. This statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. CMCLA has no items of comprehensive income for any
period presented and therefore is not required to report comprehensive income.

2. ACQUISITIONS AND DISPOSITIONS

1997 Completed Transactions

On January 31, 1997, CMCLA acquired WWWW-FM and WDFN-AM in Detroit from
affiliates of Chancellor Radio Broadcasting Company ("CRBC") for $30,000 in cash
plus various other direct acquisition costs. The Company had previously provided
certain sales and promotional functions to WWWW-FM and WDFN-AM under a joint
sales agreement since February 14, 1996 and subsequently operated the stations
under a time brokerage agreement since April 1, 1996.

On January 31, 1997, CMCLA acquired KKSF-FM and KDFC-FM/AM in San Francisco
from affiliates of the Brown Organization for $115,000 in cash plus various
other direct acquisition costs. CMCLA had previously been operating KKSF-FM and
KDFC-FM/AM under a time brokerage agreement since November 1, 1996. On July 21,
1997, CMCLA sold KDFC-FM to Bonneville International Corporation ("Bonneville")
for $50,000 in cash. The assets of KDFC-FM were classified as assets held for
sale in connection with the purchase price allocation of the acquisition of
KKSF-FM and KDFC-FM/AM and no gain or loss was recognized by CMCLA upon
consummation of the sale.

On April 1, 1997, CMCLA acquired WJLB-FM and WMXD-FM in Detroit from Secret
Communications Limited Partnership ("Secret") for $168,000 in cash plus various
other direct acquisition costs. CMCLA had previously been operating WJLB-FM and
WMXD-FM under time brokerage agreements since September 1, 1996.

On April 3, 1997, CMCLA exchanged WQRS-FM in Detroit (which CMCLA acquired
on April 3, 1997 from Secret for $32,000 in cash plus various other direct
acquisition costs), to affiliates of Greater Media Radio, Inc. ("Greater Media")
in return for WWRC-AM in Washington, D.C. (now known as WTEM-AM) and $9,500 in
cash. The exchange was accounted for as a like-kind exchange and no gain or loss
was recognized upon consummation of the transaction. The net purchase price to
CMCLA of WWRC-AM was therefore $22,500. CMCLA had previously been operating
WWRC-AM under a time brokerage agreement since June 17, 1996.

F-36
<PAGE> 220
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On May 1, 1997, CMCLA acquired WDAS-FM/AM in Philadelphia from affiliates
of Beasley FM Acquisition Corporation for $103,000 in cash plus various other
direct acquisition costs.

On May 15, 1997, CMCLA exchanged five of its six stations in Charlotte,
North Carolina (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM) for two FM stations in
Philadelphia (WIOQ-FM and WUSL-FM) owned by EZ Communications, Inc. ("EZ") in
Philadelphia (the "Charlotte Exchange"), and also sold CMCLA's sixth radio
station in Charlotte, WNKS-FM, to EZ for $10,000 in cash and recognized a gain
of $3,536. The Charlotte Exchange was accounted for as a like-kind exchange and
no gain or loss was recognized upon consummation of the transaction.

On May 30, 1997, CMCLA acquired WPNT-FM in Chicago from affiliates of
Century Broadcasting Company for $75,740 in cash (including $1,990 for the
purchase of the station's accounts receivable) plus various other direct
acquisition costs. On June 19, 1997, CMCLA sold WPNT-FM in Chicago to Bonneville
for $75,000 in cash and recognized a gain of $529.

On June 3, 1997, CMCLA sold WEJM-FM in Chicago to affiliates of Crawford
Broadcasting for $14,750 in cash and recognized a gain of $9,258.

On July 2, 1997, CMCLA acquired WLTW-FM and WAXQ-FM in New York and
WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in Washington, D.C. from Viacom
International, Inc. ("Viacom") for approximately $612,388 in cash including
various other direct acquisition costs (the "Viacom Acquisition"). The Viacom
Acquisition was financed with (i) bank borrowings under the Senior Credit
Facility (as defined) of $552,559; (ii) $53,750 in escrow funds paid by CMCLA on
February 19, 1997 and (iii) $6,079 financed through working capital. In June
1997, Chancellor Media issued 5,990,000 shares of $3.00 Convertible Preferred
Stock for net proceeds of $287,808 which were contributed to CMCLA and used to
repay borrowings under the Senior Credit Facility and subsequently were
reborrowed on July 2, 1997 as part of the financing of the Viacom Acquisition.
On July 7, 1997, CMCLA sold WJZW-FM in Washington, D.C. to affiliates of Capital
Cities/ABC Radio for $68,000 in cash. The assets of WJZW-FM, as well as the
assets of WZHF-AM and WBZS-AM, which were also sold on August 13, 1997, were
accounted for as assets held for sale in connection with the purchase price
allocation of the Viacom Acquisition and no gain or loss was recognized by CMCLA
upon consummation of the sales.

On July 7, 1997, CMCLA sold the Federal Communications Commission ("FCC")
authorizations and certain transmission equipment previously used in the
operation of KYLD-FM in San Francisco to Susquehanna Radio Corporation
("Susquehanna") for $44,000 in cash and recognized a gain of $1,726.
Simultaneously therewith, CRBC sold the call letters "KSAN-FM" (which CRBC
previously used in San Francisco) to Susquehanna. On July 7, 1997, CMCLA and
CRBC entered into a time brokerage agreement to enable CMCLA to operate KYLD-FM
on the frequency previously assigned to KSAN-FM, and on July 7, 1997, CRBC
changed the call letters of KSAN-FM to KYLD-FM. Upon the consummation of the
Chancellor Merger (as defined herein), CMCLA changed the format of the new
KYLD-FM to the format previously operated on the old KYLD-FM.

On July 14, 1997, CMCLA completed the disposition of WLUP-FM in Chicago to
Bonneville for net proceeds of $80,000 which were held by a qualified
intermediary pending the completion of the deferred exchange of WLUP-FM for
KZPS-FM and KDGE-FM in Dallas. On October 7, 1997, CMCLA applied the net
proceeds from the disposition of WLUP-FM of $80,000 in cash, plus an additional
$3,500 and various other direct acquisition costs, in a deferred exchange of
WLUP-FM for KZPS-FM and KDGE-FM in Dallas. The exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction. CMCLA had previously operated KZPS-FM and KDGE-FM under time
brokerage agreements effective August 1, 1997.

On July 21, 1997, CMCLA entered into a time brokerage agreement with CRBC
whereby CMCLA began managing certain limited functions of CRBC's stations
KBGG-FM, KNEW-AM and KABL-FM in
F-37
<PAGE> 221
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

San Francisco pending the consummation of the Chancellor Merger (as defined
herein), which occurred on September 5, 1997.

On August 13, 1997, CMCLA sold WBZS-AM and WZHF-AM in Washington, D.C.
(acquired as part of the Viacom Acquisition) and KDFC-AM in San Francisco to
affiliates of Douglas Broadcasting ("Douglas") for $18,000 in the form of a
promissory note. The promissory note, as amended on May 1, 1998, bears interest
at 7 3/4% from the closing date through February 28, 1998 and at 10.0% from
March 1, 1998 through the remainder of the term of the note, with a balloon
principal payment due four years after closing. At closing, Douglas posted a
$1,000 letter of credit for the benefit of CMCLA that will remain outstanding
until all amounts due under the promissory note are paid.

On August 27, 1997, CMCLA sold WEJM-AM in Chicago to Douglas for $7,500 in
cash and recognized a gain of $3,331.

On September 5, 1997, pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of February 19, 1997 and amended and restated on July
31, 1997 (the "Chancellor Merger Agreement"), among Chancellor Broadcasting
Company ("Chancellor"), CRBC, Evergreen Media Corporation ("Evergreen"),
Evergreen Mezzanine Holdings Corporation ("EMHC") and Evergreen Media
Corporation of Los Angeles ("EMCLA"), (i) Chancellor was merged with and into
EMHC, a direct, wholly-owned subsidiary of Evergreen, with EMHC remaining as the
surviving corporation and (ii) CRBC was merged with and into EMCLA, a direct,
wholly-owned subsidiary of EMHC, with EMCLA remaining as the surviving
corporation (collectively, the "Chancellor Merger"). Upon consummation of the
Chancellor Merger, Evergreen was renamed Chancellor Media Corporation, EMHC was
renamed Chancellor Mezzanine Holdings Corporation ("CMHC") and EMCLA was renamed
Chancellor Media Corporation of Los Angeles ("CMCLA"). Consummation of the
Chancellor Merger added 52 radio stations (36 FM and 16 AM) to CMCLA's portfolio
of stations, including 13 stations in markets in which CMCLA previously
operated. The total purchase price allocated to net assets acquired was
approximately $1,998,383 which included (i) the conversion of each outstanding
share of Chancellor Common Stock into 0.9091 shares of Chancellor Media's Common
Stock, resulting in the issuance of 34,617,460 shares of Chancellor Media's
Common Stock at $15.50 per share, (ii) the assumption of long-term debt of CRBC
of $949,000 which included $549,000 of borrowings outstanding under the CRBC
senior credit facility, $200,000 of CRBC's 9 3/8% Senior Subordinated Notes due
2004 and $200,000 of CRBC's 8 3/4% Senior Subordinated Notes due 2007, (iii) the
issuance of 2,117,629 shares of CMCLA's 12% Exchangeable Preferred Stock in
exchange for CRBC's substantially identical securities with a fair value of
$215,570 including accrued and unpaid dividends of $3,807, (iv) the issuance of
1,000,000 shares of CMCLA's 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock in exchange for CRBC's substantially identical securities with a
fair value of $120,217 including accrued and unpaid dividends of $772, (v) the
issuance of 2,200,000 shares of Chancellor Media's 7% Convertible Preferred
Stock in exchange for Chancellor's substantially identical securities with a
fair value of $111,048 including accrued and unpaid dividends of $1,048, (vi)
the assumption of stock options issued to Chancellor stock option holders with a
fair value of $34,977 and (vii) estimated acquisition costs of $31,000.

On October 28, 1997, Chancellor Media and CMCLA acquired Katz Media Group,
Inc. ("KMG"), a full-service media representation firm, in a tender offer
transaction for a total purchase price of approximately $379,101 (the "Katz
Acquisition") which included (i) the conversion of each outstanding share of KMG
Common Stock into the right to receive $11.00 in cash, resulting in total cash
payments of $149,601, (ii) the assumption of long-term debt of KMG and its
subsidiaries of $222,000 which included $122,000 of borrowings outstanding under
the KMG senior credit facility and $100,000 of 10 1/2% Senior Subordinated Notes
due 2007 of Katz Media Corporation (a subsidiary of KMG) and (iii) estimated
acquisition costs of $7,500.

On December 29, 1997, CMCLA acquired five radio stations from Pacific and
Southern Company, Inc., a subsidiary of Gannett Co., Inc., consisting of
WGCI-FM/AM in Chicago for $140,000, KKBQ-FM/AM in

F-38
<PAGE> 222
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Houston for $110,000 and KHKS-FM in Dallas for $90,000, for an aggregate
purchase price of $340,000 in cash plus various other direct acquisition costs.

1998 Completed Transactions

On January 30, 1998, CMCLA acquired KXPK-FM in Denver from Ever Green
Wireless LLC (which is unrelated to the Company) for $26,000 in cash plus
various other direct acquisition costs, of which $1,650 was previously paid by
CRBC as escrow funds and are classified as other assets at December 31, 1997.
CMCLA had previously operated KXPK-FM under a time brokerage agreement since
September 1, 1997.

On April 3, 1998, CMCLA exchanged WTOP-AM in Washington, KZLA-FM in Los
Angeles and WGMS-FM in Washington plus $63,000 in cash (including $3,000 paid by
CMCLA in escrow and classified as other assets at December 31, 1997) to
Bonneville for WBIX-FM in New York, KLDE-FM in Houston and KBIG-FM in Los
Angeles (the "Bonneville Exchange"). CMCLA had previously operated KLDE-FM and
KBIG-FM under time brokerage agreements since October 1, 1997 and WBIX-FM since
October 10, 1997, and had sold substantially all of the broadcast time of
WTOP-AM, KZLA-FM and WGMS-FM to Bonneville since October 1, 1997.

On April 13, 1998, CMCLA and Secret entered into a settlement agreement
regarding WFLN-FM in Philadelphia. Previously in August 1996, CMCLA and Secret
had entered into an agreement under which CMCLA would acquire WFLN-FM from
Secret for $37,750 in cash. In April 1997, CMCLA entered into an agreement to
sell WFLN-FM to Greater Media for $41,800 in cash. On July 16, 1997, Secret
purported to terminate the sale of WFLN-FM to CMCLA. CMCLA subsequently brought
suit against Secret to enforce its rights to acquire WFLN-FM. Pursuant to a
court settlement entered in August 1997 and the settlement agreement between
CMCLA and Secret entered on April 13, 1998, (i) Secret sold WFLN-FM directly to
Greater Media for $37,750, (ii) Greater Media deposited $4,050 (the difference
between CMCLA's proposed acquisition price for WFLN-FM from Secret and CMCLA's
proposed sale price for WFLN-FM to Greater Media) with the court and (iii) CMCLA
received $3,500 of such amount deposited by Greater Media with the court, plus
interest earned during the period which the court held such amounts (the "WFLN
Settlement"), and Secret received the balance of such amounts.

On May 29, 1998, as part of the Capstar/SFX Transaction (defined below),
CMCLA exchanged WAPE-FM and WFYV-FM in Jacksonville (valued for purposes of the
Capstar/SFX Transaction at $53,000) plus $90,250 in cash to Capstar Broadcasting
Corporation (together with its subsidiaries, "Capstar") in return for KODA-FM in
Houston (the "Houston Exchange"). Furthermore, on May 29, 1998, Capstar sold
KKPN-FM in Houston (acquired by Capstar as part of Capstar's acquisition (the
"SFX Acquisition") of SFX Broadcasting, Inc. ("SFX")) due to the attributable
ownership of Hicks, Muse, Tate & Furst, Incorporated ("Hicks Muse") in both
Capstar and CMCLA in order to comply with the FCC's multiple ownership limits.
In connection with Capstar's sale of KKPN-FM, CMCLA received a commission from
Capstar of $1,730. On May 29, 1998, CMCLA also provided a loan to Capstar in the
principal amount of $150,000 as part of the Capstar/SFX Transaction (the
"Capstar Loan"). The Capstar Loan bears interest at the rate of 12% per annum
(subject to increase in certain circumstances), and is secured by a senior
pledge of common stock of Capstar's direct subsidiary. A portion of the Capstar
Loan will be prepaid by Capstar in connection with CMCLA's acquisition of, and
the proceeds of such prepayment would be used by CMCLA as a portion of the
purchase price for, each Capstar/SFX Station. Hicks Muse, which is a substantial
shareholder of Chancellor Media, controls Capstar, and certain officers and
directors of Chancellor Media and CMCLA are directors and/or executive officers
of Capstar and/or Hicks Muse.

On June 1, 1998, CMCLA acquired WWDC-FM/AM in Washington, D.C. from Capitol
Broadcasting Company and its affiliates for $74,062 in cash (including $2,062
for the purchase of the stations' accounts receivable) plus various other direct
acquisition costs, of which $4,000 was previously paid by CMCLA as

F-39
<PAGE> 223
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

escrow funds and are classified as other assets at December 31, 1997 (the
"Capitol Broadcasting Acquisition").

On May 1, 1998, CMCLA formed a new marketing group division, in an effort
to enhance the revenues the Company derives from its sales promotion activities.
On June 1, 1998, CMCLA acquired Global Sales Development, Inc., a consulting
firm based in Richmond, Virginia, for $675 in cash plus various other direct
acquisition costs to lead its marketing efforts for this new division.

On June 15, 1998, CMCLA's national radio network, The AMFM Radio Networks,
acquired the syndicated programming shows of Global Satellite Network for
$14,000 in cash plus various other direct acquisition costs. The syndicated
programming shows acquired include "Rockline", "Modern Rock Live", "Reelin' in
the Years" and the concert series "Live from the Pit".

On July 31, 1998, CMCLA acquired Martin Media, L.P. and certain affiliated
companies ("Martin Media"), an outdoor advertising company with over 14,500
billboards and outdoor displays in 12 states serving 23 markets, for $591,674 in
cash plus working capital of $19,443 subject to certain adjustments and various
other direct acquisition costs of approximately $10,000.

On August 28, 1998, CMCLA acquired various syndicated programming shows of
Casey Kasem and the related programming libraries for $7,150 in cash and $7,000
in the form of a note due August 2000.

In September 1998, CMCLA acquired approximately 325 billboards and outdoor
displays in various markets for approximately $10,166 in cash.

On October 9, 1998, CMCLA acquired approximately a 22.4% non-voting equity
interest in Z-Spanish Media Corporation ("Z Spanish Media") for approximately
$25,000 in cash (the "Z Spanish Acquisition"). Z Spanish Media, which is
headquartered in Sacramento, California, is the owner and operator of 22
Hispanic format radio stations in California, Texas, Arizona and Illinois.

On October 23, 1998, CMCLA acquired Primedia Broadcast Group, Inc. and
certain of its affiliates, which own and operate eight FM stations in Puerto
Rico, for approximately $76,050 in cash less working capital deficit of $1,280
plus various other direct acquisition costs (the "Primedia Acquisition").

In November 1998, CMCLA acquired approximately 290 billboards and outdoor
displays in various markets for approximately $12,978 in cash.

Pending Transactions

On July 31, 1997, Martin Media paid $6,025 to Kunz & Company for an option
to purchase approximately 1,000 display faces of its Kunz Outdoor Advertising
division for $33,289 in cash plus various other direct acquisition costs (the
"Kunz Option"). Although there can be no assurance, CMCLA expects that the
exercise of the Kunz Option will be consummated in the fourth quarter of 1998.

On February 20, 1998, CMCLA entered into an agreement to acquire from
Capstar KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and KQUE-AM in
Houston, KPLN-FM and KYXY-FM in San Diego and WDRV-FM, WJJJ-FM, WXDX-FM and
WDVE-FM in Pittsburgh (collectively, the "Capstar/SFX Stations") for an
aggregate purchase price of approximately $637,500 in a series of purchases and
exchanges over a period of three years (the "Capstar/SFX Transaction"). The
Capstar/SFX stations were acquired by Capstar as part of Capstar's acquisition
of SFX on May 29, 1998. On May 29, 1998, CMCLA completed the Houston Exchange
(defined above) and began operating the remaining ten Capstar/ SFX Stations
under time brokerage agreements. CMCLA is currently assessing whether the terms
of the Capstar/SFX Transaction will be modified upon the consummation of the
Capstar Merger.

On April 8, 1998, CMCLA entered into an agreement to acquire Petry Media
Corporation, a leading independent television representation firm (the "Petry
Acquisition"). The agreement currently provides for a
F-40
<PAGE> 224
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

purchase price of $129.5 million in cash. On June 3, 1998, the Antitrust
Division of the United States Department of Justice (the "DOJ") issued a second
request for additional information under the HSR Act in connection with the
Petry Acquisition to which CMCLA has responded. CMCLA and Petry are still
negotiating with the DOJ regarding this transaction and have agreed to extend
the waiting period under the HSR Act pending completion of these discussions.
Accordingly at this time, CMCLA cannot be sure of the terms on which this
transaction will be completed, if at all.

On July 7, 1998, Chancellor Media entered into an agreement whereby the
ultimate parent of LIN Television Corporation ("LIN") will merge into Chancellor
Media (the "LIN Merger"). Pursuant to this agreement, Chancellor Media will
issue .0300 shares of Chancellor Media Common Stock for each share of LIN's
Common Stock resulting in the issuance of approximately 17,700,000 shares
(comprised of approximately 16,200,000 newly issued shares, the assumption of
LIN phantom stock units representing approximately 425,000 shares and the
assumption of LIN options representing the right to purchase approximately
1,075,000 shares). Upon consummation of the LIN Merger, it is expected that LIN
will own or operate 12 television stations in eight markets in the United
States. Although there can be no assurance, Chancellor Media expects that the
LIN Merger will be consummated in the first quarter of 1999.

On August 11, 1998, CMCLA entered into agreements to acquire four FM and
two AM radio stations in Cleveland for an aggregate purchase price of
approximately $275,000 in cash plus various other direct acquisition costs (the
"Cleveland Acquisitions"). The Cleveland Acquisitions consist of the purchase by
the Company of (i) WDOK-FM and WRMR-AM from Independent Group Limited
Partnership, (ii) WZAK-FM from Zapis Communications, (iii) Zebra Broadcasting
Corporation which owns WZJM-FM and WJMO-AM and (v) Wincom Broadcasting
Corporation which owns WQAL-FM (the "Wincom Acquisition"). The consummation of
each of the Cleveland Acquisitions (other than the Wincom Acquisition) is
contingent upon the consummation of each of the other Cleveland Acquisitions
(other than the Wincom Acquisition). CMCLA began operating WQAL-FM under a time
brokerage agreement effective October 1, 1998. Although there can be no
assurance, CMCLA expects that the Cleveland Acquisitions will be consummated in
the first quarter of 1999.

On August 20, 1998, CMCLA entered into an agreement to sell WMVP-AM in
Chicago to ABC, Inc. for $21,000 in cash (the "Chicago Disposition"). CMCLA
entered into a time brokerage agreement to sell substantially all of the
broadcast time of WMVP-AM effective September 10, 1998. Although there can be no
assurance, CMCLA expects that the Chicago Disposition will be consummated in the
fourth quarter of 1998.

On August 26, 1998, Chancellor Media and Capstar entered into an agreement
to merge in a stock-for-stock transaction that will create the nation's largest
radio broadcasting entity. Pursuant to this agreement, Chancellor Media will
acquire Capstar in a reverse merger in which Capstar will be renamed Chancellor
Media Corporation. Each share of Chancellor Media Common Stock will represent
one share in the combined entity. Each share of Capstar Common Stock will
represent 0.480 shares of Common Stock in the combined entity, subject to an
upward adjustment not to exceed 0.025 shares to the extent that Capstar's 1998
cash flow from specified assets exceeds certain specified targets. Capstar owns
and operates more than 355 radio stations serving 83 mid-sized markets
nationwide. Although there can be no assurance, Chancellor Media expects that
the Capstar Merger will be consummated in the second quarter of 1999.

On August 31, 1998, CMCLA entered into an agreement to acquire the assets
of the Outdoor Advertising Division of Whiteco Industries, Inc., an outdoor
advertising company with over 21,800 billboards and outdoor displays in 34
states, for $930,000 in cash plus working capital and various other direct
acquisition costs (the "Whiteco Acquisition"). The DOJ has requested that CMCLA
and Whiteco submit certain additional information on a voluntary basis in
connection with the DOJ's review of the Whiteco Acquisition. CMCLA and Whiteco
have responded to this request and are currently in discussions with the DOJ
regarding the terms on which this transaction may be completed. Although there
can be no assurance, CMCLA expects that the Whiteco Acquisition will be
consummated in the fourth quarter of 1998.
F-41
<PAGE> 225
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On September 3, 1998, CMCLA entered into an agreement to acquire Pegasus, a
television broadcasting company which owns a television station in Puerto Rico,
for approximately $69,600 in cash (the "Pegasus Acquisition"). Although there
can be no assurance, CMCLA expects that the Pegasus Acquisition will be
consummated in the first quarter of 1999. In connection with the LIN Merger,
CMCLA may assign its rights under its agreement with Pegasus to LIN.

On September 15, 1998, CMCLA entered into an agreement to acquire KKFR-FM
and KFYI-AM in Phoenix from The Broadcast Group, Inc. for $90,000 in cash (the
"Phoenix Acquisition"). CMCLA began operating KKFR-FM and KFYI-AM under a time
brokerage agreement effective November 5, 1998. Although there can be no
assurance, CMCLA expects that the Phoenix Acquisition will be consummated in the
second quarter of 1999.

The foregoing are collectively referred to herein as the "Pending
Transactions." Consummation of each of the Pending Transactions discussed above
is subject to various conditions, including, in certain cases, approval from the
FCC and the expiration or early termination of any waiting period required under
the HSR Act. Except as described above, CMCLA believes that such conditions will
be satisfied in the ordinary course, but there can be no assurance that this
will be the case.

Escrow funds of $6,025 related to the Kunz Option are classified as other
assets in the accompanying balance sheet at September 30, 1998. Escrow funds of
$4,650 paid by CMCLA in connection with the Bonneville Exchange and the Capitol
Broadcasting Acquisition were classified as other assets in the accompanying
balance sheet at December 31, 1997.

Other Transactions

Summary of Net Assets Acquired

The completed acquisitions discussed above were accounted for as purchases.
Accordingly, the accompanying consolidated financial statements include the
results of operations of the acquired entities from the dates of acquisition.

A summary of the net assets acquired follows:

<TABLE>
<CAPTION>
YEAR NINE MONTHS
ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Working capital, including cash of $9,724 in 1997
and $6,505 in 1998................................ $ 66,805 $ 19,223
Property and equipment.............................. 118,371 137,060
Assets held for sale................................ 131,000 --
Intangible assets................................... 3,823,746 751,808
Other assets........................................ 26,742 6,025
Deferred tax liability.............................. (279,371) --
Other liabilities................................... (39,681) (697)
---------- --------
$3,847,612 $913,419
========== ========
</TABLE>

F-42
<PAGE> 226
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The pro forma consolidated condensed results of operations data for the
nine months ended September 30, 1997 and 1998, as if the 1997 Completed
Transactions and the 1998 Completed Transactions discussed above, the 8 1/8%
Notes Offering, the amendment and restatement of the Senior Credit Facility and
the 1998 Financing Transactions (as defined herein) occurred at January 1, 1997,
follow:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 1998
-------------- -------------
<S> <C> <C>
Net revenues...................................... $ 826,026 $ 963,063
Net loss.......................................... (143,303) (119,198)
</TABLE>

The pro forma results are not necessarily indicative of what would have
occurred if the acquisitions had been in effect for the entire periods
presented.

3. FINANCING TRANSACTIONS

1998 Completed Financing Transactions

On March 13, 1998, Chancellor Media completed an offering of 21,850,000
shares of its Common Stock (the "1998 Equity Offering"). The net proceeds from
the 1998 Equity Offering of approximately $994,642 were contributed to CMCLA and
were used to reduce bank borrowings under the revolving credit portion of the
Senior Credit Facility (as defined) and the excess proceeds were initially
invested in short-term investment grade securities. The Company subsequently
used the excess proceeds for general corporate purposes, including the financing
of the Bonneville Exchange, the Capstar Loan and a portion of the Houston
Exchange.

On May 8, 1998, CMCLA completed a consent solicitation (the "12% Preferred
Stock Consent Solicitation") to modify certain timing restrictions on its
ability to exchange all shares of its 12% Exchangeable Preferred Stock (the "12%
Preferred Stock") for its 12% Subordinated Exchange Debentures due 2009 (the
"12% Debentures"). Consenting holders of 12% Preferred Stock received payments
of $0.05 per share of 12% Preferred Stock. On May 13, 1998, CMCLA exchanged the
shares of 12% Preferred Stock for 12% Debentures (the "12% Exchange"). In
connection with the 12% Preferred Stock Consent Solicitation and 12% Exchange,
CMCLA incurred approximately $270 in transaction costs which were recorded as
deferred debt issuance costs.

On June 10, 1998, CMCLA completed a cash tender offer (the "12% Debentures
Tender Offer") for all of its 12% Debentures for an aggregate repurchase cost of
$262,495 which included (i) the principal amount of the 12% Debentures of
$211,763, (ii) premiums on the repurchase of the 12% Debentures of $47,798,
(iii) accrued and unpaid interest on the 12% Debentures from May 14, 1998
through June 10, 1998 of $1,976 and (iv) estimated transaction costs of $958. In
connection with the 12% Debentures Tender Offer, CMCLA recorded an extraordinary
charge of $31,865 (net of a tax benefit of $17,158) consisting of the premiums,
estimated transaction costs and the write-off of the unamortized balance of
deferred debt issuance costs.

On July 20, 1998, CMCLA completed a consent solicitation (the "12 1/4%
Preferred Stock Consent Solicitation") to modify certain timing restrictions on
its ability to exchange all shares of its 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock (the "12 1/4% Preferred Stock") for its 12 1/4%
Subordinated Exchange Debentures due 2008 (the "12 1/4% Debentures"). Consenting
holders of 12 1/4% Preferred Stock received payments of $0.05 per share of
12 1/4% Preferred Stock. On July 23, 1998, CMCLA exchanged the shares of 12 1/4%
Preferred Stock for 12 1/4% Debentures (the "12 1/4% Exchange"). In connection
with the 12 1/4% Preferred Stock Consent Solicitation and 12 1/4% Exchange,
CMCLA incurred approximately $170 in transaction costs which were recorded as
deferred debt issuance costs.

F-43
<PAGE> 227
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On August 19, 1998, CMCLA completed a cash tender offer (the "12 1/4%
Debentures Tender Offer") for all of its 12 1/4% Debentures for an aggregate
repurchase cost of $144,527 which included (i) the principal amount of the
12 1/4% Debentures of $119,445, (ii) premiums on the repurchase of the 12 1/4%
Debentures of $22,683, (iii) accrued and unpaid interest on the 12 1/4%
Debentures from August 16, 1998 through August 19, 1998 of $1,829 and (iv)
estimated transaction costs of $570. In connection with the 12 1/4% Debentures
Tender Offer, CMCLA recorded an extraordinary charge of $15,224 (net of a tax
benefit of $8,199) consisting of the premiums, estimated transaction costs and
the write-off of the unamortized balance of deferred debt issuance costs.

On September 30, 1998, CMCLA issued $750,000 aggregate principal amount of
9% Senior Subordinated Notes due 2008 (the "9% Notes") for net proceeds of
approximately $730,000 (the "9% Notes Offering"). The net proceeds from the 9%
Notes Offering will be used to finance a portion of CMCLA's Pending
Transactions. Prior to consummation of the Pending Transactions, CMCLA used the
net proceeds to temporarily reduce borrowings outstanding under the revolving
credit portion of the Senior Credit Facility.

1998 Pending Financing Transactions

On November 12, 1998, CMCLA signed a definitive purchase agreement that
provides for the issuance of $750,000 of 8% Senior Notes due 2008 (the "8%
Senior Notes Offering"). The net proceeds from the 8% Senior Notes Offering will
be used to reduce bank borrowings under the revolving credit portion of the
Senior Credit Facility and any excess proceeds will be invested in short-term
investment grade securities pending use for general corporate purposes. Although
there can be no assurance, CMCLA expects that the 8% Senior Notes Offering will
be consummated on November 17, 1998.

4. LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1997 and September
30, 1998:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Senior Credit Facility(a)........................... $1,573,000 $ 1,268,000
9 3/8% Notes(b)..................................... 200,000 200,000
8 3/4% Notes(b)..................................... 200,000 200,000
10 1/2% Notes(b).................................... 100,000 100,000
8 1/8% Notes(b)..................................... 500,000 500,000
9% Notes(b)......................................... -- 750,000
---------- -------------
Total long-term debt...................... $2,573,000 $ 3,018,000
========== =============
</TABLE>

(a) Senior Credit Facility

On April 25, 1997, CMCLA entered into a loan agreement which amended and
restated its prior senior credit facility. Under the amended and restated
agreement, as amended on June 26, 1997, August 7, 1997, October 28, 1997,
February 10, 1998, May 1, 1998, July 31, 1998 and November 9, 1998 (as amended,
the "Senior Credit Facility"), CMCLA established a $1,250,000 revolving facility
(the "Revolving Loan Facility") and a $500,000 term loan facility (the "Term
Loan Facility"). Upon consummation of the Chancellor Merger, the aggregate
commitments under the Revolving Loan Facility and the Term Loan Facility were
increased to $1,600,000 and $900,000, respectively. In connection with the
amendment and restatement of the Senior Credit Facility, CMCLA wrote off the
unamortized balance of deferred debt issuance costs of $4,350 (net of a tax
benefit of $2,343) as an extraordinary charge.

Borrowings under the Senior Credit Facility bear interest at a rate based,
at the option of CMCLA, on the participating banks' prime rate or Eurodollar
rate, plus an incremental rate. Without giving effect to the
F-44
<PAGE> 228
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

interest rate swap and cap agreements described below, the interest rate on the
$900,000 outstanding under the Term Loan Facility at September 30, 1998 was
6.25% on a blended basis, based on Eurodollar rates, and the interest rate on
advances of $355,000 and $13,000 outstanding under the Revolving Loan Facility
were 6.25% and 8.50%, respectively, at September 30, 1998, based on the
Eurodollar and prime rates, respectively. CMCLA pays fees ranging from 0.25% to
0.375% per annum on the aggregate unused portion of the loan commitment based
upon the leverage ratio for the most recent quarter end, in addition to an
annual agent's fee. Pursuant to the Senior Credit Facility, CMCLA is required to
enter into interest hedging agreements that result in the fixing or placing a
cap on CMCLA's floating rate debt so that not less than 50% of the principal
amount of total debt outstanding has a fixed or capped rate.

The Term Loan Facility is payable in quarterly installments commencing on
September 30, 2000 and ending June 20, 2005. The Revolving Loan Facility
requires scheduled annual reductions of the commitment amount, payable in
quarterly installments commencing on September 30, 2000 and ending on June 30,
2005. At October 31, 1998, CMCLA had drawn $900,000 of the Term Loan Facility
and $433,000 of the Revolving Loan Facility. The capital stock of CMCLA's
subsidiaries is pledged to secure the performance of CMCLA's obligations under
the Senior Credit Facility, and each of CMCLA's domestic subsidiaries have
guaranteed those obligations.

(b) Senior Subordinated Notes

Upon consummation of the Chancellor Merger, on September 5, 1997, CMCLA
assumed all of the obligations under CRBC's $200,000 aggregate principal amount
9 3/8% Senior Subordinated Notes due 2004 (the "9 3/8% Notes") and the indenture
governing such securities, and assumed all of the obligations under CRBC's
$200,000 aggregate principal amount 8 3/4% Senior Subordinated Notes due 2007
(the "8 3/4% Notes") and the indenture governing such securities. Upon
consummation of the Katz Acquisition, on October 28, 1997, CMCLA assumed all of
the obligations under Katz Media Corporation's $100,000 aggregate principal
amount of 10 1/2% Senior Subordinated Notes due 2007 (the "10 1/2% Notes") and
the amended and restated indenture governing such securities. On December 22,
1997, CMCLA issued $500,000 aggregate principal amount of 8 1/8 Senior
Subordinated Notes due 2007 (the "8 1/8% Notes") for net proceeds of
approximately $485,000. On September 30, 1998, CMCLA issued $750,000 aggregate
principal amount of 9% Notes for net proceeds of approximately $730,000.

The 9 3/8% Notes, the 8 3/4% Notes, the 10 1/2% Notes, the 8 1/8% Notes and
the 9% Notes (collectively, the "Notes") are unsecured obligations of CMCLA,
subordinated in right of payment to all existing and any future senior
indebtedness of CMCLA. The Notes are fully and unconditionally guaranteed, on a
joint and several basis, by all of CMCLA's direct and indirect subsidiaries
other than certain inconsequential subsidiaries (the "Subsidiary Guarantors").
The Subsidiary Guarantors are wholly-owned subsidiaries of CMCLA. Summarized
financial information of the Subsidiary Guarantors as of December 31, 1997 and
September 30, 1998 and for the nine months ended September 30, 1998 is presented
below. Separate financial statements and other disclosures concerning the
subsidiary Guarantors are not presented because management has determined that
they are not material to investors. There are no significant restrictions on
distributions from each of the Subsidiary Guarantors to CMCLA.

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Current assets.............................................. $ 223,913 $ 300,154
Noncurrent assets........................................... 987,028 911,700
Current liabilities......................................... 89,362 90,250
Noncurrent liabilities...................................... 1,130,105 1,129,460
</TABLE>

F-45
<PAGE> 229
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
-------------
SEPTEMBER 30,
1998
-------------
<S> <C>
Net revenues................................................ $724,806
Operating income............................................ 73,563
Net income.................................................. 20,827
</TABLE>

(d) Other

The Senior Credit Facility and the indentures governing the Notes contain
customary restrictive covenants, which, among other things and with certain
exceptions, limit the ability of CMCLA and its subsidiaries to incur additional
indebtedness and liens in connection therewith, enter into certain transactions
with affiliates, pay dividends, consolidate, merge or effect certain asset
sales, issue additional stock, effect an asset swap and make acquisitions. CMCLA
is required under the Senior Credit Facility to maintain specified financial
ratios, including leverage, cash flow and debt service coverage ratios (as
defined).

5. OTHER INCOME

Other income consists of the following for the nine months ended September
30, 1997 and 1998:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 1998
------------- -------------
<S> <C> <C>
Gain on disposition of assets(a)................... $18,380 $ --
WFLN Settlement(b)................................. -- 3,559
------- ------
$18,380 $3,559
======= ======
</TABLE>

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

(a) For the nine months ended September 30, 1997, CMCLA recorded a gain on
disposition of assets of $18,380 related to the dispositions of WNKS-FM in
Charlotte on May 15, 1997 ($3,536), WPNT-FM in Chicago on May 30, 1997
($529), WEJM-FM in Chicago on June 3, 1997 ($9,258), the FCC authorizations
and certain transmission equipment previously used in the operation of
KYLD-FM in San Francisco on July 2, 1997 ($1,726) and WEJM-AM in Chicago on
August 27, 1997 ($3,331).

(b) For the nine months ended September 30, 1998, CMCLA recorded a gain from
the WFLN Settlement (defined above) of $3,559.

6. CONTINGENCIES

CMCLA is involved in several lawsuits that are incidental to its business.
A discussion of certain of these lawsuits is contained in Part II, Item 1,
"Legal Proceedings", of this Form 10-Q. CMCLA believes that the ultimate
resolution of the lawsuits will not have a material effect on its financial
position or results of operations.

F-46
<PAGE> 230

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Chancellor Radio Broadcasting Company:

We have audited the accompanying consolidated balance sheets of Chancellor
Radio Broadcasting Company and Subsidiaries (collectively the "Company") as of
December 31, 1995 and 1996 and the related consolidated statements of
operations, changes in common stockholder's equity, and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 1995 and 1996 and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

COOPERS & LYBRAND L.L.P.

Dallas, Texas
February 13, 1997,
except for Note 15 as
to which the date is
February 19, 1997

F-47
<PAGE> 231

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash...................................................... $ 1,314,214 $ 3,788,546
Accounts receivable, net of allowance for doubtful
accounts of $263,528 and $1,023,660, respectively...... 13,243,292 46,584,705
Prepaid expenses and other................................ 546,405 2,753,731
------------ ------------
Total current assets.............................. 15,103,911 53,126,982
Restricted cash........................................... -- 20,363,329
Property and equipment, net............................... 17,925,845 49,122,932
Intangibles and other, net................................ 203,808,395 551,406,094
Deferred financing costs, net............................. 4,284,413 16,723,346
------------ ------------
Total assets...................................... $241,122,564 $690,742,683
============ ============

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Accounts payable.......................................... $ 1,873,888 $ 4,409,389
Accrued liabilities....................................... 4,692,948 12,529,831
Accrued interest.......................................... 2,710,891 6,868,839
Current portion of long-term debt......................... 4,062,500 400,000
------------ ------------
Total current liabilities......................... 13,340,227 24,208,059
Long-term debt............................................ 168,107,242 354,913,499
Deferred income taxes..................................... 4,952,361 2,606,314
Other..................................................... -- 801,572
------------ ------------
Total liabilities................................. 186,399,830 382,529,444
------------ ------------
Commitments (Note 11)
Redeemable senior cumulative exchangeable preferred stock,
par value $.01 per share; 1,000,000 shares authorized,
none and 1,000,000 shares issued and outstanding,
respectively; preference in liquidation of $109,110,301... -- 107,222,416
Common stockholder's equity:
Common stock, par value $.01 per share; 2,000 shares
authorized, 1,000 shares issued and outstanding,
respectively........................................... 10 10
Additional paid-in capital................................ 66,359,990 219,520,102
Accumulated deficit....................................... (11,637,266) (18,529,289)
------------ ------------
Total common stockholder's equity................. 54,722,734 200,990,823
------------ ------------
Total liabilities and stockholder's equity........ $241,122,564 $690,742,683
============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-48
<PAGE> 232

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1994 1995 1996
----------- ------------ ------------
<S> <C> <C> <C>
Gross broadcasting revenues............. $30,080,829 $ 73,278,860 $203,188,125
Less agency commissions................. 3,763,734 8,956,717 24,786,594
----------- ------------ ------------
Net revenues.................. 26,317,095 64,322,143 178,401,531
----------- ------------ ------------
Operating expenses:
Programming, technical and news....... 5,678,829 11,734,285 40,987,411
Sales and promotion................... 7,137,039 17,556,256 47,026,490
General and administrative............ 2,844,284 8,174,189 23,195,565
Depreciation and amortization......... 2,954,159 8,256,268 20,877,374
Corporate expenses.................... 599,657 1,815,535 4,844,985
Stock option compensation............. -- 6,360,000 3,800,000
----------- ------------ ------------
19,213,968 53,896,533 140,731,825
----------- ------------ ------------
Income from operations........ 7,103,127 10,425,610 37,669,706
Other (income) expense:
Interest expense...................... 5,246,827 18,114,549 35,703,862
Other, net............................ (19,265) 42,402 68,419
----------- ------------ ------------
Income (loss) before provision
for income taxes and
extraordinary loss.......... 1,875,565 (7,731,341) 1,897,425
Provision for income taxes.............. 1,163,716 3,799,955 4,612,551
----------- ------------ ------------
Net income (loss) before
extraordinary loss.......... 711,849 (11,531,296) (2,715,126)
Extraordinary loss on early
extinguishment of debt, net of income
tax benefit........................... 817,819 -- 4,176,897
----------- ------------ ------------
Net loss...................... (105,970) (11,531,296) (6,892,023)
Dividends and accretion on preferred
stock................................. -- -- 11,556,943
Loss on repurchase of preferred stock... -- -- 16,570,065
----------- ------------ ------------
Net loss attributable to
common stock................ $ (105,970) $(11,531,296) $(35,019,031)
=========== ============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-49
<PAGE> 233

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
--------------- ADDITIONAL ACCUMULATED
SHARES AMOUNT PAID-IN CAPITAL DEFICIT TOTAL
------ ------ --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993.............. -- -- -- -- --
Issuance of common stock on January
10, 1994........................... 1,000 $ 10 $ 25,499,990 -- $ 25,500,000
Issuance of common stock on October
12, 1994........................... 1,000 10 34,499,990 -- 34,500,000
Net loss.............................. -- -- -- $ (105,970) (105,970)
------ ---- ------------ ------------ ------------
Balance, December 31, 1994.............. 2,000 20 59,999,980 (105,970) 59,894,030
Stock option compensation............. -- -- 6,360,000 -- 6,360,000
Contribution of stock held by
affiliate of Hicks, Muse, Tate &
Furst.............................. (1,000) (10) 10 -- --
Net loss.............................. -- -- -- (11,531,296) (11,531,296)
------ ---- ------------ ------------ ------------
Balance, December 31, 1995.............. 1,000 10 66,359,990 (11,637,266) 54,722,734
Loss on repurchase of preferred
stock.............................. -- -- (16,570,065) -- (16,570,065)
Dividends and accretion on preferred
stock.............................. -- -- (11,556,943) -- (11,556,943)
Capital contributions................. -- -- 181,287,120 -- 181,287,120
Net loss.............................. -- -- -- (6,892,023) (6,892,023)
------ ---- ------------ ------------ ------------
Balance, December 31, 1996.............. 1,000 $ 10 $219,520,102 $(18,529,289) $200,990,823
====== ==== ============ ============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-50
<PAGE> 234

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1994 1995 1996
------------- ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss................................................. $ (105,970) $(11,531,296) $ (6,892,023)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 2,954,159 8,256,268 20,877,374
Amortization of deferred financing costs............... 226,000 791,000 2,633,583
Stock option compensation.............................. -- 6,360,000 3,800,000
Deferred income taxes.................................. 1,490,716 3,788,877 4,548,481
Extraordinary loss..................................... 490,819 -- 4,176,897
Changes in assets and liabilities, net of the effects
of acquired businesses:
Accounts receivable, net............................. (9,675,567) (2,343,520) (13,408,364)
Prepaids and other................................... 216,036 (214,868) (982,637)
Accounts payable..................................... 1,509,064 (541,914) 1,429,070
Accrued liabilities.................................. 1,334,397 447,196 3,706,725
Accrued interest..................................... 2,251,654 459,237 4,157,948
------------- ------------ -------------
Net cash provided by operating activities......... 691,308 5,470,980 24,047,054
------------- ------------ -------------
Cash flows from investing activities:
Purchases of broadcasting properties..................... (204,509,849) (24,351,529) (439,533,609)
Purchases of other property and equipment................ (238,648) (1,709,897) (3,208,553)
------------- ------------ -------------
Net cash used in investing activities............. (204,748,497) (26,061,426) (442,742,162)
------------- ------------ -------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt................. 168,910,299 -- 277,627,630
Proceeds from borrowings under revolving debt facility... 5,639,237 54,458,819 101,966,762
Repayment of long-term debt.............................. (25,000,000) (2,437,500) (109,816,233)
Repayments of borrowings under revolving debt facility... (3,975,539) (31,633,467) (105,540,183)
Issuance of preferred stock.............................. -- -- 175,412,322
Repurchase of preferred stock............................ -- -- (95,462,423)
Additional capital contributions......................... 60,000,000 -- 178,525,254
Distribution of additional paid in capital............... -- -- (1,038,134)
Payment of preferred stock dividends..................... -- -- (505,555)
------------- ------------ -------------
Net cash provided by financing activities......... 205,573,997 20,387,852 421,169,440
------------- ------------ -------------
Net increase (decrease) in cash................... 1,516,808 (202,594) 2,474,332
Cash, at beginning of year................................. -- 1,516,808 1,314,214
------------- ------------ -------------
Cash, at end of year....................................... $ 1,516,808 $ 1,314,214 $ 3,788,546
============= ============ =============
Supplemental Disclosure of Cash Flow Information (Note 5):
Cash paid during the period for:
Interest................................................. $ 2,769,173 $ 16,864,312 $ 28,912,331
Income taxes............................................. $ -- $ -- $ 62,407
Non-cash financing:
Dividends and accretion on preferred stock............... $ -- $ -- $ 11,556,943
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-51
<PAGE> 235

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND ORGANIZATION

Chancellor Radio Broadcasting Company, formerly Chancellor Broadcasting
Company ("Chancellor Radio Broadcasting") and its wholly owned subsidiaries
(collectively, the "Company") operate in a single industry segment, which
segment encompasses the ownership and management of radio broadcast stations
located in markets throughout the United States. Chancellor Radio Broadcasting,
a wholly owned subsidiary of Chancellor Broadcasting Company, formerly
Chancellor Corporation ("Chancellor"), was formed in June 1994 to acquire and
operate radio stations owned by American Media, Inc. and two corporations and
one partnership affiliated with American Media, Inc. (collectively, the
"American Media Station Group") and by Chancellor Communications Corporation
("Chancellor Communications"). That transaction was consummated on October 12,
1994. Chancellor Communications was formed in 1993 to acquire and operate radio
stations KGBY-FM and KFBK-AM. That transaction closed on January 10, 1994 and
the consolidated financial statements include the activity of all the stations
since their respective dates of acquisition.

In June 1995, the 1,000 shares of common stock of Chancellor Communications
held by an affiliate of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse")
were exchanged for additional shares of common stock of Chancellor, which
subsequently contributed these shares to Chancellor Radio Broadcasting as an
additional capital contribution. As a result, Chancellor Communications became a
wholly owned subsidiary of Chancellor Radio Broadcasting. Chancellor
Communications was then merged with the Company. The transactions had no effect
on the financial position or results of operations of the Company.

Chancellor Broadcasting Licensee Company is a wholly-owned non-operating
legal entity formed to hold title to the Company's broadcast licenses. Such
entity has no significant other assets and no material liabilities,
contingencies or commitments. Consistent with industry practice for financial
reporting purposes, no material value has been specifically allocated to the
licenses. Accordingly, no financial statement information has been provided
herein due to its immateriality to investors.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of Chancellor
and its subsidiaries Chancellor Broadcasting and Chancellor Broadcasting
Licensee Company for all periods presented, and its subsidiaries Trefoil
Communications, Inc., Shamrock Broadcasting Inc., Shamrock Radio Licenses, Inc.,
Shamrock Broadcasting Licenses of Denver, Inc. and Shamrock Broadcasting of
Texas, Inc. from their date of acquisition. All significant intercompany
accounts and transactions have been eliminated.

Cash

The Company maintains cash in demand deposits with financial institutions.
The Company had no cash equivalents during the periods presented. All highly
liquid investments with an original maturity of less than Six months are
considered cash equivalents.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation and
amortization. Depreciation is determined using the straight-line method over the
estimated useful lives of the various classes of assets, which range from three
to twenty-five years. Leasehold improvements are amortized over the shorter of
their useful lives or the terms of the related leases. Costs of repairs and
maintenance are charged to operations as incurred.

F-52
<PAGE> 236
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Intangibles

Goodwill represents the excess of cost over the fair values of the
identifiable tangible and other intangible net assets acquired and is being
amortized over the straight-line method over forty years. Other intangible
assets comprise amounts paid for pending acquisitions, agreements not to
compete, a tower lease advantage and organization costs incurred in the
incorporation of the Company. Other intangibles, excluding pending acquisition
costs, are being amortized by the straight-line method over their estimated
useful lives ranging from three to ten years. Pending acquisition costs are
deferred and capitalized as part of completed acquisitions or expensed in the
period in which the pending acquisition is terminated.

The Company evaluates intangible assets for potential impairment by
analyzing the operating results, future cash flows on an undiscounted basis,
trends and prospects of the Company's stations, as well as by comparing them to
their competitors. The Company also takes into consideration recent acquisition
patterns within the broadcast industry, the impact of recently enacted or
potential FCC rules and regulations and any other events or circumstances which
might indicate potential impairment.

Deferred Financing Costs

Costs associated with obtaining debt financing are capitalized and
amortized using the interest method over the term of the related debt. As a
result of refinancing the Company's original credit facility, during the year
ended December 31, 1994 unamortized deferred financing costs of approximately
$818,000 were expensed as an extraordinary item in the consolidated statements
of operations. As a result of refinancing the Company's second credit facility,
the early redemption of $20.0 million of its existing notes (defined) and the
prepayment of $18.7 million of it's a Term Loan Facility (defined) from its
third credit facility, during the year ended December 31, 1996 unamortized
deferred financing costs of $3.4 million, less $543,500 of tax benefit, were
expensed as an extraordinary item in the consolidated statements of operations.
Approximately $5.1 million, $118,000 and $18.6 million of new financing costs
were incurred for the years ended December 31, 1994, 1995 and 1996,
respectively. Accumulated amortization at December 31, 1995 and 1996, amounted
to approximately $959,000 and $2.8 million, respectively.

Revenue Recognition

Broadcasting operations derive revenue primarily from the sale of program
time and commercial announcements to local, regional and national advertisers.
Revenue is recognized when the programs and commercial announcements are
broadcast.

Barter Transactions

Barter transactions represent advertising time exchanged for promotional
items, advertising, supplies, equipment, and services. Barter revenue is
recorded at the fair value of the goods or services received and is recognized
in income when the advertisements are broadcast. Goods or services are charged
to expense when received or used. Advertising time owed and goods or services
due the Company are included in accounts payable and accounts receivable,
respectively.

Advertising Costs

The Company incurs various marketing and promotional costs to add and
maintain listenership. These costs are expensed as incurred and totaled
approximately $1.4 million, $4.2 million and $16.2 million for the years ended
December 31, 1994, 1995 and 1996, respectively.

F-53
<PAGE> 237
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Stock Option Compensation

Stock option compensation expense is recognized in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees".

Income Taxes

Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable earnings. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount more likely than not to be
realized. Income tax expense is the tax payable for the period and the change
during the period in deferred tax assets and liabilities.

Chancellor, Chancellor Radio Broadcasting and Chancellor Broadcasting
Licensee Company have elected to file consolidated federal income tax returns
(the "Chancellor Group") and Trefoil Communications, Inc., Shamrock Broadcasting
Inc., Shamrock Radio Licenses, Inc., Shamrock Broadcasting Licenses of Denver,
Inc. and Shamrock Broadcasting of Texas, Inc. have elected to file consolidated
federal income tax returns (the "Shamrock Group"). Each of these groups have
entered into a tax sharing agreement governing the allocation of any
consolidated federal income tax liability among its members. In general, each
subsidiary allocates and pays income taxes computed as if each subsidiary filed
a separate federal income tax return. Similar principles apply to any
consolidated state and local income tax liabilities.

Concentration of Credit Risk

The Company's revenue and accounts receivable primarily relate to
advertising of products and services within the radio stations' broadcast areas.
The Company performs ongoing credit evaluations of its customers' financial
condition and, generally, requires no collateral from its customers. Credit
losses have been within management's expectations and adequate allowances for
any uncollectible trade receivables are maintained.

Reclassifications

Certain prior year amounts have been reclassified to conform with the
current year's presentation.

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996
----------- -----------
<S> <C> <C>
Land....................................................... $ 1,572,229 $ 3,036,663
Building and building improvements......................... 3,159,848 9,202,378
Towers and antenna systems................................. 3,689,972 14,476,104
Studio, technical and transmitting equipment............... 7,830,375 23,026,564
Office equipment, furniture and fixtures................... 2,484,261 5,521,010
Record library............................................. 1,800,510 2,193,236
Vehicles................................................... 362,787 1,117,908
Construction in progress................................... 503,504 78,877
----------- -----------
21,403,486 58,652,740
Less accumulated depreciation.............................. (3,477,641) (9,529,808)
----------- -----------
$17,925,845 $49,122,932
=========== ===========
</TABLE>

F-54
<PAGE> 238
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Depreciation expense for the years ended December 31, 1994, 1995 and 1996
was $0.9 million, $2.6 million and $6.5 million, respectively.

4. INTANGIBLE AND OTHER ASSETS

Intangible and other assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
Goodwill................................................. $205,971,820 $567,377,120
Noncompete agreements.................................... 1,950,000 2,025,000
Tower lease advantage.................................... 305,000 305,000
Pending acquisition costs................................ 3,246,265 2,620,474
Other.................................................... 45,718 626,220
------------ ------------
211,518,803 572,953,814
Less accumulated amortization............................ (7,710,408) (21,547,720)
------------ ------------
$203,808,395 $551,406,094
============ ============
</TABLE>

Amortization expense for intangible assets for the years ended December 31,
1994, 1995 and 1996 was $2.0 million, $5.7 million and $14.3 million,
respectively.

5. ACQUISITIONS AND DISPOSITIONS OF BROADCASTING PROPERTIES

On January 9, 1994, Chancellor Communications purchased substantially all
the assets and assumed certain liabilities of KGBY-FM and KFBK-AM for
approximately $49.5 million, including acquisition costs. Liabilities assumed
were limited to certain ongoing contractual rights and obligations. The
acquisition has been accounted for as a purchase and, accordingly, the results
of operations associated with the acquired assets have been included in the
accompanying statements from the date of acquisition.

The acquisition is summarized as follows (in thousands):

<TABLE>
<S> <C>
Assets acquired and liabilities assumed:
Property and equipment.................................... $ 4,921
Goodwill and other intangibles............................ 44,401
Prepaid expenses and other assets......................... 413
Accrued liabilities....................................... (205)
-------
Total acquisition................................. $49,530
=======
</TABLE>

On October 12, 1994, Chancellor Radio Broadcasting purchased substantially
all the assets and assumed certain liabilities consisting solely of accrued
expenses and future payments under ongoing contracts of the American Media
Station Group (other than KHYL-FM in Sacramento, California) for approximately
$139.5 million in cash, including acquisition costs and payments in respect of
agreements not to compete. On the same date, Chancellor Communications purchased
all the assets and certain liabilities consisting solely of accrued expenses and
future payments under ongoing contracts of KHYL-FM for approximately $15.5
million in cash, including acquisition costs and payments in respect of an
agreement not to compete. These acquisitions have been accounted for as
purchases and, accordingly, the results of operations associated with the
acquired assets have been included in the accompanying statements from the date
of acquisition.

F-55
<PAGE> 239
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The acquisition is summarized as follows (in thousands):

<TABLE>
<S> <C>
Assets acquired and liabilities assumed:
Property and equipment.................................... $ 12,671
Goodwill and other intangibles............................ 142,618
Prepaid expenses and other assets......................... 353
Accrued liabilities....................................... (662)
--------
Total acquisition................................. $154,980
========
</TABLE>

Simultaneously with the closing of these transactions, Chancellor acquired
all of Chancellor Communications' outstanding nonvoting stock in exchange for
newly issued shares of Chancellor's nonvoting stock. Chancellor contributed all
the acquired shares of Chancellor Communication's nonvoting stock to Chancellor
Radio Broadcasting, as a result of which Chancellor Communications became a
subsidiary of Chancellor Radio Broadcasting. Because these entities are under
common management and control, this exchange has been accounted for at
historical cost in a manner similar to a pooling of interests.

On July 31, 1995, the Company purchased substantially all the assets and
assumed certain liabilities of KDWB-FM for approximately $22.6 million,
including acquisition costs. Liabilities assumed were limited to certain ongoing
contractual rights and obligations. The acquisition has been accounted for as a
purchase and, accordingly, the results of operations associated with the
acquired assets have been included in the accompanying statements from the date
of acquisition.

The acquisition is summarized as follows (in thousands):

<TABLE>
<S> <C>
Assets acquired and liabilities assumed:
Property and equipment................ $ 1,866
Goodwill and other intangibles........ 21,032
Prepaid expenses and other assets..... 82
Other liabilities..................... (383)
-------
Total acquisition............. $22,597
=======
</TABLE>

On February 14, 1996, the Company acquired all of the outstanding capital
stock of Trefoil Communications, Inc. ("Trefoil") for approximately $408.0
million, including acquisition costs. Trefoil is a holding company, the sole
asset of which is the capital stock of Shamrock Broadcasting, Inc. ("Shamrock
Broadcasting"). The acquisition of Trefoil was financed through a new credit
agreement, new senior subordinated notes, Chancellor's initial public stock
offering, senior exchangeable preferred stock and the issuance of unregistered
common stock of Chancellor. The acquisition of Trefoil was accounted for as a
purchase for financial accounting purposes and a non-taxable business
combination for tax purposes and, accordingly, the results of operations
associated with the acquired assets have been included in the accompanying
statements from the date of acquisition.

F-56
<PAGE> 240
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The acquisition is summarized as follows (in thousands):

<TABLE>
<S> <C>
Assets acquired and liabilities assumed:
Cash.................................. $ 38
Accounts receivable, net.............. 18,636
Prepaid expenses and other assets..... 1,274
Property and equipment................ 36,429
Goodwill and other intangibles........ 361,425
Deferred tax asset.................... 5,464
Accrued liabilities................... (14,564)
Other noncurrent liabilities.......... (702)
--------
Total acquisition............. $408,000
========
</TABLE>

Simultaneously with the acquisition of Trefoil, the Company entered into a
time brokerage agreement with Evergreen Media Corporation for the outsourcing of
certain limited functions of WWWW-FM and WDFN-AM, both Detroit stations acquired
with Trefoil, and an option to purchase such stations for $30.0 million of cash.
These stations were operated pursuant to this agreement until January 30, 1997,
the date on which the disposition of these stations occurred. Subsequent to the
acquisition of Trefoil, KTBZ-FM, a Houston station acquired with Trefoil, was
operated by Secret Communications, L.P. ("Secret") under a Local Marketing
Agreement ("LMA")/Exchange Agreement with the Company. In March 1996, the
Company entered into an agreement to exchange KTBZ-FM and $5.6 million of cash
to Secret for KALC-FM and KIMN-FM, Denver, Colorado. The Company began managing
certain limited functions of these stations, pursuant to an LMA, effective April
1, 1996 and closed on the exchange of the stations effective July 31, 1996. The
exchange has been accounted for using the fair values of the assets exchanged
plus the $5.6 million of additional cash and $0.8 million of additional
acquisition costs, and was allocated to the net assets acquired based upon their
estimated fair market values. The excess of the purchase price over the
estimated fair value of net assets acquired amounted to approximately $28.7
million, which has been accounted for as goodwill and is being amortized over 40
years using the straight line method.

The exchange is summarized as follows (in thousands):

<TABLE>
<S> <C>
Assets acquired and liabilities assumed:
Prepaid expenses and other assets......................... $ 163
Property and equipment.................................... 2,363
Goodwill and other intangibles............................ 28,657
Accrued liabilities....................................... (138)
-------
Total acquisition................................. $31,045
=======
</TABLE>

On May 15, 1996, the Company entered into an agreement to acquire
substantially all the assets and certain liabilities of OmniAmerica Group
("Omni") for an aggregate price of $178.0 million, including $163.0 million of
cash and $15.0 million of Chancellor's Class A Common Stock. On June 24, 1996,
the Company entered into an agreement with American Radio Systems Corporation
("American Radio") whereby it will exchange the West Palm Beach, Florida
stations acquired from Omni for American Radio's KSTE-AM and $33.0 million of
cash. KSTE-AM is located in Rancho Cordova, California and is part of the
Sacramento market. On July 1, 1996, Chancellor entered into an agreement with
SFX Broadcasting, Inc. ("SFX") whereby it will exchange the Jacksonville,
Florida stations being acquired pursuant to the Omni acquisition agreement and
$11.0 million of cash for SFX's WBAB-FM, WBLI-FM, WGBB-AM and WHFM-FM,
Nassau-Suffolk, New York. Pursuant to various agreements, the Company began
managing certain limited functions of the remaining Omni stations and the SFX
stations beginning July 1, 1996, and station KSTE-AM beginning August 1, 1996.

F-57
<PAGE> 241
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On November 22, 1996, the Company acquired substantially all the assets of
WKYN-AM, Florence, Kentucky, for approximately $1.4 million, including
transaction costs. WKYN-AM serves the Cincinnati, Ohio market.

On January 23, 1997, the Company acquired substantially all the assets and
certain liabilities of Colfax Communications ("Colfax") for an aggregate price
of $373.0 million. Liabilities assumed were limited to certain ongoing
contractual rights and obligations. The acquisition will be accounted for as a
purchase. Pursuant to the acquisition agreement, at December 31, 1996 the
Company had $20.4 million of cash in a restricted escrow account which was
remitted to Colfax at closing. On January 29, 1997, the Company entered into an
agreement to sell WMIL-FM and WOKY-AM, Milwaukee, Wisconsin stations acquired
from Colfax, to Clear Channel Radio, Inc. for $40.0 million in cash.

On February 13, 1997, the Company acquired substantially all the assets and
certain liabilities of Omni. Liabilities assumed were limited to certain ongoing
contractual rights and obligations. The acquisition will be accounted for as a
purchase.

The following summarizes the unaudited consolidated pro forma data as
though the acquisitions of KDWB-FM, Shamrock Broadcasting Company and KIMN-FM
and KALC-FM had occurred as of the beginning of 1995 (in thousands):

<TABLE>
<CAPTION>
1995 1996
------------------------ ------------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenue............................. $ 64,322 $162,360 $178,402 $187,198
Net income (loss) before extraordinary
loss.................................. (11,531) (8,319) (2,715) (310)
Net loss................................ (11,531) (8,319) (6,892) (310)
</TABLE>

The following summarizes the unaudited consolidated pro forma balance sheet
as of December 31, 1996 as though the acquisition of Colfax, the issuance of the
Exchangeable Preferred Stock, the issuance of Chancellor's Convertible Preferred
Stock (including the over-allotment), and the New Credit Agreement had occurred
on that date (in thousands):

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------- -----------
(UNAUDITED)
<S> <C> <C>
Total assets................................................ $690,743 $1,053,833
======== ==========
Current liabilities......................................... $ 24,208 $ 40,598
Long-term liabilities....................................... 358,322 410,359
Preferred stock............................................. 107,222 404,585
Common stockholder's equity................................. 200,991 198,291
-------- ----------
Total liabilities and stockholders' equity.................. $690,743 $1,053,833
======== ==========
</TABLE>

6. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
---------- -----------
<S> <C> <C>
Salaries................................................... $ 534,297 $ 3,697,072
Sales commissions.......................................... 889,010 2,149,167
Rep commissions............................................ 561,189 1,549,048
Other...................................................... 2,708,452 5,134,544
---------- -----------
$4,692,948 $12,529,831
========== ===========
</TABLE>

F-58
<PAGE> 242
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
Term loan............................................... $ 67,562,500 $ 74,968,527
Revolving credit loan................................... 24,607,242 20,344,972
Subordinated notes due 2004............................. 80,000,000 260,000,000
------------ ------------
172,169,742 355,313,499
Less current portion.................................... 4,062,500 400,000
------------ ------------
$168,107,242 $354,913,499
============ ============
</TABLE>

The Company's term and revolving credit facilities were refinanced on
January 23, 1997, in conjunction with the acquisition of Colfax Communications
under a new bank credit agreement (the "New Credit Agreement") with Bankers
Trust Company, as administrative agent, and other institutions party thereto.
The New Credit Agreement includes a $225.0 million term loan facility (the "Term
Loan Facility") and a revolving loan facility (the "Revolving Loan Facility"
and, together with the Term Loan, the "New Bank Financing"). The Revolving Loan
Facility originally provides for borrowings up to $120.0 million, which is
subsequently reduced as and when the Company receives the net cash proceeds of
the pending station swaps and dispositions. In connection with the refinancing
of the term and revolving loan facilities, the Company incurred an extraordinary
charge to write-off deferred finance costs of approximately $4.5 million.

The New Bank Financing is collateralized by (i) a first priority perfected
pledge of all capital stock and notes owned by the Company and (ii) a first
priority perfected security interest in all other assets (including receivables,
contracts, contract rights, securities, patents, trademarks, other intellectual
property, inventory, equipment and real estate) owned by the Company, excluding
FCC licenses, leasehold interests in studio or office space and leasehold and
partnership interests in tower or transmitter sites in which necessary consents
to the granting of a security interest cannot be obtained without payments to
any other party or on a timely basis. The New Bank Financing also is guaranteed
by the subsidiaries of Chancellor and Chancellor Radio Broadcasting, whose
guarantees are collateralized by a first priority perfected pledge of the
capital stock Chancellor Radio Broadcasting.

The Term Loan Facility is due in increasing quarterly installments
beginning in 1997 and matures in January 2003. All outstanding borrowings under
the Revolving Facility mature in January 2003. The facilities bear interest at a
rate equal to, at the Company's option, the prime rate of Bankers Trust Company,
as announced from time to time, or the London Inter-Bank Offered Rate ("LIBOR")
in effect from time to time, plus an applicable margin rate. The Company pays
quarterly commitment fees in arrears equal to either .375% or .250% per annum on
the unused portion of the Revolving Facility, depending upon whether the
Company's leverage ratio is equal to or greater than 4.5:1 or less than 4.5:1,
respectively. The bank financing facilities which existed on December 31, 1996
accrued interest at the prime rate plus 1.25% (9.5%) on $3.3 million and the
LIBOR rate plus 2.50% (8.125%) on $92.0 million of borrowings.

In connection with the IPO (defined), the Company redeemed 25% of its
Existing Notes (defined) for approximately $22.2 million. The redemption was
completed in March 1996 and resulted in an extraordinary charge of $2.8 million.
The remaining $60.0 million 12 1/2% Senior Subordinated Notes due 2004 (the
"Existing Notes") mature October 1, 2004, and bear interest at 12.5% per annum.
On February 14, 1996, in conjunction with the acquisition of Trefoil
Communications, Inc., the Company issued $200.0 million aggregate principal
amount of 9 3/8% Senior Subordinated Notes due 2004 (the "New Notes" and,
together with the Existing Notes, the "Notes"), which mature on October 1, 2004,
and bear interest at 9.375% per annum. Interest on the Notes is paid
semi-annually. The Existing and New Notes are redeemable, in whole or

F-59
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CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in part, at the option of the Company on or after October 1, 1999 and February
1, 2000, respectively, at redemption prices expressed as a percentage of the
principal amount, ranging from 100.000% to 105.556%, plus accrued interest
thereon to the date of acquisition. In addition, prior to January 31, 1999, the
Company may redeem up to 25% of the original aggregate principal amount of the
New Notes with the net proceeds of one or more public equity offerings. The
Notes are unsecured obligations of the Company, ranking subordinate in right of
payment to all senior debt of the Company. The New Notes rank pari passu in
right of payment to the Existing Notes. The Notes are guaranteed on a senior
subordinated basis by Chancellor Radio Broadcasting Company's subsidiaries.

Scheduled debt maturities for the Company's outstanding long-term debt at
December 31, 1996 for each of the next five years and thereafter are as follows:

<TABLE>
<S> <C>
1997........................................................ $ 400,000
1998........................................................ 400,000
1999........................................................ 9,874,886
2000........................................................ 11,296,119
2001........................................................ 17,469,864
Thereafter.................................................. 315,872,630
------------
$355,313,499
============
</TABLE>

See Note 5 for pro forma effects of the New Bank Financing subsequent to
year end. Both the New Bank Financing and Notes indentures contain certain
covenants, including, among others, limitations on the incurrence of additional
debt, in the case of the New Bank Financing; requirements to maintain certain
financial ratios; and restrictions on the payment of dividends to stockholders
and from the subsidiaries to Chancellor.

8. CAPITAL STRUCTURE

In February 1996, Chancellor sold 7.7 million shares of its Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), in an initial
public offering, (the "IPO"), which generated net proceeds of $142.4 million,
and in a private placement, issued $100.0 million of exchangeable redeemable
preferred stock (the "Acquisition Preferred Stock") of Chancellor Radio
Broadcasting and 742,192 shares of Class A common stock of Chancellor to an
affiliated entity and other investors.

Immediately prior to the IPO, Chancellor effected a recapitalization of its
current capital stock. Pursuant to the recapitalization, each six shares of
Chancellor's Nonvoting Stock were reclassified into one share of Class A Common
Stock. Each six shares of Chancellor's Voting Stock were reclassified into one
share of Class B Common Stock and each six shares of Convertible Nonvoting Stock
were reclassified into one share of Class C Common Stock. In connection with the
recapitalization, 63,334 shares of Class A Common Stock were exchanged for an
equal number of shares of Class B Common Stock, and an additional 8,484,410
shares of Class A Common Stock were exchanged for an equal number of shares of
Class C Common Stock. The recapitalization has been given retroactive effect in
the financial statements.

In February 1996, subsequent to the IPO, the Company completed a private
placement of $100.0 million of newly authorized Senior Cumulative Exchangeable
Preferred Stock (the "Old Preferred Stock"). Upon completion, the proceeds of
the Old Preferred Stock were used to redeem the Acquisition Preferred Stock and
55,664 shares of Class A Common Stock. The redemption resulted in a charge to
net loss attributable to common stock of approximately $16.6 million and an
additional reduction of paid-in capital of approximately $1.0 million.

F-60
<PAGE> 244
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In June 1996, the holders of Chancellor's Class C Common Stock filed an
application with the FCC to convert the stock into Chancellor's Class B Common
Stock. The holders of Class C Common Stock received approval of their
applications and subsequently converted their stock on October 22, 1996.

In August 1996 pursuant to an agreement entered into at the time of the
IPO, Chancellor sold 1.2 million shares of Class A Common Stock in a private
placement to an affiliated entity, which generated proceeds of $23.0 million
which were contributed to Chancellor Radio Broadcasting.

In September 1996, the Company completed an exchange offering whereby it
exchanged the Old Preferred Stock for 1,000,000 shares of 12 1/4% Series A
Senior Cumulative Exchangeable Preferred Stock (the "Senior Exchangeable
Preferred Stock") in a transaction registered under the Securities Act of 1933,
as amended. The terms of the Senior Exchangeable Preferred Stock are
substantially identical to those of the Old Preferred Stock. Dividends on the
Senior Exchangeable Preferred Stock accrue from its date of issuance and are
payable quarterly commencing November 15, 1996, at a rate per annum of 12 1/4%
of the then effective liquidation preference per share. Dividends may be paid,
at the Company's option, on any dividend payment date occurring on or prior to
February 15, 2001 either in cash or by adding such dividends to the then
effective liquidation preference of the Senior Exchangeable Preferred Stock. The
Senior Exchangeable Preferred Stock is redeemable at the Company's option, in
whole or in part at any time on or after February 15, 2001, at various
redemption prices, plus, accumulated and unpaid dividends to the date of
redemption. In addition, prior to February 15, 1999, the Company may, at its
option, redeem the Senior Exchangeable Preferred Stock with the net cash
proceeds from one or more Public Equity Offerings (as defined), at various
redemption prices, plus, accumulated and unpaid dividends to the redemption
date; provided, however, that after any such redemption there is outstanding at
least 75% of the number of shares of Senior Exchangeable Preferred Stock
originally issued.

The Company is required, subject to certain conditions, to redeem all of
the Senior Exchangeable Preferred Stock outstanding on February 15, 2008, at a
redemption price equal to 100% of the then effective liquidation preference
thereof, plus, accumulated and unpaid dividends to the date of redemption. Upon
the occurrence of a change of control (as defined), the Company must offer to
purchase all of the then outstanding shares of Senior Exchangeable Preferred
Stock at a price equal to 101% of the then effective liquidation preference
thereof, plus, accumulated and unpaid dividends to the date of purchase. Subject
to certain conditions, the Senior Exchangeable Preferred Stock is exchangeable
in whole, but not in part, at the option of the Company, on any dividend payment
date for the Company's 12 1/4% subordinated exchange debentures due 2008.

On January 23, 1997, Chancellor completed a private placement of $100.0
million of newly authorized 7% Convertible Preferred Stock (the "Convertible
Preferred Stock") and Chancellor Radio Broadcasting completed a private
placement of $200.0 million of newly authorized 12% Exchangeable Preferred Stock
(the "Exchangeable Preferred Stock").

Dividends on the Convertible Preferred Stock accrue from its date of
issuance and are payable quarterly commencing April 15, 1997, at a rate per
annum of 7% of the liquidation preference per share. The liquidation preference
of the Convertible Preferred Stock is $50.00 per share, and requires cash
dividends of $7.7 million per year. Because Chancellor is a holding company with
no assets other than the common stock of the Company, Chancellor will rely
solely on the dividends from the Company to satisfy its dividend payment
obligation on the 7% Convertible Preferred Stock. The Convertible Preferred
Stock is convertible at the option of the holder at any time after March 23,
1997, unless previously redeemed, into Class A Common Stock of Chancellor at a
conversion price of $32.90 per share of Class A Common Stock, subject to
adjustment in certain events. In addition, after January 19, 2000, the Company
may, at its option, redeem the Convertible Preferred Stock, in whole or in part,
at specified redemption prices plus accrued and unpaid dividends through the
redemption date. Upon the occurrence of a change of control (as defined),
Chancellor must, subject to certain conditions, offer to purchase all of the
then outstanding shares of Convertible Preferred Stock at a
F-61
<PAGE> 245
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

price equal to 101% of the liquidation preference thereof, plus accrued and
unpaid dividends to the date of purchase.

Dividends on the Exchangeable Preferred Stock will accrue from the date of
its issuance and will be payable semi-annually commencing July 15, 1997, at a
rate per annum of 12% of the liquidation preference per share. Dividends may be
paid, at the Company's option, on any dividend payment date occurring on or
prior to January 15, 2002 either in cash or in additional shares of Exchangeable
Preferred Stock. The liquidation preference of the Exchangeable Preferred Stock
will be $100.00 per share. The Exchangeable Preferred Stock is redeemable at the
Company's option, in whole or in part at any time on or after January 15, 2002,
at the redemption prices set forth herein, plus accrued and unpaid dividends to
the date of redemption. In addition, prior to January 15, 2000, the Company may,
at its option, redeem the Exchangeable Preferred Stock with the net cash
proceeds from one or more Public Equity Offerings (as defined), at various
redemption prices plus accrued and unpaid dividends to the redemption date;
provided, however, that after any such redemption there is outstanding at least
$150.0 million aggregate liquidation preference of Exchangeable Preferred Stock.
The Company is required, subject to certain conditions, to redeem all of the
Exchangeable Preferred Stock outstanding on January 15, 2009, at a redemption
price equal to 100% of the liquidation preference thereof, plus accrued and
unpaid dividends to the date of redemption. Upon the occurrence of a Change of
Control (as defined), the Company will, subject to certain conditions, offer to
purchase all of the then outstanding shares of Exchangeable Preferred Stock at a
price equal to 101% of the liquidation preference thereof, plus accrued and
unpaid dividends to the repurchase date. In addition, prior to January 15, 1999,
upon the occurrence of a Change of Control, the Company will have the option to
redeem the Exchangeable Preferred Stock in whole but not in part at a redemption
price equal to 112% of the liquidation preference thereof, plus accrued and
unpaid dividends to the date of redemption. The Exchangeable Preferred Stock
will, with respect to dividend rights and rights on liquidation, rank junior to
the Senior Exchangeable Preferred Stock. Subject to certain conditions, the
Exchangeable Preferred Stock is exchangeable in whole, but not in part, at the
option of the Company, on any dividend payment date for the Company's 12%
subordinated exchange debentures due 2009, including any such securities paid in
lieu of cash interest.

In addition to the accrued dividends discussed above, the recorded value of
the Senior Exchangeable Preferred Stock, the Convertible Preferred Stock and the
Exchangeable Preferred Stock includes or will include an amount for the
accretion of the difference between the stock's fair value at date of issuance
and its mandatory redemption amount, calculated using the effective interest
method.

9. INCOME TAXES

All of the Company's revenues were generated in the United States. The
provision for income taxes for continuing operations consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Current:
State.......................................... $ -- $ 11,098 $ 64,070
Deferred:
Federal........................................ 1,267,109 3,220,528 3,866,209
State.......................................... 223,607 568,329 682,272
---------- ---------- ----------
Total provision........................ $1,490,716 $3,799,955 $4,612,551
========== ========== ==========
</TABLE>

F-62
<PAGE> 246
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income tax expense differs from the amount computed by applying the federal
statutory income tax rate of 34% to income before income taxes for the following
reasons:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996
---------- ----------- ----------
<S> <C> <C> <C>
U.S. federal income tax at statutory
rate.................................. $ 637,692 $(2,628,656) $ 645,125
State income taxes, net of federal
benefit............................... 112,533 (463,880) 113,846
Valuation allowance provided for loss
carryforward generated during the
current period........................ 720,490 6,589,750 307,000
Reconciliation of return to estimate.... -- 71,510 --
Permanent difference.................... 20,001 231,231 3,546,580
---------- ----------- ----------
$1,490,716 $ 3,799,955 $4,612,551
========== =========== ==========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1996
----------- ------------
<S> <C> <C>
The deferred tax assets (liabilities)
consist of the following:
Loss carryforwards expiring 2009 and
2010............................... $ 4,766,240 $ 11,806,985
Deferred stock option compensation
deduction.......................... 2,544,000 4,064,000
Tax credits........................... -- 2,951,555
Other................................. 105,411 680,819
----------- ------------
Gross deferred tax assets.......... 7,415,651 19,503,359
----------- ------------
Depreciation and amortization......... (5,057,772) (21,488,463)
----------- ------------
Deferred tax assets valuation
allowance.......................... (7,310,240) (621,210)
----------- ------------
Net deferred tax liabilities....... $(4,952,361) $ (2,606,314)
=========== ============
</TABLE>

The deferred tax valuation allowance was originally established due to the
uncertainty surrounding the realizability of the Company's deferred tax assets
using the "more likely than not" criteria. During the fourth quarter of 1996,
the Company revised its estimate of the likelihood that it will realize the
majority of its deferred tax assets and adjusted its valuation allowance
accordingly. This revised estimate was the direct result of the acquisition of
Trefoil. Reversal of the valuation allowance related to deferred tax assets
which existed on the date of acquisition or which were acquired as a result of
the Trefoil acquisition were credited against the original purchase accounting
allocation to goodwill. The reversal of the valuation allowance related to
deferred tax assets generated subsequent to the acquisition were credited as a
reduction of income tax expense and extraordinary losses as appropriate.

The Company's tax credits and net operating loss carryforwards at December
31, 1996 begin expiring in 1997 and 2001, respectively. The Company has provided
a valuation allowance for those tax credits which do not meet a "more likely
than not" realizability test.

10. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) Savings Plan, whereby eligible employees can
contribute up to either 15% of their salary, per year, subject to certain
maximum contribution amounts. Prior to 1996, the Company had not made any
contributions to the plan, nor is it required to in future periods. However, the
Company did elect to make a discretionary match for 1996 of approximately
$250,000. Employees become eligible to participate in the plan after the
completion of one year of service and the attainment of age twenty-one.

F-63
<PAGE> 247
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. COMMITMENTS

The Company leases real property, office space, broadcasting equipment and
office equipment under various noncancellable operating leases. Certain of the
Company's leases contain escalation clauses, renewal options and/or purchase
options. In addition, the Company assumed lease obligations in connection with
the acquisition of Trefoil on February 14, 1996. The Company also has employment
and rating survey agreements in excess of one year, and has entered into a
twelve-year financial monitoring and oversight agreement with Hicks Muse & Co.
Partners, L.P., which is an affiliate of Hicks, Muse, Tate & Furst Incorporated.

Future minimum payments under the noncancellable operating lease agreements
at December 31, 1996 are approximately as follows:

<TABLE>
<S> <C>
1997........................................................ $ 6,023,586
1998........................................................ 4,865,095
1999........................................................ 4,277,779
2000........................................................ 3,564,247
2001........................................................ 2,805,282
Thereafter.................................................. 13,080,261
-----------
$34,616,250
===========
</TABLE>

Rent expense was approximately $227,000, $1.3 million and $4.8 million for
the years ended December 31, 1994, 1995 and 1996, respectively.

12. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

For cash, short-term debt, and other current amounts receivable and
payable, and the variable-rate term debt, the carrying amount approximates fair
value.

For the fixed-rate long-term debt, the fair value is estimated based on
quoted market prices. The carrying values at December 31, 1995 and 1996 was
$80.0 million and $260.0 million, respectively, and the estimated fair values at
each date were $85.4 million and $267.8 million, respectively.

For Chancellor Radio Broadcasting's Senior Exchangeable Preferred Stock,
the fair value of $113.75 per share at December 31, 1996 is estimated based on
quoted market prices.

13. STOCK-BASED COMPENSATION

During 1994, Chancellor's Board of Directors granted options to purchase
996,068 shares of its common stock to the senior management of the Company at
exercise prices of $6.00 and $7.50. The option agreements vest over a five year
period and originally contained certain performance criteria and indexed
exercise prices. On September 30, 1995, Chancellor entered into an agreement
with its senior management to substantially revise and amend these option
agreements to eliminate certain of the performance criteria provisions and to
adjust and fix the exercise prices at $7.50 and $8.40, respectively. Management
developed an estimate of the fair value of the stock options in the amount of
$19.0 million. Based upon this estimate and the applicable vesting periods, the
Company recognized stock option compensation expense and a corresponding credit
to equity of $6.4 million in 1995, with the remaining amount to be amortized
over an approximate four year period.

During 1994, Chancellor's Board of Directors adopted a stock option plan
for its non-employee directors providing for the grant of options and stock
awards for up to 480,000 shares of its common stock. Upon

F-64
<PAGE> 248
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

election to the Board of Directors, each person shall be granted a stock option
to purchase a number of shares of common stock equal to the number of shares of
common stock acquired by purchase by such person upon their initial election to
the Board of Directors. Each option shall be immediately vested, will have a
maximum term of ten years and an exercise price, as determined by the plan
committee, equal to or greater than the fair market value of the common stock on
the respective dates of grant.

In February 1996, Chancellor's Board of Directors adopted a stock award
plan for the Company's management, employees and non-employee directors, elected
after the date of adoption of the plan, providing for the grant of options and
stock awards for up to 916,456 shares of Chancellor's Class A Common Stock. The
Company's compensation committee has the sole authority to grant stock options
and to establish option exercise prices and vesting schedules. However,
per-share exercise prices shall not be less than the fair market value of the
stock on the respective date of grant and if the compensation committee does not
determine a vesting schedule, such option shall vest 20% on the first
anniversary of the respective date of grant and the remaining 80% shall vest pro
rata on a monthly basis over the four-year period following the first
anniversary of the date of grant. Non-employee directors elected after the
effective date of this plan automatically are granted a fully-vested option to
purchase 5,000 shares of Chancellor's Class A Common Stock on the date he or she
first becomes a member of the Board of Directors. Terms of all options are
limited to ten years.

A summary of the Company's option activity follows. The Company has elected
to continue expense recognition under Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" and accordingly, has included
certain required pro forma information. Estimates of weighted-average grant-
date fair values of options granted and pro forma option compensation amounts
were determined using the Black-Scholes Single Option approach assuming an
expected option term of 6 years, interest rates ranging from 5.5% to 7.2%, a
dividend yield of zero and a volatility factor of .4 (zero for options issued
prior to the Company's initial public offering in February 1996).

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1994 1995 1996
-------------------------- ---------------------------- ----------------------------
WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------- ---------------- --------- ---------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year............ -- $ -- 996,068 $7.27 1,022,734 $ 7.89
Granted:
Exercise price:
equals FMV............... 996,068 7.27 26,666 7.50 713,916 26.03
less than FMV............ -- -- 996,068 7.90 -- --
Exercised.................. -- -- -- -- -- --
Canceled................... -- -- (996,068) 7.27 (9,000) 24.51
------- ----- --------- ----- --------- ------
End of year.................. 996,068 $7.27 1,022,734 $7.89 1,727,650 $15.30
======= ===== ========= ===== ========= ======
Exercisable as of end of
year....................... -- $ -- 225,879 $7.85 431,758 $ 8.06
======= ===== ========= ===== ========= ======
Weighted-average grant-date
fair value of options
granted:
Exercise price:
equals FMV............... -- 3.59 12.69
less than FMV............ -- 21.56 --
</TABLE>

F-65
<PAGE> 249
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------- ---------------------------
WEIGHTED AVERAGE
---------------------------
RANGE OF REMAINING EXERCISE WEIGHTED AVERAGE
EXERCISE PRICES SHARES CONTRACTUAL LIFE PRICE SHARES EXERCISE PRICE
- --------------- --------- ---------------- -------- ------- -----------------
<S> <C> <C> <C> <C> <C>
$ 7.50 -- $ 7.50 577,971 7.06 $ 7.50 247,188 $7.50
8.40 -- 8.40 444,763 7.83 8.40 177,904 8.40
20.00 -- 25.25 431,916 9.14 20.51 6,666 20.00
31.00 -- 36.75 273,000 9.75 34.81 -- --
--------- ---- ------ ------- -----
$ 7.50 -- $36.75 1,727,650 8.20 $15.30 431,758 $8.06
========= ==== ====== ======= =====
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
Historical net loss......................................... $(11,531,296) $(6,892,023)
Pro forma adjustment for stock option compensation.......... (781,465) (1,524,302)
Pro forma tax benefit....................................... 312,586 609,721
------------ -----------
Pro forma net loss.......................................... $(12,000,175) $(7,806,604)
============ ===========
</TABLE>

14. RELATED PARTY TRANSACTIONS

The Company has entered into a twelve-year agreement (the "Financial
Monitoring and Oversight Agreement") with Hicks Muse & Co. Partners, L.P.
("Hicks Muse Partners") and HM2/Management Partners, L.P. ("HM2"), each of which
is an affiliate of Hicks Muse. Chancellor and the Company paid Hicks Muse
Partners an annual fee of $82,000, $200,000 and $408,000 for financial oversight
and monitoring services for the years ended December 31, 1994, 1995 and 1996,
respectively. The annual fee is adjustable each December 31, according to a
formula based on changes in the consumer price index. HM2 received fees of
approximately $0.3 million, $2.4 million and $6.2 million upon consummation of
the acquisitions of KDWB-FM, the American Media Station Group and Trefoil
Communications, Inc., respectively, and is entitled to receive a fee equal to
1.5% of the transaction value (as defined) upon the consummation of each add-on
transaction (as defined) involving Chancellor or any of its subsidiaries.

Effective April 1, 1996, the Company entered into a revised financial
monitoring and oversight agreement with Hicks & Muse & Co. Partners, L.P. and
HM2/Management Partners, L.P., each of which is an affiliate of Hicks, Muse,
Tate & Furst Incorporated. The annual fee for financial oversight and monitoring
services to the Company has been adjusted to $500,000. The annual fee is
adjustable each January 1, to an amount equal to the budgeted consolidated
annual net sales of the Company for the then-current fiscal year, multiplied by
0.25%, provided, however, that in no event shall the annual fee be less than
$500,000.

The Financial Monitoring and Oversight Agreement makes available the
resources of HM2 and Hicks Muse Partners concerning a variety of financial
matters. The services that have been and will continue to be provided by HM2 and
Hicks Muse Partners could not otherwise be obtained by Chancellor and the
Company without the addition of personnel or the engagement of outside
professional advisors.

In February of 1996, the Company lent $200,000 to an affiliate of the
Company. The loan is unsecured, does not bear interest and will be forgiven
during the next three years.

15. SUBSEQUENT EVENTS

On February 14, 1997, Chancellor Radio Broadcasting completed a private
placement of an additional $10.0 million of Convertible Preferred Stock pursuant
to its over-allotment option. The net proceeds of this offering were used to
repay borrowings under the Revolving Credit Facility.

F-66
<PAGE> 250
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On February 19, 1997, Chancellor and Chancellor Radio Broadcasting entered
into an agreement to merge with Evergreen Media Corporation ("Evergreen") in a
stock-for-stock transaction (the "Merger"), with Evergreen remaining as the
surviving corporation (the "Surviving Company"). Pursuant to the agreement,
shareholders of the Company's common stock will receive 0.9091 shares of
Evergreen's common stock. Consummation of the merger is subject to shareholder
approval and certain other closing conditions including regulatory approval.

On February 19, 1997, the Company and Evergreen entered into a joint
purchase agreement whereby in the event that consummation of the stock purchase
agreement between Evergreen and Viacom International, Inc. ("Viacom") occurs
prior to the consummation of the Merger, the Company will be required to
purchase the Viacom subsidiaries which own four of the ten Viacom stations for
$480.0 million and Evergreen will be required to purchase the Viacom
subsidiaries which own six of the ten Viacom stations for $595.0 million. In the
event that consummation of the stock purchase agreement between Evergreen and
Viacom occurs after the consummation of the Merger, the Surviving Company will
acquire the stock of certain Viacom subsidiaries which own and operate ten radio
stations in five major markets. Consummation of the transaction is dependent
upon certain closing conditions, including regulatory approval.

16. UNCERTAINTIES AND THE USE OF ESTIMATES AND ASSUMPTIONS

On February 8, 1996, the President signed into law the Telecommunications
Act of 1996. Among other things, this legislation requires the Federal
Communications Commission (the "FCC"), to relax its numerical restrictions on
local ownership and affords renewal applicants significant new protections from
competing applications for their broadcast licenses. The new legislation will
enable the Company to retain all of its radio stations and to acquire more
properties; at the same time, this legislation will also allow other broadcast
entities to increase their ownership in markets where the Company currently
operates stations. The Company's management is unable to determine the ultimate
effect of this legislation on its competitive environment.

The pending acquisition, exchange and merger agreements are subject to
various governmental approvals, including the Department of Justice under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
Federal Communications Commission.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual amounts could differ from those estimates.

17. RECENT ACCOUNTING PRONOUNCEMENT

The Financial Accounting Standards Board issued SFAS No. 128, "Earnings Per
Share" in March 1997, which establishes standards for computing and presenting
earnings per share. The disclosure requirements of SFAS No. 128 will be
effective for the Company's financial statements beginning in 1997. Management
has not yet determined the impact that the adoption of SFAS No. 128 will have on
the financial statements of the Company.

F-67
<PAGE> 251

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------
<S> <C> <C>
Current assets:
Cash...................................................... $ 3,789 $ 5,889
Accounts receivable, net of allowance for doubtful
accounts of $1,024 and $1,182, respectively............ 46,585 63,576
Prepaid expenses and other................................ 2,754 2,887
-------- ----------
Total current assets.............................. 53,128 72,352
Restricted cash............................................. 20,363 53,750
Property and equipment, net................................. 49,123 69,581
Intangibles and other, net.................................. 551,406 970,080
Deferred financing costs, net............................... 16,723 16,827
Deferred income tax benefit................................. -- 1,183
-------- ----------
Total assets...................................... $690,743 $1,183,773
======== ==========

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 4,409 $ 4,989
Accrued liabilities....................................... 12,530 16,248
Accrued interest.......................................... 6,869 5,702
Current portion of long-term debt......................... 400 1,928
-------- ----------
Total current liabilities......................... 24,208 28,867
Long-term debt.............................................. 354,914 545,335
Deferred income taxes....................................... 2,606 --
Other....................................................... 802 997
-------- ----------
Total liabilities................................. 382,530 575,199
-------- ----------
Redeemable senior cumulative exchangeable preferred stock,
par value $.01 per share; 1,000,000 shares authorized,
issued and outstanding; preference in liquidation of
$117,670.................................................. 107,222 114,271
Redeemable cumulative exchangeable preferred stock, par
value $.01 per share; none and 3,600,000 shares
authorized, respectively, none and 2,000,000 shares issued
and outstanding, respectively; preference in liquidation
of $210,774............................................... -- 202,891
Common stockholder's equity:
Common stock, par value $.01 per share; 2,000 shares
authorized, 1,000 shares issued and outstanding........ 1 1
Additional paid-in capital................................ 219,519 322,216
Accumulated deficit....................................... (18,529) (30,805)
-------- ----------
Total stockholder's equity........................ 200,991 291,412
-------- ----------
Total liabilities and stockholder's equity........ $690,743 $1,183,773
======== ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-68
<PAGE> 252

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1996 1997 1996 1997
------- -------- -------- --------
<S> <C> <C> <C> <C>
Gross broadcasting revenues........................ $50,759 $ 83,538 $ 79,848 $147,015
Less agency commissions............................ 6,333 10,450 9,780 18,073
------- -------- -------- --------
Net revenues.................................. 44,426 73,088 70,068 128,942
------- -------- -------- --------
Operating expenses:
Programming, technical and news.................. 7,865 12,829 13,010 26,700
Sales and promotion.............................. 12,367 20,785 19,310 36,748
General and administrative....................... 6,002 8,051 10,405 16,404
Depreciation and amortization.................... 5,148 8,605 9,675 16,714
Corporate expenses............................... 832 2,222 1,839 3,934
Merger expense................................... -- 459 -- 2,515
Stock option compensation........................ 950 950 1,900 1,900
------- -------- -------- --------
33,164 53,901 56,139 104,915
------- -------- -------- --------
Income from operations........................ 11,262 19,187 13,929 24,027
Other (income) expense:
Interest expense................................. 9,680 12,488 17,327 23,908
Other, net....................................... 92 25 98 (1,607)
------- -------- -------- --------
Income (loss) before provision for income
taxes and extraordinary loss................ 1,490 6,674 (3,496) 1,726
Provision for income taxes......................... 662 3,727 1,601 3,327
------- -------- -------- --------
Income (loss) before extraordinary loss....... 828 2,947 (5,097) (1,601)
Extraordinary loss on early extinguishment of debt,
net of income tax benefit........................ -- 7,926 4,646 10,675
------- -------- -------- --------
Net Income (loss)............................. 828 (4,979) (9,743) (12,276)
Loss on repurchase of preferred stock.............. -- -- 16,570 --
Dividends and accretion on preferred stock......... 3,183 9,987 4,843 18,122
------- -------- -------- --------
Net loss attributable to common stock......... $(2,355) $(14,966) $(31,156) $(30,398)
======= ======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-69
<PAGE> 253

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997.................... 1,000 $1 $219,519 $(18,529) $200,991
Dividends and accretion on preferred
stock.................................. -- -- (18,122) -- (18,122)
Capital contributions, net................ -- -- 120,819 -- 120,819
Net loss.................................. -- -- -- (12,276) (12,276)
----- -- -------- -------- --------
Balance, June 30, 1997...................... 1,000 $1 $322,216 $(30,805) $291,412
===== == ======== ======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-70
<PAGE> 254

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (9,743) $ (12,276)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 9,675 16,714
Amortization of deferred financing costs............... 1,393 1,236
Stock option compensation.............................. 1,900 1,900
Deferred income taxes.................................. 1,539 3,327
Gain on disposition of stations........................ -- (1,409)
Extraordinary loss..................................... 4,646 10,675
Changes in assets and liabilities, net of the effects
of acquired businesses:
Accounts receivable.................................. (2,632) (3,741)
Prepaids and other................................... (1,380) 365
Accounts payable..................................... (87) (806)
Accrued liabilities.................................. (66) 1,564
Accrued interest..................................... 4,243 (1,167)
--------- ---------
Net cash provided by operating activities......... 9,488 16,382
--------- ---------
Cash flows from investing activities:
Purchases of broadcasting properties...................... (406,140) (582,383)
Dispositions of broadcasting properties................... -- 103,259
Purchases of other property and equipment................. (1,374) (3,690)
--------- ---------
Net cash used in investing activities............. (407,514) (482,814)
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 277,628 417,632
Proceeds from borrowings under revolving debt facility.... 46,764 255,441
Repayments of long-term debt.............................. (90,885) (342,856)
Repayments of borrowings under revolving debt facility.... (68,432) (157,399)
Issuances of preferred stock.............................. 175,119 191,817
Repurchase of preferred stock............................. (95,462) --
Additional capital contributions.......................... 155,475 105,672
Distribution of additional paid in capital................ (1,038) (1,775)
Payment of preferred stock dividends...................... (506)
--------- ---------
Net cash provided by financing activities......... 398,663 468,532
--------- ---------
Net increase in cash.............................. 637 2,100
Cash, at beginning of period................................ 1,314 3,789
--------- ---------
Cash, at end of period...................................... $ 1,951 $ 5,889
========= =========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-71
<PAGE> 255

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Chancellor
Radio Broadcasting Company ("Chancellor Radio Broadcasting") and its
subsidiaries (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six month periods ended June 30, 1997 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1997.
Chancellor Radio Broadcasting is a direct subsidiary of Chancellor Broadcasting
Company ("Chancellor"). Certain prior year amounts have been reclassified to
conform with the current year's presentation, which had no effect on net income
or stockholder's equity.

2. ACQUISITIONS AND DISPOSITIONS

On January 23, 1997, the Company acquired substantially all the assets and
certain liabilities of Colfax Communications, Inc. and its affiliates ("Colfax")
for an aggregate price of $383.7 million. Liabilities assumed were limited to
certain ongoing contractual rights and obligations. The acquisition was
accounted for as a purchase. Pursuant to the acquisition agreement, at December
31, 1996 the Company had $20.4 million of cash in a restricted escrow account
which was remitted to Colfax at closing. On January 29, 1997, the Company
entered into an agreement to sell WMIL-FM and WOKY-AM, Milwaukee stations
acquired in this transaction, to Clear Channel Radio, Inc. for $41.3 million in
cash. Accordingly, theses stations were recorded as assets held for sale with no
results of operations or gain or loss recognized. Interest capitalized on this
investment amounted to $580,000. The disposition of these stations was completed
on March 31, 1997.

The acquisition is summarized as follows (in thousands):

<TABLE>
<S> <C>
Assets acquired and liabilities assumed:
Accounts receivable, net.................................. $ 13,234
Prepaid and other assets.................................. 470
Property and equipment.................................... 14,624
Goodwill and other intangibles............................ 317,894
Other noncurrent assets................................... 46
Assets held for sale...................................... 41,253
Accrued liabilities....................................... (3,821)
--------
$383,700
</TABLE>

On January 31, 1997, the Company completed the sale of WWWW-FM and WDFN-AM
in Detroit to Evergreen Media Corporation ("Evergreen") for $30.0 million in
cash. The pre-tax gain of $1.4 million is included in other income.

On February 13, 1997, the Company acquired substantially all the assets and
certain liabilities of OmniAmerica Group ("Omni") for $166.0 million of cash and
$15.0 million of Chancellor Class A Common Stock. Liabilities assumed were
limited to certain ongoing contractual rights and obligations. The acquisition
was accounted for as a purchase.

The acquisition is summarized as follows (in thousands):

<TABLE>
<S> <C>
Assets acquired and liabilities assumed:
Property and equipment.................................... $ 9,209
Goodwill and other intangibles............................ 171,837
--------
$181,046
</TABLE>

F-72
<PAGE> 256
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On February 19, 1997, Chancellor and Chancellor Radio Broadcasting entered
into an agreement to merge with Evergreen in a stock-for-stock transaction (the
"Merger"), with Evergreen remaining as the surviving corporation. Pursuant to
the agreement, shareholders of the Company's common stock will receive 0.9091
shares of Evergreen's common stock. Consummation of the merger is subject to
shareholder approval and certain other closing conditions including regulatory
approval. The Company has incurred certain costs related to the Merger which
have been expensed in the period incurred.

On February 19, 1997, the Company and Evergreen entered into a joint
purchase agreement whereby in the event that consummation of the stock purchase
agreement between Evergreen and Viacom International, Inc. ("Viacom") occurred
prior to the consummation of the Merger, the Company would be required to
purchase the Viacom subsidiaries which own four of the ten Viacom stations for
$480.0 million, plus net working capital, and Evergreen would be required to
purchase the Viacom subsidiaries which own six of the ten Viacom stations for
$595.0 million, plus net working capital. On July 2, 1997, the Company acquired
KIBB-FM and KYSR-FM in Los Angeles, WLIT-FM in Chicago and WDRQ-FM in Detroit
from Viacom for approximately $489.8 million, plus various other direct
acquisition costs (the "Chancellor Viacom Acquisition").

On March 24, 1997, the Company exchanged the West Palm Beach stations
acquired from Omni for one AM station in Sacramento and approximately $33.0
million in cash from American Radio Systems Corporation (the "American Radio
Exchange").

On July 7, 1997, the Company entered into a time brokerage agreement with
Evergreen whereby Evergreen began managing certain limited functions of the
Company's station in San Francisco which broadcasts on frequency 94.9 (formerly
KSAN-FM).

On July 14, 1997, the Company and Evergreen entered into an agreement
pursuant to which a jointly-owned affiliate of Evergreen and the Company will
acquire Katz Media Group, Inc. ("Katz"), a full-service media representation
firm, in a tender offer transaction valued at approximately $373.0 million. Debt
of Katz of approximately $218.0 million will also be assumed in the transaction.

On July 21, 1997, the Company entered into a time brokerage agreement with
Evergreen whereby Evergreen began managing certain limited functions of the
Company's stations KBGG-FM, KNEW-AM and KABL-AM in San Francisco.

On July 30, 1997, the Company entered into an agreement to acquire KXPK-FM
in Denver from Evergreen Wireless LLC (which is unrelated to Evergreen) for
$26.0 million in cash (including $1.7 million paid by the Company in escrow).
The Company also entered into an agreement to operate KXPK-FM under a time
brokerage agreement to be effective upon receipt of HSR Act approval. Although
there can be no assurance, the Company expects that the acquisition will be
completed in the first quarter of 1998, after completion of the Merger.

On August 7, 1997, the Company and Evergreen announced that they had
acquired, for $3.0 million, an option from Bonneville International Corporation
("Bonneville") to exchange Evergreen's station WTOP-AM in Washington, the
Company's stations KZLA-FM in Los Angeles and WGMS-FM in Washington and $57.0
million of cash for Bonneville's stations WDBZ-FM in New York, KLDE-FM in
Houston and KBIG-FM in Los Angeles. The option expires on December 31, 1997.

On August 11, 1997, the Company completed the sale of WDRQ-FM in Detroit to
Capital Cities/ABC for $37.0 million. The proceeds were used to repay borrowings
under Chancellor's Interim Loan (as defined).

F-73
<PAGE> 257
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes the unaudited consolidated pro forma data as
though the acquisitions of Shamrock Broadcasting Company, KIMN-FM and KALC-FM,
Colfax, Omni and KSTE-AM, the dispositions of KTBZ-FM, WWWW-FM and WDFN-AM and
the related financing transactions had occurred as of the beginning of 1996 (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1997
---------------------- ----------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net revenue.................................. $ 70,068 $109,422 $128,942 $131,149
Loss before extraordinary loss............... (5,097) (9,428) (1,601) (1,687)
Net loss attributable to common stock........ (31,156) (28,148) (30,398) (22,687)
</TABLE>

3. LONG-TERM DEBT

The Company's term and revolving credit facilities were refinanced on
January 23, 1997, in conjunction with the acquisition of Colfax under a new bank
credit agreement. In connection with the refinancing of the term and revolving
loan facilities in January 1997, the Company incurred an extraordinary charge to
write-off deferred finance costs of $4.6 million.

On June 5, 1997, the Company closed on the tender offer for all $60.0
million of its outstanding 12 1/2% Senior Subordinated Notes for approximately
$70.1 million, which included a premium. The redemption was funded through
additional borrowings under the bank credit agreement and resulted in an
extraordinary charge of $11.8 million.

On June 24, 1997, the Company completed its private offering of $200.0
million of Chancellor Radio Broadcasting Company's 8 3/4% Senior Notes, which
mature on June 15, 2007 and bear interest at 8.75% per annum. The proceeds were
used to pay down borrowings under the bank credit agreement, which resulted in
an extraordinary charge to write-off deferred finance costs of $1.4 million.

On July 2, 1997, the Company entered into a restated credit agreement (the
"Restated Credit Agreement") in order to finance the Chancellor Viacom
Acquisition. The Restated Credit Agreement consists of a $400.0 million term
loan facility and a $350.0 million revolving loan facility. Also, Chancellor
received an interim loan of $170.0 million (the "Interim Loan"), the proceeds
from which were contributed to Chancellor Radio Broadcasting in connection with
the Viacom acquisition.

The Restated Credit Agreement is collateralized by (i) a first priority
perfected pledge of all capital stock and notes owned by the Company and (ii) a
first priority perfected security interest in all other assets (including
receivables, contracts, contract rights, securities, patents, trademarks, other
intellectual property, inventory, equipment and real estate) owned by the
Company, excluding FCC licenses, leasehold interests in studio or office space
and leasehold and partnership interests in tower or transmitter sites in which
necessary consents to the granting of a security interest cannot be obtained
without payments to any other party or on a timely basis. The Restated Credit
Agreement is also guaranteed by the subsidiaries of Chancellor and Chancellor
Radio Broadcasting, whose guarantees are collateralized by a first priority
perfected pledge of the capital stock of Chancellor Radio Broadcasting. The term
loan facility is due in increasing quarterly installments beginning in 1997 and
matures in June 2004. All outstanding borrowings under the revolving facility
mature in June 2004. The facilities bear interest at a rate equal to, at the
Company's option, the prime rate of Bankers Trust Company, as announced from
time to time, or the London Inter-Bank Offered Rate ("LIBOR") in effect from
time to time, plus an applicable margin rate. The Company pays quarterly
commitment fees in arrears equal to either .375% or .250% per annum on the
unused portion of the Revolving Facility, depending upon whether the Company's
leverage ratio is equal to or greater than 4.5:1 or less than 4.5:1,
respectively. The bank financing facilities which existed on June 30, 1997
accrued interest at the prime rate plus 1.00% (9.50%) on $11.9 million and the
LIBOR rate plus 2.00% (7.6875%) on $135.4 million of borrowings.
F-74
<PAGE> 258
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Interim Loan is an unsecured obligation of Chancellor and is due on the
earlier of the consummation of the Merger or July 2, 1999. Outstanding
borrowings under the Interim Loan bear interest at a rate equal to the
three-month LIBOR plus an applicable margin rate beginning at 3.25% and
increasing to 9.00% at various intervals during the loan period.

Scheduled debt maturities for the Company's outstanding long-term debt
under the Restated Credit Agreement as of July 2, 1997, after completion of the
Chancellor Viacom Acquisition, for each of the next five calendar years and
thereafter were as follows, in thousands:

<TABLE>
<S> <C>
1997........................................................ $ --
1998........................................................ 20,000
1999........................................................ 50,000
2000........................................................ 60,000
2001........................................................ 60,000
2002........................................................ 70,000
Thereafter.................................................. 153,000
--------
$413,000
========
</TABLE>

4. CAPITAL STRUCTURE

During the first quarter of 1997, Chancellor completed a private placement
of $110.0 million of newly authorized 7% Convertible Preferred Stock (the
"Convertible Preferred Stock") and Chancellor Radio Broadcasting completed a
private placement of $200.0 million of newly authorized 12% Exchangeable
Preferred Stock (the "Exchangeable Preferred Stock").

Dividends on the Convertible Preferred Stock accrue from its date of
issuance and are payable quarterly commencing April 15, 1997, at a rate per
annum of 7% of the liquidation preference per share. The Convertible Preferred
Stock is convertible at the option of the holder at any time after March 23,
1997, unless previously redeemed, into Class A Common Stock of Chancellor at a
conversion price of $32.90 per share of Class A Common Stock, subject to
adjustment in certain events. In addition, after January 19, 2000, the Company
may, at its option, redeem the Convertible Preferred Stock, in whole or in part,
at specified redemption prices plus accrued and unpaid dividends through the
redemption date. Upon the occurrence of a change of control (as defined),
Chancellor must, subject to certain conditions, offer to purchase all of the
then outstanding shares of Convertible Preferred Stock at a price equal to 101%
of the liquidation preference thereof, plus accrued and unpaid dividends to the
date of purchase.

F-75
<PAGE> 259
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of the liquidation preference thereof, plus accrued and unpaid dividends to the
repurchase date. In addition, prior to January 15, 1999, upon the occurrence of
a Change of Control, the Company will have the option to redeem the Exchangeable
Preferred Stock in whole but not in part at a redemption price equal to 112% of
the liquidation preference thereof, plus accrued and unpaid dividends to the
date of redemption. The Exchangeable Preferred Stock will, with respect to
dividend rights and rights on liquidation, rank junior to the Company's 12 1/4%
Senior Cumulative Exchangeable Preferred Stock (the "Senior Exchangeable
Preferred Stock"). Subject to certain conditions, the Exchangeable Preferred
Stock is exchangeable in whole, but not in part, at the option of the Company,
on any dividend payment date for the Company's 12% subordinated exchange
debentures due 2009, including any such securities paid in lieu of cash
interest.

In addition to the accrued dividends discussed above, the recorded value of
the Senior Exchangeable Preferred Stock and the Exchangeable Preferred Stock
includes an amount for the accretion of the difference between the stock's fair
value at date of issuance and its mandatory redemption amount, calculated using
the effective interest method.

5. INCOME TAXES

Income tax expense (benefit) differs from the amount computed by applying
the federal statutory income tax rate of 34% to income (loss) before income
taxes and extraordinary loss for the following reasons, dollars in thousands:

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS ENDED
ENDED JUNE 30, JUNE 30,
-------------- -----------------
1996 1997 1996 1997
---- ------ ------- ------
<S> <C> <C> <C> <C>
U.S. federal income tax at statutory rate....... $507 $2,269 $(1,189) $ 587
State income taxes, net of federal benefit...... 89 401 (210) 104
Valuation allowance provided for loss
carryforward generated during the current
period........................................ (59) -- 2,750 --
Permanent difference............................ -- 1,072 -- 2,636
Other........................................... 125 (15) 250 --
---- ------ ------- ------
$662 $3,727 $ 1,601 $3,327
==== ====== ======= ======
</TABLE>

6. SUBSEQUENT EVENT

In July 1997, the Company incurred non-cash stock option and severance
compensation of approximately $685,000 and $1.4 million, respectively, for
terminations associated with the Merger. In addition, the Company paid $945,000
for a two year consulting and non-compete agreement which will be deferred and
amortized over the related period.

7. NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standard No. 128, "Earnings per Share"
was issued in February 1997, which establishes standards for computing and
presenting earnings per share (EPS) and applies to entities with publicly held
common stock or potential common stock. The disclosure requirements of SFAS No.
128 will be effective for the Company's financial statements beginning with the
annual report for 1997. Management does not believe that the implementation of
SFAS 128 will have a material effect on its financial statements.

F-76
<PAGE> 260
CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Statement of Financial Accounting Standard No. 130, "Reporting
Comprehensive Income" was issued in June 1997, which establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. The reporting and display requirements of SFAS No. 130 will be
effective for the Company's financial statements beginning with the first
quarterly report for 1998. Management does not believe that the implementation
of SFAS 130 will have a material effect on its financial statements.

F-77
<PAGE> 261

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Evergreen Media Corporation:

We have audited the accompanying combined balance sheets of Riverside
Broadcasting Co., Inc. and WAXQ Inc. as of December 31, 1995 and 1996, and the
related combined statements of earnings and cash flows for each of the years in
the three-year period ended December 31, 1996. These combined financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Riverside
Broadcasting Inc. and WAXQ Inc. as of December 31, 1995 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1996 in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Dallas, Texas
March 14, 1997

F-78
<PAGE> 262

RIVERSIDE BROADCASTING CO., INC. AND WAXQ INC.

COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1995 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Accounts receivable, less allowance
for doubtful accounts of $99 in
1995, $208 in 1996 and $170 in
1997............................... $ 5,507 $ 9,713 $10,489
Prepaid expenses and other current
assets............................. 178 381 162
Deferred income taxes................. 45 829 829
------- ------- -------
Total current assets.......... 5,730 10,923 11,480
Property and equipment, net (note 4).... 1,075 4,177 2,668
Intangible assets, net (note 5)......... 47,422 66,626 74,038
------- ------- -------
$54,227 $81,726 $88,186
======= ======= =======
LIABILITIES AND EQUITY
Current liabilities -- accounts payable
and accrued expenses.................. $ 1,167 $ 3,669 $2,894
Deferred income taxes................... 222 4,373 4,373
Equity (note 9)......................... 52,838 73,684 80,919
Commitments and contingencies (note
10)...................................
------- ------- -------
$54,227 $81,726 $88,186
======= ======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-79
<PAGE> 263

RIVERSIDE BROADCASTING CO., INC. AND WAXQ INC.

COMBINED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross revenues.......................... $28,254 $25,862 $36,121 $14,274 $25,135
Less agency commissions and national
rep fees........................... 4,700 4,342 5,892 2,107 3,652
------- ------- ------- ------- -------
Net revenues.................. 23,554 21,520 30,229 12,167 21,483
------- ------- ------- ------- -------
Operating expenses:
Station operating expenses excluding
depreciation and amortization...... 9,212 9,069 12,447 5,192 8,893
Depreciation and amortization......... 1,662 1,676 4,528 838 1,290
Corporate general and
administrative..................... 945 980 943 510 442
------- ------- ------- ------- -------
Operating expenses................. 11,819 11,725 17,918 6,540 10,625
------- ------- ------- ------- -------
Operating income................... 11,735 9,795 12,311 5,627 10,858
Other (income) expense (note 3)......... -- -- (741) -- --
------- ------- ------- ------- -------
Earnings before income taxes....... 11,735 9,795 13,052 5,627 10,858
Income tax expense (note 6)............. 6,053 5,154 6,683 2,881 4,336
------- ------- ------- ------- -------
Net earnings.................. $ 5,682 $ 4,641 $ 6,369 $ 2,746 $ 6,522
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-80
<PAGE> 264

RIVERSIDE BROADCASTING CO., INC. AND WAXQ INC.

COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows provided by operating activities:
Net earnings................................... $ 5,682 $ 4,641 $ 6,369 $ 2,746 $ 6,522
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation................................ 153 168 286 84 266
Amortization of goodwill.................... 1,509 1,508 1,811 754 1,024
Changes in certain assets and liabilities:
Deferred income taxes..................... 32 110 (603) -- --
Accounts receivable, net.................. (676) 659 (4,172) (984) (776)
Prepaid expenses and other current
assets................................. 12 103 (203) 128 219
Accounts payable and accrued expenses..... (192) (483) 2,502 765 (775)
------- ------- ------- ------- -------
Net cash provided by operating
activities........................... 6,520 6,706 5,990 3,493 6,480
------- ------- ------- ------- -------
Cash flows used by investing activities --capital
expenditures................................... (150) (129) (695) (250) (417)
------- ------- ------- ------- -------
Net cash used by financing
activities -- distribution to parent........... (6,370) (6,577) (5,295) (3,243) (6,063)
------- ------- ------- ------- -------
Increase (decrease) in cash...................... -- -- -- -- --
Cash at beginning of period...................... -- -- -- -- --
------- ------- ------- ------- -------
Cash at end of period............................ $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= =======
Noncash financing activities -- contribution of
radio station net assets by parent (note 3).... $ -- $ -- $19,772 $ -- $ --
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-81
<PAGE> 265

RIVERSIDE BROADCASTING CO., INC. AND WAXQ INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

(1) ORGANIZATION AND BASIS OF PRESENTATION

The accompanying combined financial statements include the accounts of
Riverside Broadcasting Co., Inc. and WAXQ Inc. (collectively, the "Company").
The Company owns and operates two commercial radio stations in the New York City
market -- WLTW-FM and WAXQ-FM and is wholly owned by Viacom International Inc.
("Viacom" or "Parent"), a wholly owned subsidiary of Viacom, Inc. Significant
intercompany accounts and transactions have been eliminated in combination.

On February 16, 1997, Viacom entered into a stock purchase agreement to
sell all the issued and outstanding shares of capital stock of WAXQ Inc. and
Riverside Broadcasting Co., Inc. in the New York City market, KYSR Inc. and KIBB
Inc. in the Los Angeles market, Viacom Broadcasting East Inc. and WMZQ Inc. in
the Washington, DC market, WLIT Inc. in the Chicago market and WDRQ Inc. in the
Detroit market (collectively, the "Viacom Radio Properties") to Evergreen Media
Corporation of Los Angeles ("Evergreen"), for $1.075 billion in cash ("Proposed
Transaction"). The Proposed Transaction is expected to close after the
expiration or termination of the applicable waiting periods under the HSR Act
and approval by the Federal Communications Commission ("FCC"). Contemporaneous
with this transaction, Evergreen entered into a joint purchase agreement with
Chancellor Broadcasting Company ("Chancellor") under which Chancellor agreed to
acquire the Chicago, Detroit and Los Angeles Viacom radio properties referred to
above for $480 million from Evergreen or from Viacom directly.

The accompanying combined financial statements reflect the carve-out
historical results of operations and financial position of Riverside
Broadcasting Co., Inc. and WAXQ Inc. These financial statements are not
necessarily indicative of the results that would have occurred if the Company
had been a separate stand-alone entity during the periods presented.

The financial statements do not include Viacom's corporate assets or
liabilities not specifically identifiable to the Company. Corporate overhead
allocations have been included in the accompanying statements of earnings in
corporate general and administrative expense and station operating expenses.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Property and Equipment

(b) Intangible Assets

Intangible assets consist primarily of broadcast licenses. The Company
amortizes such intangible assets using the straight-line method over 40 years.
The Company continually evaluates the propriety of the carrying amount of
intangible assets as well as the amortization period to determine whether
current events or circumstances warrant adjustments to the carrying value and/or
revised estimates of useful lives. This evaluation consists of the projection of
undiscounted operating income before depreciation, amortization, nonrecurring
charges and interest over the remaining amortization periods of the related
intangible assets. At this time, the Company believes that no significant
impairment of intangible assets has occurred and that no reduction of the
estimated useful lives is warranted.

F-82
<PAGE> 266
RIVERSIDE BROADCASTING CO., INC. AND WAXQ INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

services to be received. Barter revenue is recorded and the liability relieved
when commercials are broadcast and barter expense is recorded and the asset
relieved when goods or services are received or used.

(d) Revenue Recognition

Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.

(e) Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts at each year end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect
taxable earnings. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount more likely than not to be realized. Income
tax expense is the total of tax payable for the period and the change during the
period in deferred tax assets and liabilities.

(f) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, on
January 1, 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell. The adoption of this Statement did not have a material impact on the
Company's financial position, results of operations, or liquidity.

(g) Fair Value

The carrying amount of accounts receivable and accounts payable
approximates fair value because of the short maturity of these instruments.

(h) Disclosure of Certain Significant Risks and Uncertainties

In the opinion of management, credit risk with respect to trade receivables
is limited due to the large number of diversified customers in the Company's
customer base. The Company performs ongoing credit evaluations of its customers
and believes that adequate allowances for any uncollectible trade receivables
are maintained. No one customer accounted for more than 10% of net revenues in
1994, 1995, or 1996.

(i) Unaudited Interim Financial Information

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

which are necessary for a fair presentation of the results for the interim
periods presented. The results for the interim periods ended June 30, 1996 and
1997 are not necessarily indicative of results to be expected for any other
interim period or for the full year.

(3) ACQUISITIONS AND DISPOSITIONS

On August 1, 1996, Viacom exchanged the assets of KBSG-AM/FM and KNDD-FM in
Seattle for the assets of WAXQ-FM in New York. The transaction was accounted for
as a nonmonetary exchange and was based on the recorded amounts of the
nonmonetary assets relinquished. For the period from July 1, 1996 to July 31,
1996, Viacom operated WAXQ-FM under a time brokerage agreement.

Station start-up costs, including fees paid pursuant to the time brokerage
agreement, amounting to $2,431,000, were capitalized and amortized during 1996.
Acquisition-related costs are reflected in the accompanying financial statements
as other expense.

A summary of net assets relinquished by Viacom in connection with the
exchange is as follows:

<TABLE>
<S> <C>
Working capital............................................. $ 34
Property and equipment...................................... 2,693
Intangible assets........................................... 21,015
Deferred taxes.............................................. (3,970)
-------
$19,772
=======
</TABLE>

(4) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1995 and
1996:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1995 1996
----------- ------ ------
<S> <C> <C> <C>
Broadcast facilities.................................. 8-20 years $1,971 $4,783
Office equipment and other............................ 5-8 years 557 754
Construction in progress.............................. 10 389
------ ------
2,538 5,926
Accumulated depreciation.............................. 1,463 1,749
------ ------
$1,075 $4,177
====== ======
</TABLE>

(5) INTANGIBLE ASSETS

Intangible assets at December 31, 1995 and 1996 consist of broadcast
licenses which are being amortized over forty years and are presented net of
accumulated amortization of $13,177 and $14,988, respectively.

(6) INCOME TAXES

The Company's results of operations are included in the combined U.S.
federal and certain combined and separate state income tax returns of Viacom
International Inc.

The tax provisions and deferred tax liabilities presented have been
determined as if the Company were a stand-alone business filing separate tax
returns. Current tax liabilities are recorded through the equity account with
Viacom.

F-84
<PAGE> 268
RIVERSIDE BROADCASTING CO., INC. AND WAXQ INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Income tax expense (benefit) consists of:

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Current:
Federal.................................................. $3,889 $3,258 $4,672
State and local.......................................... 2,132 1,786 2,614
Deferred:
Federal.................................................. 21 71 (356)
State.................................................... 11 39 (247)
------ ------ ------
$6,053 $5,154 $6,683
====== ====== ======
</TABLE>

A reconciliation of the U.S. Federal statutory tax rate to the Company's
effective tax rate on earnings before income taxes is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. tax rate..................................... 35.0% 35.0% 35.0%
Amortization of intangibles................................. 4.6 5.4 4.3
State and local taxes, net of federal tax benefit........... 11.9 12.1 11.8
Other, net.................................................. 0.1 0.1 0.1
---- ---- ----
Effective tax rate........................................ 51.6% 52.6% 51.2%
==== ==== ====
</TABLE>

Deferred tax assets and liabilities are computed by applying the U.S.
federal income tax rate in effect to the gross amounts of temporary differences
and other tax attributes. These temporary differences are primarily the result
of fixed asset basis differences and bad debt expense.

(7) DEBT AND INTEREST COST

Viacom has not allocated any portion of its debt or related interest cost
to the Company, and no portion of Viacom's debt is specifically related to the
operations of the Company. Accordingly, the Company's financial statements
include no charges for interest.

(8) RELATED PARTY TRANSACTIONS

Intercompany balances between the Company and Viacom resulting from normal
trade activity are reflected in Equity in the accompanying combined financial
statements
(see note 9).

Viacom provides services for the Company in management, accounting and
financial reporting, human resources and information systems. The allocation of
these expenses, which is generally based on revenue dollars, is reflected in the
accompanying combined financial statements as corporate general and
administrative expense. Management believes that the method of allocation of
corporate overhead is reasonable.

Viacom has a noncontributory pension plan covering substantially all of its
employees, including the employees of the Company. Costs related to these plans
are allocated to the Company based on payroll dollars. The Company recognized
expense related to these costs in the amounts of $63, $41 and $97 for 1994, 1995
and 1996, respectively. The assets and the related benefit obligation of the
plans will not be transferred to the Company upon consummation of the Proposed
Transaction, therefore, such assets and obligations are not included in the
notes to the Company's combined financial statements.

Viacom utilizes a centralized cash management system. As a result, the
Company carries minimal cash. Disbursements are funded by the Parent upon demand
and cash receipts are transferred to the Parent daily.

F-85
<PAGE> 269
RIVERSIDE BROADCASTING CO., INC. AND WAXQ INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The Company, from time to time, enters into transactions with companies
owned by or affiliated with Viacom. Generally, services received from such
related parties are charged to the Company at amounts which would be incurred in
transactions between unrelated entities.

(9) EQUITY

Equity represents Viacom's ownership interest in the recorded net assets of
the Company. All cash transactions and intercompany transactions flow through
the equity account. A summary of the activity is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of period.......... $ 55,462 $ 54,774 $ 52,838
Net earnings............................ 5,682 4,641 6,369
Net intercompany activity............... (6,370) (6,577) 14,477
-------- -------- --------
Balance at end of period................ $ 54,774 $ 52,838 $ 73,684
======== ======== ========
</TABLE>

(10) COMMITMENTS AND CONTINGENCIES

The Company has noncancelable operating leases, primarily for office space.
These leases generally contain renewal options for periods ranging from one to
ten years and require the Company to pay all executory costs such as maintenance
and insurance. Rental expense for operating leases (excluding those with lease
terms of one month or less that were not renewed) was approximately $192, $155
and $442 during 1994, 1995 and 1996, respectively.

Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31, 1996
are as follows:

<TABLE>
<S> <C>
Year ending December 31:
1997.................................... $ 709
1998.................................... 722
1999.................................... 759
2000.................................... 795
2001.................................... 818
Thereafter.............................. 2,411
------
$6,214
======
</TABLE>

F-86
<PAGE> 270

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Evergreen Media Corporation:

We have audited the accompanying combined balance sheets of WMZQ Inc. and
Viacom Broadcasting East Inc. as of December 31, 1995 and 1996, and the related
combined statements of earnings and cash flows for each of the years in the
three-year period ended December 31, 1996. These combined financial statements
are the responsibility of the Companies' management. Our responsibility is to
express an opinion on these combined financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of WMZQ Inc.
and Viacom Broadcasting East Inc. as of December 31, 1995 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1996 in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Dallas, Texas
March 14, 1997, except for note 10,
which is as of April 14, 1997

F-87
<PAGE> 271

WMZQ INC. AND VIACOM BROADCASTING EAST INC.

COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31
------------------ JUNE 30,
1995 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Accounts receivable, less allowance
for doubtful accounts of $150 in
1995, $235 in 1996 and $136 in
1997............................... $ 4,893 $ 5,401 $ 5,407
Prepaid expenses and other current
assets............................. 467 629 55
Deferred income taxes (note 5)........ 60 94 94
------- ------- -------
Total current assets.......... 5,420 6,124 5,556
Property and equipment, net (note 3).... 2,407 2,316 2,408
Intangible assets, net (note 4)......... 50,204 48,695 50,399
------- ------- -------
$58,031 $57,135 $58,363
======= ======= =======
LIABILITIES AND EQUITY
Current liabilities -- accounts payable
and accrued expenses.................. $ 2,411 $ 2,458 $ 1,814
Deferred income taxes (note 5).......... 1,899 2,121 2,123
Equity (note 8)......................... 53,721 52,556 54,426
Commitments and contingencies (note
9)....................................
------- ------- -------
$58,031 $57,135 $58,363
======= ======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-88
<PAGE> 272

WMZQ INC. AND VIACOM BROADCASTING EAST INC.

COMBINED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross revenues................................... $21,389 $25,656 $26,584 $13,422 $13,837
Less agency commissions and national rep
fees........................................ 3,321 4,131 4,075 1,624 1,818
------- ------- ------- ------- -------
Net revenues........................... 18,068 21,525 22,509 11,798 12,019
------- ------- ------- ------- -------
Operating expenses:
Station operating expenses excluding
depreciation and amortization............... 10,398 11,445 11,362 6,394 6,043
Depreciation and amortization.................. 1,798 1,814 1,884 906 989
Corporate general and administrative........... 694 940 674 436 240
------- ------- ------- ------- -------
Operating expenses.......................... 12,890 14,199 13,920 7,736 7,272
------- ------- ------- ------- -------
Earnings before income taxes................ 5,178 7,326 8,589 4,062 4,747
Income tax expense (note 5)...................... 2,607 3,437 3,929 1,858 1,556
------- ------- ------- ------- -------
Net earnings........................... $ 2,571 $ 3,889 $ 4,660 $ 2,204 $ 3,191
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-89
<PAGE> 273

WMZQ INC. AND VIACOM BROADCASTING EAST INC.

COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows provided by operating
activities:
Net earnings.......................... $ 2,571 $ 3,889 $ 4,660 $ 2,204 $ 3,191
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation....................... 289 305 375 150 237
Amortization of goodwill........... 1,509 1,509 1,509 756 752
Deferred income tax expense........ 323 302 188 -- --
Changes in certain assets and
liabilities, net of effects of
acquisitions:
Accounts receivable, net......... 179 (1,485) (508) (445) (6)
Prepaid expenses and other
current assets................ 14 (121) (162) (730) 574
Accounts payable and accrued
expenses...................... (559) 20 47 2,446 (644)
------- ------- ------- ------- -------
Net cash provided by operating
activities.................. 4,326 4,419 6,109 4,381 4,104
------- ------- ------- ------- -------
Cash flows used by investing
activities -- capital expenditures.... (194) (491) (284) (142) (232)
------- ------- ------- ------- -------
Cash flows used by financing
activities -- distribution to
Parent................................ (4,132) (3,928) (5,825) (4,239) (3,872)
------- ------- ------- ------- -------
Increase (decrease) in cash............. -- -- -- -- --
Cash at beginning of period............. -- -- -- -- --
------- ------- ------- ------- -------
Cash at end of period................... $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-90
<PAGE> 274

WMZQ INC. AND VIACOM BROADCASTING EAST INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

(1) ORGANIZATION AND BASIS OF PRESENTATION

The accompanying combined financial statements include the accounts of WMZQ
Inc. and Viacom Broadcasting East Inc. (collectively, the "Company"). The
Company owns and operates four commercial radio stations in the Washington, DC
market, WMZQ-FM, WJZW-FM, WBZS-AM and WZHF-AM, and is wholly owned by Viacom
International Inc. ("Viacom" or "Parent"), a wholly owned subsidiary of Viacom,
Inc. Significant intercompany accounts and transactions have been eliminated in
combination.

On February 16, 1997, Viacom International Inc. entered into a stock
purchase agreement to sell all the issued and outstanding shares of capital
stock of WAXQ Inc. and Riverside Broadcasting Co., Inc. in the New York City
market, KYSR Inc. and KIBB Inc. in the Los Angeles market, Viacom Broadcasting
East Inc. and WMZQ Inc. in the Washington, DC market, WLIT Inc. in the Chicago
market and WDRQ Inc. in the Detroit market (collectively the "Viacom Radio
Properties") to Evergreen Media Corporation for $1.075 billion in cash
("Proposed Transaction"). The Proposed Transaction is expected to close after
the expiration or termination of the applicable waiting periods under the HSR
Act and approval by the Federal Communications Commission ("FCC").
Contemporaneous with this transaction, Evergreen entered into a joint purchase
agreement with Chancellor Broadcasting Company ("Chancellor"), under which
Chancellor agreed to acquire the Chicago, Detroit and Los Angeles Viacom Radio
Properties referred to above for $480 million from Evergreen or from Viacom
directly.

The accompanying combined financial statements reflect the carve-out
historical results of operations and financial position of WMZQ Inc. and Viacom
Broadcasting East, Inc. These financial statements are not necessarily
indicative of the results that would have occurred if the Company had been a
separate stand-alone entity during the periods presented.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Property and Equipment

(b) Intangible Assets

F-91
<PAGE> 275
WMZQ INC. AND VIACOM BROADCASTING EAST INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(d) Revenue Recognition

Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.

(e) Income Taxes

(f) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

(g) Fair Value

The carrying amount of accounts receivable and accounts payable
approximates fair value because of the short maturity of these instruments.

(h) Disclosure of Certain Significant Risks and Uncertainties

(i) Unaudited Interim Financial Information

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(3) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1995 and
1996:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1995 1996
--------------- ------ ------
<S> <C> <C> <C>
Broadcast facilities................................... 8 - 20 years $2,268 $2,366
Land................................................... 440 440
Building............................................... 30 - 40 years 146 146
Office equipment and other............................. 5 - 8 years 1,866 1,808
Construction in progress............................... -- 5
------ ------
4,720 4,765
------ ------
Accumulated depreciation............................... 2,313 2,449
------ ------
$2,407 $2,316
====== ======
</TABLE>

(4) INTANGIBLE ASSETS

Intangible assets at December 31, 1995 and 1996 consist of broadcast
licenses which are being amortized over forty years and are presented net of
accumulated amortization of $10,714 and $12,223, respectively.

(5) INCOME TAXES

The Company's results of operations are included in the U.S. federal and
certain combined and separate state income tax returns of Viacom International
Inc.

Income tax expense consists of:

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Current:
Federal................................................... $1,704 $2,434 $2,943
State and local........................................... 580 701 798
Deferred federal and state.................................. 323 302 188
------ ------ ------
$2,607 $3,437 $3,929
====== ====== ======
</TABLE>

F-93
<PAGE> 277
WMZQ INC. AND VIACOM BROADCASTING EAST INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the U.S. Federal statutory tax rate to the Company's
effective tax rate on earnings before income taxes is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. tax rate................. 35.0% 35.0% 35.0%
Amortization of intangibles............. 7.4 5.2 4.5
State and local taxes, net of federal
tax benefit........................... 7.9 6.7 6.2
Other, net.............................. 0.0 0.0 0.0
---- ---- ----
Effective tax rate.................... 50.3% 46.9% 45.7%
==== ==== ====
</TABLE>

(6) DEBT AND INTEREST COST

(7) RELATED PARTY TRANSACTIONS

Intercompany balances between the Company and Viacom resulting from normal
trade activity are reflected in Equity in the accompanying combined financial
statements (see note 8).

Viacom provides services for the Company in management, accounting and
financial reporting, human resources, information systems, legal, taxes and
other corporate services. The allocation of these expenses, which is generally
based on revenue dollars, is reflected in the accompanying financial statements
as corporate general and administrative expense. Management believes that the
method of allocation of corporate overhead is reasonable.

Viacom has a noncontributory pension plan covering substantially all of its
employees, including the employees of the Company. Costs related to these plans
are allocated to the Company based on payroll dollars and are included in
station operating expenses. The Company recognized expense related to these
costs in the amounts of $77, $74 and $242 for 1994, 1995 and 1996, respectively.
The assets and the related benefit obligation of the plans will not be
transferred to the Company upon consummation of the Proposed Transaction,
therefore, such assets and obligations are not included in the notes to the
Company's financial statements.

Viacom utilizes a centralized cash management system. As a result, the
Company carries minimal cash. Disbursements are funded centrally upon demand and
cash receipts are transferred to the Parent daily.

F-94
<PAGE> 278
WMZQ INC. AND VIACOM BROADCASTING EAST INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(8) EQUITY

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of period......................... $55,321 $53,760 $53,721
Net earnings........................................... 2,571 3,889 4,660
Net intercompany activity.............................. (4,132) (3,928) (5,825)
------- ------- -------
Balance at end of period............................... $53,760 $53,721 $52,556
======= ======= =======
</TABLE>

(9) COMMITMENTS AND CONTINGENCIES

The Company has noncancelable operating leases, primarily for office space.
These leases generally contain renewal options for periods ranging from 1 to 10
years and require the Company to pay all executory costs such as maintenance and
insurance. Rental expense for operating leases (excluding those with lease terms
of one month or less that were not renewed) was approximately $332, $356 and
$373 during 1994, 1995 and 1996, respectively.

Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31, 1996
are as follows:

<TABLE>
<S> <C>
Year ending December 31:
1997........................................................ $ 506
1998........................................................ 523
1999........................................................ 310
2000........................................................ 222
2001........................................................ 200
Thereafter.................................................. 814
------
$2,575
======
</TABLE>

(10) SUBSEQUENT EVENT

On April 14, 1997, Evergreen Media Corporation and Chancellor Broadcasting
Company entered into an agreement with ABC Radio ("ABC"), a division of The Walt
Disney Company, whereby ABC will purchase from Evergreen and Chancellor two
radio stations, WDRQ-FM and WJZW-FM for a total of $105 million.

F-95
<PAGE> 279

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Beasley FM Acquisition Corp.:

We have audited the accompanying balance sheet of WDAS-AM/FM (station owned
and operated by Beasley FM Acquisition Corp.) as of December 31, 1996, and the
related statements of earnings and station equity and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of WDAS-AM/FM as of December
31, 1996, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

St. Petersburg, Florida
March 28, 1997

F-96
<PAGE> 280

WDAS-AM/FM
(STATION OWNED AND OPERATED BY
BEASLEY FM ACQUISITION CORP.)

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Current assets:
Cash...................................................... $ 2,111 $ 2,805
Accounts receivable, less allowance for doubtful accounts
of $166 and $138 in 1996 and 1997...................... 3,693 2,938
Trade sales receivable.................................... 359 29
Prepaid expense and other................................. 150 130
------- -------
Total current assets.............................. 6,313 5,902
Property and equipment, net (note 2)........................ 3,297 3,523
Notes receivable from related parties (note 5).............. 2,766 3,625
Intangibles, less accumulated amortization.................. 17,738 17,122
------- -------
$30,114 $30,172
======= =======

LIABILITIES AND STATION EQUITY

Current liabilities:
Current installments of long-term debt (note 3)........... $ 49 $ 49
Notes payable to related parties (note 5)................. 352 494
Accounts payable.......................................... 269 191
Accrued expenses.......................................... 515 313
Trade sales payable....................................... 39 12
------- -------
Total current liabilities......................... 1,224 1,059
Long-term debt, less current installments (note 3).......... 627 627
------- -------
Total liabilities................................. 1,851 1,686
Station equity.............................................. 28,263 28,486
Commitments and related party transactions (notes 4 and
5)........................................................
------- -------
$30,114 $30,172
======= =======
</TABLE>

See accompanying notes to financial statements.

F-97
<PAGE> 281

WDAS-AM/FM
(STATION OWNED AND OPERATED BY
BEASLEY FM ACQUISITION CORP.)

STATEMENTS OF EARNINGS AND STATION EQUITY

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, ------------------
1996 1996 1997
------------ ------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Net revenues................................................ $14,667 $ 2,623 $ 3,000
------- ------- -------
Costs and expenses:
Program and production.................................... 2,028 445 620
Technical................................................. 212 59 50
Sales and advertising..................................... 3,514 660 802
General and administrative................................ 2,005 497 459
------- ------- -------
7,759 1,661 1,931
------- ------- -------
Operating income, excluding items shown separately
below........................................... 6,908 962 1,069
Management fees (note 5).................................... (620) (156) (128)
Depreciation and amortization............................... (2,763) (651) (657)
Interest income (expense), net.............................. (40) (13) 7
Other....................................................... -- -- (78)
------- ------- -------
Net income........................................ 3,485 142 213
Station equity, beginning of period......................... 25,367 25,367 28,273
Forgiveness of related party note receivable (note 5)....... (589) -- --
------- ------- -------
Station equity, end of period............................... $28,263 $25,509 $28,486
======= ======= =======
</TABLE>

See accompanying notes to financial statements.

F-98
<PAGE> 282

WDAS-AM/FM
(STATION OWNED AND OPERATED BY BEASLEY FM ACQUISITION CORP.)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, -------------------------------
1996 1996 1997
------------ --------------- -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................... $ 3,485 $ 142 $ 213
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 2,763 651 657
Allowance for doubtful accounts................... 8 (56) (28)
Decrease (increase) in receivables................ (398) 792 1,113
(Increase) decrease) in prepaid expense and other
assets.......................................... (96) (104) 20
Decrease in payables and accrued expenses......... (507) (331) (297)
------- ----- ------
Net cash provided by operating activities.... 5,255 1,094 1,678
------- ----- ------

Cash flows from investing activities -- capital
expenditures for property and equipment.............. (775) (572) (267)
------- ----- ------

Cash flows from financing activities:
Proceeds from issuance of indebtedness............... 676 - -
Principal payments on indebtedness................... (820) - -
Payment of loan fees................................. (6) - -
Net change in borrowings to/from affiliates.......... (2,647) (305) (717)
------- ----- ------
Net cash used in financing activities........ (2,797) (305) (717)
------- ----- ------
Net increase in cash................................... 1,683 217 694
Cash at beginning of period............................ 428 428 2,111
------- ----- ------
Cash at end of period.................................. $ 2,111 $ 645 $2,805
======= ===== ======
Noncash transactions:
Forgiveness of related note receivable
Release of WDAS-AM/FM's obligations under a note
payable which related to obtaining an easement.
WDAS-AM/FM is now directly responsible for the costs
necessary to obtain this easement and has included
these costs in accrued expenses in the accompanying
balance sheet........................................ $ 350
=======
</TABLE>

See accompanying notes to financial statements.

F-99
<PAGE> 283

WDAS-AM/FM
(STATION OWNED AND OPERATED BY BEASLEY FM ACQUISITION CORP.)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(IN THOUSANDS)

(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Organization

WDAS-AM/FM (the Station) is a radio station operating in Philadelphia,
Pennsylvania. The assets, liabilities and operations of WDAS-AM/FM are part of
Beasley FM Acquisition Corp. (BFMA). These financial statements reflect only the
assets, liabilities and operations relating to radio station WDAS-AM/FM and are
not representative of the financial statements of BFMA.

(b) Revenue Recognition

Revenue is recognized as advertising air time is broadcast and is net of
advertising agency commissions.

Property and equipment are stated at cost. Depreciation is calculated using
the straight-line method over the estimated lives of the assets, which range
from 5 to 31 years.

(d) Intangibles

Intangibles consist primarily of FCC licenses, which are amortized
straight-line over ten years. Other intangibles are amortized straight-line over
5 to 10 years.

(e) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

BFMA adopted the provisions of Statement of Financial Accounting Standards
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, on January 1, 1996. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Adoption of this Statement did not have
a material impact on the Station's financial position, results of operations, or
liquidity.

(f) Barter Transactions

Trade sales are recorded at the fair value of the products or services
received and totaled approximately $676 for the year ended December 31, 1996.
Products and services received and expensed totaled approximately $449 for the
year ended December 31, 1996.

(g) Income Taxes

BFMA has elected to be treated as an "S" Corporation under provisions of
the Internal Revenue Code. Under this corporate status, the stockholders of BFMA
are individually responsible for reporting their share of taxable income or
loss. Accordingly, no provision for federal or state income taxes has been
reflected in the accompanying financial statements.

F-100
<PAGE> 284
WDAS-AM/FM
(STATION OWNED AND OPERATED BY BEASLEY FM ACQUISITION CORP.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(h) Defined Contribution Plan

BFMA has a defined contribution plan which conforms with Section 401(k) of
the Internal Revenue Code. Under this plan, employees may contribute a minimum
of 1% of their compensation (no maximum) to the Plan. The Internal Revenue Code,
however, limited contributions to $9,500 in 1996. There are no employer matching
contributions.

(i) Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from these estimates. To the
extent management's estimates prove to be incorrect, financial results for
future periods may be adversely affected.

(j) Interim Financial Statements

In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position, results of operations, and
cash flows of the Station for the three-month periods ended March 31, 1997 and
1996 and as of June 30, 1997.

(2) PROPERTY AND EQUIPMENT

Property and equipment, at cost, is comprised of the following at December
31, 1996:

<TABLE>
<S> <C>
Land, buildings, and improvements........................... $2,204
Broadcast equipment......................................... 1,200
Office equipment and other.................................. 477
Transportation equipment.................................... 79
------
3,960
Less accumulated depreciation..................... (663)
------
$3,297
======
</TABLE>

(3) LONG-TERM DEBT

BFMA and six affiliates (the Group) refinanced their $100,000 revolving
credit loan on June 24, 1996. Under terms of the new agreement, the Group was
provided a revolving credit loan with an initial maximum commitment of $115,000.
The credit agreement was subsequently amended and the maximum commitment was
increased to $120,000. The Group's borrowings under the revolving credit loan
totaled $115,784 at December 31, 1996, of which $676 was allocated to
WDAS-AM/FM. The loan bears interest at either the base rate or LIBOR plus a
margin which is determined by the Group's debt to cash flow ratio. The base rate
is equal to the higher of the prime rate or the overnight federal funds
effective rate plus 0.5%. At December 31, 1996, the revolving credit loan
carried interest at an average rate of 8.61%. Interest is generally payable
monthly. The Group has entered into interest rate hedge agreements as discussed
in note 6.

The amount available under the Group's revolving credit loan will be
reduced quarterly beginning September 30, 1997 through its maturity on December
31, 2003. The loan agreement includes restrictive covenants and requires the
Group to maintain certain financial ratios. The loans are secured by the common
stock and substantially all assets of the Group.

F-101
<PAGE> 285
WDAS-AM/FM
(STATION OWNED AND OPERATED BY BEASLEY FM ACQUISITION CORP.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Annual maturities on the Group's revolving credit loan for the next five
years are as follows:

<TABLE>
<CAPTION>
DEBT
MATURITIES
----------
<S> <C>
1997........................................................ $ 8,434
1998........................................................ 12,650
1999........................................................ 13,800
2000........................................................ 14,950
2001........................................................ 15,525
Thereafter.................................................. 50,425
--------
Total............................................. $115,784
========
</TABLE>

S-AM/FM paid interest of approximately $79 in 1996.

(4) COMMITMENTS

On September 19, 1996, BFMA entered into an asset purchase agreement (APA)
with Evergreen Media Corporation of Los Angeles (Evergreen) for the sale of
WDAS-AM/FM. Under the terms of the APA, BFMA will convey substantially all of
the assets used in the operation of the station to Evergreen in exchange for a
purchase price of $103,000, subject to adjustment, to be paid in cash. BFMA
expects to close on this sale before July 1, 1997.

WDAS-AM/FM leases facilities and a tower under 10-year operating leases
which expire in July 2004 and January 2007, respectively. WDAS-AM/FM also leases
certain other office equipment on a month-to-month basis. Lease expense was
approximately $215 in 1996. Future minimum lease payments by year are summarized
as follows:

<TABLE>
<S> <C>
1997........................................................ $ 236
1998........................................................ 247
1999........................................................ 258
2000........................................................ 270
2001........................................................ 283
Thereafter.................................................. 1,275
------
$2,569
======
</TABLE>

In the normal course of business, the Station is party to various legal
matters. The ultimate disposition of these matters will not, in management's
judgment, have a material adverse effect on the Station's financial position.

(5) RELATED PARTY TRANSACTIONS

The Company has a management agreement with Beasley Management Company, an
affiliate of the Company's principal stockholder. Management fee expense under
the agreement was $620 in 1996.

The notes receivable from/payable to related parties are non-interest
bearing and are due on demand. A note receivable due from a related party of
$589 was forgiven in 1996.

F-102
<PAGE> 286
WDAS-AM/FM
(STATION OWNED AND OPERATED BY BEASLEY FM ACQUISITION CORP.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(6) FINANCIAL INSTRUMENTS

WDAS-AM/FM's significant financial instruments and the methods used to
estimate their fair value are as follows:

Revolving credit loan -- The fair value approximates carrying value
due to the loan being refinanced on June 24, 1996 and the interest rate
being based on current market rates.

Notes receivable from/payable to related parties -- It is not
practicable to estimate the fair value of these notes payable due to their
related party nature.

Interest rate swap, cap and collar agreements -- The Group entered
into an interest rate swap agreement with a notional amount of $15,000, an
interest rate cap agreement with a notional amount of $3,100, and an
interest rate collar agreement with a notional amount of $15,000 to act as
a hedge by reducing the potential impact of increases in interest rates on
the revolving credit loan. These agreements expire on various dates in
1999. The Group is exposed to credit loss in the event of nonperformance by
the other parties to the agreements. The Group, however, does not
anticipate nonperformance by the counterparties. The fair value of the
interest rate swap agreement is estimated using the difference between the
present value of discounted cash flows using the base rate stated in the
swap agreement (5.37%) and the present value of discounted cash flows using
the LIBOR rate at December 31, 1996. The fair values of the interest rate
cap agreement, which establishes a maximum base rate of 7.50%, and the
interest rate collar agreement, which establishes a minimum base rate of
4.93% and a maximum base rate of 6%, are estimated based on the amounts the
Group would expect to receive or pay to terminate the agreement. The
estimated fair value of each of these agreements is negligible.

F-103
<PAGE> 287

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Chancellor Broadcasting Company:

We have audited the accompanying combined balance sheets of KYSR Inc. and
KIBB Inc. as of December 31, 1995 and 1996, and the related combined statements
of operations and cash flows for each of the years in the three-year period
ended December 31, 1996. These combined financial statements are the
responsibility of the Companies' management. Our responsibility is to express an
opinion on these combined financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of KYSR Inc.
and KIBB Inc. as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

Dallas, Texas
March 14, 1997

F-104
<PAGE> 288

KYSR INC. AND KIBB INC.

COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Accounts receivable, less allowance for doubtful accounts
of $218 in 1995 and $246 in 1996 and $321 in 1997...... $ 6,253 $ 7,283 $ 7,403
Prepaid expenses and other................................ 412 609 18
Deferred income taxes (note 5)............................ 89 101 101
-------- -------- --------
Total current assets.............................. 6,754 7,993 7,522
Property and equipment, net (note 3)........................ 4,172 4,082 4,195
Intangible assets, net (note 4)............................. 116,946 113,644 111,984
Other assets, net........................................... 22 22 22
-------- -------- --------
$127,894 $125,741 $123,723
======== ======== ========

LIABILITIES AND EQUITY

Current liabilities -- accounts payable and accrued
expenses.................................................. $ 3,883 $ 3,624 $ 2,082
Deferred income taxes (note 5).............................. 9,683 11,027 11,027
Equity (note 8)............................................. 114,328 111,090 110,614
Commitments and contingencies (note 9)......................
-------- -------- --------
$127,894 $125,741 $123,723
======== ======== ========
</TABLE>

See accompanying notes to combined financial statements.

F-105
<PAGE> 289

KYSR INC. AND KIBB INC.

COMBINED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross revenues.......................... $28,590 $30,571 $33,769 $15,762 $16,784
Less agency commissions and national
rep fees........................... 4,490 4,882 5,462 2,196 2,385
------- ------- ------- ------- -------
Net revenues.................. 24,100 25,689 28,307 13,566 14,399
------- ------- ------- ------- -------
Operating expenses:
Station operating expenses, excluding
depreciation and amortization...... 13,407 12,901 13,378 6,834 7,119
Depreciation and amortization......... 3,640 3,661 3,627 1,826 1,844
Corporate general and
administrative..................... 892 1,094 844 542 302
------- ------- ------- ------- -------
Operating expenses................. 17,939 17,656 17,849 9,202 9,265
------- ------- ------- ------- -------
Operating income................... 6,161 8,033 10,458 4,364 5,134
Interest expense (note 7)............... 6,374 6,374 6,374 3,187 3,178
------- ------- ------- ------- -------
Earnings (loss) before income taxes... (213) 1,659 4,084 1,177 1,956
Income tax expense (benefit) (note 5)... (70) 699 1,694 494 296
------- ------- ------- ------- -------
Net earnings (loss)........... $ (143) $ 960 $ 2,390 $ 683 $ 1,660
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-106
<PAGE> 290

KYSR INC. AND KIBB INC.

COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
------------------------ -----------------
1994 1995 1996 1996 1997
------ ------ ------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows provided by operating activities:
Net earnings (loss).......................... $ (143) $ 960 $2,390 $ 683 $ 1,660
Adjustments to reconcile net earnings (loss)
to net cash provided by operating
activities:
Depreciation.............................. 338 359 325 175 193
Amortization of intangibles............... 3,302 3,302 3,302 1,651 1,651
Deferred tax expense...................... 1,597 1,412 1,332 -- --
Changes in certain assets and liabilities:
Accounts receivable, net................ (1,452) (120) (1,030) (330) (120)
Prepaid expenses and other current
assets............................... 372 (149) (197) (1,468) 591
Accounts payable and accrued expenses... (345) 265 (259) 2,236 (1,542)
------ ------ ------ ------- -------
Net cash provided by operating
activities......................... 3,669 6,029 5,863 2,947 2,433
------ ------ ------ ------- -------
Cash used by investing activities -- capital
expenditures................................. (280) (223) (235) (80) (296)
------ ------ ------ ------- -------
Cash flows used by financing
activities -- distributions to Parent........ (3,389) (5,806) (5,628) (2,867) (2,137)
------ ------ ------ ------- -------
Increase (decrease) in cash.................... -- -- -- -- --
Cash at beginning of period.................... -- -- -- -- --
------ ------ ------ ------- -------
Cash at end of period.......................... $ -- $ -- $ -- $ -- $ --
====== ====== ====== ======= =======
</TABLE>

See accompanying notes to combined financial statements.

F-107
<PAGE> 291

KYSR INC. AND KIBB INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

(1) ORGANIZATION AND BASIS OF PRESENTATION

The accompanying combined financial statements include the accounts of KYSR
Inc. and KIBB Inc. (collectively, the "Company"). The Company owns and operates
two commercial radio stations in the Los Angeles market, KYSR-FM and KIBB-FM,
and is wholly owned by Viacom International Inc. ("Viacom" or "Parent"), a
wholly owned subsidiary of Viacom, Inc. Significant intercompany balances and
transactions have been eliminated in combination.

On February 16, 1997, Viacom entered into a stock purchase agreement to
sell all the issued and outstanding shares of capital stock of WAXQ Inc. and
Riverside Broadcasting Co., Inc. in the New York City market, KYSR Inc. and KIBB
Inc. in the Los Angeles market, Viacom Broadcasting East Inc. and WMZQ Inc. in
the Washington, DC market, WLIT Inc. in the Chicago market and WDRQ Inc. in the
Detroit market (collectively, the "Viacom Radio Properties") to Evergreen Media
Corporation of Los Angeles ("Evergreen"), for $1.075 billion in cash ("Proposed
Transaction"). The Proposed Transaction is expected to close after the
expiration or termination of the applicable waiting periods under the HRS Act
and approval by the Federal Communications Commission ("FCC"). Contemporaneous
with this transaction, Evergreen entered into a joint purchase agreement with
Chancellor Broadcasting Company ("Chancellor") under which Chancellor agreed to
acquire the Chicago, Detroit and Los Angeles Viacom Radio Properties referred to
above for $480 million from Evergreen or from Viacom directly.

The accompanying combined financial statements reflect the carve-out
historical results of operations and financial position of KYSR Inc. and KIBB
Inc. These financial statements are not necessarily indicative of the results
that would have occurred if the Company had been a separate stand-alone entity
during the period presented.

The combined financial statements do not include Viacom's corporate assets
or liabilities not specifically identifiable to the Company. Corporate overhead
allocations have been included in the accompanying combined statements of
earnings in corporate general and administrative expense and station operating
expenses.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Property and Equipment

(b) Intangible Assets

F-108
<PAGE> 292
KYSR INC. AND KIBB INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The Company trades commercial air time for goods and services used
principally for promotional, sales and other business activities. An asset and
liability are recorded at the fair market value of the goods or services to be
received. Barter revenue is recorded and the liability relieved when commercials
are broadcast and barter expense is recorded and the asset relieved when goods
or services are received or used.

(d) Revenue Recognition

Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.

(e) Income Taxes

(f) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

(g) Fair Value

The carrying amount of accounts receivable and accounts payable
approximates fair value because of the short maturity of these instruments.

(h) Disclosure of Certain Significant Risks and Uncertainties

In the opinion of management, credit risk with respect to trade receivables
is limited due to the large number of diversified customers in the Company's
customer base. The Company performs ongoing credit evaluations of its customers
and believes that adequate allowances for any uncollectible trade receivables
are maintained. No one advertiser accounted for more than 10% of net revenues in
1994, 1995, or 1996. Certain

F-109
<PAGE> 293
KYSR INC. AND KIBB INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

advertisers purchase the advertising of the stations through a third party
buying service. Approximately 22%, 20% and 19% of total revenue was derived
through the use of this service in 1994, 1995 and 1996, respectively.

(i) Unaudited Interim Financial Information

In the opinion of management, the unaudited interim combined financial
statements as of and for the six months ended June 30, 1996 and 1997, reflect
all adjustments, consisting of only normal and recurring items, which are
necessary for a fair presentation of the results for the interim periods
presented. The results for the interim periods ended June 30, 1996 and 1997 are
not necessarily indicative of results to be expected for any other interim
period or for the full year.

(3) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1995 and
1996:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1995 1996
----------- ------ ------
<S> <C> <C> <C>
Land.................................................... $2,875 $2,875
Building................................................ 40 years 474 474
Broadcast facilities.................................... 8-20 years 1,501 1,572
Office equipment and other.............................. 5-8 years 725 902
Construction in progress................................ 36 24
------ ------
5,611 5,847
Accumulated depreciation................................ 1,439 1,765
------ ------
$4,172 $4,082
====== ======
</TABLE>

(4) INTANGIBLE ASSETS

Intangible assets at December 31, 1995 and 1996 consist of broadcast
licenses which are being amortized over forty years and are presented net of
accumulated amortization of $15,148 and $18,450, respectively.

(5) INCOME TAXES

The Company's results of operations are included in the combined U.S.
federal and certain combined and separate state income tax returns of Viacom
International Inc.

Income tax expense (benefit) consists of:

<TABLE>
<CAPTION>
1994 1995 1996
------- ----- ------
<S> <C> <C> <C>
Current:
Federal.................................................. $(1,289) $(551) $ 278
State and local.......................................... (378) (162) 84
Deferred federal........................................... 1,597 1,412 1,332
------- ----- ------
$ (70) $ 699 $1,694
======= ===== ======
</TABLE>

F-110
<PAGE> 294
KYSR INC. AND KIBB INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the U.S. Federal statutory tax rate to the Company's
effective tax rate on earnings (loss) before income taxes is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. tax rate..................................... 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit........... 6.2 6.2 6.1
Other, net.................................................. (8.3) 0.9 0.4
---- ---- ----
Effective tax rate.......................................... 32.9% 42.1% 41.5%
==== ==== ====
</TABLE>

(6) DEBT AND INTEREST COST

Viacom has not allocated any portion of its debt or related interest cost
to the Company, and no portion of Viacom's debt is specifically related to the
operations of the Company.

(7) RELATED PARTY TRANSACTIONS

Intercompany balances between the Company and Viacom resulting from normal
trade activity are reflected in Equity in the accompanying combined financial
statements (see note 8).

On January 25, 1990, KYSR, Inc., formerly KXEZ, Inc., issued an
intercompany demand note to Viacom in the amount of $66,400. The note bears
interest at 9.6% per year payable on the last day of each calendar year. The
principal and final interest payment are payable on January 25, 2000. However,
immediately prior to closing of the Proposed Transaction, all debts between the
Company and Viacom will be canceled. As such, the promissory note issued to
Viacom is reflected as an increase to equity and included in intercompany
activity in the amount of $66,400 at December 31, 1995 and 1996 (see note 8).

Viacom provides services for the Company in management, accounting and
financial reporting, human resources, information systems, legal, taxes and
other corporate services. The allocation of these expenses, which is generally
based on revenue dollars, is reflected in the accompanying combined financial
statements as corporate general and administrative expense. Management believes
that the method of allocation of overhead is reasonable.

Viacom has a noncontributory pension plan covering substantially all of its
employees, including the employees of the Company. Costs related to this plan
are allocated to the Company based on payroll dollars and are included in
station operating expenses. The Company recognized expense related to this plan
in the amounts of $70, $56 and $191 for 1994, 1995 and 1996, respectively. The
assets and the related benefit obligation of the plan will not be transferred to
the Company upon consummation of the Proposed Transaction, therefore, such
assets and obligations are not included in the notes to the Company's combined
financial statements.

The Company, from time to time, enters into transactions with companies
owned by or affiliated with Viacom. Generally, services rendered from such
related parties are charged to the Company at amounts which would be incurred in
transactions between unrelated entities.

F-111
<PAGE> 295
KYSR INC. AND KIBB INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(8) EQUITY

<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of period....................... $122,706 $119,174 $114,328
Net earnings (loss).................................. (143) 960 2,390
Net intercompany activity............................ (3,389) (5,806) (5,628)
-------- -------- --------
Balance at end of period............................. $119,174 $114,328 $111,090
======== ======== ========
</TABLE>

(9) COMMITMENTS AND CONTINGENCIES

The Company has noncancelable operating leases, primarily for office space.
These leases generally contain renewal options for periods ranging from one to
ten years and require the Company to pay all executory costs such as maintenance
and insurance. Rental expense for operating leases (excluding those with lease
terms of one month or less that were not renewed) was approximately $377, $365
and $405 during 1994, 1995 and 1996, respectively.

Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31, 1996
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31:
- ------------
<S> <C> <C>
1997.................................................................. $ 365
1998.................................................................. 366
1999.................................................................. 312
2000.................................................................. 19
Thereafter............................................................ --
------
$1,062
======
</TABLE>

F-112
<PAGE> 296

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Chancellor Broadcasting Company:

We have audited the accompanying balance sheets of WLIT Inc. as of December
31, 1995 and 1996, and the related statements of earnings and cash flows for
each of the years in the three-year period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of WLIT Inc. as of December 31,
1995 and 1996, and the results of its operations and its cash flows for each of
the years in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

Dallas, Texas
March 14, 1997

F-113
<PAGE> 297

WLIT INC.

BALANCE SHEETS
(DOLLARS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Accounts receivable, less allowance for doubtful accounts
of $79 in 1995 and $87 in 1996 and $110 in 1997........ $ 3,110 $ 3,627 $ 3,836
Prepaid expenses and other current assets................. 592 490 200
Deferred income taxes (note 5)............................ 37 44 44
------- ------- -------
Total current assets.............................. 3,739 4,161 4,080
Property and equipment, net (note 3)........................ 461 457 545
Intangible assets, net (note 4)............................. 16,958 16,415 16,143
------- ------- -------
$21,158 $21,033 $20,768
======= ======= =======

LIABILITIES AND EQUITY

Current liabilities -- accounts payable and accrued
expenses.................................................. $ 1,442 $ 1,195 $ 1,376
Deferred income taxes (note 5).............................. 58 53 53
Equity (note 8)............................................. 19,658 19,785 19,339
Commitment and contingencies (note 9).......................
------- ------- -------
$21,158 $21,033 $20,768
======= ======= =======
</TABLE>

See accompanying notes to financial statements.

F-114
<PAGE> 298

WLIT INC.

STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------- ----------------
1994 1995 1996 1996 1997
------- ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross revenues................................ $14,367 $16,720 $18,294 $8,080 $10,035
Less agency commissions and national rep
fees..................................... 2,523 2,848 3,071 1,144 1,410
------- ------- ------- ------ -------
Net revenues........................ 11,844 13,872 15,223 6,936 8,625
------- ------- ------- ------ -------
Operating expenses:
Station operating expenses excluding
depreciation and amortization............ 6,555 6,977 7,508 3,839 4,221
Depreciation and amortization............... 655 653 659 327 340
Corporate general and administrative........ 478 630 479 274 172
------- ------- ------- ------ -------
Operating expenses....................... 7,688 8,260 8,646 4,440 4,733
------- ------- ------- ------ -------
Earnings before income taxes............. 4,156 5,612 6,577 2,496 3,892
Income tax expense (note 5)................... 1,804 2,359 2,728 1,048 1,280
------- ------- ------- ------ -------
Net earnings........................ $ 2,352 $ 3,253 $ 3,849 $1,448 $ 2,612
======= ======= ======= ====== =======
</TABLE>

See accompanying notes to financial statements.

F-115
<PAGE> 299

WLIT INC.

STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows provided by operating
activities:
Net earnings.......................... $ 2,352 $ 3,253 $ 3,849 $ 1,448 $ 2,612
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation....................... 114 114 116 55 68
Amortization of intangibles........ 541 539 543 272 272
Deferred income taxes.............. (13) 5 (8) -- --
Changes in certain assets and
liabilities:
Accounts receivable, net......... (73) (460) (517) (476) (209)
Prepaid expenses and other
current assets................ (101) (181) 98 (577) 295
Accounts payable and accrued
expenses...................... (384) 173 (247) 1,461 (1,542)
------- ------- ------- ------- -------
Net cash provided by operating
activities.................. 2,436 3,443 3,834 2,183 1,496
------- ------- ------- ------- -------
Cash flows used by investing
activities -- capital expenditures.... (180) (110) (112) (45) (156)
------- ------- ------- ------- -------
Cash flows used by financing
activities -- distributions to
Parent................................ (2,256) (3,333) (3,722) (2,138) (1,340)
------- ------- ------- ------- -------
Increase (decrease) in cash............. -- -- -- -- --
Cash at beginning of period............. -- -- -- -- --
------- ------- ------- ------- -------
Cash at end of period................... $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to financial statements.

F-116
<PAGE> 300

WLIT INC.

NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

(1) ORGANIZATION AND BASIS OF PRESENTATION

The accompanying financial statements include the accounts of WLIT Inc.
(the "Company"). The Company owns and operates a commercial radio station in the
Chicago market, WLIT-FM, and is wholly owned by Viacom International Inc.
("Viacom" or "Parent"), a wholly owned subsidiary of Viacom, Inc.

On February 16, 1997, Viacom International Inc. entered into a stock
purchase agreement to sell all the issued and outstanding shares of capital
stock of WAXQ Inc. and Riverside Broadcasting Co., Inc. in the New York City
market, KYSR Inc. and KIBB Inc. in the Los Angeles market, Viacom Broadcasting
East Inc. and WMZQ Inc. in the Washington, DC market, WLIT Inc. in the Chicago
market and WDRQ Inc. in the Detroit market (collectively, the "Viacom Radio
Properties") to Evergreen Media Corporation ("Evergreen") for $1.075 billion in
cash ("Proposed Transaction"). The Proposed Transaction is expected to close
after the expiration or termination of the applicable waiting periods under the
HSR Act and approval by the Federal Communications Commission ("FCC").
Contemporaneous with this transaction, Evergreen entered into a joint purchase
agreement with Chancellor Broadcasting Company ("Chancellor"), under which
Chancellor agreed to acquire the Chicago, Detroit and Los Angeles Viacom Radio
Properties referred to above for $480 million from Evergreen or from Viacom
directly.

The accompanying financial statements reflect the carve-out historical
results of operations and financial position of WLIT Inc. These financial
statements are not necessarily indicative of the results that would have
occurred if the Company had been a separate stand-alone entity during the
periods presented.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Property and Equipment

(b) Intangible Assets

F-117
<PAGE> 301
WLIT INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(d) Revenue Recognition

Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.

(e) Income Taxes

(f) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

(g) Fair Value

The carrying amount of accounts receivable and accounts payable
approximates fair value because of the short maturity of these instruments.

(h) Disclosure of Certain Significant Risks and Uncertainties

(i) Unaudited Interim Financial Information

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(3) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1995 and
1996:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE 1995 1996
----------- ------ ------
<S> <C> <C> <C>
Broadcast facilities.................................... 8-20 years $1,116 $1,141
Office equipment and other.............................. 5-8 years 791 868
Construction in progress................................ 13 13
------ ------
1,920 2,022
Accumulated depreciation................................ 1,459 1,565
------ ------
$ 461 $ 457
====== ======
</TABLE>

(4) INTANGIBLE ASSETS

Intangible assets at December 31, 1995 and 1996 consist of broadcast
licenses which are being amortized over forty years and are presented net of
accumulated amortization of $5,585 and $6,128, respectively.

(5) INCOME TAXES

The Company's results of operations are included in the U.S. federal and
certain combined and separate state income tax returns of Viacom International
Inc.

Income tax expense (benefit) consists of:

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Current:
Federal.................................................. $1,588 $2,058 $2,391
State and local.......................................... 229 296 345
Deferred federal........................................... (13) 5 (8)
------ ------ ------
$1,804 $2,359 $2,728
====== ====== ======
</TABLE>

A reconciliation of the U.S. Federal Statutory tax rate to the Company's
effective tax rate on earnings before income taxes is as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. tax rate..................................... 35.0% 35.0% 35.0%
Amortization of intangibles................................. 4.7 3.4 2.9
State and local taxes, net of federal tax benefit........... 3.6 3.4 3.4
Other, net.................................................. 0.2 0.2 0.2
---- ---- ----
Effective tax rate................................ 43.5% 42.0% 41.5%
==== ==== ====
</TABLE>

F-119
<PAGE> 303
WLIT INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(6) DEBT AND INTEREST COST

(7) RELATED PARTY TRANSACTIONS

Intercompany balances between the Company and Viacom resulting from normal
trade activity are reflected in Equity in the accompanying financial statements
(see note 8).

Viacom provides services for the Company in management, accounting and
financial reporting, human resources, information systems, legal, tax and other
corporate services. The allocation of these expenses, which is generally based
on revenue dollars, is reflected in the accompanying financial statements as
corporate general and administrative expense. Management believes that the
method of allocation of corporate overhead is reasonable.

Viacom has a noncontributory pension plan covering substantially all of its
employees, including the employees of the Company. Costs related to this plan
are allocated to the Company based on payroll dollars. The Company recognized
expense related to this plan in the amounts of $67, $46 and $126 for 1994, 1995
and 1996, respectively. The assets and the related benefit obligation of the
plan will not be transferred to the Company upon consummation of the Proposed
Transaction, therefore, such assets and obligations are not included in the
notes to the Company's financial statements.

(8) EQUITY

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of period.......................... $19,642 $19,738 $19,658
Net earnings............................................ 2,352 3,253 3,849
Net intercompany activity............................... (2,256) (3,333) (3,722)
------- ------- -------
Balance at end of period................................ $19,738 $19,658 $19,785
======= ======= =======
</TABLE>

F-120
<PAGE> 304
WLIT INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(9) COMMITMENTS AND CONTINGENCIES

The Company has noncancelable operating leases, primarily for office space.
These leases generally contain renewal options for periods ranging from 1 to 10
years and require the Company to pay all executory costs such as maintenance and
insurance. Rental expense for operating leases (excluding those with lease terms
of one month or less that were not renewed) was approximately $319, $337 and
$327 during 1994, 1995 and 1996, respectively.

Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31, 1996
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31:
- ------------
<S> <C> <C>
1997.................................................................. $ 266
1998.................................................................. 291
1999.................................................................. 298
2000.................................................................. 287
2001.................................................................. 296
Thereafter............................................................ 103
------
$1,541
======
</TABLE>

F-121
<PAGE> 305

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
Colfax Communications, Inc. Radio Group:

We have audited the accompanying combined balance sheets of the Colfax
Communications, Inc. Radio Group (the "Company") as of December 31, 1996, 1995,
and 1994, and the related combined statements of income (loss), changes in
partners' equity and cash flows for each of the three years in the period ended
December 31, 1996. These combined financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audit.

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

In January 1997, substantially all of the assets and liabilities of the
Company were sold.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the Colfax
Communications, Inc. Radio Group as of December 31, 1996, 1995, and 1994, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.

/s/ ARTHUR ANDERSEN LLP

Washington, D.C.
March 31, 1997

F-122
<PAGE> 306

COLFAX COMMUNICATIONS, INC. RADIO GROUP

COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1996, 1995, AND 1994

<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Current assets:
Cash............................................... $ 1,718,589 $ 682,672 $ 216,414
Accounts receivable, net of allowance for doubtful
accounts of $710,813, $441,889, and $238,801,
respectively.................................... 15,514,187 7,626,579 8,978,881
Prepaid expenses and other current assets.......... 520,358 286,774 343,441
------------ ----------- -----------
Total current assets....................... 17,753,134 8,596,025 9,538,736
Property and equipment at cost, net of
depreciation....................................... 14,508,097 8,675,724 9,608,603
Intangibles and other noncurrent assets at cost, net
of amortization.................................... 147,579,599 32,383,587 37,653,803
------------ ----------- -----------
Total assets............................... $179,840,830 $49,655,336 $56,801,142
============ =========== ===========
Liabilities:
Accounts payable and accrued expenses.............. $ 5,116,890 $ 3,224,139 $ 3,883,242
Current maturities of long-term debt............... -- -- 900,000
------------ ----------- -----------
Total current liabilities.................. 5,116,890 3,224,139 4,783,242
Long-term debt..................................... 55,650,000 39,225,000 7,100,000
------------ ----------- -----------
Total liabilities.......................... 60,766,890 42,449,139 11,883,242
------------ ----------- -----------
Commitments (Note 8):
Partners' equity:
Radio Acquisition Associates....................... (1,141,558) (2,783,226) (3,121,671)
Equity Group Holdings.............................. 119,013,080 9,888,902 47,558,478
Colfax Communications, Inc......................... 1,202,418 100,521 481,093
Class B Limited Partners........................... -- -- --
------------ ----------- -----------
Total partners' equity..................... 119,073,940 7,206,197 44,917,900
------------ ----------- -----------
Total liabilities and partners' equity..... $179,840,830 $49,655,336 $56,801,142
============ =========== ===========
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-123
<PAGE> 307

COLFAX COMMUNICATIONS, INC. RADIO GROUP

COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994

<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Advertising revenues:
Local sponsors...................................... $37,496,454 $23,425,588 $24,147,363
National sponsors................................... 12,885,713 9,151,724 8,221,228
Other............................................... 2,518,200 1,910,483 2,090,737
----------- ----------- -----------
Gross advertising revenues.................. 52,900,367 34,487,795 34,459,328
Less -- Commissions................................. (6,785,322) (4,345,062) (4,283,386)
----------- ----------- -----------
Net advertising revenues.................... 46,115,045 30,142,733 30,175,942
----------- ----------- -----------
Operating expenses:
Programming......................................... 7,675,793 5,461,691 9,604,067
Sales and advertising............................... 14,507,662 11,360,597 10,885,717
General and administrative.......................... 5,793,377 4,332,286 3,651,832
Engineering......................................... 1,260,447 1,014,375 1,084,282
Depreciation and amortization....................... 4,617,958 6,505,492 7,599,901
----------- ----------- -----------
Total operating expenses.................... 33,855,237 28,674,441 32,825,799
----------- ----------- -----------
Income (loss) from operations............... 12,259,808 1,468,292 (2,649,857)
Interest expense...................................... 4,368,669 655,795 531,387
Loss on sale of fixed assets.......................... -- 770,689 --
Other expense (income)................................ (184,289) -- 75,364
----------- ----------- -----------
Net income (loss)........................... $ 8,075,428 $ 41,808 $(3,256,608)
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-124
<PAGE> 308

COLFAX COMMUNICATIONS, INC. RADIO GROUP

COMBINED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994

<TABLE>
<CAPTION>
RADIO EQUITY CLASS B
ACQUISITION COLFAX GROUP LIMITED
ASSOCIATES COMM., INC. HOLDINGS PARTNERS TOTAL
----------- ----------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993.......... $(2,464,398) $ 528,938 $ 52,305,936 $ -- $ 50,370,476
Capital contributions from
partners....................... 368,281 60,023 5,949,744 -- 6,378,048
Capital distributions to
partners....................... (1,678,638) (68,618) (6,826,760) -- (8,574,016)
Net income (loss)................. 653,084 (39,250) (3,870,442) -- (3,256,608)
----------- ---------- ------------ ----- ------------
Balance, December 31, 1994.......... (3,121,671) 481,093 47,558,478 -- 44,917,900
Capital contributions from
partners....................... -- 5,735 567,746 -- 573,481
Capital distributions to
partners....................... (1,031,464) (372,709) (36,922,819) -- (38,326,992)
Net income (loss)................. 1,369,909 (13,598) (1,314,503) -- 41,808
----------- ---------- ------------ ----- ------------
Balance, December 31, 1995.......... (2,783,226) 100,521 9,888,902 -- 7,206,197
Capital contributions from
partners....................... 5,104 1,130,725 111,941,654 -- 113,077,483
Capital distributions to
partners....................... (981,106) (82,845) (8,221,217) -- (9,285,168)
Net income (loss)................. 2,617,670 54,017 5,403,741 -- 8,075,428
----------- ---------- ------------ ----- ------------
Balance, December 31, 1996.......... $(1,141,558) $1,202,418 $119,013,080 $ -- $119,073,940
=========== ========== ============ ===== ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-125
<PAGE> 309

COLFAX COMMUNICATIONS, INC. RADIO GROUP

COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994

<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $ 8,075,428 $ 41,808 $(3,256,608)
Adjustments to reconcile net loss to net cash
used in operating activities --
Depreciation and amortization................. 4,617,958 6,505,492 7,599,901
Loss on asset disposal........................ -- 770,689 57,398
Restructuring charge.......................... -- 737,729 --
Change in assets and liabilities:
(Increase) decrease in accounts
receivable............................... (7,888,416) 1,352,302 (1,664,323)
(Increase) decrease in prepaid expenses and
other current assets..................... (233,584) 56,667 170,619
Increase (decrease) in accounts payable and
accrued expenses......................... 1,892,751 (1,396,832) 708,448
------------- ------------ -----------
Net cash provided by operating
activities............................. 6,464,137 8,067,855 3,615,435
------------- ------------ -----------
Cash flows from investing activities:
Cash paid for acquisition of intangibles and
other noncurrent assets....................... (126,017,951) (363,174) (12,944)
Payments for additions to property and
equipment..................................... (5,907,584) (823,737) (968,929)
Disposal of intangible assets.................... 6,280,000 -- --
Disposal of fixed assets......................... -- 113,825 --
------------- ------------ -----------
Net cash used in investing activities.... (125,645,535) (1,073,086) (981,873)
------------- ------------ -----------
Cash flows from financing activities:
Repayment of note payable........................ (5,800,000) (8,000,000) (800,000)
Loan proceeds.................................... 22,225,000 39,225,000 --
Capital contributions from partners.............. 113,077,483 573,481 6,378,048
Capital distributions to partners................ (9,285,168) (38,326,992) (8,190,101)
------------- ------------ -----------
Net cash provided by (used in) financing
activities............................. 120,217,315 (6,528,511) (2,612,053)
------------- ------------ -----------
Net increase (decrease) in cash.................... 1,035,917 466,258 21,509
Cash, beginning of period.......................... 682,672 216,414 194,905
------------- ------------ -----------
Cash, end of period................................ $ 1,718,589 $ 682,672 $ 216,414
============= ============ ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest........... $ 4,391,300 $ 615,900 $ 514,213
============= ============ ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-126
<PAGE> 310

COLFAX COMMUNICATIONS, INC. RADIO GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996, 1995, AND 1994

1. BASIS OF PRESENTATION:

The accompanying combined financial statements include the radio station
holdings of Colfax Communications, Inc. ("Colfax"), a Maryland Corporation.
Three of the stations serve the Washington, D.C., market: WGMS-FM (classical
format), WBIG-FM (oldies format), and WTEM(AM) (all-sports format). Two
stations, WBOB-FM (country format) and KQQL(FM) (oldies format), serve the
Minneapolis-St. Paul market. Five of the stations serve the Phoenix market:
KOOL-FM (oldies format), KOY(AM) (nostalgia format), KZON-FM (alternative
format), KISO(AM) (urban adult contemporary format), and KYOT-FM (new adult
contemporary format). Two stations serve the Milwaukee market: WMIL-FM (country
format) and WOKY(AM) (adult standard format). Three stations serve the Boise
market: KIDO(AM) (news/talk format), KLTB(FM) (oldies format), and KARO(FM)
(class rock format). All stations are owned by entities under the common control
of Colfax and its affiliates.

2. DESCRIPTION OF COLFAX COMMUNICATIONS, INC., RADIO GROUP:

Classical Acquisition Limited Partnership

Classical Acquisition Limited Partnership ("CALP") is a Maryland limited
partnership formed to acquire and operate radio stations WGMS(AM) (currently
WTEM(AM)) and WGMS-FM. Radio Acquisition Associates Limited Partnership, a
Maryland limited partnership, had a 98.04 percent general partner interest and
Equity Group Holdings, a District of Columbia general partnership, had a 1.96
percent limited partner interest in CALP prior to the admission of the Class B
Limited Partners as discussed below. Radio Acquisition Associates Limited
Partnership has Colfax as a 1 percent general partner and Equity Group Holdings
as a 99 percent limited partner.

Certain Class B Limited Partners were admitted to the partnership on
January 1, 1993 and on January 1, 1995. The Class B Limited Partners have a
13.25 percent interest in CALP and Equity Group Holdings' limited partnership
interest in CALP was reduced to 1.813 percent effective January 1, 1993. Radio
Acquisition Associates' Limited Partnership general partnership interest was
reduced to 90.687 percent and 84.937 percent effective January 1, 1993 and
January 1, 1995, respectively.

Radio 570 Limited Partnership

Radio 570 Limited Partnership ("Radio 570") is a Maryland limited
partnership formed on December 10, 1991, to operate radio station WTEM-AM
(formerly WGMS-AM). Radio 570 was formed by Colfax as the 1 percent general
partner and Equity Group Holdings as the 99 percent limited partner. WTEM began
broadcasting on May 24, 1992.

Effective January 1, 1993, certain Class B Limited Partners were admitted
to the partnership. On September 15, 1995, a Class B Limited Partner was
redeemed of his partnership interest. As of December 31, 1996 and 1995, the
Class B Limited Partners had a 9.25 percent interest and Equity Group Holdings
had an 89.75 percent Class A Limited Partnership interest.

Radio 100 Limited Partnership

Radio 100 Limited Partnership ("Radio 100") was formed on August 11, 1992,
to acquire and operate radio stations. Radio 100 was formed by Colfax as the 1
percent general partner and Equity Group Holdings as the 99 percent limited
partner.

In 1993, Radio 100 completed its acquisition of two radio stations in
Minnesota for $25,500,000. WBOB-FM (formerly WCTS-FM) and KQQL(FM) began on-air
operations under Radio 100 ownership on May 7, 1993, and February 18, 1993,
respectively.

F-127
<PAGE> 311
COLFAX COMMUNICATIONS, INC. RADIO GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Effective January 1, 1993, certain Class B Limited Partners were admitted
to the partnership. The Class B Limited Partners have a 10.25 percent interest
and the Equity Group Holdings Class A Limited Partnership interest was reduced
to 88.75 percent.

Radio 100 of Maryland Limited Partnership

Radio 100 of Maryland Limited Partnership ("Radio 100 of Maryland") was
formed on December 2, 1992 to acquire and operate radio stations. Radio 100 of
Maryland was formed by Colfax as the 1 percent general partner and Equity Group
Holdings as the 99 percent limited partner.

On June 3, 1993, Radio 100 of Maryland acquired WBIG-FM (formerly WJZE-FM)
in Washington, D.C. for $19,500,000.

Effective January 1, 1993, certain Class B Limited Partners were admitted
to the partnership. On September 15, 1995, a Class B Limited Partner was
redeemed of his partnership interest. On October 1, 1995, a Class B Limited
Partner was admitted to the partnership. As of December 31, 1996 and 1995, the
Class B Limited Partners had an 11.25 percent interest and Equity Group Holdings
had an 87.75 percent Class A Limited Partnership interest.

Radio 94 of Phoenix Limited Partnership

Radio 94 of Phoenix Limited Partnership ("Radio 94") was formed on January
3, 1996, to acquire and operate radio stations. Radio 94 was formed by Colfax as
the 1 percent general partner and Equity Group Holdings as the 99 percent
limited partner. On April 1, 1996, Radio 94 acquired KOOL(AM) and KOOL-FM in
Phoenix, Arizona for $35,000,000. Effective April 5, 1996, certain Class B
Limited Partners were admitted to the partnership. The Class B Limited Partners
have an 8.25 percent interest and the Equity Group Holdings Class A Limited
Partnership interest was reduced to 90.75 percent. On October 4, 1996, Radio 94
sold KOOL(AM) to Salem Media of Arizona, Inc.

Radio 95 of Phoenix Limited Partnership

Radio 95 of Phoenix Limited Partnership ("Radio 95") was formed on May 3,
1996, to acquire and operate radio stations. Radio 95 was formed by Colfax as
the 1 percent general partner and Equity Group Holdings as the 99 percent
limited partner. On September 12, 1996, Radio 95 acquired KYOT-FM, KZON-FM,
KOY(AM), and KISO(AM), each in Phoenix, Arizona; KIDO(AM) and KLTB(FM), each in
Boise, Idaho; KARO(FM) in Caldwell, Idaho; WMIL-FM in Waukesha, Wisconsin; and
WOKY(AM) in Milwaukee, Wisconsin, for $95,000,000.

F-128
<PAGE> 312
COLFAX COMMUNICATIONS, INC. RADIO GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Sale of Stations

On August 24, 1996, Chancellor Radio Broadcasting Company ("Chancellor"), a
Delaware Corporation, agreed to purchase substantially all of the assets of
CALP, Radio 570, Radio 100, Radio 100 of Maryland, Radio 94 (with the exception
of KOOL(AM)), and Radio 95 (with the exception of KIDO(AM), KLTB(FM), and
KARO(FM)) for total consideration of $365,000,000 plus the net working capital
of the stations. The transaction closed on January 23, 1997. The agreement
stipulates that the purchase price for the assets be allocated among the limited
partnerships as follows:

<TABLE>
<S> <C>
CALP........................................................ $ 50,000,000
Radio 570................................................... 21,000,000
Radio 100................................................... 85,000,000
Radio 100 of Maryland....................................... 90,000,000
Radio 94.................................................... 30,000,000
Radio 95.................................................... 89,000,000
------------
$365,000,000
============
</TABLE>

On October 28, 1996, Jacor Broadcasting of Idaho, Inc., an Ohio
corporation, entered into an agreement to purchase substantially all of the
assets of radio stations KIDO(AM), KLTB(FM), and KARO(FM) for $11,000,000. The
transaction closed on January 31, 1997.

Partnership Allocations

The partnerships distribute cash from operations and allocate net profits
or losses to the partners, in general, in accordance with their stated interests
except that no partner shall receive any distribution from a partnership until
such time as the net invested capital of the general partner and Class A Limited
Partner have been distributed, along with a cumulative priority return on the
average net invested capital at an annual rate equal to the prime rate plus one
quarter of one percent compounded monthly.

In accordance with the Company's debt agreement (described below)
distributions to partners may be permitted on a quarterly basis if certain
requirements are met.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Accounting

The accompanying financial statements are prepared on the accrual basis of
accounting in accordance with generally accepted accounting principles.

Barter Transactions

The partnerships enter into barter transactions in which they provide
on-air advertising in exchange for goods and services. Revenues and expenses
from barter transactions are presented in the accompanying statement of revenues
and expenses based on the estimated fair market value of the goods or services
received. Barter revenue approximated $1,925,000, $1,590,000, and $1,870,000 for
the years ended December 31, 1996, 1995, and 1994, respectively; while barter
expense approximated $1,763,000, $1,486,000, and $1,520,000 for the years ended
December 31, 1996, 1995, and 1994, respectively.

Income Taxes

Provision for Federal and state income taxes has not been made in the
accompanying financial statements since the partnerships do not pay Federal and
state income taxes but rather allocate profits and losses to the partners for
inclusion in their respective income tax returns.

F-129
<PAGE> 313
COLFAX COMMUNICATIONS, INC. RADIO GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Buildings and Leasehold Improvements

Buildings and leasehold improvements are recorded at cost or appraised
value at acquisition. Depreciation is recorded using the straight-line method
over 31.5 or 40 years as prescribed by the Internal Revenue Code.

Furniture, Fixtures and Equipment

Furniture, fixtures and equipment are recorded at cost or appraised value
at acquisition. Depreciation is recorded using the straight-line method over the
estimated useful life of the assets, which is typically 5 to 7 years.

Intangible Assets

Intangible assets are recorded at cost or appraised value at acquisition.
Amortization is recorded over their useful lives. The estimated useful lives of
intangible assets as of December 31, 1996, are as follows:

<TABLE>
<CAPTION>
USEFUL LIFE
-----------
<S> <C>
FCC Licenses................................................ 7-25 years
Covenants Not to Compete.................................... 3 years
Employment Agreements....................................... 2 years
Organizational Costs........................................ 5 years
Start-up Costs.............................................. 5 years
</TABLE>

Land

Certain partners have contributed to Radio 570 a parcel of land in
Germantown, Maryland which is being used as the site for a new array of
broadcasting towers. The land has been recorded at its original purchase price
plus costs related to preparing the land for its intended use.

Radio 100 of Maryland acquired a parcel of land and property in Washington,
D.C., in connection with the acquisition of WJZE-FM. This parcel of land was
recorded at its appraised value at acquisition. This land was sold in February
1995.

Radio 100 acquired a parcel of land in Nowthen, Minnesota, through the
purchase of KQQL-FM. This parcel of land was recorded at its appraised value at
acquisition.

Radio 95 acquired various parcels of land located in Phoenix, Milwaukee,
and Boise in connection with its purchase of nine stations during 1996. These
parcels of land were recorded at their estimated market value at acquisition.

Estimates

The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

In 1995 the Company adopted Statement of Financial Accounting Standard
("SFAS") No. 107, "Disclosure about Fair Value of Financial Instruments," which
requires disclosures of fair value information about financial instruments,
whether or not recognized in the balance sheet.

F-130
<PAGE> 314
COLFAX COMMUNICATIONS, INC. RADIO GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The carrying amount reported in the balance sheets for cash, accounts
receivable, accounts payable and accrued liabilities, approximate their fair
value due to the immediate or short-term maturity of such instruments. The
carrying amount reported for long-term debt approximates fair value due to the
debt being priced at floating rates (see Note 7 for additional information).

4. PROPERTY AND EQUIPMENT:

The components of property and equipment at December 31, 1996 and 1995, are
summarized below:

<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Land.................................... $ 3,719,572 $ 1,901,663 $ 2,233,341
Buildings............................... 1,372,161 26,453 604,927
Construction in progress................ 27,660 27,232 201,404
Furniture, fixtures and equipment....... 11,323,175 8,520,853 7,690,841
Leasehold improvements.................. 835,407 816,031 522,806
----------- ----------- -----------
17,277,975 11,292,232 11,253,319
Less -- Accumulated depreciation........ (2,769,878) (2,616,508) (1,644,716)
----------- ----------- -----------
$14,508,097 $ 8,675,724 $ 9,608,603
=========== =========== ===========
</TABLE>

5. FCC LICENSES AND OTHER NONCURRENT ASSETS:

The components of FCC licenses and other noncurrent assets at December 31,
1996 and 1995, are summarized below:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
FCC licenses............................ $163,988,330 $ 39,505,773 $ 39,505,773
Covenants not to compete................ 1,931,834 8,493,147 8,493,147
Start-up and organization costs......... 2,489,973 2,132,587 2,153,036
Other................................... 1,376,763 958,245 1,891,395
------------ ------------ ------------
169,786,900 51,089,752 52,043,351
Less -- Accumulated amortization........ (22,207,301) (18,706,165) (14,389,548)
------------ ------------ ------------
$147,579,599 $ 32,383,587 $ 37,653,803
============ ============ ============
</TABLE>

6. RELATED-PARTY TRANSACTIONS:

Each partnership is involved in certain transactions with other
partnerships in the radio group related to sharing of services and purchasing.
These transactions are settled on a current basis through adjustments to
partners' equity accounts.

On January 18, 1995, CALP and Radio 100 of Maryland each entered into a 10
year agreement to lease tower space from Colfax Towers, Inc. The annual rental
payment for CALP equaled $31,200 and $30,000 for the years ended December 31,
1996 and 1995, respectively. The annual rental payment for Radio 100 of Maryland
equaled $37,200 and $36,000 for the years ended December 31, 1996 and 1995,
respectively. Colfax Towers, Inc., is owned by the shareholders of Colfax
Communications, Inc.

Employees of Colfax perform activities on behalf of and oversee the
operations of the radio stations included in the radio group. Colfax does not
charge any fees to the radio stations for the performance of such services.
Corporate expenses of $1,240,253, $1,354,296, and $1,144,082 related to those
services are not included in the financial statements of the radio group for the
years ending December 31, 1996, 1995, and

F-131
<PAGE> 315
COLFAX COMMUNICATIONS, INC. RADIO GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

1994, respectively. These corporate expenses were funded directly by the owners
of Colfax Communications, Inc.

7. LONG-TERM DEBT:

On December 27, 1995, CALP, Radio 570, Radio 100, and Radio 100 of Maryland
entered into a $40 million revolving loan agreement. On April 2, 1996, under an
amendment to the loan agreement, CALP, Radio 570, Radio 100, Radio 100 of
Maryland, and Radio 94 (collectively, the "Borrowers") increased the amount
available under the revolving loan agreement to $60 million. At December 31,
1996, $55,650,000 was outstanding under this agreement. The proceeds were
allocated to each borrower on the basis of each station's capital account as
follows:

<TABLE>
<S> <C>
CALP........................................................ $ 5,702,360
Radio 570................................................... 4,156,587
Radio 100................................................... 16,423,860
Radio 100 of Maryland....................................... 9,214,544
Radio 94.................................................... 20,152,649
-----------
$55,650,000
===========
</TABLE>

The initial proceeds were used to repay the indebtedness of CALP to make
certain permitted distributions to partners of the Borrowers, and for working
capital purposes in the operations of the Borrowers. Borrowings under this
agreement bear interest at floating rates equal to prime and/or LIBOR (as
defined in the loan agreement) plus an applicable margin determined by a
leverage ratio. The expiration date of the loan agreement is December 31, 2002.
Under the loan agreement, the Borrowers are required to maintain a specific
leverage ratio and certain ratios pertaining to cash flow coverage.

In connection with the sale of the stations (discussed in Note 2), the debt
was repaid in full in January 1997.

8. COMMITMENTS:

The Radio Group has entered into various contracts for exclusive radio
broadcasting rights and other programming. In addition, the partnerships lease
office space and have entered into various service contracts, including certain
personal service contracts. These broadcasting rights, leases and service
contracts expire over periods ranging from 1997 to 2012. The minimum future
commitments under these agreements, leases and service contracts are as follows:

<TABLE>
<S> <C>
1997........................................................ $ 3,766,028
1998........................................................ 2,826,433
1999........................................................ 1,178,594
2000........................................................ 1,140,345
2001........................................................ 646,234
Thereafter.................................................. 2,077,616
-----------
$11,635,250
===========
</TABLE>

9. RESTRUCTURING CHARGES:

During 1995, the Radio Group recorded restructuring costs of $737,729 at
certain radio stations. These costs included severance and salary payments to
terminated employees of $357,563, costs related to hiring a new general manager
at one of the radio stations of $135,519 and costs related to a loss on space
vacated by one of the radio stations of $244,647.

F-132
<PAGE> 316

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Whiteco Industries, Inc.
Merrillville, Indiana

We have audited the accompanying balance sheets of the Outdoor Advertising
Division of Whiteco Industries, Inc. as of December 31, 1996 and 1997, and the
related statements of income and cash flows for each of the three years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Division's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Outdoor Advertising
Division of Whiteco Industries, Inc. as of December 31, 1996 and 1997, and the
results of its operations and cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.

BDO Seidman, LLP

Chicago, Illinois
September 17, 1998

F-133
<PAGE> 317

OUTDOOR ADVERTISING DIVISION OF
WHITECO INDUSTRIES, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- SEPTEMBER 30,
1996 1997 1998
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets
Cash............................................. $ 155,781 $ 249,733 $ 7,109,413
Accounts receivable (net of $631,000, $1,111,000
and $1,941,000 allowance for uncollectible
accounts for December 31, 1996, 1997 and
September 30, 1998, respectively)............. 9,112,798 10,718,470 13,113,464
Prepaid expenses and other
receivables................................... 2,520,913 2,684,801 2,655,593
Prepaid sign costs............................... 4,880,789 5,064,178 4,951,369
------------ ------------ ------------
Total current assets..................... 16,670,281 18,717,182 27,829,839
------------ ------------ ------------
Property and equipment
Land, buildings and improvements................. 5,389,827 6,279,957 6,980,180
Advertising signs................................ 134,120,274 150,697,192 160,138,490
Equipment........................................ 4,226,984 4,925,336 6,210,613
------------ ------------ ------------
Total cost............................... 143,737,085 161,902,485 173,329,283
Accumulated depreciation......................... 84,300,457 91,601,392 98,914,094
------------ ------------ ------------
Net property and equipment......................... 59,436,628 70,301,093 74,415,189
------------ ------------ ------------
Other sign costs................................... 707,273 1,424,848 2,164,372
------------ ------------ ------------
$ 76,814,182 $ 90,443,123 $104,409,400
============ ============ ============

LIABILITIES AND DIVISIONAL EQUITY
Current liabilities
Accounts payable................................. $ 505,561 $ 900,145 $ 462,790
Customers' advance payments and deposits......... 127,925 70,174 17,777
Accrued expenses................................. 1,577,194 2,210,355 3,965,815
------------ ------------ ------------
Total current liabilities................ 2,210,680 3,180,674 4,446,382
------------ ------------ ------------
Commitments
Divisional equity.................................. 74,603,502 87,262,449 99,963,018
------------ ------------ ------------
$ 76,814,182 $ 90,443,123 $104,409,400
============ ============ ============
</TABLE>

See accompanying notes to financial statements.

F-134
<PAGE> 318

OUTDOOR ADVERTISING DIVISION OF
WHITECO INDUSTRIES, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ --------------------------
1995 1996 1997 1997 1998
------------ ------------ ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................................. $108,447,476 $117,268,324 $126,800,754 $93,827,208 $103,693,938
Less: Agency discounts................... 6,616,011 8,400,821 8,702,563 6,372,877 7,190,622
------------ ------------ ------------ ----------- ------------
Net revenues........................... 101,831,465 108,867,503 118,098,191 87,454,331 96,503,316
Cost of revenues......................... 40,659,116 42,021,229 45,615,461 34,260,557 34,981,851
Selling and administrative
expenses............................... 14,878,784 16,288,955 18,369,034 13,127,709 14,642,469
Corporate overhead expenses.............. 5,176,832 5,644,490 6,073,671 4,786,406 5,193,299
Depreciation and amortization............ 8,675,204 10,501,844 11,525,410 8,232,183 8,760,265
Profit participation fee................. 2,101,620 2,248,329 2,321,884 1,701,068 1,756,342
------------ ------------ ------------ ----------- ------------
Income from operations before other
income and interest expense............ 30,339,909 32,162,656 34,192,731 25,346,408 31,169,090
Other income, less other
expenses............................... (1,060,355) (1,131,033) (1,833,411) 1,523,219 852,526
Interest expense......................... 38,556 17,927 3,794 (622) (98,231)
------------ ------------ ------------ ----------- ------------
Net income............................... $ 31,361,708 $ 33,275,762 $ 36,022,348 $26,869,005 $ 31,923,385
============ ============ ============ =========== ============
</TABLE>

See accompanying notes to financial statements.

F-135
<PAGE> 319

OUTDOOR ADVERTISING DIVISION OF
WHITECO INDUSTRIES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ ---------------------------
1995 1996 1997 1997 1998
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income................................... $ 31,361,708 $ 33,275,762 $ 36,022,348 $ 26,869,005 $ 31,923,385
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for depreciation and
amortization........................... 8,675,204 10,501,844 11,525,410 8,232,183 8,760,266
Gain on disposals of assets.............. (795,498) (812,482) (1,488,665) (1,369,119) (792,637)
Increase in accounts receivable.......... (694,344) (1,853,160) (1,605,672) (1,332,818) (2,394,994)
Decrease (increase) in prepaid expenses
and other receivables.................. (220,881) (1,202,910) (163,888) (373,047) 29,208
Increase in prepaid sign costs and other
sign costs............................. (1,044,722) (815,916) (1,840,672) (963,958) (1,063,971)
(Decrease) increase in accounts payable
and accrued expenses................... (66,319) 869,627 1,027,745 570,828 1,318,105
Increase (decrease) in customers' advance
payments and deposits.................. 185,750 (57,825) (57,751) (41,035) (52,397)
------------ ------------ ------------ ------------ ------------
Total adjustments.................... 6,039,190 6,629,178 7,396,507 4,723,034 5,803,580
------------ ------------ ------------ ------------ ------------
Net cash provided by operating activities.... 37,400,898 39,904,940 43,418,855 31,592,039 37,726,965
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities
Proceeds from sales of assets.............. 1,352,297 1,115,793 2,474,779 1,679,067 1,170,065
Expenditures for advertising signs......... (26,033,225) (14,713,166) (19,541,162) (16,815,288) (9,563,563)
Expenditures for property and equipment.... (1,986,847) (2,180,644) (2,895,119) (2,111,561) (3,250,971)
------------ ------------ ------------ ------------ ------------
Net cash used in investing activities........ (26,667,775) (15,778,017) (19,961,502) (17,247,782) (11,644,469)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities
Interdivisional transactions............... (11,489,912) (24,124,287) (23,363,401) (7,445,015) (19,222,816)
------------ ------------ ------------ ------------ ------------
Net cash used in financing activities........ (11,489,912) (24,124,287) (23,363,401) (7,445,015) (19,222,816)
------------ ------------ ------------ ------------ ------------
Net (decrease) increase in cash.............. (756,789) 2,636 93,952 6,899,242 6,859,680
Cash, at beginning of year................... 909,934 153,145 155,781 155,781 249,733
------------ ------------ ------------ ------------ ------------
Cash, at end of year......................... $ 153,145 $ 155,781 $ 249,733 $ 7,055,023 $ 7,109,413
============ ============ ============ ============ ============
</TABLE>

See accompanying notes to financial statements.

F-136
<PAGE> 320

OUTDOOR ADVERTISING DIVISION OF
WHITECO INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 1998 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1998 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Whiteco Industries, Inc. ("Whiteco") has entered into an agreement to sell
substantially all of the assets and certain liabilities of its Outdoor
Advertising Division (the "Division"). The Division owns and operates outdoor
advertising signs throughout the United States.

During the periods covered by the financial statements, the Division was
conducted as an integral part of Whiteco's overall operations and separate
financial statements were not prepared. These financial statements have been
prepared from Whiteco's historical accounting records. Corporate overhead
expenses are actual expenses incurred by the Division. The Division operated
independently from Whiteco Industries, Inc. However, the expenses incurred by
the Division for corporate overhead may not necessarily be indicative of
expenses that would have been incurred had the Division been operated as a
separate entity.

Interim Financial Statements

The financial information as of September 30, 1998 and with respect to the
nine months ended September 30, 1997 and 1998 is unaudited. In the opinion of
management, the financial statements contain all adjustments consisting of
normal recurring accruals, necessary for the fair presentation of the results
for such periods. The information is not necessarily indicative of the results
of operations to be expected for the fiscal year end.

Contracts and Revenue Recognition

Outdoor advertising signs are contracted to customers under individual
advertising contracts that primarily run from one month to five years. Revenue
is recognized ratably over the life of the contract. Costs associated with the
outdoor advertising operations, including contract costs and land rental, are
expensed over the related contract term.

Prepaid Sign Costs and Other Sign Costs

Prepaid sign costs and other sign costs are primarily land rental payments
relating to future periods. Amortization on these assets was $1,020,942,
$1,075,827 and $939,708 for the years ended December 31, 1995, 1996 and 1997,
and $223,975 and $437,256 for the nine months ended September 30, 1997 and 1998,
respectively.

Property and Equipment

LAND, BUILDINGS AND IMPROVEMENTS AND EQUIPMENT

Land, buildings and improvements and equipment are carried at cost,
including interest charges capitalized during construction. Depreciation on
these assets is computed over various lives under the straight-line method and
amounted to $767,872, $911,890 and $1,092,869 for the years ended December 31,
1995, 1996 and 1997 and $957,510 and $1,113,288 for the nine months ended
September 30, 1997 and 1998, respectively.

ADVERTISING SIGNS

Advertising sign structures are depreciated by the straight-line method
over lives principally from eight to twelve years. Depreciation of advertising
signs was $6,886,390, $8,514,127 and $9,492,833 for the years ended

F-137
<PAGE> 321
OUTDOOR ADVERTISING DIVISION OF
WHITECO INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

December 31, 1995, 1996 and 1997, and $7,050,698 and $7,209,722 for the nine
months ended September 30, 1997 and 1998, respectively.

Income Taxes

The Division is part of Whiteco Industries, Inc. which is an "S"
corporation and, as such, federal and most state income taxes are the
responsibility of the stockholder and therefore not reflected on the Division's
financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

2. LEASES

The Division leases office facilities and property under various operating
leases. The Division's primary office premises are leased from a partnership in
which Whiteco Industries, Inc. is the general partner. Annual minimum rental
payments under leases that have an initial or remaining term in excess of one
year at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
RELATED
YEAR PARTY OTHER TOTAL
---- -------- -------- ----------
<S> <C> <C> <C>
1998................................................ $224,000 $270,000 $ 494,000
1999................................................ 224,000 131,000 355,000
2000................................................ 224,000 130,000 354,000
2001................................................ 224,000 131,000 355,000
2002................................................ 224,000 131,000 355,000
Thereafter.......................................... 56,000 962,000 1,018,000
</TABLE>

Total lease expense was approximately $675,000, $646,000 and $665,000 for
the years ended December 31, 1995, 1996 and 1997, and $326,000 and $333,000 for
the nine months ended September 30, 1997 and 1998, respectively. Related party
lease expense was $254,000, $230,000 and $117,000 for the years ended December
31, 1995, 1996 and 1997, and $172,000 and $176,000 for the nine months ended
September 30, 1997 and 1998, respectively.

3. RETIREMENT SAVINGS PLAN

The Division is a part of Whiteco Industries, Inc. ("Whiteco") who
maintains a qualified plan under Section 401(k) of the Internal Revenue Code.
This plan is available for all employees who have completed one year or more of
continuous service. The plan permits employees to contribute up to 15% of their
annual compensation. The plan allows for discretionary Whiteco contributions.
Currently, Whiteco matches 20% of the employees' contributions, to a maximum of
6% of earnings, and also makes a 1% quarterly matching contribution.
Contributions were $154,160, $171,270 and $177,100 for the years ended December
31, 1995, 1996 and 1997, and $135,000 and $186,432 for the nine months ended
September 30, 1997 and 1998, respectively.

F-138
<PAGE> 322
OUTDOOR ADVERTISING DIVISION OF
WHITECO INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. MANAGEMENT AGREEMENT

In October 1984, the Division entered into an agreement with Metro
Management Associates (the "Partnership"), a partnership in which several
partners are employees of Whiteco, for the management and operation of
approximately 540 outdoor advertising signs located in Indiana, Texas, Rhode
Island, Missouri, Ohio, Florida, Illinois, Kentucky, Pennsylvania and Virginia.
All revenue and operating expenses related to the management and operation of
the Partnership's outdoor advertising signs are included in the Division's
results of operations. The Division is required to pay a profit participation
fee to the Partnership which approximates the operating profit of the managed
assets and is based upon a fixed monthly fee and a variable fee based upon
revenue. On August 31, 1998, the Partnership entered into an agreement to sell
substantially all of the assets and certain specified liabilities of the
Partnership to Chancellor Media Corporation. The management agreement between
the Division and the Partnership will be terminated upon consummation of the
acquisition by Chancellor Media Corporation.

5. SUBSEQUENT EVENT

On August 31, 1998, Whiteco Industries, Inc. entered into an agreement to
sell substantially all of the assets and certain specified liabilities of the
Division to Chancellor Media Corporation.

F-139
<PAGE> 323

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information........ i
Prospectus Summary......................... 1
Risk Factors............................... 13
Use of Proceeds............................ 23
Capitalization............................. 23
Selected Consolidated Historical Financial
Data..................................... 25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 27
Business................................... 35
Management and Board of Directors.......... 69
Security Ownership of Certain Beneficial
Owners and Management.................... 86
Certain Relationships and Related
Transactions............................. 89
The Exchange Offer......................... 91
Description of New Notes................... 100
Book-Entry; Delivery and Form.............. 125
Description of Certain Indebtedness........ 127
Description of Capital Stock............... 140
Certain Federal Income Tax
Considerations........................... 149
Plan of Distribution....................... 149
Legal Matters.............................. 150
Experts.................................... 150
Pro Forma Financial Information............ P-1
Index to Financial Statements.............. F-1
</TABLE>

------------------------------
UNTIL , 1999, ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------

------------------------------------------------------
------------------------------------------------------
OFFER TO EXCHANGE ALL
OUTSTANDING
8% SENIOR
NOTES DUE 2008
FOR
8% SENIOR
NOTES DUE 2008
CHANCELLOR MEDIA CORPORATION OF
LOS ANGELES
-------------------------

PROSPECTUS
-------------------------
, 1999
------------------------------------------------------
------------------------------------------------------
<PAGE> 324

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of the State of Delaware ("DGCL")
empowers a Delaware corporation to indemnify any person who is, or is threatened
to be made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation) by reason of the fact that
such person is or was an officer or director of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which he actually and reasonably incurred in
connection therewith.

CMCLA's Certificate of Incorporation, as amended, provides that no director of
the Company shall be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to CMCLA or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for
any transaction from which the director derived an improper personal benefit.

CMCLA's Bylaws provide that CMCLA shall indemnify every person who is or was a
party or is or was threatened to be made a party to any action suit, or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or officer of the corporation or, while
a director or officer or employee of the corporation, is or was serving at the
request of the corporation as a director, officer, employee, agent or trustee of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonable incurred by him in
connection with such action, suit or proceeding, to the full extent permitted by
applicable law.

II-1
<PAGE> 325

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

A. Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.11(h) -- Agreement and Plan of Merger by and among Pyramid
Communications, Inc., Evergreen Media Corporation and
Evergreen Media/Pyramid Corporation dated as of July 14,
1995 (see table of contents for list of omitted exhibits
and schedules).
2.11A(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated September
7, 1995.
2.11B(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated January 11,
1996.
2.12(j) -- Purchase Agreement between Fairbanks Communications, Inc.
and Evergreen Media Corporation dated October 12, 1995
(see table of contents for list of omitted exhibits and
schedules).
2.13(n) -- Option Agreement dated as of January 9, 1996 between
Chancellor Broadcasting Company and Evergreen Media
Corporation (including Form of Advertising Brokerage
Agreement and Form of Asset Purchase Agreement).
2.14(o) -- Asset Purchase Agreement dated April 4, 1996 between
American Radio Systems Corporation and Evergreen Media
Corporation of Buffalo (see table of contents for list of
omitted exhibits and schedules).
2.15(o) -- Asset Purchase Agreement dated April 11, 1996 between
Mercury Radio Communications, L.P. and Evergreen Media
Corporation of Los Angeles, Evergreen Media/Pyramid
Holdings Corporation, WHTT (AM) License Corp. and WHTT
(FM) License Corp. (see table of contents for list of
omitted exhibits and schedules).
2.16(o) -- Asset Purchase Agreement dated April 19, 1996 between
Crescent Communications L.P. and Evergreen Media
Corporation of Los Angeles (see table of contents for
list of omitted exhibits and schedules).
2.17(p) -- Asset Purchase Agreement dated June 13, 1996 between
Evergreen Media Corporation of Los Angeles and Greater
Washington Radio, Inc. (see table of contents for list of
omitted exhibits and schedules).
2.18(p) -- Asset Exchange Agreement dated June 13, 1996 among
Evergreen Media Corporation of Los Angeles, Evergreen
Media Corporation of the Bay State, WKLB License Corp.,
Greater Media Radio, Inc. and Greater Washington Radio,
Inc. (see table of contents for list of omitted exhibits
and schedules).
2.19(p) -- Purchase Agreement dated June 27, 1996 between WEDR,
Inc., and Evergreen Media Corporation of Los Angeles.
(See table of contents for list of omitted schedules).
</TABLE>

II-2
<PAGE> 326

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.20(p) -- Time Brokerage Agreement dated July 10, 1996 by and
between Evergreen Media Corporation of Detroit, as
Licensee, and Kidstar Interactive Media Incorporated, as
Time Broker.
2.21(p) -- Asset Purchase Agreement dated July 15, 1996 by and among
Century Chicago Broadcasting L.P., Century Broadcasting
Corporation, Evergreen Media Corporation of Los Angeles
and Evergreen Media Corporation of Chicago.
2.22(p) -- Asset Purchase Agreement dated August 12, 1996 by and
among Chancellor Broadcasting Company, Shamrock
Broadcasting, Inc. and Evergreen Media Corporation of the
Great Lakes.
2.23(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles (WQRS-FM).
(See table of contents for list of omitted exhibits and
schedules)
2.24(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles. (See table of
contents for list of omitted schedules)
2.25(q) -- Letter of intent dated August 27, 1996 between EZ
Communications, Inc. and Evergreen Media Corporation.
2.26(q) -- Asset Purchase Agreement dated September 19, 1996 between
Beasley-FM Acquisition Corp., WDAS License Limited
Partnership and Evergreen Media Corporation of Los
Angeles.
2.27(q) -- Asset Purchase Agreement dated September 19, 1996 between
The Brown Organization and Evergreen Media Corporation of
Los Angeles.
2.28(r) -- Stock Purchase Agreement by and between Viacom
International Inc. and Evergreen Media Corporation of Los
Angeles, dated February 16, 1997 (See table of contents
for omitted schedules and exhibits).
2.29(r) -- Agreement and Plan of Merger, by and among Evergreen
Media Corporation, Chancellor Broadcasting Company and
Chancellor Radio Broadcasting Company, dated as of
February 19, 1997.
</TABLE>

II-3
<PAGE> 327

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.30(r) -- Stockholders Agreement, by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Scott
K. Ginsburg (individually and as custodian for certain
shares held by his children), HM2/Chancellor, L.P.,
Hicks, Muse, Tate & First Equity Fund II, L.P., HM2/HMW,
L.P., The Chancellor Business Trust, HM2/HMD Sacramento
GP, L.P., Thomas O. Hicks, as Trustee of the William Cree
Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as Trustee
of the Catherine Forgave Hicks 1993 Irrevocable Trust,
Thomas O. Hicks, as Trustee of the John Alexander Hicks
1984 Trust, Thomas O. Hicks, as Trustee of the Mack
Hardin Hicks 1984 Trust, Thomas O. Hicks, as Trustee of
Robert Bradley Hicks 1984 Trust, Thomas O. Hicks, as
Trustee of the Thomas O. Hicks, Jr. 1984 Trust, Thomas O.
Hicks and H. Rand Reynolds, as Trustees for the Muse
Children's GS Trust, and Thomas O. Hicks, dated as of
February 19, 1997.
2.31(r) -- Joint Purchase Agreement, by and among Chancellor Radio
Broadcasting Company, Chancellor Broadcasting Company,
Evergreen Media Corporation of Los Angeles, and Evergreen
Media Corporation, dated as of February 19, 1997.
2.32(s) -- Asset Exchange Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Philadelphia, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of Charlotte,
Evergreen Media Corporation of the East, Evergreen Media
Corporation of Carolinaland, WBAV/ WBAV-FM/WPEG License
Corp. and WRFX License Corp., dated as of December 5,
1996 (See table of contents for list of omitted
schedules).
2.33(s) -- Asset Purchase Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Charlotte, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of the East and
Evergreen Media Corporation of Carolinaland, dated as of
December 5, 1996 (See table of contents for list of
omitted schedules).
2.34(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: WGCI-AM and WGCI-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.35(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KKBQ-AM and KKBQ-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.36(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KHKS-FM), dated as of April 4, 1997 (see
table of contents for list of omitted schedules and
exhibits).
</TABLE>

II-4
<PAGE> 328

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.41(y) -- Amended and Restated Agreement and Plan of Merger among
Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company, Evergreen Media Corporation,
Evergreen Mezzanine Holdings Corporation and Evergreen
Media Corporation of Los Angeles, dated as of February
19, 1997, amended and restated as of July 31, 1997.
2.42(gg) -- Option Agreement, by and among Evergreen Media
Corporation, Chancellor Broadcasting Company, Bonneville
International Corporation and Bonneville Holding Company,
dated as of August 6, 1997.
2.43(ss) -- Letter Agreement, dated February 20, 1998, between CMCLA
and Capstar Broadcasting Corporation.
2.44(yy) -- Amendment No. 1, dated May 19, 1998, to Letter Agreement
dated February 20, 1998, between CMCLA and Capstar
Broadcasting Corporation.
2.45(yy) -- Unit and Stock Purchase Agreement by and among CMCLA,
Martin Media, L.P., Martin & MacFarlane, Inc., Nevada
Outdoor Systems, Inc., MW Sign Corp. and certain sellers
named therein, dated as of June 19, 1998 (see table of
contents for list of omitted schedules and exhibits).
2.46(yy) -- Agreement and Plan of Merger between Chancellor Media
Corporation and Ranger Equity Holdings Corporation dated
as of July 7, 1998.
2.47(yy) -- Asset Purchase Agreement, dated August 11, 1998, between
Chancellor Media Corporation of Los Angeles and
Independent Group Limited Partnership.
2.48(yy) -- Asset Purchase Agreement, dated August 11, 1998, between
Chancellor Media Corporation of Los Angeles and Zapis
Communications Corporation.
2.49(yy) -- Stock Purchase Agreement, dated August 11, 1998, among
Chancellor Media Corporation of Los Angeles, Young Ones,
Inc., Zebra Broadcasting Corporation and the Sellers
named therein.
2.50(yy) -- Stock Purchase Agreement, dated August 11, 1998, among
Chancellor Media Corporation of Los Angeles, ML Media
Partners LP., Wincom Broadcasting Corporation and WIN
Communications, Inc.
2.51(yy) -- Stock Purchase and Merger Agreement, dated July 9, 1998,
by and among Chancellor Media Corporation, Chancellor
Mexico LLC, Grupo Radio Centro, S.A. De C.V., and the
Selling Shareholders.
2.52(bbb) -- Asset Purchase Agreement, dated August 30, 1998, by and
among Chancellor Media Corporation of Los Angeles,
Whiteco Industries Inc. and Metro Management Associates.
3.3(ff) -- Certificate of Incorporation of Chancellor Media
Corporation of Los Angeles, formerly known as Evergreen
Media Corporation.
</TABLE>

II-5
<PAGE> 329

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.3A(pp) -- Amendment to Certificate of Incorporation of Chancellor
Media Corporation of Los Angeles, filed September 5,
1997.
3.3B(uu) -- Amendment to the Certificate of Incorporation of
Chancellor Media Corporation, filed October 28, 1997.
3.4(ff) -- Bylaws of Chancellor Media Corporation of Los Angeles.
3.5(bbb) -- Certificate of Incorporation of Chancellor Media of the
Lone Star State.
3.6(bbb) -- Bylaws of Chancellor Media Corporation of the Lone Star
State.
3.7(bbb) -- Certificate of Incorporation of KZPS/KDGE License Corp.
3.8(bbb) -- Bylaws of KZPS/KDGE License Corp.
3.9(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of California.
3.10(bbb) -- Bylaws of Chancellor Media Corporation of California.
3.11(bbb) -- Certificate of Incorporation of KIOI License Corp.
3.12(bbb) -- Bylaws of KIOI License Corp.
3.13(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Illinois.
3.14(bbb) -- Bylaws of Chancellor Media Corporation of Illinois.
3.15(bbb) -- Certificate of Incorporation of Chancellor Media Illinois
License Corp.
3.16(bbb) -- Bylaws of Chancellor Media Illinois License Corp.
3.17(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Dade County.
3.18(bbb) -- Bylaws of Chancellor Media Corporation of Dade County.
3.19(bbb) -- Certificate of Incorporation of WVCG License Corp.
3.20(bbb) -- Bylaws of WVCG License Corp.
3.21(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Massachusetts.
3.22(bbb) -- Bylaws of Chancellor Media Corporation of Massachusetts.
3.23(bbb) -- Certificate of Incorporation of Chancellor Media
Pennsylvania License Corp.
3.24(bbb) -- Bylaws of Chancellor Media Pennsylvania License Corp.
3.25(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Miami.
3.26(bbb) -- Bylaws of Chancellor Media Corporation of Miami.
3.27(bbb) -- Certificate of Incorporation of WEDR License Corp.
3.28(bbb) -- Bylaws of WEDR License Corp.
3.29(bbb) -- Agreement of Limited Partnership of Chancellor Media
Corporation of Houston Limited Partnership.
3.30(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Houston.
</TABLE>

II-6
<PAGE> 330

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.31(bbb) -- Bylaws of Chancellor Media Corporation of Houston.
3.32(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of the Keystone State.
3.33(bbb) -- Bylaws of Chancellor Media Corporation of the Keystone
State.
3.34(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of New York.
3.35(bbb) -- Bylaws of Chancellor Media Corporation of New York.
3.36(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Charlotte.
3.37(bbb) -- Bylaws of Chancellor Media Corporation of Charlotte.
3.38(bbb) -- Certificate of WIOQ License Corp.
3.39(bbb) -- Bylaws of WIOQ License Corp.
3.40(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Washington, D.C.
3.41(bbb) -- Bylaws of Chancellor Media Corporation of Washington,
D.C.
3.42(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of St. Louis.
3.43(bbb) -- Bylaws of Chancellor Media Corporation of St. Louis.
3.44(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Michigan.
3.45(bbb) -- Bylaws of Chancellor Media Corporation of Michigan.
3.46(bbb) -- Certificate of Incorporation of Chancellor Media/WAXQ
License Corp.
3.47(bbb) -- Bylaws of Chancellor Media/WAXQ License Corp.
3.48(bbb) -- Certificate of WAXQ License Corp.
3.49(bbb) -- Bylaws of WAXQ License Corp.
3.50(bbb) -- Certificate of Incorporation of Chancellor Media/KCMG
Inc.
3.51(bbb) -- Bylaws of Chancellor Media/KCMG Inc.
3.52(bbb) -- Certificate of Incorporation of Chancellor
Media/Riverside Broadcasting Co., Inc.
3.53(bbb) -- Bylaws of Chancellor Media/Riverside Broadcasting Co.,
Inc.
3.54(bbb) -- Certificate of Incorporation of WLTW License Corp.
3.55(bbb) -- Bylaws of WLTW License Corp.
3.56(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of the Capital City.
3.57(bbb) -- Bylaws of Chancellor Media Corporation of the Capital
City.
3.58(bbb) -- Certificate of Incorporation of Chancellor Media D.C.
License Corp.
3.59(bbb) -- Bylaws of Chancellor Media D.C. License Corp.
</TABLE>

II-7
<PAGE> 331

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.60(bbb) -- Certificate of Incorporation of Chancellor Media Licensee
Company.
3.61(bbb) -- Bylaws of Chancellor Media Licensee Company.
3.62(bbb) -- Certificate of Incorporation of Chancellor Media/Trefoil
Communications, Inc.
3.63(bbb) -- Amended and Restated Bylaws of Chancellor Media/Trefoil
Communications, Inc.
3.64(bbb) -- Certificate of Incorporation of Chancellor Media/Shamrock
Broadcasting, Inc.
3.65(bbb) -- Amended and Restated Bylaws of Chancellor Media/Shamrock
Broadcasting, Inc.
3.66(bbb) -- Certificate of Incorporation of Chancellor Media/Shamrock
Radio Licenses, Inc.
3.67(bbb) -- Bylaws of Chancellor Media/Shamrock Radio Licenses, Inc.
3.68(bbb) -- Certificate of Incorporation of Chancellor Media/Shamrock
Broadcasting Licenses of Denver, Inc.
3.69(bbb) -- Bylaws of Chancellor Media/Shamrock Broadcasting Licenses
of Denver, Inc.
3.70(bbb) -- Articles of Incorporation of Chancellor Media/Shamrock
Broadcasting of Texas, Inc.
3.71(bbb) -- Amended and Restated Bylaws of Chancellor Media/Shamrock
Broadcasting of Texas, Inc.
3.72(bbb) -- Limited Liability Company Agreement of Chancellor
Media/Shamrock Radio Licenses, LLC.
3.73(bbb) -- Certificate of Incorporation of Chancellor Media Outdoor
Corporation.
3.74(bbb) -- Bylaws of Chancellor Media Outdoor Corporation.
3.75(bbb) -- Certificate of Incorporation of Chancellor Media Nevada
Sign Corporation.
3.76(bbb) -- Bylaws of Chancellor Media Nevada Sign Corporation.
3.77(bbb) -- Certificate of Incorporation of Chancellor Media MW Sign
Corporation.
3.78(bbb) -- Bylaws of Chancellor Media MW Sign Corporation.
3.79(bbb) -- Certificate of Incorporation of Chancellor Media Martin
Corporation.
3.80(bbb) -- Bylaws of Chancellor Media Martin Corporation.
3.81(bbb) -- Articles of Incorporation of Western Poster, Inc.
3.82(bbb) -- Bylaws of Western Poster, Inc.
3.83(bbb) -- Certificate of Incorporation of The AMFM Radio Networks,
Inc.
3.84(bbb) -- Bylaws of The AMFM Radio Networks, Inc.
3.85(bbb) -- Certificate of Incorporation of Chancellor Media Air
Services Corporation.
</TABLE>

II-8
<PAGE> 332

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.86(bbb) -- Bylaws of Chancellor Media Air Services Corporation.
3.87(bbb) -- Certificate of Incorporation of Chancellor Media Whiteco
Outdoor Corporation.
3.88(bbb) -- Bylaws of Chancellor Media Whiteco Outdoor Corporation.
3.89(bbb) -- Certificate of Incorporation of Chancellor Merger Corp.
3.90(bbb) -- Bylaws of Chancellor Merger Corp.
3.91(bbb) -- Articles of Organization of Broadcast Architecture, Inc.
3.92(bbb) -- Bylaws of Broadcast Architecture, Inc.
3.93(bbb) -- Agreement of Limited Partnership of Martin Media.
3.94(bbb) -- Articles of Incorporation of Dowling Company
Incorporated.
3.95(bbb) -- Bylaws of Dowling Company Incorporated.
3.96(bbb) -- Articles of Incorporation of Nevada Outdoor Systems, Inc.
3.97(bbb) -- Bylaws of Nevada Outdoor Systems, Inc.
3.98(bbb) -- Articles of Incorporation of MW Sign Corp.
3.99(bbb) -- Bylaws of MW Sign Corp.
3.100(bbb) -- Articles of Incorporation of Martin & MacFarlane, Inc.
3.101(bbb) -- Bylaws of Martin & MacFarlane, Inc.
3.102(bbb) -- Certificate of Incorporation of Katz Media Corporation.
3.103(bbb) -- Bylaws of Katz Media Corporation.
3.104(bbb) -- Certificate of Incorporation of Katz Communications, Inc.
3.105(bbb) -- Bylaws of Katz Communications, Inc.
3.106(bbb) -- Certificate of Incorporation of Katz Millennium
Marketing, Inc.
3.107(bbb) -- Bylaws of Katz Millennium Marketing, Inc.
3.108(bbb) -- Certificate of Incorporation of Amcast Radio Sales, Inc.
3.109(bbb) -- Bylaws of Amcast Radio Sales, Inc.
3.110(bbb) -- Certificate of Incorporation of Christal Radio Sales,
Inc.
3.111(bbb) -- Amended and Restated Bylaws of Christal Radio Sales, Inc.
3.112(bbb) -- Certificate of Incorporation of Eastman Radio Sales, Inc.
3.113(bbb) -- Bylaws of Eastman Radio Sales, Inc.
3.114(bbb) -- Certificate of Incorporation of Seltel, Inc.
3.115(bbb) -- Bylaws of Seltel, Inc.
3.116(bbb) -- Certificate of Incorporation of Katz Cable Corporation.
3.117(bbb) -- Amended and Restated Bylaws of Katz Cable Corporation.
3.118(bbb) -- Certificate of Incorporation of The National Payroll
Company, Inc.
3.119(bbb) -- Bylaws of The National Payroll Company, Inc.
3.120(bbb) -- Limited Liability Company Agreement of Chancellor Media
Radio Licenses, LLC
</TABLE>

II-9
<PAGE> 333

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.121(bbb) -- Agreement of Limited Partnership of KLOL License Limited
Partnership.
3.122(bbb) -- Agreement of Limited Partnership of WTOP License Limited
Partnership.
3.123(bbb) -- Certificate of Formation of Radio 100, L.L.C.
4.10(t) -- Second Amended and Restated Loan Agreement dated as of
April 25, 1997 among Evergreen Media Corporation of Los
Angeles, the financial institutions whose names appear as
Lenders on the signature pages thereof (the "Lenders"),
Toronto Dominion Securities, Inc., as Arranging Agent,
The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, NationsBank of Texas, N.A. and
Union Bank of California, as Co-Documentation Agents, and
Toronto Dominion (Texas), Inc., as Administrative Agent
for the Lenders, together with certain collateral
documents attached thereto as exhibits, including
Assignment of Partnership Interests, Assignment of Trust
Interests, Borrower's Pledge Agreement, Parent Company
Guaranty, Stock Pledge Agreement, Subsidiary Guaranty and
Subsidiary Pledge Agreement (see table of contents for
list of omitted schedules and exhibits.
4.11(z) -- First Amendment to Second Amended and Restated Loan
Agreement, dated June 26, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.15(aa) -- Indenture, dated as of February 14, 1996, governing the
9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.16(bb) -- First Supplemental Indenture, dated as of February 14,
1996, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.17(cc) -- Indenture, dated as of February 26, 1996, governing the
12 1/4% Subordinated Exchange Debentures due 2008 of
CMCLA.
4.18(dd) -- Indenture, dated as of January 23, 1997, governing the
12% Subordinated Exchange Debentures due 2009 of CMCLA.
4.19(ee) -- Indenture, dated as of June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
4.21(ff) -- Specimen of the 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock Certificate of CMCLA.
4.22(ff) -- Specimen of the 12% Exchangeable Preferred Stock
Certificate of CMCLA.
4.23(ff) -- Form of Certificate of Designation for the 12 1/4% Series
A Senior Cumulative Exchangeable Preferred Stock of
CMCLA.
4.24(ff) -- Form of Certificate of Designation for the 12%
Exchangeable Preferred Stock of CMCLA.
</TABLE>

II-10
<PAGE> 334

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.25(pp) -- Second Amendment to Second Amended and Restated Loan
Agreement, dated August 7, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.26(hh) -- Second Supplemental Indenture, dated as of April 15,
1997, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.27(pp) -- Third Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.28(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
4.29(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated February 26, 1997, governing
the 12 1/4% Subordinated Exchange Debentures due 2008 of
CMCLA.
4.30(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated January 23, 1997, governing
the 12% Subordinated Exchange Debentures due 2009 of
CMCLA.
4.34(uu) -- Amended and Restated Indenture, dated as of October 28,
1997, governing the 10 1/2% Senior Subordinated Notes due
2007 of CMCLA.
4.35(uu) -- Second Supplement Indenture, dated as of October 28,
1997, to the Amended and Restated Indenture dated October
28, 1997 governing the 10 1/2% Senior Subordinated Notes
due 2007 of CMCLA.
4.36(uu) -- Third Amendment to Second Amended and Restated Loan
Agreement, dated October 28, 1997, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.37(uu) -- Fourth Amendment to Second Amended and Restated Loan
Agreement, dated February 10, 1998, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.38(vv) -- Indenture, dated as of December 22, 1997, governing the
8 1/8% Senior Subordinated Notes due 2007 of CMCLA.
4.39(ww) -- Fifth Amendment to Second Amended and Restated Loan
Agreement, dated May 1, 1998, among CMCLA, the Lenders,
the Agents and the Administrative Agent.
4.40(yy) -- Sixth Amendment to Second Amended and Restated Loan
Agreement, dated July 31, 1998, among CMCLA, the Lenders,
the Agents and the Administrative Agent.
4.41(bbb) -- Indenture, dated as of September 30, 1998, governing the
9% Senior Subordinated Notes due 2008 of CMCLA.
4.42(bbb) -- Purchase Agreement, dated as of September 25, 1998, among
CMCLA, the Guarantors named therein and Goldman, Sachs &
Co.
</TABLE>

II-11
<PAGE> 335

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.43(bbb) -- Registration Rights Agreement, dated as of September 30,
1998, among CMCLA, the Guarantors named therein and
Goldman, Sachs & Co.
4.44(aaa) -- Seventh Amendment to Second Amended and Restated Loan
Agreement, dated November 9, 1998, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.45(bbb) -- Indenture, dated as of November 17, 1998, governing the
8% Senior Notes due 2008 of CMCLA.
4.46(bbb) -- Purchase Agreement, dated as of November 12, 1998, among
CMCLA, the Guarantors named therein, BT Alex. Brown
Incorporated, Chase Securities Inc., Morgan Stanley & Co.
Incorporated and Salomon Smith Barney Inc.
4.47(bbb) -- Registration Rights Agreement, dated as of November 17,
1998, among CMCLA, the Guarantors named therein, BT Alex.
Brown Incorporated, Chase Securities Inc., Morgan Stanley
& Co. Incorporated and Salomon Smith Barney Inc.
5.1* -- Opinion of Weil, Gotshal & Manges LLP.
10.23(xx) -- Amended and Restated Chancellor Media Corporation Stock
Option Plan for Non-employee Directors.
10.26(n)** -- Employment Agreement dated February 9, 1996 by and
between Evergreen Media Corporation and Kenneth J.
O'Keefe.
10.28(o) -- 1995 Stock Option Plan for executive officers and key
employees of Evergreen Media Corporation.
10.30(pp)** -- First Amendment to Employment Agreement dated March 1,
1997 by and between Evergreen Media Corporation and
Kenneth J. O'Keefe.
10.31(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Scott K. Ginsburg.
10.32(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and James de Castro.
10.33(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Matthew E. Devine.
10.34(pp)** -- Second Amendment to Employment Agreement dated September
4, 1997 by and among Evergreen Media Corporation,
Evergreen Media Corporation of Los Angeles and Kenneth J.
O'Keefe.
10.35(ii)** -- Employment Agreement dated February 14, 19965 by and
among Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company and Steven Dinetz.
10.36(jj) -- Chancellor Broadcasting Company 1996 Stock Award Plan.
10.37(kk) -- Chancellor Holdings Corp. 1994 Director Stock Option
Plan.
</TABLE>

II-12
<PAGE> 336

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.38(ll) -- Stock Option Grant Letter dated September 30, 1996 from
Chancellor Corporation to Steven Dinetz.
10.39(mm) -- Stock Option Grant Letter dated September 30, 1996 from
Chancellor Corporation to Eric W. Neumann.
10.40(nn) -- Stock Option Grant Letter dated September 30, 1996 from
Chancellor Corporation to Marvin Dinetz.
10.41(oo) -- Stock Option Grant Letter dated February 14, 1997 from
Chancellor Broadcasting Company to Carl M. Hirsch.
10.44(vv)** -- Agreement dated April 20, 1998 by and among Chancellor
Media Corporation, Chancellor Media Corporation of Los
Angeles and Scott K. Ginsburg.
10.45(vv)** -- Employment Agreement dated April 29, 1998 by and among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Jeffrey A. Marcus.
10.46(yy) -- Chancellor Media Corporation 1998 Stock Option Plan.
10.47(yy) -- Voting Agreement, among Chancellor Media Corporation and
Rangers Equity Partners, L.P. dated as of July 7, 1998.
10.48(bbb) -- Employment Agreement, dated as of May 18, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and James E. de Castro.
10.49(bbb) -- Employment Agreement, dated as of May 18, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Matthew E. Devine.
10.50(bbb) -- Employment Agreement, dated as of June 1, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Eric C. Neuman.
10.51(bbb) -- Employment Agreement, dated as of August 18, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and James A. McLaughlin, Jr.
12.1+ -- Chancellor Media Corporation of Los Angeles Computation
of Ratio of Earnings to Combined Fixed Charges.
23.1 -- Consent of Weil, Gotshal & Manges LLP (included as part
of their opinion listed as Exhibit 5.1).
23.2+ -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.3+ -- Consent of KPMG Peat Marwick LLP, independent
accountants.
23.4+ -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.5+ -- Consent of KPMG Peat Marwick LLP, independent
accountants.
23.6+ -- Consent of Arthur Andersen LLP, independent accountants.
23.7+ -- Consent of BDO Seidman, LLP, independent accountants.
24.1+ -- Powers of Attorney (included on signature pages).
</TABLE>

II-13
<PAGE> 337

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
25.1* -- Statement of Eligibility and Qualification of The Bank of
New York, as trustee, under the Indenture listed as
Exhibit 4.45 hereto on Form T-1.
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
</TABLE>

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

* To be filed by amendment.

** Management Contract or Compensatory Agreement.

+ Filed herewith.

(a) Incorporated by reference to the identically numbered exhibit to the
Registration Statement on Form S-1, as amended (Reg. No. 33-60036), of
Evergreen Media Corporation ("Evergreen").

(f) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-4, as amended (Reg. No.
33-89838).

(h) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 14, 1995.

(i) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated January 17, 1996.

(j) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
June 30, 1995.

(k) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-69752).

(n) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.

(o) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
March 31, 1996.

(p) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996.

(q) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-3, as amended (Reg. No.
333-12453).

(r) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated February 16, 1997 and filed
March 9, 1997.

(s) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1996.

(t) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated April 1, 1997 and filed May
9, 1997.

(y) Incorporated by reference to the identically numbered exhibit of
Evergreen's Registration Statement on Form S-4, filed August 1, 1997.

(z) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 7, 1997 and filed July
31, 1997.

II-14
<PAGE> 338

(aa) Incorporated by reference to Exhibit 4.4 to the Current Report on Form
8-K of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.

(bb) Incorporated by reference to Exhibit 4.5 to the Annual Report on Form
10-K of Chancellor Broadcasting Company, Chancellor Radio Broadcasting
Company and Chancellor Broadcasting Licensee Company for the fiscal year
ended December 31, 1995.

(cc) Incorporated by reference to Exhibit 4.6 to the Current Report on Form
8-K of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.

(dd) Incorporated by reference to Exhibit 4.7 to the Current Report on Form
8-K of Chancellor Radio Broadcasting Company, as filed on February 6,
1997.

(ee) Incorporated by reference to Exhibit 4.1 to the Current Report on Form
8-K of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company as filed on July 17, 1997.

(ff) Incorporated by reference to the identically-numbered exhibit to the
Registration Statement on Form S-4 (Reg. No. 333-32259), dated July 29,
1997, as amended, of Evergreen Media Corporation of Los Angeles
("EMCLA").

(gg) Incorporated by reference to the identically numbered exhibit to the
Quarterly Report on Form 10-Q of Evergreen and EMCLA for the quarterly
period ending June 30, 1997.

(hh) Incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form
10-Q of Chancellor Broadcasting Company ("CBC") and CRBC for the
quarterly period ending March 31, 1997.

(ii) Incorporated by reference to Exhibit 10.6 to CBC's Registration Statement
on Form S-1 (Reg. No. 333-02782) filed February 9, 1996.

(jj) Incorporated by reference to Exhibit 4.22 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.

(kk) Incorporated by reference to Exhibit 4.23 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.

(ll) Incorporated by reference to Exhibit 4.24 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.

(mm) Incorporated by reference to Exhibit 4.25 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.

(nn) Incorporated by reference to Exhibit 4.26 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.

(oo) Incorporated by reference to Exhibit 4.27 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.

(pp) Incorporated by reference to the identically numbered exhibit to the
CMCLA's Registration Statement on Form S-4 (Reg. No. 333-36451), dated
September 26, 1997, as amended.

II-15
<PAGE> 339

(ss) Incorporated by reference to the identically numbered exhibit to the
Current Report on Form 8-K of Chancellor Media and CMCLA, dated as of
February 23, 1998 and filed as of February 27, 1998.

(tt) Incorporated by reference to the identically numbered exhibit to the
Annual Report on Form 10-K of Chancellor Media and the CMCLA for the
fiscal year ended December 31, 1997.

(uu) Incorporated by reference to the identically numbered exhibit to the
Annual Report on Form 10-K of Chancellor and CMCLA for the fiscal year
ended December 31, 1997.

(vv) Incorporated by reference to the identically numbered exhibit to CMCLA's
Registration Statement on Form S-4 (Reg. No. 333-50739), dated April 22,
1998, as amended.

(ww) Incorporated by reference to the identically numbered exhibit to the
Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the
quarterly period ending March 31, 1998.

(xx) Incorporated by reference to Exhibit 4.41 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-53179), dated May 20,
1998.

(yy) Incorporated by reference to the identically numbered exhibit to the
Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the
quarterly period ending June 30, 1998.

(aaa) Incorporated by reference to Exhibit 4.42 to the Quarterly Report on Form
10-Q of Chancellor Media and CMCLA for the quarterly period ending
September 30, 1998.

(bbb) Incorporated by reference to the identically numbered exhibit to CMCLA's
Registration Statement on Form S-4 (Reg. No. 333-66971), dated December
10, 1998, as amended.

The Company hereby agrees to furnish supplementary a copy of any omitted
schedule or exhibit to the Securities and Exchange Commission upon request.

B. Financial Statement Schedules

All schedules have been omitted since the required information is either not
present or not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the consolidated
financial statements or the notes thereto.

ITEM 22. UNDERTAKINGS.

A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 20 above, 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 expense 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 against the

II-16
<PAGE> 340

registrant 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.

B. 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 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 therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

C. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

D. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

E. (1) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145, the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

(2) The registrant undertakes that every prospectus: (i) that is filed pursuant
to paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933, as amended, and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-17
<PAGE> 341

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on December 23, 1998.

CHANCELLOR MEDIA CORPORATION
OF LOS ANGELES

By: /s/ MATTHEW E. DEVINE
--------------------------------------
Matthew E. Devine
Senior Vice President and
Chief Financial Officer

POWERS OF ATTORNEY

Each person whose signature appears below constitutes and appoints Jeffrey A.
Marcus and Matthew E. Devine, and each of them, as his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in his name, place and stead, in any and all capacities, to
sign any or all further amendment (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission granting unto said attorney-in-fact and agent, 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 to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.

Pursuant to the requirements of the Securities and Exchange Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

Chairman of the Board
- ------------------------------------------
Thomas O. Hicks

/s/ JEFFREY A. MARCUS Chief Executive Officer December 23, 1998
- ------------------------------------------ and President (Principal
Jeffrey A. Marcus Executive Officer)

/s/ JAMES E. DE CASTRO Chief Operating Officer December 23, 1998
- ------------------------------------------ and Director
James E. de Castro

/s/ MATTHEW E. DEVINE Senior Vice President and December 23, 1998
- ------------------------------------------ Chief Financial Officer
Matthew E. Devine (Principal Financial
Officer and Principal
Accounting Officer)
</TABLE>

II-18
<PAGE> 342

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ THOMAS J. HODSON Director December 23, 1998
- ------------------------------------------
Thomas J. Hodson

/s/ PERRY J. LEWIS Director December 23, 1998
- ------------------------------------------
Perry J. Lewis

/s/ JOHN H. MASSEY Director December 23, 1998
- ------------------------------------------
John H. Massey

/s/ MICHAEL J. LEVITT Director December 23, 1998
- ------------------------------------------
Michael J. Levitt

Director
- ------------------------------------------
Lawrence D. Stuart, Jr.

/s/ STEVEN DINETZ Director December 23, 1998
- ------------------------------------------
Steven Dinetz

/s/ VERNON E. JORDAN, JR. Director December 23, 1998
- ------------------------------------------
Vernon E. Jordan, Jr.

/s/ J. OTIS WINTERS Director December 23, 1998
- ------------------------------------------
J. Otis Winters
</TABLE>

II-19
<PAGE> 343

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the
Co-Registrants listed on Attachment A hereto has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on December 23, 1998.

THE CO-REGISTRANTS LISTED ON
ATTACHMENT A HERETO

By: /s/ MATTHEW E. DEVINE
--------------------------------------
Matthew E. Devine
Vice President
of Each Co-Registrant Listed on
Attachment A

POWERS OF ATTORNEY

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1933, AS
AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ JEFFREY A. MARCUS Chief Executive Officer December 23, 1998
- ------------------------------------------ and President of Each
Jeffrey A. Marcus Co-Registrant (Principal
Executive Officer of
Each Co-Registrant)

/s/ MATTHEW E. DEVINE Vice President and December 23, 1998
- ------------------------------------------ Director of Each
Matthew E. Devine Co-Registrant (Principal
Financial Officer and
Principal Accounting
Officer of Each
Co-Registrant)
</TABLE>

II-20
<PAGE> 344

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ ERIC C. NEUMAN Director of Each Co- December 23, 1998
- ------------------------------------------ Registrant
Eric C. Neuman

Director of Each Co-
- ------------------------------------------ Registrant
Lawrence D. Stuart, Jr.
</TABLE>

II-21
<PAGE> 345

ATTACHMENT A

Chancellor Media Corporation of the Lone Star State
KZPS/KDGE License Corp.
Chancellor Media Corporation of California
KIOI License Corp.
Chancellor Media Corporation of Illinois
Chancellor Media Illinois License Corp.
Chancellor Media Corporation of Dade County
WVCG License Corp.
Chancellor Media Corporation of Massachusetts
Chancellor Media Pennsylvania License Corp.
Chancellor Media Corporation of Miami
WEDR License Corp.
Chancellor Media Corporation of Houston
Chancellor Media Corporation of the Keystone State
Chancellor Media Corporation of New York
Chancellor Media Corporation of Charlotte
WIOQ License Corp.
Chancellor Media Corporation of Washington, D.C.
Chancellor Media Corporation of St. Louis
Chancellor Media Corporation of Michigan
Chancellor Media/WAXQ Inc.
WAXQ License Corp.
Chancellor Media/KCMG Inc.
Chancellor Media/Riverside Broadcasting Co., Inc.
WLTW License Corp.
Chancellor Media Corporation of the Capital City
Chancellor Media D.C. License Corp.
Chancellor Media Licensee Company
Chancellor Media/Trefoil Communications, Inc.
Chancellor Media/Shamrock Broadcasting, Inc.
Chancellor Media/Shamrock Radio Licenses, Inc.
Chancellor Media/Shamrock Broadcasting Licenses of Denver,
Inc.
Chancellor Media/Shamrock Broadcasting of Texas, Inc.
The AMFM Radio Networks, Inc.
Chancellor Media Air Services Corporation
Chancellor Merger Corp.
Broadcast Architecture, Inc.
</TABLE>

II-22
<PAGE> 346

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the
Co-Registrants listed on Attachment B hereto has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on December 23, 1998.
THE CO-REGISTRANTS LISTED ON
ATTACHMENT B HERETO.

By: /s/ MATTHEW E. DEVINE
--------------------------------------
Matthew E. Devine
Vice President of Each Co-Registrant
Listed on Attachment B

POWERS OF ATTORNEY

Each person whose signature appears below constitutes and appoints Matthew E.
Devine as his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for such person and in his name, place and
stead, in any and all capacities, to sign any or all further amendment
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission granting unto said
attorney-in-fact and agent, 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 to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ JEFFREY A. MARCUS Chief Executive Officer, December 23, 1998
- ------------------------------------------ President and Director
Jeffrey A. Marcus of Each Co-Registrant
(Principal Executive
Officer)

/s/ MATTHEW E. DEVINE Vice President of Each Co- December 23, 1998
- ------------------------------------------ Registrant, (Principal
Matthew E. Devine Financial Officer and
Principal Accounting
Officer)

/s/ ERIC C. NEUMAN Director of each December 23, 1998
- ------------------------------------------ Co-Registrant
Eric C. Neuman
</TABLE>

II-23
<PAGE> 347

ATTACHMENT B

Chancellor Media Outdoor Corporation
Chancellor Media Nevada Sign Corporation
Chancellor Media MW Sign Corporation
Chancellor Media Martin Corporation
Chancellor Media Whiteco Outdoor Corporation
Dowling Company Incorporated
Nevada Outdoor Systems, Inc.
</TABLE>

II-24
<PAGE> 348

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the
Co-Registrants listed on Attachment C hereto has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on December 23, 1998.
THE CO-REGISTRANTS LISTED ON
ATTACHMENT C HERETO.

By: /s/ RICHARD E. VENDIG
--------------------------------------
Richard E. Vendig
Senior Vice President, Chief Financial
and
Administrative Officer, Treasurer of
Each
Co-Registrant Listed on Attachment C

POWERS OF ATTORNEY

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ RICHARD E. VENDIG Senior Vice President, December 23, 1998
- ------------------------------------------ Chief Financial and
Richard E. Vendig Administrative Officer,
Treasurer of Each Co-
Registrant (Principal
Executive Officer,
Principal Financial
Officer and Principal
Accounting Officer)

/s/ JEFFREY A. MARCUS Director of Each Co- December 23, 1998
- ------------------------------------------ Registrant
Jeffrey A. Marcus
</TABLE>

II-25
<PAGE> 349

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ MATTHEW E. DEVINE Director of Each Co- December 23, 1998
- ------------------------------------------ Registrant
Matthew E. Devine

/s/ ERIC C. NEUMAN Director of Each Co- December 23, 1998
- ------------------------------------------ Registrant
Eric C. Neuman
</TABLE>

II-26
<PAGE> 350

ATTACHMENT C

MW Sign Corp.
Martin & MacFarlane, Inc.
Katz Media Corporation
Katz Communications, Inc.
Katz Millennium Marketing, Inc.
Amcast Radio Sales, Inc.
Christal Radio Sales, Inc.
Eastman Radio Sales, Inc.
Seltel, Inc.
Katz Cable Corporation
The National Payroll Company, Inc.
</TABLE>

II-27
<PAGE> 351

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the
Co-Registrants has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on December 23, 1998.

CHANCELLOR MEDIA/SHAMROCK
RADIO LICENSES, LLC
CHANCELLOR MEDIA RADIO
LICENSES, LLC
RADIO 100, L.L.C.

By: /s/ MATTHEW E. DEVINE
--------------------------------------
Matthew E. Devine
Vice President of Each Co-Registrant

POWERS OF ATTORNEY

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ JEFFREY A. MARCUS Chief Executive Officer December 23, 1998
- ------------------------------------------ and President of Each
Jeffrey A. Marcus Co-Registrant (Principal
Executive Officer)

/s/ MATTHEW E. DEVINE Vice President of Each Co- December 23, 1998
- ------------------------------------------ Registrant (Principal
Matthew E. Devine Financial Officer and
Principal Accounting
Officer)
</TABLE>

II-28
<PAGE> 352

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Co-Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on December 23, 1998.

WTOP LICENSE LIMITED
PARTNERSHIP

By: CHANCELLOR MEDIA CORPORATION OF
WASHINGTON, D.C., its general partner

By: /s/ MATTHEW E. DEVINE
--------------------------------------
Matthew E. Devine
Vice President

POWERS OF ATTORNEY

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ JEFFREY A. MARCUS Chief Executive Officer and December 23, 1998
- ------------------------------------------ President (Principal
Jeffrey A. Marcus Executive Officer)

/s/ MATTHEW E. DEVINE Vice President and Director December 23, 1998
- ------------------------------------------ (Principal Financial
Matthew E. Devine Officer and Principal
Accounting Officer)

/s/ ERIC C. NEUMAN Director December 23, 1998
- ------------------------------------------
Eric C. Neuman

Director
- ------------------------------------------
Lawrence D. Stuart, Jr.
</TABLE>

II-29
<PAGE> 353

SIGNATURES

CHANCELLOR MEDIA CORPORATION
OF HOUSTON LIMITED PARTNERSHIP
KLOL LICENSE LIMITED
PARTNERSHIP

By: CHANCELLOR MEDIA CORPORATION OF
HOUSTON, their general partner

By: /s/ MATTHEW E. DEVINE
--------------------------------------
Matthew E. Devine
Vice President

POWERS OF ATTORNEY

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ JEFFREY A. MARCUS Chief Executive Officer December 23, 1998
- ------------------------------------------ and President (Principal
Jeffrey A. Marcus Executive Officer)

/s/ MATTHEW E. DEVINE Vice President and December 23, 1998
- ------------------------------------------ Director (Principal
Matthew E. Devine Financial Officer and
Principal Accounting
Officer)
</TABLE>

II-30
<PAGE> 354

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ ERIC C. NEUMAN Director December 23, 1998
- ------------------------------------------
Eric C. Neuman

Director
- ------------------------------------------
Lawrence D. Stuart, Jr.
</TABLE>

II-31
<PAGE> 355

SIGNATURES

MARTIN MEDIA, L.P.

By: MW SIGN CORP., its general partner

By: /s/ MATTHEW E. DEVINE
--------------------------------------
Matthew E. Devine
Vice President

POWERS OF ATTORNEY

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ JEFFREY A. MARCUS Chief Executive Officer, December 23, 1998
- ------------------------------------------ President and Director
Jeffrey A. Marcus (Principal Executive
Officer)

/s/ MATTHEW E. DEVINE Vice President and December 23, 1998
- ------------------------------------------ Director (Principal
Matthew E. Devine Financial Officer and
Principal Accounting
Officer)

/s/ ERIC C. NEUMAN Director December 23, 1998
- ------------------------------------------
Eric C. Neuman
</TABLE>

II-32
<PAGE> 356

SIGNATURES

WESTERN POSTER SERVICE, INC.

By: /s/ MATTHEW E. DEVINE
--------------------------------------
Matthew E. Devine
Vice President

POWERS OF ATTORNEY

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

/s/ JEFFREY A. MARCUS Chief Executive Officer, December 23, 1998
- ------------------------------------------ President and Director
Jeffrey A. Marcus (Principal Executive
Officer)

/s/ MATTHEW E. DEVINE Vice President and December 23, 1998
- ------------------------------------------ Director (Principal
Matthew E. Devine Financial Officer and
Principal Accounting
Officer)

/s/ ERIC C. NEUMAN Director December 23, 1998
- ------------------------------------------
Eric C. Neuman

Director
- ------------------------------------------
Rachel Kitchens

Director
- ------------------------------------------
William Pierce
</TABLE>

II-33
<PAGE> 357

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.21(p) -- Asset Purchase Agreement dated July 15, 1996 by and among
Century Chicago Broadcasting L.P., Century Broadcasting
Corporation, Evergreen Media Corporation of Los Angeles
and Evergreen Media Corporation of Chicago.
2.22(p) -- Asset Purchase Agreement dated August 12, 1996 by and
among Chancellor Broadcasting Company, Shamrock
Broadcasting, Inc. and Evergreen Media Corporation of the
Great Lakes.
2.23(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles (WQRS-FM).
(See table of contents for list of omitted exhibits and
schedules)
2.24(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles. (See table of
contents for list of omitted schedules)
2.25(q) -- Letter of intent dated August 27, 1996 between EZ
Communications, Inc. and Evergreen Media Corporation.
2.26(q) -- Asset Purchase Agreement dated September 19, 1996 between
Beasley-FM Acquisition Corp., WDAS License Limited
Partnership and Evergreen Media Corporation of Los
Angeles.
2.27(q) -- Asset Purchase Agreement dated September 19, 1996 between
The Brown Organization and Evergreen Media Corporation of
Los Angeles.
2.28(r) -- Stock Purchase Agreement by and between Viacom
International Inc. and Evergreen Media Corporation of Los
Angeles, dated February 16, 1997 (See table of contents
for omitted schedules and exhibits).
2.29(r) -- Agreement and Plan of Merger, by and among Evergreen
Media Corporation, Chancellor Broadcasting Company and
Chancellor Radio Broadcasting Company, dated as of
February 19, 1997.
2.30(r) -- Stockholders Agreement, by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Scott
K. Ginsburg (individually and as custodian for certain
shares held by his children), HM2/Chancellor, L.P.,
Hicks, Muse, Tate & First Equity Fund II, L.P., HM2/HMW,
L.P., The Chancellor Business Trust, HM2/HMD Sacramento
GP, L.P., Thomas O. Hicks, as Trustee of the William Cree
Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as Trustee
of the Catherine Forgave Hicks 1993 Irrevocable Trust,
Thomas O. Hicks, as Trustee of the John Alexander Hicks
1984 Trust, Thomas O. Hicks, as Trustee of the Mack
Hardin Hicks 1984 Trust, Thomas O. Hicks, as Trustee of
Robert Bradley Hicks 1984 Trust, Thomas O. Hicks, as
Trustee of the Thomas O. Hicks, Jr. 1984 Trust, Thomas O.
Hicks and H. Rand Reynolds, as Trustees for the Muse
Children's GS Trust, and Thomas O. Hicks, dated as of
February 19, 1997.
</TABLE>
<PAGE> 359

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.31(r) -- Joint Purchase Agreement, by and among Chancellor Radio
Broadcasting Company, Chancellor Broadcasting Company,
Evergreen Media Corporation of Los Angeles, and Evergreen
Media Corporation, dated as of February 19, 1997.
2.32(s) -- Asset Exchange Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Philadelphia, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of Charlotte,
Evergreen Media Corporation of the East, Evergreen Media
Corporation of Carolinaland, WBAV/ WBAV-FM/WPEG License
Corp. and WRFX License Corp., dated as of December 5,
1996 (See table of contents for list of omitted
schedules).
2.33(s) -- Asset Purchase Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Charlotte, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of the East and
Evergreen Media Corporation of Carolinaland, dated as of
December 5, 1996 (See table of contents for list of
omitted schedules).
2.34(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: WGCI-AM and WGCI-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.35(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KKBQ-AM and KKBQ-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.36(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KHKS-FM), dated as of April 4, 1997 (see
table of contents for list of omitted schedules and
exhibits).
2.41(y) -- Amended and Restated Agreement and Plan of Merger among
Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company, Evergreen Media Corporation,
Evergreen Mezzanine Holdings Corporation and Evergreen
Media Corporation of Los Angeles, dated as of February
19, 1997, amended and restated as of July 31, 1997.
2.42(gg) -- Option Agreement, by and among Evergreen Media
Corporation, Chancellor Broadcasting Company, Bonneville
International Corporation and Bonneville Holding Company,
dated as of August 6, 1997.
2.43(ss) -- Letter Agreement, dated February 20, 1998, between CMCLA
and Capstar Broadcasting Corporation.
2.44(yy) -- Amendment No. 1, dated May 19, 1998, to Letter Agreement
dated February 20, 1998, between CMCLA and Capstar
Broadcasting Corporation.
</TABLE>
<PAGE> 360

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.45(yy) -- Unit and Stock Purchase Agreement by and among CMCLA,
Martin Media, L.P., Martin & MacFarlane, Inc., Nevada
Outdoor Systems, Inc., MW Sign Corp. and certain sellers
named therein, dated as of June 19, 1998 (see table of
contents for list of omitted schedules and exhibits).
2.46(yy) -- Agreement and Plan of Merger between Chancellor Media
Corporation and Ranger Equity Holdings Corporation dated
as of July 7, 1998.
2.47(yy) -- Asset Purchase Agreement, dated August 11, 1998, between
Chancellor Media Corporation of Los Angeles and
Independent Group Limited Partnership.
2.48(yy) -- Asset Purchase Agreement, dated August 11, 1998, between
Chancellor Media Corporation of Los Angeles and Zapis
Communications Corporation.
2.49(yy) -- Stock Purchase Agreement, dated August 11, 1998, among
Chancellor Media Corporation of Los Angeles, Young Ones,
Inc., Zebra Broadcasting Corporation and the Sellers
named therein.
2.50(yy) -- Stock Purchase Agreement, dated August 11, 1998, among
Chancellor Media Corporation of Los Angeles, ML Media
Partners LP., Wincom Broadcasting Corporation and WIN
Communications, Inc.
2.51(yy) -- Stock Purchase and Merger Agreement, dated July 9, 1998,
by and among Chancellor Media Corporation, Chancellor
Mexico LLC, Grupo Radio Centro, S.A. De C.V., and the
Selling Shareholders.
2.52(bbb) -- Asset Purchase Agreement, dated August 30, 1998, by and
among Chancellor Media Corporation of Los Angeles,
Whiteco Industries Inc. and Metro Management Associates.
3.3(ff) -- Certificate of Incorporation of Chancellor Media
Corporation of Los Angeles, formerly known as Evergreen
Media Corporation.
3.3A(pp) -- Amendment to Certificate of Incorporation of Chancellor
Media Corporation of Los Angeles, filed September 5,
1997.
3.3B(uu) -- Amendment to the Certificate of Incorporation of
Chancellor Media Corporation, filed October 28, 1997.
3.4(ff) -- Bylaws of Chancellor Media Corporation of Los Angeles.
3.5(bbb) -- Certificate of Incorporation of Chancellor Media of the
Lone Star State.
3.6(bbb) -- Bylaws of Chancellor Media Corporation of the Lone Star
State.
3.7(bbb) -- Certificate of Incorporation of KZPS/KDGE License Corp.
3.8(bbb) -- Bylaws of KZPS/KDGE License Corp.
3.9(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of California.
3.10(bbb) -- Bylaws of Chancellor Media Corporation of California.
3.11(bbb) -- Certificate of Incorporation of KIOI License Corp.
3.12(bbb) -- Bylaws of KIOI License Corp.
</TABLE>
<PAGE> 361

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.13(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Illinois.
3.14(bbb) -- Bylaws of Chancellor Media Corporation of Illinois.
3.15(bbb) -- Certificate of Incorporation of Chancellor Media Illinois
License Corp.
3.16(bbb) -- Bylaws of Chancellor Media Illinois License Corp.
3.17(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Dade County.
3.18(bbb) -- Bylaws of Chancellor Media Corporation of Dade County.
3.19(bbb) -- Certificate of Incorporation of WVCG License Corp.
3.20(bbb) -- Bylaws of WVCG License Corp.
3.21(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Massachusetts.
3.22(bbb) -- Bylaws of Chancellor Media Corporation of Massachusetts.
3.23(bbb) -- Certificate of Incorporation of Chancellor Media
Pennsylvania License Corp.
3.24(bbb) -- Bylaws of Chancellor Media Pennsylvania License Corp.
3.25(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Miami.
3.26(bbb) -- Bylaws of Chancellor Media Corporation of Miami.
3.27(bbb) -- Certificate of Incorporation of WEDR License Corp.
3.28(bbb) -- Bylaws of WEDR License Corp.
3.29(bbb) -- Agreement of Limited Partnership of Chancellor Media
Corporation of Houston Limited Partnership.
3.30(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Houston.
3.31(bbb) -- Bylaws of Chancellor Media Corporation of Houston.
3.32(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of the Keystone State.
3.33(bbb) -- Bylaws of Chancellor Media Corporation of the Keystone
State.
3.34(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of New York.
3.35(bbb) -- Bylaws of Chancellor Media Corporation of New York.
3.36(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Charlotte.
3.37(bbb) -- Bylaws of Chancellor Media Corporation of Charlotte.
3.38(bbb) -- Certificate of WIOQ License Corp.
3.39(bbb) -- Bylaws of WIOQ License Corp.
3.40(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Washington, D.C.
3.41(bbb) -- Bylaws of Chancellor Media Corporation of Washington,
D.C.
3.42(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of St. Louis.
</TABLE>
<PAGE> 362

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.43(bbb) -- Bylaws of Chancellor Media Corporation of St. Louis.
3.44(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of Michigan.
3.45(bbb) -- Bylaws of Chancellor Media Corporation of Michigan.
3.46(bbb) -- Certificate of Incorporation of Chancellor Media/WAXQ
License Corp.
3.47(bbb) -- Bylaws of Chancellor Media/WAXQ License Corp.
3.48(bbb) -- Certificate of WAXQ License Corp.
3.49(bbb) -- Bylaws of WAXQ License Corp.
3.50(bbb) -- Certificate of Incorporation of Chancellor Media/KCMG
Inc.
3.51(bbb) -- Bylaws of Chancellor Media/KCMG Inc.
3.52(bbb) -- Certificate of Incorporation of Chancellor
Media/Riverside Broadcasting Co., Inc.
3.53(bbb) -- Bylaws of Chancellor Media/Riverside Broadcasting Co.,
Inc.
3.54(bbb) -- Certificate of Incorporation of WLTW License Corp.
3.55(bbb) -- Bylaws of WLTW License Corp.
3.56(bbb) -- Certificate of Incorporation of Chancellor Media
Corporation of the Capital City.
3.57(bbb) -- Bylaws of Chancellor Media Corporation of the Capital
City.
3.58(bbb) -- Certificate of Incorporation of Chancellor Media D.C.
License Corp.
3.59(bbb) -- Bylaws of Chancellor Media D.C. License Corp.
3.60(bbb) -- Certificate of Incorporation of Chancellor Media Licensee
Company.
3.61(bbb) -- Bylaws of Chancellor Media Licensee Company.
3.62(bbb) -- Certificate of Incorporation of Chancellor Media/Trefoil
Communications, Inc.
3.63(bbb) -- Amended and Restated Bylaws of Chancellor Media/Trefoil
Communications, Inc.
3.64(bbb) -- Certificate of Incorporation of Chancellor Media/Shamrock
Broadcasting, Inc.
3.65(bbb) -- Amended and Restated Bylaws of Chancellor Media/Shamrock
Broadcasting, Inc.
3.66(bbb) -- Certificate of Incorporation of Chancellor Media/Shamrock
Radio Licenses, Inc.
3.67(bbb) -- Bylaws of Chancellor Media/Shamrock Radio Licenses, Inc.
3.68(bbb) -- Certificate of Incorporation of Chancellor Media/Shamrock
Broadcasting Licenses of Denver, Inc.
3.69(bbb) -- Bylaws of Chancellor Media/Shamrock Broadcasting Licenses
of Denver, Inc.
3.70(bbb) -- Articles of Incorporation of Chancellor Media/Shamrock
Broadcasting of Texas, Inc.
</TABLE>
<PAGE> 363

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.71(bbb) -- Amended and Restated Bylaws of Chancellor Media/Shamrock
Broadcasting of Texas, Inc.
3.72(bbb) -- Limited Liability Company Agreement of Chancellor
Media/Shamrock Radio Licenses, LLC.
3.73(bbb) -- Certificate of Incorporation of Chancellor Media Outdoor
Corporation.
3.74(bbb) -- Bylaws of Chancellor Media Outdoor Corporation.
3.75(bbb) -- Certificate of Incorporation of Chancellor Media Nevada
Sign Corporation.
3.76(bbb) -- Bylaws of Chancellor Media Nevada Sign Corporation.
3.77(bbb) -- Certificate of Incorporation of Chancellor Media MW Sign
Corporation.
3.78(bbb) -- Bylaws of Chancellor Media MW Sign Corporation.
3.79(bbb) -- Certificate of Incorporation of Chancellor Media Martin
Corporation.
3.80(bbb) -- Bylaws of Chancellor Media Martin Corporation.
3.81(bbb) -- Articles of Incorporation of Western Poster, Inc.
3.82(bbb) -- Bylaws of Western Poster, Inc.
3.83(bbb) -- Certificate of Incorporation of The AMFM Radio Networks,
Inc.
3.84(bbb) -- Bylaws of The AMFM Radio Networks, Inc.
3.85(bbb) -- Certificate of Incorporation of Chancellor Media Air
Services Corporation.
3.86(bbb) -- Bylaws of Chancellor Media Air Services Corporation.
3.87(bbb) -- Certificate of Incorporation of Chancellor Media Whiteco
Outdoor Corporation.
3.88(bbb) -- Bylaws of Chancellor Media Whiteco Outdoor Corporation.
3.89(bbb) -- Certificate of Incorporation of Chancellor Merger Corp.
3.90(bbb) -- Bylaws of Chancellor Merger Corp.
3.91(bbb) -- Articles of Organization of Broadcast Architecture, Inc.
3.92(bbb) -- Bylaws of Broadcast Architecture, Inc.
3.93(bbb) -- Agreement of Limited Partnership of Martin Media.
3.94(bbb) -- Articles of Incorporation of Dowling Company
Incorporated.
3.95(bbb) -- Bylaws of Dowling Company Incorporated.
3.96(bbb) -- Articles of Incorporation of Nevada Outdoor Systems, Inc.
3.97(bbb) -- Bylaws of Nevada Outdoor Systems, Inc.
3.98(bbb) -- Articles of Incorporation of MW Sign Corp.
3.99(bbb) -- Bylaws of MW Sign Corp.
3.100(bbb) -- Articles of Incorporation of Martin & MacFarlane, Inc.
3.101(bbb) -- Bylaws of Martin & MacFarlane, Inc.
3.102(bbb) -- Certificate of Incorporation of Katz Media Corporation.
3.103(bbb) -- Bylaws of Katz Media Corporation.
3.104(bbb) -- Certificate of Incorporation of Katz Communications, Inc.
</TABLE>
<PAGE> 364

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.105(bbb) -- Bylaws of Katz Communications, Inc.
3.106(bbb) -- Certificate of Incorporation of Katz Millennium
Marketing, Inc.
3.107(bbb) -- Bylaws of Katz Millennium Marketing, Inc.
3.108(bbb) -- Certificate of Incorporation of Amcast Radio Sales, Inc.
3.109(bbb) -- Bylaws of Amcast Radio Sales, Inc.
3.110(bbb) -- Certificate of Incorporation of Christal Radio Sales,
Inc.
3.111(bbb) -- Amended and Restated Bylaws of Christal Radio Sales, Inc.
3.112(bbb) -- Certificate of Incorporation of Eastman Radio Sales, Inc.
3.113(bbb) -- Bylaws of Eastman Radio Sales, Inc.
3.114(bbb) -- Certificate of Incorporation of Seltel, Inc.
3.115(bbb) -- Bylaws of Seltel, Inc.
3.116(bbb) -- Certificate of Incorporation of Katz Cable Corporation.
3.117(bbb) -- Amended and Restated Bylaws of Katz Cable Corporation.
3.118(bbb) -- Certificate of Incorporation of The National Payroll
Company, Inc.
3.119(bbb) -- Bylaws of The National Payroll Company, Inc.
3.120(bbb) -- Limited Liability Company Agreement of Chancellor Media
Radio Licenses, LLC
3.121(bbb) -- Agreement of Limited Partnership of KLOL License Limited
Partnership.
3.122(bbb) -- Agreement of Limited Partnership of WTOP License Limited
Partnership.
3.123(bbb) -- Certificate of Formation of Radio 100, L.L.C.
4.10(t) -- Second Amended and Restated Loan Agreement dated as of
April 25, 1997 among Evergreen Media Corporation of Los
Angeles, the financial institutions whose names appear as
Lenders on the signature pages thereof (the "Lenders"),
Toronto Dominion Securities, Inc., as Arranging Agent,
The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, NationsBank of Texas, N.A. and
Union Bank of California, as Co-Documentation Agents, and
Toronto Dominion (Texas), Inc., as Administrative Agent
for the Lenders, together with certain collateral
documents attached thereto as exhibits, including
Assignment of Partnership Interests, Assignment of Trust
Interests, Borrower's Pledge Agreement, Parent Company
Guaranty, Stock Pledge Agreement, Subsidiary Guaranty and
Subsidiary Pledge Agreement (see table of contents for
list of omitted schedules and exhibits.
4.11(z) -- First Amendment to Second Amended and Restated Loan
Agreement, dated June 26, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.15(aa) -- Indenture, dated as of February 14, 1996, governing the
9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
</TABLE>
<PAGE> 365

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.16(bb) -- First Supplemental Indenture, dated as of February 14,
1996, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.17(cc) -- Indenture, dated as of February 26, 1996, governing the
12 1/4% Subordinated Exchange Debentures due 2008 of
CMCLA.
4.18(dd) -- Indenture, dated as of January 23, 1997, governing the
12% Subordinated Exchange Debentures due 2009 of CMCLA.
4.19(ee) -- Indenture, dated as of June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
4.21(ff) -- Specimen of the 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock Certificate of CMCLA.
4.22(ff) -- Specimen of the 12% Exchangeable Preferred Stock
Certificate of CMCLA.
4.23(ff) -- Form of Certificate of Designation for the 12 1/4% Series
A Senior Cumulative Exchangeable Preferred Stock of
CMCLA.
4.24(ff) -- Form of Certificate of Designation for the 12%
Exchangeable Preferred Stock of CMCLA.
4.25(pp) -- Second Amendment to Second Amended and Restated Loan
Agreement, dated August 7, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.26(hh) -- Second Supplemental Indenture, dated as of April 15,
1997, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.27(pp) -- Third Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.28(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
4.29(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated February 26, 1997, governing
the 12 1/4% Subordinated Exchange Debentures due 2008 of
CMCLA.
4.30(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated January 23, 1997, governing
the 12% Subordinated Exchange Debentures due 2009 of
CMCLA.
4.34(uu) -- Amended and Restated Indenture, dated as of October 28,
1997, governing the 10 1/2% Senior Subordinated Notes due
2007 of CMCLA.
4.35(uu) -- Second Supplement Indenture, dated as of October 28,
1997, to the Amended and Restated Indenture dated October
28, 1997 governing the 10 1/2% Senior Subordinated Notes
due 2007 of CMCLA.
4.36(uu) -- Third Amendment to Second Amended and Restated Loan
Agreement, dated October 28, 1997, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
</TABLE>
<PAGE> 366

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.37(uu) -- Fourth Amendment to Second Amended and Restated Loan
Agreement, dated February 10, 1998, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.38(vv) -- Indenture, dated as of December 22, 1997, governing the
8 1/8% Senior Subordinated Notes due 2007 of CMCLA.
4.39(ww) -- Fifth Amendment to Second Amended and Restated Loan
Agreement, dated May 1, 1998, among CMCLA, the Lenders,
the Agents and the Administrative Agent.
4.40(yy) -- Sixth Amendment to Second Amended and Restated Loan
Agreement, dated July 31, 1998, among CMCLA, the Lenders,
the Agents and the Administrative Agent.
4.41(bbb) -- Indenture, dated as of September 30, 1998, governing the
9% Senior Subordinated Notes due 2008 of CMCLA.
4.42(bbb) -- Purchase Agreement, dated as of September 25, 1998, among
CMCLA, the Guarantors named therein and Goldman, Sachs &
Co.
4.43(bbb) -- Registration Rights Agreement, dated as of September 30,
1998, among CMCLA, the Guarantors named therein and
Goldman, Sachs & Co.
4.44(aaa) -- Seventh Amendment to Second Amended and Restated Loan
Agreement, dated November 9, 1998, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.45(bbb) -- Indenture, dated as of November 17, 1998, governing the
8% Senior Notes due 2008 of CMCLA.
4.46(bbb) -- Purchase Agreement, dated as of November 12, 1998, among
CMCLA, the Guarantors named therein, BT Alex. Brown
Incorporated, Chase Securities Inc., Morgan Stanley & Co.
Incorporated and Salomon Smith Barney Inc.
4.47(bbb) -- Registration Rights Agreement, dated as of November 17,
1998, among CMCLA, the Guarantors named therein, BT Alex.
Brown Incorporated, Chase Securities Inc., Morgan Stanley
& Co. Incorporated and Salomon Smith Barney Inc.
5.1* -- Opinion of Weil, Gotshal & Manges LLP.
10.23(xx) -- Amended and Restated Chancellor Media Corporation Stock
Option Plan for Non-employee Directors.
10.26(n)** -- Employment Agreement dated February 9, 1996 by and
between Evergreen Media Corporation and Kenneth J.
O'Keefe.
10.28(o) -- 1995 Stock Option Plan for executive officers and key
employees of Evergreen Media Corporation.
10.30(pp)** -- First Amendment to Employment Agreement dated March 1,
1997 by and between Evergreen Media Corporation and
Kenneth J. O'Keefe.
10.31(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Scott K. Ginsburg.
</TABLE>
<PAGE> 367

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.32(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and James de Castro.
10.33(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Matthew E. Devine.
10.34(pp)** -- Second Amendment to Employment Agreement dated September
4, 1997 by and among Evergreen Media Corporation,
Evergreen Media Corporation of Los Angeles and Kenneth J.
O'Keefe.
10.35(ii)** -- Employment Agreement dated February 14, 19965 by and
among Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company and Steven Dinetz.
10.36(jj) -- Chancellor Broadcasting Company 1996 Stock Award Plan.
10.37(kk) -- Chancellor Holdings Corp. 1994 Director Stock Option
Plan.
10.38(ll) -- Stock Option Grant Letter dated September 30, 1996 from
Chancellor Corporation to Steven Dinetz.
10.39(mm) -- Stock Option Grant Letter dated September 30, 1996 from
Chancellor Corporation to Eric W. Neumann.
10.40(nn) -- Stock Option Grant Letter dated September 30, 1996 from
Chancellor Corporation to Marvin Dinetz.
10.41(oo) -- Stock Option Grant Letter dated February 14, 1997 from
Chancellor Broadcasting Company to Carl M. Hirsch.
10.44(vv)** -- Agreement dated April 20, 1998 by and among Chancellor
Media Corporation, Chancellor Media Corporation of Los
Angeles and Scott K. Ginsburg.
10.45(vv)** -- Employment Agreement dated April 29, 1998 by and among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Jeffrey A. Marcus.
10.46(yy) -- Chancellor Media Corporation 1998 Stock Option Plan.
10.47(yy) -- Voting Agreement, among Chancellor Media Corporation and
Rangers Equity Partners, L.P. dated as of July 7, 1998.
10.48(bbb) -- Employment Agreement, dated as of May 18, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and James E. de Castro.
10.49(bbb) -- Employment Agreement, dated as of May 18, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Matthew E. Devine.
10.50(bbb) -- Employment Agreement, dated as of June 1, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Eric C. Neuman.
10.51(bbb) -- Employment Agreement, dated as of August 18, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and James A. McLaughlin, Jr.
12.1+ -- Chancellor Media Corporation of Los Angeles Computation
of Ratio of Earnings to Combined Fixed Charges.
</TABLE>
<PAGE> 368

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
23.1 -- Consent of Weil, Gotshal & Manges LLP (included as part
of their opinion listed as Exhibit 5.1).
23.2+ -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.3+ -- Consent of KPMG Peat Marwick LLP, independent
accountants.
23.4+ -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.5+ -- Consent of KPMG Peat Marwick LLP, independent
accountants.
23.6+ -- Consent of Arthur Andersen LLP, independent accountants.
23.7+ -- Consent of BDO Seidman, LLP, independent accountants.
24.1+ -- Powers of Attorney (included on signature pages).
25.1* -- Statement of Eligibility and Qualification of The Bank of
New York, as trustee, under the Indenture listed as
Exhibit 4.45 hereto on Form T-1.
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
</TABLE>