KATZ MEDIA CORP, S-4/A, 1999-05-06

KATZ MEDIA CORP
S-4/A, 1999-05-06
ADVERTISING AGENCIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1999

REGISTRATION NO. 333-69607
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

AMENDMENT NO. 2

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>

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

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

THOMAS O. HICKS
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CHANCELLOR MEDIA CORPORATION
OF LOS ANGELES
1845 WOODALL RODGERS FREEWAY
SUITE 1300
DALLAS, TEXAS 75201
(214) 922-8700

(Name, Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices and agent
for service of process)
---------------------

Copies To:

<TABLE>
<S> <C>
MICHAEL A. SASLAW, ESQ. WILLIAM S. BANOWSKY, JR.
WEIL, GOTSHAL & MANGES LLP EXECUTIVE VICE PRESIDENT AND
100 CRESCENT COURT, SUITE 1300 GENERAL COUNSEL
DALLAS, TEXAS 75201 CHANCELLOR MEDIA CORPORATION
(214) 746-7700 OF LOS ANGELES
1845 WOODALL RODGERS FREEWAY
SUITE 1300
DALLAS, TEXAS 75201
(214) 922-8700
</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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<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>
- --------------------------------------------------------------------------------------------------------------------------------
8% Senior Notes due 2008...................... $750,000,000 100% $750,000,000 $208,500.00
- --------------------------------------------------------------------------------------------------------------------------------
Guarantees of the 8% Senior Notes due
2008(3)..................................... -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

(2) Previously paid in connection with the original filing.

(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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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>
Amcast Radio Sales, Inc. ................................ Delaware 7319 13-3406436
The AMFM Radio Networks, Inc. ........................... Delaware 4832 52-2100851
Broadcast Architecture, Inc. ............................ Massachusetts 4832 04-3096275
Chancellor Media Air Services Corporation................ Delaware 7319 75-2771440
Chancellor Media Corporation of California............... Delaware 4832 59-2312787
Chancellor Media Corporation of Charlotte................ Delaware 4832 62-1364794
Chancellor Media Corporation of Houston.................. Delaware 4832 75-2486583
Chancellor Media Corporation of Illinois................. Delaware 4832 75-2490925
Chancellor Media Corporation of the Keystone State....... Delaware 4832 04-3221374
Chancellor Media Corporation of the Lone Star State...... Delaware 4832 99-0248294
Chancellor Media Corporation of Massachusetts............ Delaware 4832 04-3216274
Chancellor Media Corporation of Miami.................... Delaware 4832 04-3216285
Chancellor Media Corporation of Michigan................. Delaware 4832 75-2775714
Chancellor Media Corporation of New York................. Delaware 4832 75-2775716
Chancellor Media Corporation of Ohio..................... Delaware 4832 75-2798586
Chancellor Media Corporation of St. Louis................ Delaware 4832 75-2449637
Chancellor Media Corporation of Washington, D.C. ........ Delaware 4832 75-2432561
Chancellor Media of Houston Limited Partnership.......... Delaware 4832 75-2486577
Chancellor Media Licensee Company........................ Delaware 4832 75-2544625
Chancellor Media Martin Corporation...................... Delaware 7319 75-2779598
Chancellor Media MW Sign Corporation..................... Delaware 7319 75-2779602
Chancellor Media Nevada Sign Corporation................. Delaware 7319 75-2788530
Chancellor Media Outdoor Corporation..................... Delaware 7319 75-2779605
Chancellor Media Pennsylvania License Corp. ............. Delaware 4832 04-3221375
Chancellor Media Radio Licenses, LLC..................... Delaware 4832 75-2779589
Chancellor Media/Riverside Broadcasting Co., Inc. ....... Delaware 4832 13-2688382
Chancellor Media/Shamrock Broadcasting, Inc. ............ Delaware 4832 95-4068583
Chancellor Media/Shamrock Broadcasting of Texas, Inc. ... Texas 4832 71-0527506
Chancellor Media/Shamrock Radio Licenses, LLC............ Delaware 4832 75-2779594
Chancellor Media/WAXQ Inc. .............................. Delaware 4832 13-3387794
Chancellor Media Whiteco Outdoor Corporation............. Delaware 7319 75-2783296
Christal Radio Sales, Inc. .............................. Delaware 7319 13-2618663
Cleveland Radio Licenses, LLC............................ Delaware 4832 75-2815879
Creative Resources, Inc.................................. Oklahoma 7319 73-1484377
Dowling Company Incorporated............................. Virginia 7319 54-0787845
Eastman Radio Sales, Inc. ............................... Delaware 7319 13-3581043
Hardin Development Corporation........................... Florida 7319 Pending
Katz Cable Corporation................................... Delaware 7319 13-3814104
Katz Communications, Inc. ............................... Delaware 7319 13-0904500
Katz Media Corporation................................... Delaware 7319 13-3779266
Katz Millennium Marketing, Inc. ......................... Delaware 7319 13-3894491
KLOL License Limited Partnership......................... Delaware 4832 75-2486580
KZPS/KDGE License Corp. ................................. Delaware 4832 75-2449662
</TABLE>

<PAGE> 3
TABLE OF CO-REGISTRANTS -- (CONTINUED)

THIS PROSPECTUS, DATED MAY 6, 1999, 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

- - The exchange offer will expire at 5:00 p.m., New York City time on
, 1999, unless we extend this date.

- - If you decide to participate in this exchange offer, the new notes you receive
will be the same as your outstanding notes, except that, unlike your
outstanding notes, you will be able to offer and sell the new notes freely to
any potential buyer in the United States.

- - We will not receive any proceeds from the exchange offer.

- - You will not owe additional federal income taxes if you exchange your
outstanding notes.

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

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.

WE URGE YOU TO READ THE "RISK FACTORS" SECTION OF THIS PROSPECTUS BEGINNING ON
PAGE 15, WHICH DESCRIBES INFORMATION YOU SHOULD CONSIDER BEFORE PARTICIPATING
IN THE EXCHANGE OFFER.

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

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

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.
Unless the context requires otherwise, "CMCLA" refers to Chancellor Media
Corporation of Los Angeles, the "Company," "we," "our" or similar terms refer to
Chancellor Media Corporation of Los Angeles and its subsidiaries and
predecessors, and "Chancellor Media" refers to Chancellor Media Corporation, our
indirect parent.

THE COMPANY

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
1845 Woodall Rodgers Freeway, Suite 1300
Dallas, Texas 75201
(214) 922-8700

We are an indirect, wholly-owned subsidiary of Chancellor Media and a
diversified media company with operations in radio broadcasting, outdoor
advertising and media representation, which consists of:

- - a radio station portfolio consisting of 124 radio stations (92 FM and 32 AM)
concentrated in the top 30 markets in the United States and in Puerto Rico,
including 13 stations currently operated under time brokerage agreements which
allow us to program another person's station and sell the advertising;

- - an outdoor advertising portfolio with over 42,500 billboards and outdoor
displays in 38 states in the United States; and

- - Katz Media Group, a full-service media representation firm that sells national
spot advertising time for its clients in the radio and television industries
throughout the Unites States and for our portfolio of radio stations.

BUSINESS STRATEGY

Our overall strategy is to enhance shareholder value by focusing on revenue and
cash flow growth and the reduction of leverage through the successful operation
of our radio, outdoor and media representation assets, as well as through the
development of Chancellor Media's Internet initiative as part of the Chancellor
Media Services Group. In this regard, we have built a diversified portfolio of
media assets which allows us to deliver more options and greater value to our
advertising clients. We plan on leveraging the extensive operating experience of
our senior management team to continue to enhance revenue and cash flow growth.

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 can
attract increased revenues in a market by delivering larger combined audiences
to advertisers and by engaging in joint marketing and promotional activities.
1
<PAGE> 6

Outdoor Advertising Strategy. The business strategy of our outdoor advertising
group is to develop one of the top outdoor advertising companies in the United
States through the successful consolidation and integration of Martin Media,
acquired in July 1998, and Whiteco, acquired in December 1998, and through
additional 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 advances such as computer vinyl technology to
enhance the attractiveness and flexibility of the outdoor medium while reducing
costs.

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.

RECENT DEVELOPMENTS

On January 20, 1999, Chancellor Media announced that its Board of Directors
engaged the investment banking firm of BT Alex. Brown Incorporated as financial
advisor for the purpose of assisting management and the Board of Directors of
Chancellor Media in developing, reviewing and structuring a range of strategic
alternatives intended to maximize stockholder value. On February 11, 1999,
Chancellor Media announced that it had added additional advisors Morgan Stanley
Dean Witter, Hicks, Muse, Tate & Furst Incorporated, Goldman, Sachs & Co.,
Greenhill & Co., LLC and Chase Securities Inc. to assist in exploring these
alternatives, which included the potential sale, merger or consolidation of the
entire company or some of its operating assets.

On March 15, 1999, Chancellor Media announced that it had completed the review
of strategic alternatives and announced the following series of steps to better
position Chancellor Media strategically, operationally and financially:

LIN Merger Termination. On July 7, 1998, Chancellor Media entered into a merger
agreement with the indirect parent of LIN Television Corporation to acquire LIN
in a stock for stock transaction. Effective March 15, 1999, Chancellor Media and
LIN agreed to terminate the LIN merger agreement.

Executive Management Realignment. On March 15, 1999, Chancellor Media announced
the following executive management changes:

- - the appointments of Thomas O. Hicks as Chief Executive Officer of Chancellor
Media and CMCLA, of James E. de Castro as President and Chief Executive
Officer of a newly created Chancellor Radio and Outdoor Group and of R. Steven
Hicks, currently President and Chief Executive Officer of Capstar, as
President and Chief Executive Officer of the newly created Chancellor Media
Services Group;

- - the creation of an Office of the Chairman of Chancellor Media's Board of
Directors, in which Mr. de Castro and Mr. Steven Hicks will join Chancellor
Media's Chairman, Mr. Thomas Hicks, as Vice Chairmen;

- - the resignation of Jeffrey A. Marcus as Chancellor Media's and CMCLA's
President and Chief Executive Officer effective March 15, 1999;
2
<PAGE> 7

- - the appointments of Kenneth J. O'Keefe as Chief Operating Officer of
Chancellor Radio Group and James A. McLaughlin as President and Chief
Operating Officer of Chancellor Outdoor Group;

- - the appointment of D. Geoffrey Armstrong, former Chief Operating Officer of
Capstar, as Executive Vice President and Chief Financial Officer, replacing
Thomas P. McMillin, who also resigned from his executive positions with
Chancellor Media and CMCLA effective March 15, 1999;

- - the resignation of Eric C. Neuman as Chancellor Media's and CMCLA's Senior
Vice President -- Strategic Development effective March 15, 1999; and

- - the appointment of William S. Banowsky, Jr., currently Executive Vice
President and General Counsel of Capstar, as Executive Vice President and
General Counsel, replacing Richard A. B. Gleiner, formerly Senior Vice
President, Secretary and General Counsel of Chancellor Media and CMCLA.

We are expected to record a significant non-recurring charge in the first
quarter of 1999 in connection with Chancellor Media's termination of the LIN
merger and the executive management realignment discussed above.
3
<PAGE> 8

THE EXCHANGE OFFER

SECURITIES TO BE EXCHANGED... On November 12, 1998, we issued $750.0 million
aggregate principal amount of outstanding 8%
Senior Notes due 2008, referred to herein as old
notes, to the initial purchasers, referred to
herein as the original offering, in a
transaction exempt from the registration
requirements of the Securities Act of 1933. The
terms of the registered 8% Senior Notes due
2008, referred to herein as new notes, and the
old notes are substantially identical in all
material respects, except that the new notes
will be freely transferable by you except as
otherwise provided herein. The old notes and new
notes are sometimes collectively referred to as
the "notes." See "Description of the 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 of this prospectus, 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 in connection with the exchange
offer in exchange for old notes may be offered
for resale, resold or otherwise transferred by
you, unless you are an "affiliate" of ours or
the guarantors within the meaning of Rule 405
under the Securities Act, or a broker-dealer who
purchased old notes directly from us to resell
under Rule 144A or any other available exemption
under the Securities Act, without compliance
with the registration and prospectus delivery
requirements of the Securities Act, provided
that your new notes are acquired in the ordinary
course of your business and you 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 other circumstances.
Furthermore, you must, unless you are a
broker-dealer, acknowledge that you are not
engaged in, and do not intend to engage in, a
distribution of your new notes and have no
arrangement or understanding to participate in a
distribution of new notes. If you are a
broker-dealer that receives new notes for your
own account pursuant to the exchange offer you
4
<PAGE> 9

must acknowledge that you will comply with the
prospectus delivery requirements of the
Securities Act in connection with any resale of
your new notes. If you are a broker-dealer who
acquired old notes directly from us and not as a
result of market-making activities or other
trading activities, you 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 new
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 under the Securities Act.
In connection with the sale, we, together with
the guarantors, entered into a registration
rights agreement with the initial purchaser
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:

- cause the registration statement with respect
to the exchange offer to be declared effective
on or before May 11, 1999; and

- consummate the exchange offer on or before
June 25, 1999.

See "The Exchange Offer -- Purpose and Effect."

EXPIRATION DATE.............. The exchange offer will expire at 12:00
midnight, New York City time, ,
1999 or such later date and time to which it is
extended.

WITHDRAWAL................... You may withdraw your old notes tendered
pursuant to the exchange offer at any time prior
to 12:00 midnight, New York City time, on
, 1999, or such later date and
time to which we extend the offer. If we do not
accept your old notes tendered for exchange for
any reason, your old notes will be returned to
you without expense as soon as practicable after
the expiration or termination of the exchange
offer.

INTEREST ON THE NEW NOTES AND
THE OLD NOTES.............. Interest on your new notes will accrue from the
date of the original issuance of your old notes
or from the date of the last periodic payment of
interest on your old notes, whichever is later.
No additional interest will be paid on your old
notes tendered and accepted for exchange.
5
<PAGE> 10

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

PROCEDURES FOR TENDERING OLD
NOTES...................... If you want to accept the exchange offer you
must complete, sign and date the letter of
transmittal, or a copy thereof, in accordance
with the instructions contained in this
prospectus and the letter of transmittal, and
mail or otherwise deliver the letter of
transmittal, or the copy, together with your old
notes and any other required documentation, to
the exchange agent at the address set forth in
this prospectus. If you hold your old notes
through the Depository Trust Company and want to
accept the exchange offer you must do so under
the DTC's Automated Tender Offer Program, by
which you will agree to be bound by the letter
of transmittal. By executing or agreeing to be
bound by the letter of transmittal, you will
represent to us and the guarantors that, among
other things:

- your new notes acquired in connection with the
exchange offer are being obtained in the
ordinary course of your business, whether or
not you are the registered holder of the old
notes;

- you are not engaging in and do not intend to
engage in a distribution of your new notes;

- you do not have an arrangement or
understanding with any person to participate
in the distribution of your new notes; and

- you are not our "affiliate" or an "affiliate"
of the guarantors, as defined under Rule 405
under the Securities Act.

Under the registration rights agreement, if:

- we determine that we are not permitted to
effect the exchange offer as contemplated
because of any change in applicable law or SEC
policy; or

- any holder of Transfer Restricted Securities,
as defined on page , notifies us prior to
the 20th day following consummation of the
exchange offer that it:

(a) is prohibited by law or SEC policy from
participating in the exchange offer,

(b) may not resell the new notes acquired by
it in the exchange offer to the public
without deliv-
6
<PAGE> 11

ering a prospectus and that this
prospectus is not appropriate or available
for such resales, or

we are required to file a "shelf" registration
statement for a continuous offering under Rule
415 of the Securities Act in respect of the old
notes.

We will accept for exchange any and all of your
old notes which you properly tender, and do not
withdraw, in the exchange offer prior to 12:00
midnight, New York City time, on ,
1999. The new notes issued in connection with
the exchange offer will be delivered promptly to
you 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 in connection with the exchange offer.

MATERIAL FEDERAL INCOME TAX
CONSIDERATIONS............. The exchange of your old notes for new notes in
connection with the exchange offer should not
constitute a sale or an exchange for federal
income tax purposes. See "Material Federal
Income Tax Considerations."

EFFECT OF NOT TENDERING...... If you fail to tender your old notes or if you
tender your old notes and we do not accept them,
your old notes will, following completion of the
exchange offer, continue to be subject to the
existing transfer restrictions. Under these
circumstances, we will have no further
obligation to provide for the registration of
your old notes under the Securities Act.
7
<PAGE> 12

THE NEW NOTES

The summary below describes the principal terms of the new notes. Some 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........... $750.0 million in 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 December 31, 1998, on a pro forma
basis, we estimate that we and our subsidiaries
would have had approximately $2.7 billion of
senior debt, with approximately $506.0 million
more available to us 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 that
guarantee our obligations under our senior
credit facility, as well as future subsidiaries
that guarantee our obligations under our senior
credit facility, will unconditionally guarantee
the new notes with unsecured 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> 13

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;

- 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 you an
opportunity to sell us your notes at 101% of
their face amount, plus accrued interest.

We might not be able to pay you the required
price for new notes at the time of a Change of
Control because we may have to repay the amount
outstanding under 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 make distributions on capital
stock or repurchase capital stock;

- issue stock of subsidiaries;

- make particular types of 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> 14

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

Use of Proceeds.............. We will not receive any cash proceeds from the
issuance of the new notes in connection with the
exchange offer.

RISK FACTORS

We urge you to carefully review the Risk Factors beginning on page 15 for a
discussion of factors you should consider before exchanging your old notes for
new notes.
10
<PAGE> 15

SUMMARY PRO FORMA FINANCIAL INFORMATION

The summary historical financial information set forth below as of and for the
year ended December 31, 1998 has been derived from the audited historical
financial statements of CMCLA included elsewhere in this prospectus. The
information should be read in conjunction with the unaudited pro forma condensed
financial statements included on Pages P-1 through P-12 of this prospectus and
in conjunction with CMCLA's historical financial statements and related notes
and other financial information included in this prospectus.

EBITDA, before non-cash and non-recurring charges, consists of operating income
or loss excluding depreciation and amortization and non-cash and non-recurring
charges. Although EBITDA, before non-cash and non-recurring charges is not
calculated in accordance with generally accepted accounting principles, we
believe that EBITDA, before non-cash and non-recurring charges is widely used by
analysts, investors and others in the broadcast industry as a measure of
operating performance. In addition, EBITDA, before non-cash and non-recurring
charges is one of the financial measures by which certain covenants under the
indentures governing our long-term indebtedness are calculated. EBITDA, before
non-cash and non-recurring charges eliminates the non-cash effect of
considerable amounts of depreciation and amortization primarily resulting from
the significant number of recent acquisitions. 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 our
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. EBITDA, before non-cash and
non-recurring charges does not take into account our debt service requirements
and other commitments and, accordingly, EBITDA, before non-cash and
non-recurring charges is not necessarily indicative of amounts that may be
available for reinvestment in our business or other discretionary uses. In
addition, our calculation of EBITDA, before non-cash and non-recurring charges
is not necessarily comparable to similarly titled measures reported by other
companies.

For purposes of calculating the ratio of earnings to fixed charges, "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 our management to be representative of the interest
factor thereon.

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.
11
<PAGE> 16

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-------------------------
COMPANY COMPANY
HISTORICAL PRO FORMA
----------- ----------
(IN THOUSANDS)
<S> <C> <C>
OPERATING DATA:
Net revenues............................................. $ 1,273,856 $1,517,499
Operating expenses excluding depreciation and
amortization........................................... 682,061 806,877
Depreciation and amortization............................ 446,338 584,329
Corporate general and administrative..................... 36,722 48,927
Non-cash and non-recurring charges....................... 63,661 63,661
Operating income......................................... 45,074 13,705
Interest expense, net.................................... 201,486 353,210
Net loss................................................. (77,988) (127,331)
Preferred stock dividends................................ 17,601 --
Net loss attributable to common stock.................... (95,589) (127,331)
BALANCE SHEET DATA (END OF PERIOD):
Working capital (excluding current portion of long-term
debt).................................................. $ 188,193 $ 198,172
Intangible assets, net................................... 5,056,047 5,476,445
Total assets............................................. 7,227,907 7,680,808
Long-term debt (including current portion)............... 4,096,000 4,493,962
Stockholder's equity..................................... 2,391,830 2,401,076
OTHER DATA:
EBITDA, before non-cash and non-recurring charges........ $ 555,073 $ 661,695
Ratio of earnings to fixed charges(1).................... 1.0 --
CASH FLOWS RELATED TO:
Operating activities..................................... $ 267,631 $ 343,975
Investing activities..................................... (2,291,169) (77,416)
Financing activities..................................... 2,019,210 (266,559)
</TABLE>

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

(1) 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 $176,391 for the year ended December
31, 1998.
12
<PAGE> 17

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

We are providing the following financial information to aid you in your analysis
of an investment in the new notes. We derived this information from our audited
financial statements for 1994 through 1998. The information is only a summary
and you should read it in conjunction with our historical financial statements
and related notes contained in this prospectus. No separate financial
information for the guarantors has been provided in this prospectus because
management has determined that it is not material to investors since the
guarantees are full and unconditional and joint and several and the guarantors
have no operations independent from those of the Company on a consolidated
basis.

EBITDA, before non-cash and non-recurring charges consists of operating income
or loss excluding depreciation and amortization and non-cash and non-recurring
charges. Although EBITDA, before non-cash and non-recurring charges is not
calculated in accordance with generally accepted accounting principles, we
believe that EBITDA, before non-cash and non-recurring charges is widely used by
analysts, investors and others in the broadcast industry as a measure of
operating performance. In addition, EBITDA, before non-cash and non-recurring
charges is one of the financial measures by which certain covenants under our
indentures governing our long-term indebtedness are calculated. EBITDA, before
non-cash and non-recurring charges eliminates the non-cash effect of
considerable amounts of depreciation and amortization primarily resulting from
the significant number of recent acquisitions. 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 our
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. EBITDA, before non-cash and
non-recurring charges does not take into account our debt service requirements
and other commitments and, accordingly, EBITDA, before non-cash and
non-recurring charges is not necessarily indicative of amounts that may be
available for reinvestment in our business or other discretionary uses. In
addition, our calculation of EBITDA, before non-cash and non-recurring charges
is not necessarily comparable to similarly titled measures reported by other
companies.

For purposes of calculating the ratio of earnings to fixed charges, "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.
13
<PAGE> 18

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- ---------- ----------- -----------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Gross revenues.......................... $125,478 $186,365 $ 337,405 $ 663,804 $ 1,440,357
Net revenues............................ 109,516 162,931 293,850 582,078 1,273,856
Operating expenses excluding
depreciation and amortization......... 68,852 97,674 174,344 316,248 682,061
Depreciation and amortization........... 30,596 47,005 93,749 185,982 446,338
Corporate general and administrative.... 2,672 4,475 7,797 21,442 36,722
Non-cash and non-recurring charges(1)... -- -- -- -- 63,661
-------- -------- ---------- ----------- -----------
Operating income........................ 7,396 13,777 17,960 58,406 45,074
Interest expense, net................... 13,718 19,144 37,050 83,095 201,486
Gain on disposition of assets........... (6,991) -- -- (18,380) (123,845)
Gain on disposition of representation
contracts............................. -- -- -- -- (32,198)
Other (income) expense, net............. 630 291 -- 383 (3,221)
-------- -------- ---------- ----------- -----------
Income (loss) before income taxes and
extraordinary item.................... 39 (5,658) (19,090) (6,692) 2,852
Income tax expense (benefit)............ -- 192 (2,896) 7,802 33,751
-------- -------- ---------- ----------- -----------
Income (loss) before extraordinary
item.................................. 39 (5,850) (16,194) (14,494) (30,899)
Extraordinary loss, net of tax
benefit(2)............................ 3,585 -- -- 4,350 47,089
-------- -------- ---------- ----------- -----------
Net loss................................ (3,546) (5,850) (16,194) (18,844) (77,988)
Preferred stock dividends............... -- -- -- 12,901 17,601
-------- -------- ---------- ----------- -----------
Net loss attributable to common stock... $ (3,546) $ (5,850) $ (16,194) $ (31,745) $ (95,589)
======== ======== ========== =========== ===========
CONSOLIDATED BALANCE SHEET DATA (END OF
PERIOD):
Working capital......................... $ 15,952 $ 30,556 $ 41,421 $ 112,724 $ 188,193
Intangible assets, net.................. 233,494 458,787 853,643 4,404,443 5,056,047
Total assets............................ 297,990 552,347 1,020,959 4,968,875 7,227,907
Long-term debt (including current
portion).............................. 174,000 201,000 358,000 2,573,000 4,096,000
Redeemable preferred stock.............. -- -- -- 331,208 --
Stockholder's equity.................... 112,353 304,577 549,411 1,480,207 2,391,830
OTHER FINANCIAL DATA:
EBITDA, before non-cash and
non-recurring charges................. $ 37,992 $ 60,782 $ 111,709 $ 244,388 $ 555,073
Ratio of earnings to fixed charges(3)... 1.0 -- -- -- 1.0
CASH FLOWS RELATED TO:
Operating activities.................... $ 19,880 $ 39,693 $ 47,481 $ 139,514 $ 267,631
Investing activities.................... (32,928) (192,112) (461,938) (1,423,009) (2,291,169)
Financing activities.................... 11,683 154,633 414,087 1,297,019 2,019,210
</TABLE>

- -------------------------
(1) Consists of a one-time charge related to the resignation of Scott K.
Ginsburg as President and Chief Executive Officer of Chancellor Media and
CMCLA and Matthew E. Devine as Senior Vice President and Chief Financial
Officer of Chancellor Media and CMCLA and new employment agreements entered
into with certain members of executive management.

(2) Extraordinary losses consist of charges incurred in connection with various
refinancings. These charges are reported net of the related tax benefit.

(3) Earnings were insufficient to cover fixed charges by $5,658, $19,090 and
$6,692 for the years ended December 31, 1995, 1996 and 1997, respectively.
14
<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.

OUR SUBSTANTIAL AMOUNT OF INDEBTEDNESS COULD PREVENT US FROM FULFILLING OUR
OBLIGATIONS UNDER THE NOTES

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. Such a large amount
of indebtedness could have negative consequences for us, including 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;

- - approximately 43% of our borrowings are at variable rates of interest which
will make us vulnerable to increases in interest rates, subject to certain
interest rate swaps we have entered into.

Our failure to comply with the covenants in the agreements governing the terms
of our indebtedness 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.

THE NOTES ARE EFFECTIVELY SUBORDINATED TO OUR SECURED INDEBTEDNESS AND THE
GUARANTEES ARE EFFECTIVELY SUBORDINATED TO THE SECURED INDEBTEDNESS OF OUR
SUBSIDIARIES

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 us to incur substantial additional
senior indebtedness that could be secured by liens on our assets and the assets
of our subsidiaries. Accordingly, we may in the future incur substantial
additional secured indebtedness to which the notes would be effectively
subordinated.

15
<PAGE> 20

WE ARE SUBJECT TO NUMEROUS RESTRICTIONS IMPOSED BY THE AGREEMENTS GOVERNING OUR
DEBT INSTRUMENTS

Our senior loan agreements and the various indentures governing our debt
instruments contain covenants that restrict or will restrict, among other
things, our ability to:

- - incur additional debt, issue preferred stock, incur liens, pay dividends or
make certain types of payments;

- - sell assets;

- - enter into transactions with affiliates;

- - enter into sale and leaseback transactions;

- - conduct businesses other than the ownership and operation of broadcast
stations and related businesses; or

- - merge or consolidate with any other person or dispose of all or substantially
all of our assets.

Also, the senior loan agreement requires us to maintain particular financial
ratios and satisfy financial condition tests.

WE HAVE A HISTORY OF NET LOSSES AND INSUFFICIENT EARNINGS TO COVER FIXED CHARGES

In the past, we have experienced net losses as a result of significant interest
charges and amortization charges relating to acquisitions. Our net loss
attributable to common stock for the years ended December 31, 1996, 1997 and
1998 was $16.2 million, $31.7 million and $95.6 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 net loss attributable to
common stock would have been $127.3 million for the year ended December 31,
1998.

COMPETITIVE NATURE OF RADIO BROADCASTING, OUTDOOR ADVERTISING AND MEDIA
REPRESENTATION

Our various lines of business are in highly competitive industries. Our radio
broadcasting stations and outdoor advertising properties compete for audiences
and advertising revenues with other radio stations and outdoor advertising
companies, as well as a wide variety of other media, including broadcast and
cable television and newspapers, magazines and other print media such as direct
mail. Our media representation business competes not only with other independent
and network media representatives but also with direct national advertising.
Audience ratings and market shares are subject to change, which could have an
adverse effect on our revenues in that market. Consequently, we may not be able
to maintain or increase its current audience ratings or advertising revenues.

POTENTIAL EFFECTS ON LICENSES AND OWNERSHIP OF REGULATION OF THE RADIO
BROADCASTING INDUSTRIES

The radio broadcasting industry is subject to regulation by governmental
entities. In particular, under the Communications Act of 1934, as amended, the
Federal Communica-

16
<PAGE> 21

tions Commission licenses radio stations and extensively regulates their
ownership and operation. We depend on our ability to hold our respective Federal
Communications Commission broadcast licenses, which are normally granted for
terms of eight years and are renewable. Although the vast majority of Federal
Communications Commission broadcast licenses are routinely renewed when their
terms expire, there can be no assurance that a renewal will be granted in any
given case or, if granted, that restrictive conditions will not be imposed on
the grant. In addition, limitations on the ownership of radio stations under the
Federal Communications Commission's current rules, or under revised rules now
being considered by the Federal Communications Commission, could restrict our
ability to consummate future transactions and in certain circumstances could
require that some radio stations be sold.

WE MAY EXPERIENCE DIFFICULTIES 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, including radio, outdoor advertising,
media representation and a new national radio network. Consequently,
management's focus will be on integrating many new acquisitions, learning new
markets and conducting our operations on a much larger scale.

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 the
notes and our outstanding senior subordinated notes. We cannot be sure that any
future acquisitions will not have a material adverse effect on our financial
condition and results of operations.

THE CONSUMMATION OF OUR PENDING TRANSACTIONS IS SUBJECT TO POTENTIAL DELAY DUE
TO ANTITRUST AND FEDERAL COMMUNICATIONS COMMISSION REVIEW

As a result of the concentration of ownership in the radio broadcast industry,
the Department of Justice has been looking closely at acquisitions in the
industry, including some of our transactions. The completion 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 U.S. Department of Justice or the
Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended. U.S. Department of Justice review of particular
transactions has caused, and may continue to cause, delays in anticipated
closings of various transactions and, in some cases, may result in attempts by
the U.S. Department of Justice to enjoin these transactions or negotiate
modifications to the proposed terms. Any delays, injunctions or modifications
could have a negative effect on us and result in the abandonment of some
otherwise attractive opportunities.

In addition to review by the U.S. Department of Justice and the Federal Trade
Commission, the Federal Communications Commission has also recently issued
public notices in connection with particular transactions expressing concern
that the proposed acquisition of radio stations would give the acquiring party
an excessive share of the radio advertising revenues in a given market or would
otherwise result in excessive concentration of ownership.

17
<PAGE> 22

POSSIBLE LOSS OF ADVERTISING SPACE DUE 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. 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.

WE MAY LOSE ADVERTISERS DUE TO TOBACCO AND ALCOHOL INDUSTRY REGULATION

The major U.S. tobacco companies that are defendants in numerous class action
suits throughout the country recently reached an out-of-court settlement with 46
states that includes a ban on outdoor advertising of tobacco products. The terms
of the individual settlements also included bans on outdoor advertising of
tobacco products. We do not expect the ban on outdoor advertising of tobacco
products to have a material impact.

In addition to the settlement agreements, state and local governments are also
regulating the outdoor advertising of alcohol and tobacco products. It is
possible that state and local governments may propose or pass similar ordinances
to limit outdoor advertising of alcohol and other products or services in the
future. The effect of these regulations, potential legislation and settlement
agreements on our business and operations could be material.

HICKS MUSE HAS SIGNIFICANT INFLUENCE ON US

Prior to Chancellor Media's pending merger with Capstar, Thomas O. Hicks and
affiliates of Hicks, Muse, Tate & Furst Incorporated hold approximately 17.7% of
the outstanding shares of Chancellor Media common stock. Affiliates of Hicks
Muse also have a controlling interest in Capstar. Immediately following
Chancellor Media's merger with Capstar and the issuance of Chancellor Media
common stock, it is expected that Mr. Thomas O. Hicks and affiliates of Hicks
Muse will control approximately 30.7% of the outstanding shares, 25.9% on a
fully-diluted basis, of Chancellor Media common stock. Additionally, Messrs.
Thomas O. 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. Thomas O. 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. Thomas O. 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.

18
<PAGE> 23

A FEDERAL OR STATE COURT MAY VOID OR ALTER OUR OBLIGATIONS TO YOU UNDER THE
NOTES

A court could void our obligations under your new notes, subordinate your new
notes to our other debt, or order you to return any amounts paid to you under
the new notes to us or to a fund benefitting our creditors if the court finds
that, at the time we sold the new notes, we intended to defraud our creditors or
did not receive fair value for the new notes and we:

- - were "insolvent," which means we could not pay our debts when they came due or
the sum of our debts was greater than the fair value of all of our assets, or
we became insolvent as a result of our obligations under the new notes;

- - did not have enough capital to operate our business following the sale of the
new notes; or

- - intended to or believed that we overextended our debt obligations.

The standards for insolvency vary. We cannot predict which standard a court
would apply or if a court would determine that we were insolvent at the time of
sale of the new notes or became insolvent as a result of the sale.

WE WILL HAVE DIFFICULTY SATISFYING OUR 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 the amount outstanding
under 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 in connection with 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 that 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 that we offer to repurchase our existing senior subordinated
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.

THE NEW NOTES DO NOT HAVE AN ESTABLISHED MARKET

Since the original offering, there has been no public market for the notes. We
do not plan on listing the new notes on any securities exchange. The initial
purchasers have told us

19
<PAGE> 24

that they plan on making a market in the 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 notes will develop;

- - the liquidity of any such market;

- - your ability to sell your notes; or

- - the prices that you may obtain for your notes if sold.

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

INVESTORS SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING INFORMATION

Information contained in this prospectus may contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which can be identified by the use of forward-looking terminology like "may,"
"will," "expect," "intend," "anticipate," "believe," "project," "foresee,"
"could," "estimate," or "continue" or the negative thereof or other variations
of those words or comparable terminology. All statements other than statements
of historical facts included in this prospectus, including those regarding our
financial position, business strategy, projected costs and plans and objectives
of management for future operations are forward-looking statements. The
foregoing matters and other factors noted throughout this prospectus are
cautionary statements identifying factors with respect to any forward-looking
statements, including particular risks and uncertainties, that could cause
actual results to differ materially from those in the forward-looking
statements.

All forward-looking statements contained in this prospectus are expressly
qualified in their entirety by the cautionary statements. You are cautioned not
to place undue reliance on these forward-looking statements which speak only as
of the date of this prospectus. We do not 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 in this prospectus.

20
<PAGE> 25

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 our:

- - actual capitalization as of December 31, 1998;

- - pro forma capitalization as further adjusted to give effect to the completed
transactions that closed after December 31, 1998 and the pending transaction.
See "Pro Forma Financial Information" on page P-1.

<TABLE>
<CAPTION>
COMPANY COMPANY
HISTORICAL PRO FORMA
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Senior Credit Facility(1)................................. $1,596,000 $1,993,962
8% Senior Notes due 2008.................................. 750,000 750,000
9 3/8% Senior Subordinated Notes due 2004................. 200,000 200,000
8 3/4% Senior Subordinated Notes due 2007................. 200,000 200,000
10 1/2% Senior Subordinated Notes due 2007................ 100,000 100,000
8 1/8% Senior Subordinated Notes due 2007................. 500,000 500,000
9% Senior Subordinated Notes due 2008..................... 750,000 750,000
---------- ----------
Total long-term debt............................... 4,096,000 4,493,962
Stockholder's equity:
Common stock.............................................. 1 1
Additional paid-in capital................................ 2,670,510 2,670,510
Accumulated deficit....................................... (278,681) (269,435)
---------- ----------
Total stockholder's equity.............................. 2,391,830 2,401,076
---------- ----------
Total capitalization............................... $6,487,830 $6,895,038
========== ==========
</TABLE>

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

(1) Our senior credit facility 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, we expect to be able to access the additional facility
indebtedness under the facility in the amount of $250.0 million. Although
there can be no assurance, we believe that amounts available under our
senior credit facility and the $250.0 million potentially available under
our additional facility indebtedness will be used to finance our 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."

21
<PAGE> 26

BUSINESS

GENERAL

We are a diversified media company with operations in radio broadcasting,
outdoor advertising and media representation.

RADIO BROADCASTING -- CHANCELLOR RADIO GROUP

Our current station portfolio consists of 124 radio stations, 92 FM and 32 AM,
concentrated in the top 30 markets in the United States and in Puerto Rico,
including 13 radio stations operated under time brokerage agreements. We own
superduopolies, clusters of four or five FM stations, in 11 of the nation's 15
largest radio markets -- New York, Los Angeles, Chicago, San Francisco,
Philadelphia, Detroit, Dallas/Ft. Worth, Washington, D.C., Houston, Puerto Rico
and Phoenix and in five other large markets -- Minneapolis-St. Paul, Pittsburgh,
Denver, Cleveland and Orlando.

We also operate a national radio network, The AMFM Radio Networks, which
broadcasts advertising and syndicated programming shows to a national audience
of approximately 66 million listeners in the United States, including 39 million
listeners from the Company's portfolio of stations. The AMFM Radio Networks'
syndicated programming shows include, among others, American Top 40 with Casey
Kasem, Rockline, The Dave Koz Show, The Bob and Tom Morning Show and special
events such as the Kentucky Derby.

On August 26, 1998, Chancellor Media and Capstar Broadcasting Corporation
entered into an agreement to merge in a stock-for-stock transaction. Upon
consummation of Chancellor Media's merger with Capstar, Chancellor Media will be
the largest radio broadcasting company in the United States and will own and
operate 464 radio stations serving 105 markets and will increase its number of
superduopolies to 45. Although there can be no assurance, we expect that
Chancellor Media's merger with Capstar will be consummated in the second quarter
or early third quarter of 1999.

Our portfolio of radio stations 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 our
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 station
portfolio, we are not unduly reliant on the performance of any one station or
market. Management also believes that the diversity of its portfolio of radio
stations helps to insulate us from downturns in specific markets and changes in
musical tastes.

OUTDOOR ADVERTISING -- CHANCELLOR OUTDOOR GROUP

We are the fifth largest outdoor advertising company in the United States. As of
April 20, 1999, we owned over 42,500 billboards and outdoor displays in 38
states in the United States. We entered the outdoor advertising business with
the acquisition of Martin Media, Martin & MacFarlane, Inc. and certain
affiliated companies in July 1998 and further expanded our outdoor presence with
the acquisition of the outdoor advertising division of Whiteco Industries, Inc.
in December 1998 and other outdoor acquisitions that complement our existing
outdoor and radio markets.

22
<PAGE> 27

MEDIA REPRESENTATION

We entered into the media representation business with the acquisition of Katz
Media Group, Inc. ("Katz") on October 28, 1997. Katz is a full-service media
representation firm that sells national spot advertising time for its clients in
the radio and television industries throughout the United States. Katz is
retained on an exclusive basis by radio and television stations 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.
Katz is the exclusive representation firm for over 2,200 radio stations,
including radio stations we own and operate and radio stations owned and
operated by Capstar, Jacor Communications, Inc., CBS Radio, Inc., Cox Radio,
Inc. and Heftel Broadcasting Corporation. Katz is also the exclusive
representation firm for over 365 television stations, including television
stations owned and operated by Paramount Communications, Inc., Hearst Argyle
Television, Inc., The E.W. Scripps Company, Clear Channel Communications, Inc.,
Allbritton Communications Company and Sinclair Broadcast Group, Inc., among
others.

NEW INITIATIVES

Chancellor Media recently appointed R. Steven Hicks as President and Chief
Executive Officer of its newly created Chancellor Media Services Group. The
business activities of the Chancellor Media Services Group will include
Chancellor Media's current media representation operations, a new Internet
initiative and the development and delivery of various programming, sales
training, digital technology, traffic, billing and yield management systems,
such as Capstar's StarSystem(TM) and Galaxy(TM) system, to the Chancellor Radio
Group and other media companies.

CONSOLIDATED COMPANY

On a pro forma basis after giving effect to the transactions described in "Pro
Forma Financial Information" beginning on page P-1, we would have had net
revenue and EBITDA, before non-cash and non-recurring charges of approximately
$1.5 billion and $661.7 million, respectively, for the year ended December 31,
1998. Furthermore, we would have generated approximately 73% of our net revenue
from radio operations, approximately 14% from outdoor advertising operations and
approximately 13% from media representation operations.

RECENT DEVELOPMENTS

Review of Strategic Alternatives

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<PAGE> 28

Executive Management Realignment. On March 15, 1999, Chancellor Media and CMCLA
announced the following executive management changes:

- - the creation of an Office of the Chairman of Chancellor Media's Board of
Directors, in which Mr. de Castro and Mr. R. Steven Hicks will join Chancellor
Media's Chairman, Mr. Thomas O. Hicks, as Vice Chairmen;

- - the resignation of Jeffrey A. Marcus as Chancellor Media's and CMCLA's
President and Chief Executive Officer effective March 15, 1999;

- - the appointments of Kenneth J. O'Keefe as Chief Operating Officer of
Chancellor Radio Group and James A. McLaughlin as President and Chief
Operating Officer of Chancellor Outdoor Group;

- - the resignation of Eric C. Neuman as Chancellor Media's and CMCLA's Senior
Vice President -- Strategic Development effective March 15, 1999; and

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<PAGE> 29

TRANSACTIONS COMPLETED SINCE JANUARY 1, 1998

We have completed the following radio broadcasting and outdoor advertising
transactions from January 1, 1998 through April 20, 1999:

RADIO BROADCASTING -- 1998 AND 1999 COMPLETED TRANSACTIONS

We completed the following radio broadcasting transactions from January 1, 1998
through April 20, 1999:

- - the acquisition of 11 radio stations, ten FM and one AM, for approximately
$175.7 million in cash;

- - the exchange of five radio stations, four FM and one AM, and approximately
$153.3 million in cash for four FM radio stations;

- - the acquisition of various national radio network syndicated programming shows
and related programming libraries, including American Top Forty with Casey
Kasem, for approximately $28.2 million in cash;

- - the 1999 acquisition of six radio stations, four FM and two AM, in Cleveland
for approximately $283.8 million in cash and the February 1999 time brokerage
agreement to operate an additional AM radio station in Cleveland; and

- - the 1999 sale of one AM radio station in Chicago for approximately $21.0
million.

OUTDOOR ADVERTISING -- 1998 AND 1999 COMPLETED TRANSACTIONS

We completed the acquisition of approximately 37,900 outdoor advertising
billboards and display faces for approximately $1.7 billion during 1998. As of
April 20, 1999, we completed the acquisition of an additional 4,600 outdoor
advertising billboards and display faces for approximately $45.2 million in
1999.

PENDING TRANSACTIONS

The following transactions are referred to collectively as the "Pending
Transactions."

On February 20, 1998, we 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, we 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") and began programming the
remaining ten Capstar/SFX Stations under time brokerage agreements. The purchase
price for the remaining ten Capstar/SFX Stations is approximately $494.3
million. Chancellor Media is currently assessing whether the terms of the
Capstar/SFX Transaction will be modified upon the consummation of the Capstar
merger.

On September 15, 1998, we entered into an agreement to acquire KKFR-FM and
KFYI-AM in Phoenix from The Broadcast Group, Inc. for $90.0 million in cash. We
began operating KKFR-FM and KFYI-AM under a time brokerage agreement effective

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<PAGE> 30

November 5, 1998. Although there can be no assurance, we expect that the Phoenix
acquisition will be consummated in the second quarter of 1999.

Consummation of each of the transactions discussed above is subject to various
conditions, including, in most cases, approval from the Federal Communications
Commission (the "FCC") and the expiration or early termination of any waiting
period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended ("HSR Act"). We believe that such conditions will be satisfied in the
ordinary course, but there can be no assurance that this will be the case.

OTHER TRANSACTIONS

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 entity. Pursuant to this
agreement, as amended, a wholly-owned subsidiary of Chancellor Media will merge
into Capstar, with Capstar surviving the merger as a wholly-owned subsidiary of
Chancellor Media. Each share of Capstar common stock will be converted into
0.4955 of a share of common stock of Chancellor Media. Upon consummation of its
pending transactions, Capstar will own and operate or program more than
340 radio stations serving 81 markets nationwide. Upon consummation of the
Capstar merger by Chancellor Media, 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 or early third quarter of 1999.

On September 3, 1998, we entered into an agreement to acquire Pegasus
Broadcasting of San Juan, L.L.C. ("Pegasus"), a television broadcasting company
which owns a television station in Puerto Rico, for approximately $69.6 million
in cash. In connection with the decision by Chancellor Media and LIN to
terminate the LIN merger, the Board of Directors of CMCLA approved the
negotiation of the assignment of our agreement to acquire Pegasus to LIN. The
assignment of the agreement to acquire Pegasus is still subject to negotiation
of definitive documentation, third-party approval and various other conditions,
including governmental approvals and, accordingly, there can be no assurance
that such a transaction will be completed on favorable terms, if at all. In the
event that an assignment to LIN of the Pegasus acquisition agreement cannot be
finalized, we expect to solicit another third-party buyer for such company.

1998 FINANCING TRANSACTIONS

On March 13, 1998, Chancellor Media completed an offering of 21,850,000 shares
of its Common Stock for net proceeds of approximately $994.6 million. The net
proceeds were used to reduce bank borrowings under the revolving credit portion
of our senior credit facility and the excess proceeds were initially invested in
short-term investment grade securities. Chancellor Media subsequently used the
excess proceeds for general corporate purposes, including the financing of
certain acquisitions and exchanges.

On May 8, 1998, we completed a consent solicitation (the "12% Preferred Stock
Consent Solicitation") to modify certain timing restrictions on our ability to
exchange all shares of its 12% Preferred Stock for its 12% Subordinated Exchange
Debentures due 2009 (the

26
<PAGE> 31

"12% Debentures"). Consenting holders of 12% Preferred Stock received payments
of $0.05 per share of 12% Preferred Stock. On May 13, 1998, we 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,
we incurred approximately $0.3 million in transaction costs which were recorded
as deferred debt issuance costs.

On June 10, 1998, we 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

- - the principal amount of the 12% Debentures of $211.8 million,

- - premiums on the repurchase of the 12% Debentures of $47.8 million,

- - accrued and unpaid interest on the 12% Debentures from May 13, 1998 through
June 10, 1998 of $2.0 million and

- - estimated transaction costs of $0.9 million. In connection with the 12%
Debentures Tender Offer, we 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, we 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, we 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, we
incurred approximately $0.2 million in transaction costs which were recorded as
deferred debt issuance costs.

On August 19, 1998, we 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 $143.8 million which included

- - the principal amount of the 12 1/4% Debentures of $119.4 million,

- - premiums on the repurchase of the 12 1/4% Debentures of $22.7 million,

- - accrued and unpaid interest on the 12 1/4% Debentures from July 23, 1998
through August 19, 1998 of $1.1 million and

- - estimated transaction costs of $0.6 million.

In connection with the 12 1/4% Debentures Tender Offer, we recorded an
extraordinary charge of $15.2 million (net of a tax benefit of $8.2 million)
consisting of the premiums, estimated transaction costs and the write-off of the
unamortized balance of deferred debt issuance costs.

On September 30, 1998, we issued $750.0 million aggregate principal amount of 9%
Senior Subordinated Notes due 2008 (the "9% Notes") for estimated net proceeds
of $730.0 million in a private placement and subsequently exchanged the 9% Notes
on

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<PAGE> 32

December 10, 1998 for substantially identical notes in a registered exchange
offer. Interest on the 9% Notes is payable semiannually, commencing on April 1,
1999.

On November 17, 1998, we issued $750.0 million aggregate principal amount of the
old notes for estimated net proceeds of $730.0 million in a private placement.
Interest on the notes is payable semiannually, on May 1 and November 1 of each
year.

COMPANY STRATEGY

Our overall strategy is to enhance stockholder value by focusing on revenue and
cash flow growth and the reduction of leverage through the successful operation
of our radio, outdoor and media representation business assets, as well as
through the development of Chancellor Media's Internet initiative as part of the
Chancellor Media Services Group. In this regard, we have built a diversified
portfolio of media assets which enables us to deliver more options and greater
value to our advertising clients. We plan on leveraging the extensive operating
experience of our senior management team to continue to enhance revenue and cash
flow growth.

Radio Broadcast Strategy. Our senior management team, led by James E. de Castro,
President and Chief Executive Officer of Chancellor Radio and Outdoor Group and
Kenneth J. O'Keefe, Chief Operating Officer of Chancellor Radio Group, has
extensive experience in acquiring and operating radio station groups. Our
business strategy is to assemble and operate radio station clusters in order to
maximize the broadcast cash flow generated in each market.

We seek to capitalize on the 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
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.

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

We also seek to leverage our radio expertise and platform and enhance revenue
and cash flow growth through the continued expansion of our national radio
network, The AMFM Radio Networks, as well as through the newly formed Chancellor
Marketing Group, which provides full service sales promotion and marketing
programs for Fortune 100 companies.

Outdoor Advertising Strategy. The Chancellor Outdoor Group is led by James E. de
Castro, President and Chief Executive Officer of Chancellor Radio and Outdoor
Group and James A. McLaughlin, President and Chief Operating Officer of
Chancellor Outdoor Group. Mr. McLaughlin is an outdoor advertising industry
veteran with over 25 years of experience. Our outdoor business strategy is to
develop one of the top outdoor advertising companies in the Unites States
through the successful consolidation and integration of Martin, acquired in July
1998, and Whiteco, acquired in December 1998, and through additional
acquisitions that complement our existing outdoor and radio markets.

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<PAGE> 33

Our strategy is to generate significant revenue growth and cost savings through
the consolidation of certain sales management, leasing management, marketing,
and accounting and administrative support functions. Additionally, 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 advances such as computer vinyl technology to enhance the
attractiveness and flexibility of the outdoor medium while reducing costs.

Media Representation Strategy. Our overall strategy for 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. Management will seek to increase market
share by developing new clients, expanding operations in existing and new
markets and acquiring representation contracts of our competitors. We will
continue to provide the highest level of quality service to our 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. We will also have the ability to
expand our level of service to advertisers through the growth of our unwired
network of radio and television stations which provides advertisers with greater
flexibility and the ability to target specific demographic groups or markets.

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

Internet Strategy. Chancellor Media intends to enhance its existing business of
operating radio stations by extending its reach and presence on the Internet as
part of the newly created Chancellor Media Services Group. Chancellor Media
plans to actively develop and organize individual websites reflecting the local
identity, audience, format, programming content, and character of our respective
radio stations. These websites will be designed to strengthen the individual
listener's affinity relationship with each respective radio broadcasting station
by providing information and interactive functionality that augment the
individual user's listening experience. Management believes that incremental
revenue may be generated through the coordination and operation of these
websites. Chancellor Media expects to derive this revenue from a variety of
sources including, but not limited to, targeted advertising, direct consumer
product sales, and database marketing.

RADIO BROADCASTING

The primary source of our radio revenues is the sale of broadcasting time for
local, regional and national advertising. Approximately 69% of our gross radio
revenues were generated from the sale of local advertising in 1996 and 1997, and
approximately 66% of our gross radio revenues were generated from the sale of
local advertising in 1998. We believe that radio is one of the most efficient,
cost-effective means for advertisers to reach

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<PAGE> 34

specific demographic groups. The advertising rates charged by our radio stations
are based primarily on:

- - 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

- - 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. We determine 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, we engage an advertising
representative for each of our 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 following table sets forth selected information with respect to the
portfolio of radio stations that we owned and/or operated as of April 20, 1999.

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<PAGE> 35

<TABLE>
<CAPTION>
STATION RANKING
MSA AUDIENCE TARGET IN TARGET
MARKET(1) RANK(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
--------- ------- ------------------ ----------- ---------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Philadelphia, PA...... 5 WDAS-FM 5.9 Urban Contemporary Persons 25-54 1
WUSL-FM 5.3 Urban Contemporary Women 18-34 2
WJJZ-FM 4.2 Smooth Jazz Persons 35-54 5
WIOQ-FM 4.1 Contemporary Hit Radio Persons 18-34 6
WYXR-FM 3.1 Hot Adult Contemporary Women 18-49 4
WDAS-AM 1.2 Gospel N/A N/A
Detroit, MI........... 6 WNIC-FM 8.0 Adult Contemporary Women 25-54 1
WJLB-FM 6.8 Urban Contemporary Persons 18-34 1
WMXD-FM 4.5 Adult Urban Persons 25-54 4
Contemporary
WWWW-FM 3.6 Country Women 25-54 9
WKQI-FM 3.5 Hot Adult Contemporary Women 25-54 4
WDFN-AM 1.6 Sports Men 25-49 4
WYUR-AM 0.1 Nostalgic Persons 35-64 29
Dallas, TX............ 7 KHKS-FM 7.3 Top 40 Women 18-34 1
KZPS-FM 3.8 Classic Rock Persons 25-54 5
KDGE-FM 2.7 Alternative Rock Persons 18-34 8
KSKY-AM N/A Southern Gospel N/A N/A
Music/Religious
KTXQ-FM** 3.6 Jammin' Oldies Persons 25-54 4
KBFB-FM** 2.0 Soft Rock Persons 25-54 17
Boston, MA............ 8 WJMN-FM 6.3 Contemporary Hits Persons 18-34 2
Radio/Rhythmic
WXKS-FM 5.0 Contemporary Hit Women 25-34 1
Radio/Top 40
WXKS-AM 1.6 Bloomberg News/ Music Persons 35-64 20
Memory
Washington, D.C. ..... 9 WASH-FM 4.7 Adult Contemporary Women 25-54 4
WMZQ-FM 4.5 Country Persons 25-54 8
WBIG-FM 4.4 Oldies Persons 25-54 6
WWDC-FM 3.5 Album Oriented Rock Persons 18-34 4
WGAY-FM 3.2 Jammin' Oldies Persons 35-44 N/M
WTEM-AM 1.3 Sports/Talk Men 18-49 14
WWDC-AM 0.7 Music of Your Life Persons 55+ 9
WWRC-AM 0.4 Talk Persons 35-64 31
Houston, TX........... 10 KODA-FM 6.4 Adult Contemporary Persons 25-54 1
KTRH-AM 4.5 News/Info/Sports Persons 35-54 5
KLOL-FM 3.8 Rock Men 18-34 1
KLDE-FM 3.4 Oldies Persons 25-54 10
KKBQ-FM 3.3 Country Persons 25-54 13
KBME-AM 1.9 Popular Standards Persons 35-64 20
KKRW-FM**(6) 3.2 Classic Rock Persons 25-54 8
KQUE-AM**(6) N/A Classic Rock Persons 25-54 N/A
Miami/Ft. Lauderdale,
FL................... 11 WEDR-FM 8.0 Urban Contemporary Persons 25-54 1
WVCG-AM N/A Brokered(7) N/A N/A
Atlanta, GA........... 12 WFOX-FM 3.7 Oldies Persons 25-54 10
Puerto Rico........... 13 WZNT-FM N/A Oldies/Classic Music Men 18-49 N/A
WOYE-FM N/A Top 40 Persons 12-24 N/A
WCOM-FM N/A Top 40 Persons 12-24 N/A
WOQI-FM N/A Top 40 Persons 12-24 N/A
WCTA-FM N/A Oldies/Classic Music Men 18-49 N/A
WIOA-FM N/A Continuous Favorite Women 18-49 N/A
Ballads/Today's Hits
WIOB-FM N/A Continuous Favorite Women 18-49 N/A
Ballads/Today's Hits
WIOC-FM N/A Continuous Favorite Women 18-49 N/A
Ballads/Today's Hits
</TABLE>

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<PAGE> 36

<TABLE>
<CAPTION>
STATION RANKING
MSA AUDIENCE TARGET IN TARGET
MARKET(1) RANK(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
--------- ------- ------------------ ----------- ---------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Phoenix, AZ........... 15 KMLE-FM 5.9 Country Persons 25-54 2
KOOL-FM 4.3 Oldies Persons 25-54 4
KYOT-FM 4.1 Contemporary Jazz Persons 25-54 8
KZON-FM 3.6 Alternative Rock Persons 18-34 5
KOY-AM 3.6 Adult Standards Persons 35-64 14
KISO-AM 1.1 Country Persons 35-54 25
KKFR-FM* 5.7 Urban Contemporary Hit Persons 18-34 1
Radio
KFYI-AM* 5.3 News/Talk Persons 25-54 10
San Diego, CA......... 16 KYXY-FM** 5.6 Soft Adult Women 25-54 2
Contemporary
KPLN-FM** 2.6 Classic Rock Men 25-54 8
Nassau/Suffolk, NY
(Long Island)(8)..... 17 WALK-FM 5.8 Adult Contemporary Persons 25-54 2
WALK-AM N/A Adult Contemporary Persons 35-64 N/A
Minneapolis/St. Paul,
MN................... 18 KEEY-FM 8.1 Country Persons 25-54 2
KDWB-FM 8.0 Contemporary Hit Radio Women 18-49 1
KQQL-FM 4.1 Oldies Persons 25-54 8
KTCZ-FM 3.5 Adult Oriented Rock Persons 25-54 9
KFAN-AM(9) 2.7 Sports/Talk Men 25-54 4
WRQC-FM 2.1 Active Rock Men 18-34 7
KFXN-AM(9) 0.6 Sports/Talk Men 25-54 17
Pittsburgh, PA........ 21 WWSW-FM(10) 4.4 Oldies Person 25-54 5
WWSW-AM(10) 0.3 Oldies Persons 25-54 25
WDVE-FM** 7.3 Rock Persons 25-54 1
WXDX-FM** 5.6 Alternative Rock Persons 18-34 2
WJJJ-FM** 3.8 Smooth Jazz Persons 25-54 12
WDRV-FM (formerly
WVTY-FM)** 3.5 Hot Adult Women 25-54 4
Contemporary(11)
Denver, CO............ 23 KXKL-FM 4.8 Oldies Persons 25-54 5
KALC-FM 4.5 Hot Adult Contemporary Persons 18-34 3
KIMN-FM 3.5 Hot Adult Persons 25-54 11
Contemporary(11)
KXPK-FM 2.4 Adult Modern Rock Persons 18-49 13
KVOD-FM 2.3 Classical Persons 25-54 17
KRRF-AM 0.7 Talk Men 25-54 21
Cleveland, OH......... 24 WZAK-FM 8.7 Urban Contemporary Women 25-54 1
WDOK-FM 7.0 Soft Adult Women 25-54 1
Contemporary
WZJM-FM 5.8 Jammin' Oldies Persons 25-54 N/M
WQAL-FM 5.0 Hot Adult Contemporary Persons 25-54 8
WRMR-AM 4.8 Adult Standard Persons 35-64 14
WJMO-AM 2.6 Oldies Persons 25-54 12
WKNR-AM** 2.1 All Sports Men 25-54 8
Cincinnati, OH........ 26 WUBE-FM(12) 8.0 Country Persons 25-54 2
WYGY-FM(12) 2.2 Young Country Persons 18-34 9
WBOB-AM 1.0 Sports/Talk Men 18-49 12
WUBE-AM N/A Sports/Talk Men 25-49 N/A
Sacramento, CA........ 28 KFBK-AM 10.3 News/Talk Persons 25-54 1
KGBY-FM 4.0 Adult Contemporary Women 25-54 2
KHYL-FM 4.0 Oldies Persons 25-54 7
KSTE-AM 3.3 Talk Persons 25-54 11
Riverside/San
Bernardino, CA....... 29 KGGI-FM 7.0 Contemporary Hit Radio Persons 18-34 1
KKDD-AM N/A Radio Disney N/A N/A
</TABLE>

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

<TABLE>
<C> <S>
N/A: Not available
N/M: The Fall 1998 station ranking is based on the station's
previous target demographic and format and is, therefore,
not considered meaningful.
* Indicates we will acquire this station in a pending
transaction and we currently operate this station pursuant
to a time brokerage agreement.
** Indicates station currently owned by Capstar and that we
operate pursuant to a time brokerage agreement.
(1) Actual city of license may differ from metropolitan market
served in certain cases.
(2) Metropolitan Statistical Area ("MSA") rank obtained from BIA
Research-Master Access Pro, Version 2.5 Radio Analysis
Database (current as of February 24, 1999), based upon 1998
gross revenue for the indicated markets.
(3) Information derived from The Arbitron Company, Fall 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, Fall 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) Programming provided to KNEW-AM via simulcast of programming
broadcast on KIOI-FM.
(6) Programming provided to KQUE-AM via simulcast of programming
broadcast on KKRW-FM.
(7) We sell airtime on WVCG-AM to third parties for broadcast of
specialty programming on a variety of topics.
(8) Nassau/Suffolk (Long Island) may be considered part of the
greater New York market, although it is reported separately
as a matter of convention.
(9) KFAN-AM and KFXN-AM are sold in combination.
(10) Programming provided to WWSW-AM via simulcast of programming
broadcast on WWSW-FM.
(11) The format of the station was changed subsequent to December
31, 1998. The station ranking in target demographics for
Fall 1998 is based on the previous station format.
(12) WUBE-FM and WYGY-FM are sold in combination.
</TABLE>

OUTDOOR ADVERTISING

Outdoor advertising revenue is derived from contracts with advertisers for the
rental of outdoor advertising space generally covering periods of one month up
to five years. Advertising rates are based on a particular display's exposure,
or number of "impressions" delivered, in relation to the demographics of the
particular market and/or its location within that market. The number of
"impressions" delivered by a display is measured by the number of vehicles
passing the site during a defined period and is weighted to give effect to such
factors as its proximity to other displays, the speed and viewing angle of

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<PAGE> 38

approaching traffic, the national average of adults riding in vehicles and
whether the display is illuminated. The number of impressions delivered by a
display is verified by independent auditing companies.

The size and geographic diversity of our markets allow us to attract national
advertisers by providing the opportunity to package displays in several of our
markets in a single contract allowing a national advertiser to simplify its
purchasing process and simultaneously present its message in several markets.
National advertisers generally seek wide exposure in major markets and therefore
tend to make larger purchases.

Billboards are generally mounted on advertising structures we own and are
located on land that we either own or lease or on which we have acquired a
permanent easement. Bus shelters are usually constructed, owned and maintained
by the outdoor service provider under revenue-sharing arrangements with a
municipality or transit authority.

We operate the following types of outdoor advertising billboards and displays:

- - Bulletins generally are 14 feet high by 48 feet wide or 20 feet high by 60
feet wide and consist of panels on which advertising copy is displayed.
Bulletin advertising copy is either printed with computer-generated graphics
on a single sheet of vinyl that is "wrapped" around an outdoor advertising
structure, or is hand painted and attached to the structure. Bulletins also
include "wallscapes" that are painted on vinyl surfaces or directly on the
sides of buildings, typically four stories or less. Because of their greater
impact and higher cost, bulletins are usually located on major highways and
freeways. In addition, wallscapes are located on major freeways, commuter and
tourist routes and in downtown business districts.

- - Thirty-sheet posters are generally 12 feet high by 25 feet wide. Advertising
copy for 30-sheet posters consists of lithographed or silk-screened paper
sheets supplied by the advertiser that are pasted and applied like wallpaper
to the face of the display. Thirty-sheet posters are typically concentrated on
major traffic arteries.

- - Eight-sheet posters are usually six feet high by 12 feet wide. Displays are
prepared and mounted in the same manner as 30-sheet posters. Most 8-sheet
posters, because of their smaller size, are concentrated on city streets
targeting pedestrian traffic.

- - Transit displays are lithographed or silk-screened paper sheets located on bus
and commuter train exteriors, commuter rail terminals, interior train cars,
bus shelters and subway platforms.

- - Street furniture displays are back illuminated, typically two square meter,
display faces located on bus and tram shelters, newsstands, bicycle racks,
information kiosks, recycling bins and automatic public toilets.

34
<PAGE> 39

We own over 42,500 billboards and outdoor displays in 38 states which are served
by divisional sales offices. The following table sets forth the outdoor
advertising sales offices and the total outdoor advertising displays by each
sales office as of April 20, 1999:

<TABLE>
<CAPTION>
TOTAL DISPLAYS+
---------------
<S> <C>
Northern Region:
Chicago, IL........................ 2,905
Pittsburgh, PA..................... 3,751
Providence, RI..................... 726
Harrisburg, PA..................... 1,307
Milwaukee, WI...................... 1,174
Hartford, CT....................... 414
Scranton, PA....................... 1,002
Albany, NY......................... 678
Washington D.C..................... 594
------
Total...................... 12,551
======
Southeastern Region:
Ocala, FL.......................... 2,882
Terre Haute, IN.................... 1,780
Columbus, OH....................... 1,294
Rocky Mt., NC...................... 1,622
Atlanta, GA........................ 864
Cincinnati, OH..................... 811
Evansville, IN..................... 1,081
------
Total...................... 10,334
======
Southwestern Region:
Dallas, TX......................... 1,751
St. Joseph, MO..................... 2,880
Tyler, TX.......................... 1,731
Amarillo, TX....................... 1,053
Topeka, KS......................... 1,051
Lubbock, TX........................ 697
Midland, TX........................ 695
Abilene, TX........................ 434
San Angelo, TX..................... 251
------
Total...................... 10,543
======
Western Region:
Las Vegas, NV...................... 973
Bakersfield, CA.................... 1,584
Lancaster, CA...................... 856
San Bernardino, CA................. 357
San Diego, CA...................... 273
Laughlin, AZ....................... 356
Yuma, AZ........................... 222
------
Total...................... 4,621
======
</TABLE>

35
<PAGE> 40

<TABLE>
<CAPTION>
TOTAL DISPLAYS+
---------------
<S> <C>
Shelters/Street Furniture:
Las Vegas, NV...................... 2,296
Denver, CO......................... 1,375
New Orleans, LA.................... 588
Providence, RI..................... 288
------
Total...................... 4,547
======
Grand Total................ 42,596
======
</TABLE>

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

+ In connection with our outdoor acquisitions, we entered into consent decrees
with the U.S. Department of Justice (the "DOJ") whereby we have agreed to
divest approximately 466 display faces in certain of the markets described in
these tables.

MEDIA REPRESENTATION

Our 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 development of large client station groups, the
frequency of representation contract "buyouts" has increased. These buyouts
occur 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 recognizes the
gain on the disposition of representation contracts on the effective date of the
buyout agreement.

EMPLOYEES

As of the date of this prospectus, we have approximately 5,700 full-time
employees and approximately 1,000 part-time employees. Approximately 365
employees are represented by unions. We believe that we have good relations with
our employees and these unions.

We employ several high-profile on-air personalities who have large, loyal
audiences in their respective markets. We believe that our relationships with
our on-air talent are valuable, and we generally enter into employment
agreements with these individuals.

PROPERTIES

Our corporate headquarters is located in Dallas, Texas. The types of properties
required to support each of our radio stations, outdoor advertising operations
and media representation business include offices, studios, transmitter sites,
antenna sites and production facilities.

A radio station's studio is generally housed with its office in a downtown or
business district. A radio station's transmitter sites and antenna sites
generally are located in a

36
<PAGE> 41

manner that provides maximum market coverage. The outdoor advertising business
operates out of approximately 32 separate locations throughout the United
States. The media representation business operates out of 54 separate locations
throughout the United States.

The offices and studios of our corporate headquarters, radio stations, outdoor
advertising business and media representation business are located in leased or
owned facilities. These leases generally have expiration dates that range from
one to thirteen years. We either own or lease our transmitter and antenna sites.
These leases generally have expiration dates that range from one to thirty
years. We do not anticipate any difficulties in renewing those leases that
expire within the next several years or in leasing other space, if required. We
own substantially all of the studio and other equipment used in our radio
broadcasting business.

We lease the majority of the land occupied by our outdoor advertising
structures. The leases expire at various dates, generally during the next ten
years, and have varying options to renew and cancel. There is no significant
concentration of outdoor advertising structures under any one lease or subject
to negotiation with any one landlord.

No one property is material to our overall operations. We believe that our
properties are in good condition and suitable for our operations.

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 defendants in the case include Hicks, Muse, Tate & Furst Incorporated
("Hicks Muse"), LIN Television Corporation and some of Chancellor Media's
directors. The plaintiff alleges that, among other things,

- 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 when it
acquired LIN; and

- 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.
Plaintiff, defendants and Chancellor Media had reached a tentative settlement of
this lawsuit. However, as a result of the decision by Chancellor Media and LIN
to terminate the LIN Merger, the settlement will not proceed as planned.

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

37
<PAGE> 42

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. Chancellor Media
believes that the lawsuit is without merit and intends to vigorously defend the
action.

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., 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 Grupo Radio that it was terminating the
acquisition agreement in accordance with its terms. Chancellor Media has
received notice from Grupo Radio requesting arbitration under the terms of the
acquisition agreement of allegations that Chancellor Media wrongfully terminated
that agreement, and the parties have commenced the arbitration process.
Chancellor Media believes that it had a proper basis for terminating the
agreement in accordance with its terms and is contesting these allegations
vigorously.

We are also involved in various other claims and lawsuits which are generally
incidental to our business. We are also vigorously contesting all of these
matters and believe that the ultimate resolution of these matters and those
mentioned above will not have a material adverse effect on our consolidated
financial position or results of operations.

REGULATION OF RADIO BROADCASTING 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 our
licenses, are subject to the jurisdiction of the FCC, which acts under authority
granted by the Communications Act of 1934, as amended. 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 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 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 on 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 in such licensees and proposed licensees, and
compliance with the Anti-Drug Abuse Act of 1988.

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,

38
<PAGE> 43

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. If a
substantial and material question of fact concerning a renewal application is
raised by the FCC or other interested parties, or if for any reason the FCC
cannot determine that the grant of the renewal application would serve the
public interest, convenience and necessity, the FCC will hold an evidentiary
hearing on the application. If as a result of an evidentiary hearing the FCC
determines that the licensee has failed to meet certain requirements and that no
mitigating factors justify the imposition of a lesser sanction, then the FCC may
deny a license renewal application. Only after a license renewal application is
denied will the FCC accept and consider competing applications for the vacated
frequency. Historically, FCC licenses have generally been renewed. We have no
reason to believe that our licenses will not be renewed in the ordinary course,
although there can be no assurance to that effect. The non-renewal of our
licenses could have a material adverse effect on us.

The following table sets forth the date we acquired the radio stations that we
own and/or operate as of April 20, 1999, the frequency of each such station, and
the date of expiration of such station's main FCC broadcast license:

<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
- ------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
WLTW-FM.............. New York, NY 7/97 106.7 MHz 6/06
WHTZ-FM.............. New York, NY 9/97 100.3 MHz 6/06
WKTU-FM.............. New York, NY 5/95 103.5 MHz 6/06
WAXQ-FM.............. New York, NY 7/97 104.3 MHz 6/06
WTJM-FM.............. New York, NY 4/98 105.1 MHz 6/06
KKBT-FM.............. Los Angeles, CA 5/89 92.3 MHz 12/05
KCMG-FM.............. Los Angeles, CA 9/97 104.3 MHz 12/05
KYSR-FM.............. Los Angeles, CA 9/97 98.7 MHz 12/05
KBIG-FM.............. Los Angeles, CA 4/98 100.3 MHz 12/05
KLAC-AM.............. Los Angeles, CA 9/97 570 kHz 12/05
WGCI-FM.............. Chicago, IL 12/97 107.5 MHz 12/04
WNUA-FM.............. Chicago, IL 1/96 95.5 MHz 12/04
WVAZ-FM.............. Chicago, IL 5/95 102.7 MHz 12/04
WLIT-FM.............. Chicago, IL 9/97 93.9 MHz 12/04
WUBT-FM.............. Chicago, IL 12/93 103.5 MHz 12/04
WGCI-AM.............. Chicago, IL 12/97 1390 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
KISQ-FM.............. San Francisco, CA 9/97 98.1 MHz 12/97*
</TABLE>

39
<PAGE> 44

<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
- ------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
KIOI-FM.............. San Francisco, CA 4/94 101.3 MHz 12/05
KABL-AM.............. San Francisco, CA 9/97 960 kHz 12/05
KNEW-AM.............. San Francisco, CA 9/97 910 kHz 12/05
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 8/06
WDAS-AM.............. Philadelphia, PA 5/97 1480 kHz 8/06
WNIC-FM.............. Detroit, MI 5/95 100.3 MHz 10/04
WJLB-FM.............. Detroit, MI 4/97 97.9 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
WKQI-FM.............. Detroit, MI 5/95 95.5 MHz 10/04
WDFN-AM.............. Detroit, MI 1/97 1130 kHz 10/04
WYUR-AM.............. Detroit, MI 5/95 1310 kHz 10/04
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
KTXQ-FM]............. Dallas, TX Pending 102.1 MHz 8/05
KBFB-FM]............. Dallas, TX Pending 97.9 MHz 8/05
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
WASH-FM.............. Washington, D.C. 11/92 97.1 MHz 10/03
WMZQ-FM.............. Washington, D.C. 7/97 98.7 MHz 10/03
WBIG-FM.............. Washington, D.C. 9/97 100.3 MHz 10/03
WWDC-FM.............. Washington, D.C. 6/98 101.1 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
WWDC-AM.............. Washington, D.C. 6/98 1260 kHz 10/03
WWRC-AM(2)........... Washington, D.C. 9/97 570 kHz(2) 10/03
KODA-FM.............. Houston, TX 5/98 99.1 MHz 8/05
KTRH-AM.............. Houston, TX 6/93 740 kHz 8/05
KLOL-FM.............. Houston, TX 6/93 101.1 MHz 8/97*
KLDE-FM.............. Houston, TX 4/98 94.5 MHz 8/05
KKBQ-FM.............. Houston, TX 12/97 92.9 MHz 8/05
KBME-AM.............. Houston, TX 12/97 790 kHz 8/05
KKRW-FM]............. Houston, TX Pending 93.7 MHz 8/05
KQUE-AM]............. Houston, TX Pending 1230 kHz 8/05
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
WFOX-FM.............. Atlanta, GA 9/97 97.1 MHz 4/04
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
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
</TABLE>

40
<PAGE> 45

<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
- ------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
KZON-FM.............. Phoenix, AZ 9/97 101.5 MHz 10/05
KOY-AM............... Phoenix, AZ 9/97 550 kHz 10/05
KISO-AM.............. Phoenix, AZ 9/97 1230 kHz 10/05
KKFR-FM]............. Phoenix, AZ Pending 92.3 MHz 10/05
KFYI-AM]............. Phoenix, AZ Pending 910 kHz 10/05
KYXY-FM]............. San Diego, CA Pending 96.5 MHz 12/05
KPLN-FM]............. San Diego, CA Pending 103.7 MHz 12/97*
WALK-FM.............. Nassau/Suffolk (Long Island), NY 9/97 97.5 MHz 6/06
WALK-AM.............. Nassau/Suffolk (Long Island), NY 9/97 1370 kHz 6/06
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
KFAN-AM.............. Minneapolis/St. Paul, MN 9/97 1130 kHz 4/05
WRQC-FM.............. Minneapolis/St. Paul, MN 9/97 100.3 MHz 4/05
KFXN-AM.............. Minneapolis/St. Paul, MN 9/97 690 kHz 4/05
WWSW-FM.............. Pittsburgh, PA 9/97 94.5 MHz 8/06
WWSW-AM.............. Pittsburgh, PA 9/97 970 kHz 8/06
WDVE-FM]............. Pittsburgh, PA Pending 102.5 MHz 8/98*
WXDX-FM]............. Pittsburgh, PA Pending 105.9 MHz 8/98*
WJJJ-FM]............. Pittsburgh, PA Pending 104.7 MHz 8/06
WDRV-FM]............. Pittsburgh, PA Pending 96.1 MHz 8/06
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
WZAK-FM.............. Cleveland, OH 1/99 93.1 MHz 10/04
WDOK-FM.............. Cleveland, OH 1/99 102.1 MHz 10/04
WZJM-FM.............. Cleveland, OH 1/99 92.3 MHz 10/04
WQAL-FM.............. Cleveland, OH 1/99 104.1 MHz 10/04
WRMR-AM.............. Cleveland, OH 1/99 850 kHz 10/04
WJMO-AM.............. Cleveland, OH 1/99 1490 kHz 10/04
WKNR-AM]............. Cleveland, OH Pending 1220 kHz 10/04
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
KFBK-AM.............. Sacramento, CA 9/97 1530 kHz 12/05
KGBY-FM.............. Sacramento, CA 9/97 92.5 MHz 12/05
KHYL-FM.............. Sacramento, CA 9/97 101.1 MHz 12/05
KSTE-AM.............. Sacramento, CA 9/97 650 kHz 12/05
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
WXXL-FM.............. Orlando, FL 9/97 106.7 MHz 2/04
WJHM-FM.............. Orlando, FL 9/97 101.9 MHz 2/04
WOMX-FM.............. Orlando, FL 9/97 105.1 MHz 2/04
WOCL-FM.............. Orlando, FL 9/97 105.9 MHz 2/04
</TABLE>

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

* Indicates pending renewal application.

] Indicates station to be acquired in a pending transaction.

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

41
<PAGE> 46

(2) On March 9, 1998, we 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. The Communications Act and the FCC rules impose specific limits on
the number of commercial radio stations an entity can own in a single market.
These rules preclude us from acquiring certain stations we might otherwise seek
to acquire. The rules also effectively prevent us from selling stations in a
market to a buyer that has reached its ownership limit in the market. The
ownership rules are as follows:

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

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

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

- - in markets with 14 or fewer commercial radio stations, ownership is limited to
five commercial stations or no more than 50% of the market's total, whichever
is lower, and no more than three of which can be either AM or FM.

Under the FCC's ownership attribution rules, interests either we, officers,
directors and some voting stockholders hold in broadcast stations not owned by
Chancellor Media must be counted as if we owned them for purposes of applying
the FCC's multiple ownership rules. Four of Chancellor Media's directors, Thomas
O. Hicks, R. Steven Hicks, Lawrence D. Stuart, Jr., and Michael J. Levitt, are
directors of Capstar and Thomas O. Hicks is the controlling stockholder of
Capstar, which presently owns or proposes to acquire approximately 340 radio
stations serving 81 mid-sized markets throughout the United States and which
Chancellor Media has agreed to acquire in a merger transaction. Because
Chancellor Media and Capstar have common directors and a common attributable
stockholder, in markets where both companies own radio stations, for example,
Dallas, those stations are currently deemed to be commonly owned for purposes of
applying the local radio ownership limits. Similarly, because Capstar and LIN
have a common attributable stockholder, Mr. Thomas O. Hicks, and common
directors, Messrs. Thomas O. Hicks, and Levitt, and because Capstar operates
radio stations in certain markets where LIN operates television stations, those
operations require an FCC waiver of the rule that normally prohibits the same
owner from owning a television station and a radio station in the same market,
commonly referred to as the "one-to-a-market" rule.

To date, all required one-to-a-market waivers in regard to Capstar overlap have
been obtained. The FCC is considering changes to its one-to-a-market rule and
waiver policy and to its ownership attribution rules. It is possible, but not at
all certain, that revised regulations could require Chancellor Media to divest
its interests in some stations in order to comply with a more restrictive limit
on radio-television cross-ownership in the same market. In general, there can be
no assurance that the FCC's existing rules or any newly adopted rules will not
have a negative effect on Chancellor Media's future acquisition strategy or on
its business, financial condition and results of operations.

Finally, the FCC has issued public notices evidencing concern about radio
station acquisitions that would give the acquiring party an excessive share of
the radio advertising

42
<PAGE> 47

revenues in a given market or would otherwise result in excessive concentration
of ownership. 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
and the FTC.

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 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 pay regulatory and application
fees and follow various rules promulgated under the Communications Act that
regulate, among other things, political advertising, sponsorship identifications
and technical operations, including limits on human exposure to radio frequency
radiation. 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. In addition, the FCC traditionally has required licensees to
develop and implement programs and procedures designed to promote equal
employment opportunities. The U.S. Court of Appeals for the District of Columbia
recently invalidated the FCC's equal employment rules. The FCC has initiated a
proceeding to adopt new equal employment rules to replace the ones that were
invalidated by the Court of Appeals.

Time Brokerage Agreements. Over the past several years, a number of radio
stations, including certain of our stations, have entered into what commonly are
referred to as "Time Brokerage Agreements," or "TBAs." Some types of 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. As of April 20, 1999, we operated 13 stations under TBAs and one of
our stations is being operated by a third party under a TBA.

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

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<PAGE> 48

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

- - raising the basic benchmark for attributing ownership from 5% to 10% of the
licensee's voting stock;

- - raising the attribution benchmark for certain institutional investors from 10%
to 20%;

- - attributing certain minority stockholdings in corporations with a single
majority stockholder; and

- - attributing certain LMAs, TBAs, Joint Sales Agreements, debt or non-voting
stock interests that have heretofore been non-attributable.

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 our radio broadcast stations, result in the loss of audience
share and advertising revenues for our radio broadcast stations, and affect our
ability 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 our radio stations over and
above the already substantial impact of the 1996 Act.

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 FCC currently is considering authorizing the use of In-Band On-Channel(TM)
technology for FM radio stations. In-Band On-Channel technology would permit an
FM station to transmit radio programming in both analog and digital formats, or
in digital only formats, using the bandwidth that the radio station is currently
licensed to use. It is unclear what

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<PAGE> 49

regulations the FCC will adopt regarding In-Band On-Channel technology and what
effect such regulations would have on our business or the operations of its
radio stations.

The FCC is considering a proposal to authorize the operation of low power radio
and "microradio" within the existing FM band. Low power radio and microradio
would operate at power levels below that of full power FM radio stations, such
as those we own. The FCC has proposed that low power radio and microradio
stations not be subject to the same level of regulation regarding interference
to which full power radio stations are subject. We cannot predict the outcome of
this FCC proceeding or what effect, including interference effect, that low
power radio and microradio would have on the operations of our radio stations or
on our ability to engage in digital transmission of our radio programming.

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

Federal Antitrust Laws. The Federal Trade Commission 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 Act 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 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 we do not believe that our 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 we may have to make as a
result of antitrust review, there can be no assurance that this will be the
case.

OUTDOOR ADVERTISING

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<PAGE> 50

In addition, the major U.S. tobacco companies that are defendants in numerous
class action suits throughout the country recently reached an out-of-court
settlement with 46 states that includes a ban on outdoor advertising of tobacco
products. The settlement agreement was finalized on November 23, 1998, but must
be ratified by the courts in each of the 46 states participating in the
settlement. In addition to the mass settlement, the tobacco industry previously
had come to terms with the remaining four states individually. The terms of the
individual settlements also included bans on outdoor advertising of tobacco
products. The ban on outdoor advertising of tobacco products is not expected to
have a material impact on us.

In addition to the settlement agreements, state and local governments are also
regulating the outdoor advertising of alcohol and tobacco products. For example,
several states and cities have laws restricting tobacco billboard advertising
near schools and other locations frequented by children. Some cities have
proposed even broader restrictions, including complete bans on outdoor tobacco
advertising on billboards, kiosks, and private business window displays. It is
possible that state and local governments may propose or pass similar ordinances
to limit outdoor advertising of alcohol and other products or services in the
future.

The effect of these regulations, potential legislation and settlement agreements
on our business and operations could be material. The elimination of billboard
advertising by the tobacco industry may cause a reduction in our direct revenues
from advertisers and may simultaneously increase the available space on the
existing inventory of billboards in the outdoor advertising industry. This
industry-wide increase in space may in turn result in a lowering of outdoor
advertising rates in outdoor advertising markets or limit the ability of
industry participants to increase rates for some period of time.

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<PAGE> 51

WHERE YOU CAN FIND MORE INFORMATION

We, together with Chancellor Media, our indirect parent corporation, file
annual, quarterly and special reports, proxy statements and other information
with the Securities and Exchange Commission. 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. IF YOU ARE GIVEN ANY INFORMATION OR REPRESENTATIONS
ABOUT THESE MATTERS THAT IS NOT DISCUSSED 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 IS CORRECT AFTER THIS DATE.

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<PAGE> 52

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

REVIEW OF STRATEGIC ALTERNATIVES

On January 20, 1999, Chancellor Media, our indirect parent, announced that its
Board of Directors engaged the investment banking firm of BT Alex. Brown
Incorporated as financial advisor for the purpose of assisting management and
the Board of Directors of Chancellor Media in developing, reviewing and
structuring a range of strategic alternatives intended to maximize stockholder
value. On February 11, 1999, Chancellor Media announced that it had added
additional advisors Morgan Stanley Dean Witter, Hicks, Muse, Tate & Furst
Incorporated, Goldman, Sachs & Co., Greenhill & Co., LLC and Chase Securities
Inc. to assist in exploring these alternatives, which included the potential
sale, merger or consolidation of the entire company or some of its operating
assets.

Executive Management Realignment. On March 15, 1999, Chancellor Media and CMCLA
announced the following executive management changes:

- - the resignation of Jeffrey A. Marcus as Chancellor Media's and CMCLA's
President and Chief Executive Officer effective March 15, 1999;

- - the appointments of Kenneth J. O'Keefe as Chief Operating Officer of
Chancellor Radio Group and James A. McLaughlin as President and Chief
Operating Officer of Chancellor Outdoor Group;

- - the resignation of Eric C. Neuman as Chancellor Media's and CMCLA's Senior
Vice President -- Strategic Development effective March 15, 1999;

- - the appointment of William S. Banowsky, Jr., currently Executive Vice
President and General Counsel of Capstar, as Chancellor Media's and CMCLA's
Executive Vice President and General Counsel, replacing Richard A. B. Gleiner
formerly Senior Vice

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<PAGE> 53

President, Secretary and General Counsel of Chancellor Media and CMCLA,
effective March 15, 1999.

The Company is expected to record a significant non-recurring charge in the
first quarter of 1999 in connection with Chancellor Media's termination of the
LIN merger and the executive management realignment discussed above.

GENERAL

Since 1995, we have engaged in an acquisition strategy concentrating on
expanding our presence in the nation's largest radio markets. Our portfolio of
radio stations that we owned and/or operated as of December 31, 1996, 1997 and
1998 follows:

<TABLE>
<CAPTION>
MSA
MARKET RANK(1) 1996 1997 1998
- ------ ------- ---- ---- ----
<S> <C> <C> <C> <C>
New York.......................... 1 1 4 5
Los Angeles....................... 2 1 5 5
Chicago........................... 3 7 7 7
San Francisco..................... 4 5 7 7
Philadelphia...................... 5 2 6 6
Detroit........................... 6 5 7 7
Dallas/Ft. Worth.................. 7 1 4 6
Boston............................ 8 3 3 3
Washington, D.C. ................. 9 3 8 8
Houston........................... 10 2 4 8
Miami/Ft. Lauderdale.............. 11 2 2 2
Atlanta........................... 12 -- 1 1
Puerto Rico....................... 13 -- -- 8
Phoenix........................... 15 -- 6 8
San Diego......................... 16 -- -- 2
Nassau/Suffolk (Long Island)...... 17 -- 2 2
Minneapolis/St. Paul.............. 18 -- 7 7
Pittsburgh........................ 21 -- 2 6
Denver............................ 23 -- 5 6
Cleveland......................... 24 -- -- 1
Cincinnati........................ 26 -- 4 4
Sacramento........................ 28 -- 4 4
Riverside/San Bernardino.......... 29 -- 2 2
Charlotte......................... 37 6 -- --
Orlando........................... 39 -- 4 4
Jacksonville...................... 52 -- 2 --
-- -- ---
Total................... 38 96 119
== == ===
</TABLE>

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

(1) MSA rank obtained from BIA Research-Master Access Pro, Version 2.5 Radio
Analysis Database, current as of February 24, 1999, based upon 1998 gross
revenue for the indicated markets.

We entered the media representation business with the acquisition of Katz in
October 1997, and further broadened our media presence by entering the outdoor
advertising business with the acquisition of Martin in July 1998 and Whiteco in
December 1998.

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<PAGE> 54

Our results of operations from period to period have not historically been
comparable because of the impact of the various acquisitions and dispositions
that we have completed. For a discussion of the various transactions completed
and agreements entered into since January 1, 1996 as part of our acquisition
strategy, see Note 2 to the consolidated financial statements included elsewhere
in this prospectus.

As a result of the strategic alternatives review and initiatives resulting from
that review described elsewhere in this prospectus, we are expected to record a
significant non-recurring charge in the first quarter of 1999 in connection with
Chancellor Media's termination of the LIN merger and the executive management
realignment discussed elsewhere herein.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Net revenues for the year ended December 31, 1998 increased 118.8% to $1.3
billion compared to $582.1 million for the year ended December 31, 1997.
Operating expenses excluding depreciation and amortization for 1998 increased
115.7% to $682.1 million compared to $316.2 million in 1997. The increase in net
revenues and operating expenses was primarily attributable to the net impact of
the various acquisitions and dispositions discussed elsewhere herein, in
addition to the overall net operational improvements we realized.

Depreciation and amortization for 1998 increased 140.0% to $446.3 million
compared to $186.0 million in 1997. The increase is primarily due to the impact
of the acquisitions completed during 1998.

Corporate general and administrative expenses for 1998 increased 71.3% to $36.7
million compared to $21.4 million in 1997. The increase is due to the growth of
the Company, and related increase in properties and staff, primarily due to
recent acquisitions.

The executive severance charge of $63.7 million for 1998 includes one-time
charges incurred in connection with the resignation of Scott K. Ginsburg as
President and Chief Executive Officer of Chancellor Media and Matthew E. Devine
as Senior Vice President and Chief Financial Officer and new employment
agreements entered into with certain members of executive management.

As a result of the above factors, operating income for 1998 decreased 22.8% to
$45.1 million compared to $58.4 million in 1997.

Interest expense for 1998 increased 155.4% to $217.1 million compared to $85.0
million in 1997. The net increase in interest expense was primarily due to

- - 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 March 13, 1998 offering
of 21,850,000 shares of common stock;

- - the assumption of the 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 merger with Chancellor Broadcasting Company on
September 5, 1997;

- - the assumption of 10 1/2% Senior Subordinated Notes due 2007 (the "10 1/2%
Notes") upon consummation of the acquisition of Katz on October 28, 1997;

- - the issuance of the 8 1/8% Senior Subordinated Notes due 2007 (the "8 1/8%
Notes") by us on December 22, 1997;

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<PAGE> 55

- - the issuance of the 9% Senior Subordinated Notes due 2008 by us on September
30, 1998; and

- - the issuance of the 8% Senior Notes due 2008 by us on November 17, 1998.

We recorded a gain on disposition of assets of $123.8 million in 1998 related to
the exchange of WTOP-AM and WGMS-FM in Washington and KZLA-FM in Los Angeles
plus $63.0 million in cash for WTJM-FM in New York, KLDE-FM in Houston and
KBIG-FM in Los Angeles. We 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).

We recorded a gain on disposition of representation contracts of $32.2 million
in 1998 related to its media representation operations. A buyout agreement is
typically entered into for the purchase of representation contracts by a
successor representation firm. 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 or notice period, plus
two months. The gain represents the sales proceeds received from a successor
representation firm for the buyout of an existing media representation contract,
net of any remaining deferred costs associated with obtaining the original
representation contract. While the consolidation of the radio broadcasting
industry has resulted in an increase in buyout activity, the impact on future
periods cannot be predicted.

The provision for income tax expense of $33.8 million for the year ended
December 31, 1998 is comprised of current federal and state income taxes of $5.0
million and a deferred federal income tax expense of $28.8 million.

We 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 tender offer for the 12% Subordinated Exchange Debentures
due 2009 and the tender offer for the 12 1/4% Subordinated Exchange Debentures
due 2008. We 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 our senior credit facility on April 25, 1997.

Dividends on CMCLA's preferred stock were $17.6 million in 1998 compared to
$12.9 million in 1997. The preferred stock consisted of

- - 12% Exchangeable Preferred Stock (the "12% Preferred Stock") which was issued
in September 1997 as part of the merger with Chancellor Broadcasting Company
and was subsequently exchanged in May 1998 for 12% Debentures and

- - 12 1/4% Series A Senior Cumulative Exchangeable Preferred Stock (the "12 1/4%
Preferred Stock") which was issued in September 1997 as part of the merger
with Chancellor Broadcasting Company and was subsequently exchanged in July
1998 for 12 1/4% Debentures.

As a result of the above factors, the Company incurred a $95.6 million net loss
attributable to common stock in 1998 compared to a $31.7 million net loss in
1997.

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<PAGE> 56

See Note 14 to the Consolidated Financial Statements included elsewhere in this
prospectus for additional information on the Company's business segments.

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

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 compared to $174.3 million in 1996. The increase in net
revenues and operating expenses 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 Viacom Acquisition and the merger with Chancellor Broadcasting Company,
as well as other acquisitions completed during 1997.

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

- - additional bank borrowings under the senior credit facility required to
finance the various acquisitions discussed elsewhere offset by repayment of
borrowings from the net proceeds of the Company's various radio station
dispositions;

- - the assumption of the 9 3/8% Notes and the 8 3/4% Notes upon consummation of
the merger with Chancellor Broadcasting Company on September 5, 1997; and

- - the assumption of the 10 1/2% Notes upon consummation of the acquisition of
Katz 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% Preferred Stock and the 12 1/4% Preferred Stock issued in September
1997 as part of the merger with Chancellor Broadcasting Company.
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<PAGE> 57

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.

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. Operating activities provided net cash of $267.6 million in 1998, $139.5
million in 1997 and $47.5 million in 1996. The Company historically has used the
proceeds of bank debt and private and public debt and equity offerings,
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 up to $434.3 million. Although there can be no assurance, the
Company expects that $90.0 million of such amount will be required to be
borrowed during the second quarter of 1999 for the acquisition of Phoenix. The
remaining $344.3 million may be required to be borrowed for the Capstar/SFX
Transaction over the three year period in which the Capstar/SFX stations will be
acquired. As the result of Chancellor Media's pending merger with Capstar,
however, we are currently evaluating the treatment of the Capstar/SFX
Transaction assuming the Capstar merger is completed. Accordingly, it is unclear
when such amounts would be required to be borrowed by us, if at all. Depending
on the timing of the consummation of the Pending Transactions and the status of
the Capstar merger, the Company may need to obtain additional financing.

The Company believes that amounts available under the senior credit facility
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 $2.5 billion, consisting of a $1.6 billion revolving credit
facility and a $900.0 million term loan facility. At April 20, 1999, the Company
had drawn $1.0 billion of the revolving credit facility and $900.0 million of
the 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, we
are required to pay interest on the notes and our senior subordinated notes.
Interest payment requirements on these notes are $214.9 million per year. Cash
dividend requirements of the Company on Chancellor Media's $3.00 convertible
exchangeable preferred stock and 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 Chancellor Mezzanine Holdings
Corporation, Chancellor Media must rely solely on dividends from Chancellor
Mezzanine Holdings Corporation, which in turn is expected to distribute
dividends paid to it by CMCLA and other subsidiaries to Chancellor Media, to
permit Chancellor Media to pay cash dividends on the $3.00 convertible
exchangeable preferred stock and the 7% convertible preferred stock. The senior
credit facility and the indentures governing the notes and our senior
subordinated notes limit, but do not prohibit, CMCLA from paying such dividends
to Chancellor Mezzanine Holdings Corporation.

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<PAGE> 58

For additional information regarding the senior credit facility, the notes, the
redeemable preferred stock and the preferred stock see Notes 7, 8 and 9,
respectively, to the consolidated financial statements included elsewhere in
this prospectus.

FORWARD LOOKING STATEMENTS

Certain statements used in the preceding and following discussion and elsewhere
in this prospectus are forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934. These forward-looking statements about our financial condition, prospects,
operations and business are generally accompanied by words such as "believes,"
"expects," "plans," "anticipates," "intends," "likely," "estimates," or similar
expressions. These forward-looking statements are subject to risks,
uncertainties and other factors, some of which are beyond our control, that
could cause actual results to differ materially from those forecast or
anticipated in such forward-looking statements.

These risks, uncertainties and other factors include, but are not limited to:
the potential negative consequences of our substantial indebtedness; the
restrictions imposed on us and our subsidiaries by the agreements governing our
debt instruments; the competitive nature of the radio broadcasting, outdoor
advertising and media representation businesses; the potential adverse effects
on licenses and ownership of regulation of the radio broadcasting industry; the
difficulty of integrating substantial acquisitions and entering new lines of
business; the potential loss of outdoor advertising space due to the regulation
of outdoor advertising; the potential loss of advertisers due to tobacco and
alcohol industry regulation; and the control of the Company by affiliates of
Hicks Muse and potential conflicts of interest relating thereto.

Because such forward-looking statements are subject to risks and uncertainties,
readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's view only as of the date of this
prospectus. We undertake no obligation to update these statements or publicly
release the result of any revisions to these forward-looking statements which it
may make to reflect events or circumstances after the date of this report or to
reflect the occurrence of unanticipated or unforeseen events.

RECENTLY-ISSUED ACCOUNTING PRINCIPLE

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. This Statement establishes accounting and
reporting standards for derivative instruments and 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 our consolidated financial statements.

YEAR 2000 ISSUE

The Year 2000 ("Y2K") issue is whether our 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.

We have conducted a comprehensive review of our computer systems to identify the
systems that could be affected by the Y2K issue and have developed an
implementation

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<PAGE> 59

plan. We use purchased software programs for corporate financial reporting,
radio broadcasting operations and media representation operations. The companies
providing these software programs are Y2K compliant, and we have received Y2K
compliance certificates from these software vendors. We use proprietary software
programs for our outdoor advertising operations and are in the process of
reviewing various modifications and replacement plans. We estimate that
approximately 30 percent of the outdoor systems' Y2K remediation has been
completed as of March 1, 1999. The remaining remediation efforts are expected to
be completed by the end of the third quarter of 1999. Our Y2K implementation
plan also includes ensuring that our computer hardware and other equipment with
embedded chips or processors are Y2K compliant.

Costs associated with ensuring that our existing systems are Y2K compliant and
replacing certain existing systems are currently expected to be approximately
$3.7 million, of which $0.8 million has been incurred through March 1, 1999.
These costs, in conjunction with investments we are making in information
systems and technology, are expected to reduce the risks associated with Y2K
issues. Future costs are to be funded through our operating cash flow.

In addition, we review the computer systems of companies we intend to acquire in
order to assess whether the systems are Y2K compliant. To the extent the systems
are not Y2K compliant, we will develop an implementation plan to ensure the
systems are Y2K compliant or will convert the systems to our computer systems
which are Y2K compliant. We continue our comprehensive review of the computer
systems related to Chancellor Media's pending merger with Capstar, expected to
be consummated in the second quarter or early third quarter of 1999. We are in
the process of reviewing various modifications and replacement plans related to
Chancellor Media's pending merger with Capstar. The costs associated with such
efforts may be material. There is no guarantee that the systems of companies to
be acquired by us in the future will be timely converted and would not have an
adverse effect on our.

The ability of third parties with whom we transact business to adequately
address their Y2K issues is outside of the our control. Therefore, there can be
no assurance that the failure of such third parties to adequately address their
Y2K issues will not have a material adverse effect on our business, financial
condition, cash flows and results of operations. We have begun development of
contingency plans intended to mitigate any possible disruption in business that
may result from certain of our systems or the systems of third parties that are
not Y2K compliant.

The Y2K cost estimates are subject to change based on further analysis, and any
change in the costs may be material. As solutions are implemented and new issues
are recognized, the focus of our efforts and costs to address the Y2K issue may
be adjusted. Furthermore, we cannot guarantee that there will be no Y2K issues
in spite of these efforts and if such modifications and replacements are not
made, or are not completed in time, the Y2K issue could have a material impact
on our operations.

55
<PAGE> 60

MANAGEMENT AND BOARD OF DIRECTORS

Our directors and executive officers, and the directors and executive officers
of Chancellor Media and Chancellor Mezzanine Holdings Corporation and CMCLA are
as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas O. Hicks........................... 53 Chairman of the Board and Chief
Executive Officer
James E. de Castro........................ 46 Vice Chairman -- President and Chief
Executive Officer of Chancellor Radio
and Outdoor Group
R. Steven Hicks........................... 49 Vice Chairman -- President and Chief
Executive Officer of Chancellor Media
Services Group
D. Geoffrey Armstrong..................... 41 Executive Vice President and Chief
Financial Officer
Kenneth J. O'Keefe........................ 44 Executive Vice President and Chief
Operating Officer of Chancellor Radio
Group
James A. McLaughlin....................... 49 President and Chief Operating Officer
of Chancellor Outdoor Group
William S. Banowsky, Jr................... 37 Executive Vice President and General
Counsel
Steven Dinetz............................. 52 Director
Thomas J. Hodson.......................... 55 Director
Vernon E. Jordan, Jr...................... 63 Director
Michael J. Levitt......................... 40 Director
Perry J. Lewis............................ 61 Director
Jeffrey A. Marcus......................... 52 Director
John H. Massey............................ 59 Director
Lawrence D. Stuart, Jr.................... 54 Director
J. Otis Winters........................... 66 Director
</TABLE>

Thomas O. Hicks

Mr. Thomas O. Hicks was elected Chairman of the Board of Chancellor Media and
CMCLA in September 1997 and elected Chief Executive Officer in March 1999. He
had been Chairman of the Board of Chancellor Broadcasting Company and Chancellor
Radio Broadcasting Company prior to that time since April 1996. Mr. Thomas O.
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. Thomas O. Hicks was Co-Chairman of
the Board and Co-Chief Executive Officer of Hicks & Haas, Incorporated, a Dallas
based private investment firm. Mr. Thomas O. Hicks serves as a director of
Capstar, LIN Holdings Corp., LIN Television Corporation, Sybron International
Corporation, Inc., Cooperative Computing, Inc., International Home Foods, Regal
Cinemas, Inc., Triton Energy Limited, D.A.C. Vision Inc., Home Interiors &
Gifts, Inc. and Olympus Real Estate Corporation. Mr. Thomas O. Hicks is the
brother of Mr. R. Steven Hicks.

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<PAGE> 61

James E. de Castro

Mr. de Castro was elected Vice Chairman of Chancellor Media and President and
Chief Executive Officer of the Chancellor Radio and Outdoor Group in March 1999.
Prior thereto, Mr. de Castro served as Chief Operating Officer of Chancellor
Media and CMCLA from September 22, 1997 to August 19, 1998, and from August 19,
1998 to March 15, 1999, Mr. de Castro served as President of the Chancellor
Radio Group. From September 5, 1997 to September 22, 1997, Mr. de Castro served
as Co-Chief Operating Officer of Chancellor Media. Mr. de Castro was elected
Co-Chief Operating Officer and a director of Chancellor Media in September 1997.
Mr. de Castro was previously President of Evergreen Media Corporation since 1993
and Chief Operating Officer and a director of Evergreen Media Corporation 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.

R. Steven Hicks

Mr. R. Steven Hicks was elected Vice Chairman of Chancellor Media and President
and Chief Executive Officer of the Chancellor Media Services Group in March 1999
and has served as President, Chief Executive Officer and a director of Capstar
since June 1997. Mr. R. Steven Hicks has also served as Chairman of the Board of
Capstar from June to September 1997. Mr. R. Steven Hicks founded Capstar
Broadcasting in October 1996. Prior to joining Capstar, Mr. R. Steven Hicks
acted as Chairman of the Board and Chief Executive Officer of GulfStar
Communications, Inc. from January 1987 to July 1997 and as President and Chief
Executive Officer of SFX Broadcasting, Inc. ("SFX") from November 1993 to May
1996. Mr. R. Steven Hicks is a 31-year veteran of the radio broadcasting
industry, including 18 years as a station owner. Mr. R. Steven Hicks is the
brother or Mr. Thomas O. Hicks.

D. Geoffrey Armstrong

Mr. Armstrong was elected Executive Vice President and Chief Financial Officer
of Chancellor Media and CMCLA in March 1999. Mr. Armstrong served as Executive
Vice President and Chief Operating Officer of Capstar from July 1998 to March
1999, and has served as a director of Capstar since July 1998. Mr. Armstrong has
also served as a director of SFX Entertainment since September 1998. Mr.
Armstrong served as the Chief Operating Officer and an Executive Vice President
of SFX from November 1996 to May 1998 and served as a director of SFX from 1993
to 1998. Mr. Armstrong became the Chief Operating Officer of SFX in June 1996
and served as the Chief Financial Officer and Treasurer of SFX from 1992 until
March 1995. Prior thereto, Mr. Armstrong served as Executive Vice President and
Chief Financial Officer of Capstar, a predecessor of SFX and unrelated to
Capstar Broadcasting Corporation, since 1989. From 1988 to 1989, Mr. Armstrong
was the Chief Executive Officer of Sterling Communications Corporation.

Kenneth J. O'Keefe

Mr. O'Keefe was appointed Chief Operating Officer of the Chancellor Radio Group
in March 1999 and has served as Executive Vice President of Chancellor Media and
CMCLA since September 1997. Mr. O'Keefe had been an Executive Vice President of
Evergreen Media Corporation since February of 1996 and served as a director of
Evergreen

57
<PAGE> 62

from May of 1996 to September 1997. 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.

James A. McLaughlin

Mr. McLaughlin was appointed Chief Operating Officer of the Chancellor Outdoor
Group in March 1999 and became the President of the Chancellor Outdoor Group in
August 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 advertising company
in the United States.

William S. Banowsky, Jr.

Mr. Banowsky was elected Executive Vice President and General Counsel of
Chancellor Media and CMCLA in March 1999 and has served as Executive Vice
President, General Counsel and Secretary of Capstar since June 1997. Mr.
Banowsky joined Capstar in January 1997. Mr. Banowsky was an attorney with
Snell, Banowsky & Trent, P.C., Dallas, Texas, for six years before joining
Capstar. Prior to that time, he was an attorney for Johnson & Gibbs, P.C.,
Dallas, Texas, for four years.

Steven Dinetz

Mr. Dinetz was elected Co-Chief Operating Officer and a director of Chancellor
Media and CMCLA in September 1997. As of September 22, 1997, Mr. Dinetz no
longer serves as Co-Chief Operating Officer of Chancellor Media and CMCLA, but
continues to serve as a director. Prior to September 1997, Mr. Dinetz served as
President, Chief Executive Officer and a director of Chancellor Broadcasting
Company and Chancellor Radio Broadcasting Company since their formation and
prior thereto was the President and Chief Executive Officer and a director of
Chancellor Communications, a predecessor entity of Chancellor Broadcasting
Company.

Thomas J. Hodson

Mr. Hodson became a director of Chancellor Media and CMCLA in September 1997.
Mr. Hodson had previously served as a director of Evergreen Media Corporation
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 Aluminum
Company from January 1994 to March 1998. He had been a Vice President of
Stephens, Inc. from 1986 through 1993.

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<PAGE> 63

Vernon E. Jordan, Jr.

Mr. Jordan became a director of Chancellor Media and CMCLA on October 14, 1997.
Mr. Jordan currently serves as a senior partner in the Washington, D.C. 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.

Michael J. Levitt

Michael J. Levitt became a director of Chancellor Media and CMCLA on May 19,
1998. Mr. Levitt is a 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 Capstar, LIN Holdings Corp., LIN Television
Corporation, Regal Cinemas, Inc., STC Broadcasting, Inc. and International Home
Foods, Inc.

Perry J. Lewis

Mr. Lewis became a director of Chancellor Media and CMCLA in September 1997. Mr.
Lewis had previously served as a director of Evergreen Media Corporation since
Evergreen Media Corporation 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.

Jeffrey A. Marcus

Mr. Marcus served as President and Chief Executive Officer of Chancellor Media
and CMCLA from June 1, 1998 to March 15, 1999. Mr. Marcus became a director of
Chancellor Media and CMCLA in September 1997. Prior to the merger with
Chancellor Broadcasting Company, Mr. Marcus served as a director of Chancellor
Broadcasting Company and Chancellor Radio Broadcasting Company. Prior to joining
Chancellor Media on June 1, 1998, Mr. Marcus served as the 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. 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.

59
<PAGE> 64

John H. Massey

Mr. Massey became a director of Chancellor Media and CMCLA in September 1997.
Prior to that time, Mr. Massey served as a director of Chancellor Broadcasting
Company and Chancellor Radio Broadcasting Company. 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 STC
Broadcasting, Inc.

Lawrence D. Stuart, Jr.

Mr. Stuart became a director of Chancellor Media and CMCLA in September 1997.
Mr. Stuart previously served as a director of Chancellor Broadcasting Company
and Chancellor Radio Broadcasting Company 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 also
serves as a director of Capstar, Home Interiors & Gifts, Inc. and Arena Brands,
Inc.

J. Otis Winters

Mr. Winters became a director of Chancellor Media and CMCLA 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), and
director and Chairman of the executive committee for Walden Residential
Properties, Inc.

There are no family relationships between any of the directors and executive
officers of the Company, except that Thomas O. Hicks is the brother of R. Steven
Hicks.

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<PAGE> 65

Compensation of Directors

Directors who are also officers of Chancellor Media and CMCLA receive no
additional compensation for their services as directors. Effective in September
1997, Chancellor Media and CMCLA who are not officers will receive:

- - a fee of $36,000 per annum;

- - a $1,000 fee for attendance at board meetings or, if applicable, a $500 fee
for attendance at board meetings by telephone;

- - a fee of $24,000 per annum for service on the Special Committee or Negotiating
Committee $36,000 for chairman of Special Committee; and

- - a $2,000 fee for attendance as chairman of a board committee $1,000 for
attendance by telephone, 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, Chancellor Mezzanine Holdings and CMCLA 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, Chancellor Mezzanine Holdings and CMCLA 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.

COMPENSATION OF EXECUTIVE OFFICERS

Summary Compensation. The following table sets forth all compensation, including
bonuses, stock option awards and other payments, we paid or accrued for the
three fiscal years ending December 31, 1998, to our five most highly compensated
executive officers serving in that capacity at the end of the last completed
fiscal year and our former Chief Executive Officer whose total annual salary and
bonus exceeded $100,000 during the fiscal year ended December 31, 1998.

SUMMARY COMPENSATION TABLE(1)

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------ -----------------------------------
SECURITIES
OTHER UNDERLYING
NAME AND ANNUAL RESTRICTED OPTIONS LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) STOCK AWARDS (#) PAYOUTS COMPENSATION
- ------------------ ---- -------- ---------- --------------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jeffrey A. Marcus.......... 1998 $656,250(3) $2,333,333(3) -- -- 1,450,000 -- $ 1,001,885(4)
President, Chief Executive
Officer and Director
Scott K. Ginsburg.......... 1998 $372,222(5) $ -- -- -- 800,000 -- $37,781,091(6)
Former President and 1997 850,000 3,615,000 -- -- 500,000 -- 9,101(6)
Chief Executive Officer 1996 750,000 956,000 -- -- 375,000 -- 9,776(6)
James E. de Castro......... 1998 $900,000 $3,000,000 -- -- 960,000 -- $ 6,003,903(7)
President -- Chancellor 1997 825,000 2,581,000 -- -- 425,000 -- 2,630(7)
Radio Group and Director 1996 750,000 704,000 -- -- 75,000 -- 2,455(7)
Matthew E. Devine.......... 1998 $500,000 $2,000,000 -- -- 720,000 -- $ 5,112,825(8)
Senior Vice President and 1997 375,000 1,205,000 -- -- 262,500 -- --
Chief Financial Officer 1996 300,000 352,000 -- -- 37,500 -- --
Kenneth J. O'Keefe......... 1998 $500,000 $1,500,000 -- -- 100,000 -- $ --
Executive Vice 1997 320,000 1,205,000 -- -- -- -- --
President -- Operations 1996 210,000(9) 210,000 -- -- 300,000 -- --
James A. McLaughlin........ 1998 $181,944(10) $ 375,000 -- -- 360,000 -- $ 1,001,273(11)
President -- Chancellor
Outdoor Group
</TABLE>

61
<PAGE> 66

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

(1) No information is set forth in this section regarding Thomas O. Hicks, who
served as interim Chief Executive Officer of Chancellor Media and CMCLA
from April 14, 1998 through June 1, 1998. Mr. Thomas O. Hicks received fees
in conjunction with his service as our Chairman of the Board, but received
no additional compensation in conjunction with his service as interim Chief
Executive Officer.

(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 compensation for the period beginning June 1, 1998, when Mr.
Marcus joined the Company.

(4) Represents a one-time execution bonus of $1,000,000 paid to Mr. Marcus in
connection with his employment agreement effective June 1, 1998 and
payments of $1,885 for a term life insurance policy for Mr. Marcus for
1998.

(5) Represents compensation for the period January 1, 1998 to the date of Mr.
Ginsburg's resignation effective April 14, 1998 and four weeks of accrued
and unpaid vacation.

(6) Other compensation for 1998 represents compensation related to Mr.
Ginsburg's resignation on April 14, 1998 of:

- a lump sum severance payment of $20,000,000;

- compensation expense of $16,000,000 related to the grant of 800,000
options at an exercise price of $23.25 that are exercisable one third at
April 14, 1998, 1999 and 2000, respectively; and

- consulting fees of $1,770,833 earned by Mr. Ginsburg for the period April
14, 1998 to December 31, 1998 and payments of $10,258 for term life
insurance policies for Mr. Ginsburg during 1998.

Other compensation for 1997 and 1996 represents payments for term life
insurance policies for Mr. Ginsburg.

(7) Other compensation for 1998 represents a one-time cash payment of
$5,000,000 and a one-time execution bonus of $1,000,000 paid to Mr. de
Castro in connection with Mr. de Castro's employment agreement effective
April 17, 1998 and payments of $3,903 for a term life insurance policy for
Mr. de Castro for 1998. Other compensation for 1997 and 1996 represents
payments for a term life insurance policy for Mr. de Castro.

(8) Other compensation for 1998 represents:

- a one-time cash payment of $2,000,000 and a one-time execution bonus of
$1,000,000 paid to Mr. Devine in connection with Mr. Devine's employment
agreement effective April 17, 1998;

- a lump sum severance payment of $2,000,000 and other payments of $111,552
paid to Mr. Devine in connection with Mr. Devine's resignation and

- payments of $1,273 for a term life insurance policy.

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

(10) Represents compensation for the period beginning August 18, 1998, when Mr.
McLaughlin joined the Company.

(11) Represents a one-time execution bonus of $1,000,000 paid to Mr. McLaughlin
in connection with his employment agreement effective August 18, 1998 and
payments of $1,273 for a term life insurance policy.

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<PAGE> 67

Option Grants in Last Fiscal Year. The following table sets forth information
regarding options to purchase Chancellor Media common stock granted by
Chancellor Media to its Chief Executive Officer and the other executive officers
named in the Summary Compensation Table during the 1998 fiscal year.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL GRANT DATE VALUE
UNDERLYING OPTIONS MARKET PRICE --------------------------
OPTIONS GRANTED TO EXERCISE OR ON DATE OF GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE GRANT EXPIRATION PRESENT VALUE
NAME (#)(1) FISCAL YEAR ($/SHARE) ($/SHARE) DATE $(2)
- ---- ---------- ------------ ----------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey A. Marcus............ 1,250,000 16.9% $42.13 $42.13 4/29/08 $26,513,246
200,000 2.7% 41.50 41.50 10/1/08 4,179,180
Scott K. Ginsburg............ 800,000 10.8% 23.25 42.13 4/20/05 22,551,494
James E. de Castro........... 800,000 10.8% 42.13 42.13 5/18/08 16,968,477
160,000 2.2% 41.50 41.50 10/1/08 3,343,344
Matthew E. Devine............ 720,000 9.7% 42.13 42.13 5/18/08 15,271,630
Kenneth J. O'Keefe........... 100,000 1.4% 37.31 37.31 1/01/05 1,878,768
James A. McLaughlin.......... 300,000 4.1% 48.38 48.38 8/18/08 7,307,271
60,000 0.8% 48.38 48.38 8/18/08 1,461,454
</TABLE>

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

(1) Represents options to purchase shares of Chancellor Media common stock
granted under the 1998 Plan. The options awarded to Mr. Marcus are
exercisable in whole or part beginning on April 29, 1998. The options
awarded to Mr. Ginsburg are exercisable in whole or part beginning on April
20, 1998. The options awarded to Mr. De Castro are exercisable in whole or
part beginning on April 17, 1998. The options awarded to Mr. Devine are
exercisable in whole or part beginning on April 17, 1998. The options
awarded to Mr. O'Keefe are exercisable in whole or part beginning on January
1, 1998. The 300,000 share grant of options awarded to Mr. McLaughlin are
exercisable in whole or part beginning on August 18, 1998. The 60,000 share
grant of options awarded to Mr. McLaughlin are exercisable in whole or part
beginning on August 18, 1999. The options may expire earlier upon the
occurrence of certain merger or consolidation transactions involving
Chancellor Media. Chancellor Media is not required to issue and deliver any
certificate for shares of Chancellor Media 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 Chancellor Media common stock under federal
or state securities laws and the payment to Chancellor Media 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 Chancellor Media common stock
purchasable upon exercise of the options unless and until certificates
representing such shares shall have been issued by Chancellor Media 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.

(2) 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
39.91%; risk-free interest rate of 4.80%, and expected life of seven years.

63
<PAGE> 68

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, 1998 by Chancellor Media's Chief Executive Officer and
the other executive officers named in the Summary Compensation Table, and the
value of each executive officer's unexercised options at December 31, 1998.

<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>
Jeffrey A. Marcus......... -- -- 861,742 657,500 $6,183,838 $4,232,575
Scott K. Ginsburg......... -- -- 1,141,667 533,333 32,714,050 13,133,325
James E. de Castro........ 150,000 $6,099,500 2,405,000 -- 59,994,675 --
Matthew E. Devine......... -- -- 1,470,000 -- 31,082,250 --
Kenneth J. O'Keefe........ -- -- 100,000 300,000 1,056,500 11,163,000
James A. McLaughlin....... -- -- 75,000 285,000 -- --
</TABLE>

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

(1) Based upon a per share price for the Chancellor Media common stock of
$47.875. This price represents the closing price for the Chancellor Media
common stock on The Nasdaq National Market System on December 31, 1998.

Employment Contracts, Termination of Employment and Change-in-Control
Arrangements

de Castro Employment Agreement

On October 1, 1998, Chancellor Media and CMCLA entered into an amended and
restated employment agreement with Mr. de Castro, effective as of April 17,
1998. 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 subject to increase each year by a
percentage equal to the percentage change in the consumer price index during the
preceding year (provided that the base salary in any year cannot be less than
the base salary in the prior year). In addition, the de Castro employment
agreement provides for an annual bonus based upon a percentage of the amount by
which Chancellor Media 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 of the employment agreement and on each of the first
four anniversaries of the employment agreement on which Mr. de Castro remains
employed by Chancellor Media, 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 the
termination date a number of options equal to 800,000 minus the number of
options previously granted to Mr. de Castro under the preceding sentence prior
to that date. The de Castro employment agreement provides

- - for a signing bonus in the gross amount of $1,000,000;

- - that Chancellor Media shall make a one-time cash payment to Mr. de Castro of
$5,000,000; and

64
<PAGE> 69

- - that Chancellor Media shall grant to Mr. de Castro stock options to purchase
800,000 shares of 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 the common stock at the close of trading on
the day immediately preceding the date of the grant; provided, however, that
with respect to any options the grant of which is accelerated because Mr. de
Castro's employment is terminated as the result of a "change of control," the
exercise price of such options will be the lower of

- - the exercise price equal to the average last reported sale price of the common
stock for the 30 trading days prior to the ten trading days ending at the
close of the trading day prior to the day of any announcement of such "change
of control," and

- - the exercise price equal to the market price of the common stock at the close
of the trading day immediately preceding the date of grant.

The de Castro employment agreement provides that, in the event of termination of
Mr. de Castro's employment by Chancellor Media without "cause" or by Mr. de
Castro with "good reason," Chancellor Media 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 Chancellor Media to terminate employment or to become
employed by any other radio station, Chancellor Media 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 the event of
termination by Mr. de Castro of his employment for other than "good reason,"
Chancellor Media also has the right, in exchange for the payment at the end of
each calendar year through December 31, 2002, of an amount equal Mr. de Castro's
average bonus (the greater of actual bonus and $1,600,000 in the applicable
year), and on the last day of the calendar year ended December 31, 2003, make a
payment to Mr. de Castro equal to the product of Mr. de Castro's average bonus
(the greater of actual bonus or $1,600,000 in the applicable year) multiplied by
the fraction of the 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 employed by or perform activities on behalf of or have ownership
interest in any broadcasting or related businesses. 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,
Chancellor Media 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
Chancellor Media 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 provided to the Chief
Executive Officer, Mr. de Castro would be provided benefits in substantially
comparable amount and/or under substantially comparable terms, on an aggregate
basis.

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Chancellor Media and CMCLA are currently negotiating an amendment to Mr. de
Castro's employment agreement that is expected to provide for the following:

- - an increase in Mr. de Castro's base salary to $950,000;

- - an amendment to the bonus provisions contained in his agreement to provide
only for discretionary bonuses as determined by the Compensation Committee,
based upon the recommendation of the Chief Executive Officer;

- - the acceleration of the grant, subject to four year vesting in equal amounts
on each of April 17, 1999, 2000, 2001 and 2002, of options to acquire 640,000
shares of Chancellor Media common stock provided for in his employment
agreement;

- - a grant of additional options to acquire 1,000,000 shares of Chancellor Media
common stock with

(A) an exercise price of $46.63 per share,

(B) 20% of the shares of Chancellor Media common stock issuable pursuant to
such options vesting annually over five years, and

(C) exercisability conditioned upon the average fair market value of the
Chancellor Media common stock, calculated on a daily basis, being equal to
or exceeding $100.00 per share for a period of 30 consecutive days during
the five-year period commencing on the date of grant; and

- - accelerated vesting of all unvested options upon termination by Mr. de Castro
for "good reason" or by Chancellor Media without "cause."

R. Steven Hicks Employment Agreement

On April 29, 1999, Chancellor Media and CMCLA entered into an employment
agreement with Mr. R. Steven Hicks, effective as of March 15, 1999. The R.
Steven Hicks employment agreement provides for the following:

- - a five year term;

- - base salary of $950,000, subject to increase each year by a percentage equal
to the percentage change in the consumer price index during the preceding
year;

- - a discretionary bonus as determined by Chancellor Media's Compensation
Committee, based upon the recommendation of the Chief Executive Officer;

- - a grant of options to purchase 1,000,000 shares of Chancellor Media common
stock not subject to stockholder approval of the proposed Chancellor Media
Corporation 1999 Stock Option Plan (the "1999 Plan") with

(A) an exercise price of $46.63 per share,

(B) 20% of the shares of Chancellor Media common stock issuable pursuant to
such options vesting annually over five years, and

(C) exercisability conditioned upon the average fair market value of
Chancellor Media common stock, calculated on a daily basis, being equal to
or exceeding $100.00 per share for a period of 30 consecutive days during
the five-year period commencing on the date of grant;

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- - accelerated vesting of all unvested options upon termination by Mr. R. Steven
Hicks for "good reason" or by Chancellor Media without "cause";

- - in the event of termination of Mr. R. Steven Hicks' employment by Chancellor
Media without "cause" or by Mr. R. Steven Hicks for "good reason," a one-time
cash payment of $5,000,000 less applicable employee withholding taxes will be
paid to Mr. R. Steven Hicks;

- - an agreement by Mr. R. Steven Hicks to not induce any employee of Chancellor
Media to terminate employment or to become employed by any other competitive
business (the "Hicks Non-Solicitation Agreement") for the original five-year
term of the employment agreement;

- - in the event of termination of Mr. R. Steven Hicks' employment by Mr. R.
Steven Hicks for other than "good reason," in exchange for the Hicks
Non-Solicitation Agreement, Chancellor Media will continue to pay Mr. R.
Steven Hicks his applicable base salary through the fifth anniversary of the
effective date of his employment agreement;

- - in the event of termination by Mr. R. Steven Hicks of his employment for other
than "good reason," Chancellor Media also has the right, in exchange for the
payment at the end of each calendar year through December 31, 2003, of an
amount equal to Mr. R. Steven Hicks' average bonus (the greater of actual
bonus and $1,600,000 in the applicable year), and on the last day of the
calendar year ended December 31, 2004, make a payment to Mr. R. Steven Hicks
equal to the product of Mr. R. Steven Hicks' average bonus (the greater of
actual bonus and $1,600,000 in the applicable year) multiplied by the fraction
of the calendar year which precedes the fifth anniversary of the effective
date of R. Steven Hicks' employment agreement, to require that Mr. R. Steven
Hicks not to be employed by or perform activities on behalf of or have
ownership interest in any broadcasting or related businesses;

- - in the event of termination by reason of expiration or non-renewal of his
employment agreement, Chancellor Media will make a one-time cash payment to
Mr. R. Steven Hicks equal to two times the amount of his annual base salary
for the contract year in which such employment terminates; and

- - if Chancellor Media provides employment related benefits in an aggregate
amount greater than or on more favorable terms as are granted to any other
senior executives, Mr. R. Steven Hicks would be provided benefits in
substantially comparable amount and/or under substantially comparable terms,
on an aggregate basis.

Mr. R. Steven Hicks continues to serve as the President and Chief Executive
Officer of Capstar. As a result, his employment agreement provides that Mr. R.
Steven Hicks is obligated to use his good faith efforts to allocate his time
reasonably between Capstar and Chancellor Media. Additionally, Mr. R. Steven
Hicks' base salary of $950,000 consists of his base salary for his positions at
both Capstar and Chancellor Media. Capstar and Chancellor Media are obligated to
split the cost of Mr. R. Steven Hicks' base salary, with Chancellor Media being
obligated to pay $400,000, plus 50% of the remaining $550,000 in base salary.
Chancellor Media and Capstar are obligated to split evenly all other
compensation paid to Mr. R. Steven Hicks and Chancellor Media reimburses Capstar
for 50% of the cost of any and all benefit plans of Capstar in which Mr. R.
Steven Hicks participates.

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Armstrong Employment Agreement

Chancellor Media and CMCLA expect to enter into an employment agreement with Mr.
Armstrong, effective as of March 15, 1999. The Armstrong employment agreement is
expected to provide for the following:

- - a five year term;

- - base salary of $550,000, subject to increase each year by a percentage equal
to the percentage change in the consumer price index during the preceding
year;

- - a discretionary bonus as determined by Chancellor Media's Compensation
Committee, based upon the recommendation of the Chief Executive Officer;

- - a grant of options to purchase 500,000 shares of Chancellor Media common stock
not subject to stockholder approval of the 1999 Plan with

(A) an exercise price of $46.63 per share,

(B) 20% of the shares of Chancellor Media common stock issuable pursuant to
such options vesting annually over five years, and

- - accelerated vesting of all unvested options upon termination by Mr. Armstrong
for "good reason" or by Chancellor Media without "cause";

- - in the event of termination of Mr. Armstrong's employment by Chancellor Media
without "cause" or by Mr. Armstrong for "good reason," a one-time cash payment
will be paid to Mr. Armstrong equal to two times Mr. Armstrong's annual base
salary for the contract year in which such employment terminates;

- - Mr. Armstrong will be subject to, at Chancellor Media's option, a
non-solicitation provision pursuant to which Mr. Armstrong will not be
permitted to induce any employee of Chancellor Media to terminate employment
or to become employed by any competitive business for up to the original term
of his employment agreement in exchange for the continued payment of his base
salary (net of any other severance payments made to Mr. Armstrong);

- - an agreement by Mr. Armstrong not to be employed by or perform activities on
behalf of or have ownership interest in any broadcasting or related businesses
for the ninety-day period following termination of his employment; and

- - if Chancellor Media provides employment related benefits in an aggregate
amount greater than or on more favorable terms as are granted to any other
executive vice presidents, Mr. Armstrong would be provided benefits in
substantially comparable amount and/or under substantially comparable terms,
on an aggregate basis.

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Banowsky Employment Agreement

On April 29, 1999, Chancellor Media and CMCLA entered into an employment
agreement with Mr. Banowsky, effective as of March 15, 1999. The Banowsky
employment agreement provides for the following:

- - a five year term;

- - base salary of $400,000, subject to increase each year by a percentage equal
to the percentage change in the consumer price index during the preceding
year;

- - a discretionary bonus as determined by Chancellor Media's Compensation
Committee, based upon the recommendation of the Chief Executive Officer;

- - a grant of options to purchase 400,000 shares of Chancellor Media common stock
not subject to stockholder approval of the 1999 Plan with

(A) an exercise price of $46.63 per share,

(B) 20% of the shares of Chancellor Media common stock issuable pursuant to
such options vesting annually over five years, and

- - accelerated vesting of all unvested options upon termination by Mr. Banowsky
for "good reason" or by Chancellor Media without "cause";

- - in the event of termination of Mr. Banowsky's employment by Chancellor Media
without "cause" or by Mr. Banowsky for "good reason," a one-time cash payment
will be paid to Mr. Banowsky equal to two times Mr. Banowsky's annual base
salary for the contract year in which such employment terminates;

- - Mr. Banowsky will be subject to, at Chancellor Media's option, a
non-solicitation provision pursuant to which Mr. Banowsky will not be
permitted to induce any employee of Chancellor Media to terminate employment
or to become employed by any competitive business for up to the original term
of his employment agreement in exchange for the continued payment of his base
salary (net of any other severance payments made to Mr. Banowsky);

- - an agreement by Mr. Banowsky not to be employed by or perform activities on
behalf of or have ownership interest in any broadcasting or related businesses
for the ninety-day period following termination of his employment; and

- - if Chancellor Media provides employment related benefits in an aggregate
amount greater than or on more favorable terms as are granted to any other
executive vice presidents, Mr. Banowsky would be provided benefits in
substantially comparable amount and/or under substantially comparable terms,
on an aggregate basis.

Mr. Banowsky continues to serve as the Executive Vice President and General
Counsel of Capstar. As a result, his employment agreement provides that Mr.
Banowsky is obligated to use his good faith efforts to allocate his time
reasonably between Capstar and Chancellor Media. Additionally, Mr. Banowsky's
base salary of $400,000 consists of his

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base salary for his positions at both Capstar and Chancellor Media. Capstar and
Chancellor Media are obligated to split the cost of Mr. Banowsky's base salary,
with Chancellor Media being obligated to pay $75,000, plus 50% of the remaining
$325,000 in base salary. Chancellor Media and Capstar are obligated to split
evenly all other compensation paid to Mr. Banowsky and Chancellor Media
reimburses Capstar for 50% of the cost of any and all benefit plans of Capstar
in which Mr. Banowsky participates.

McLaughlin Employment Agreement

On October 1, 1998, Chancellor Media and CMCLA entered into an amended and
restated employment agreement with Mr. McLaughlin, to be effective as of August
18, 1998, 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, subject to increase each year by a percentage equal to the percentage
change in the consumer price index during the preceding year (provided that the
base salary in any year cannot be less than the base salary in the prior year).
The McLaughlin employment agreement provides for Mr. McLaughlin to receive an
annual bonus as determined by Chancellor Media's 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 of the employment agreement on which Mr. McLaughlin
remains employed by Chancellor Media, Mr. McLaughlin shall be granted options to
purchase 60,000 shares of the common stock. 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 the termination date a number of options equal to 300,000 minus the
number of options previously granted to Mr. McLaughlin under the preceding
sentence prior to that date. In addition, as an execution bonus, Chancellor
Media granted to Mr. McLaughlin options to purchase 300,000 shares of common
stock at a price of $48.375 per share 25% of which vested on the effective date
of the employment agreement and 25% of which will vest on each of the three
anniversaries of the date of grant. Chancellor Media 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 under 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 the common
stock at the close of trading on the day immediately preceding the date of the
grant; provided, however, that with respect to any options the grant of which is
accelerated because Mr. McLaughlin's employment is terminated as the result of a
"change of control," the exercise price of such options will be the lower of

- - the exercise price equal to the market price of the common stock at the close
of the trading day immediately preceding the date of grant.

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The McLaughlin employment agreement provides that, in the event of termination
of Mr. McLaughlin's employment by Chancellor Media without "cause" or by Mr.
McLaughlin with "good reason," Chancellor Media shall make a one-time cash
payment to Mr. McLaughlin in a gross amount so that the net payments retained by
Mr. McLaughlin, after payment by the Company of any excise taxes imposed by
Section 4999 of the Code with respect to that 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 Chancellor Media to terminate employment
or to become employed by any other media company, Chancellor Media shall
continue to pay Mr. McLaughlin one-half of his applicable base salary through
the earlier of the fifth anniversary of the effective date of the employment
agreement or the second anniversary of the termination of employment. In the
event of termination of Mr. McLaughlin's employment other than for "good
reason," Chancellor Media also has the right, in exchange for the payment at the
end of each calendar year preceding the earlier of the fifth anniversary of the
effective date or the second anniversary of termination, an amount equal to
one-half of Mr. McLaughlin's average bonus, and on the last day of the calendar
year which includes the earlier of the fifth anniversary of the effective date
or the second anniversary of termination, an amount equal to the product of
one-half Mr. McLaughlin's average bonus multiplied by the fraction of such
calendar year which precedes the earlier of the fifth anniversary of the
effective date or the second anniversary of termination, 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 Chancellor Media.

O'Keefe Employment Agreement

In February of 1996, Chancellor Media and CMCLA entered into an 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 Chancellor Media exceeds various annual performance targets as
defined in the agreement. The agreement also provides that Mr. O'Keefe is
eligible for options to purchase common stock. Under 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 Chancellor Media 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 selected events specified in his
employment agreement, including Mr. O'Keefe's death or disability, a change in
control of Chancellor Media, termination without cause and a material breach of
the employment agreement by Chancellor Media leading to the resignation of Mr.
O'Keefe. The agreement terminates upon the death of Mr. O'Keefe and may be
terminated by Chancellor Media 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 Chancellor Media. However, with the approval of Chancellor
Media, Mr. O'Keefe may engage in activities not directly competitive with the

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business of Chancellor Media as long as those activities do not materially
interfere with Mr. O'Keefe's employment obligations. On March 1, 1997, Evergreen
Media Corporation and Mr. O'Keefe amended the O'Keefe employment agreement in
order to make selected provisions of the O'Keefe employment agreement comparable
to those contained in Mr. de Castro's and Mr. Devine's former employment
agreement.

On September 4, 1997, Chancellor Media and CMCLA amended its employment
agreement with Mr. O'Keefe. As a result of the O'Keefe amendment, the O'Keefe
employment agreement expired as of December 31, 1997, and the O'Keefe amendment
was 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 various
annual performance targets which are defined in the O'Keefe amendment. The
O'Keefe amendment provides that, on January 1, 1998 and 1999, since Mr. O'Keefe
remained employed by Chancellor Media on those dates, Mr. O'Keefe was 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, all options became exercisable on February 28, 1999, since
Mr. O'Keefe remained employed by Chancellor Media on that date.

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 under the O'Keefe amendment will be granted
at a price per share equal to the market price for the 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 Chancellor Media without "cause," Chancellor
Media 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.

Chancellor Media and CMCLA are currently negotiating a new employment agreement
with Mr. O'Keefe that is expected to provide for the following:

- - a five year term;

- - an increase in Mr. O'Keefe's base salary to $550,000, subject to increases
each year by a percentage equal to the percentage change in the consumer price
index during the preceding year;

- - a discretionary bonus as determined by Chancellor Media's Compensation
Committee, based upon the recommendation of the Chief Executive Officer;

- - a grant of options to acquire 500,000 shares of Chancellor Media common stock
with

(A) an exercise price of $46.63 per share,

(B) 20% of the shares of Chancellor Media common stock issuable pursuant to
such options vesting annually over five years, and

(C) exercisability conditioned upon the average fair market value of the
Chancellor Media common stock, calculated on a daily basis, being equal to
or exceeding

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$100.00 per share for a period of 30 consecutive days during the five-year
period commencing on the date of grant;

- - accelerated vesting of all unvested options upon termination by Mr. O'Keefe
for "good reason" or by Chancellor Media without "cause";

- - in the event of termination of Mr. O'Keefe's employment by Chancellor Media
without "cause" or by Mr. O'Keefe for "good reason," a one-time cash payment
will be paid to Mr. O'Keefe equal to two times Mr. O'Keefe's annual base
salary for the contract year in which such employment terminates;

- - Mr. O'Keefe will be subject to, at Chancellor Media's option, a
non-solicitation provision pursuant to which Mr. O'Keefe will not be permitted
to induce any employee of Chancellor Media to terminate employment or to
become employed by any competitive business for up to the original term of his
employment agreement in exchange for continued payment of his base salary (net
of any other severance payments made to Mr. O'Keefe);

- - an agreement by Mr. O'Keefe not to be employed by or perform activities on
behalf of or have ownership interest in any broadcasting or related businesses
for the ninety-day period following termination of his employment; and

- - if Chancellor Media provides employment related benefits in an aggregate
amount greater than or on more favorable terms as are granted to any other
executive vice presidents, Mr. O'Keefe would be provided benefits in
substantially comparable amount and/or under substantially comparable terms,
on an aggregate basis.

Marcus Employment Agreement

Prior to March 15, 1999, Mr. Marcus served as President and Chief Executive
Officer of Chancellor Media and CMCLA. Chancellor Media and CMCLA entered into
an amended and restated employment agreement as of October 1, 1998 with Jeffrey
A. Marcus, which was effective as of June 1, 1998. The Marcus employment
agreement, which had a term that extended through June 1, 2003, provided for an
initial annual base salary of $1,125,000 for the first year of the employment
agreement, subject to increase each year by a percentage equal to the percentage
change in the consumer price index during the preceding year (provided that the
base salary in any year cannot be less than the base salary in the prior year).
The Marcus employment agreement provided for a one-time execution bonus in the
gross amount of $1,000,000. In addition, the Marcus employment agreement
provided for an annual bonus in an amount to be determined by Chancellor Media's
Compensation Committee in its reasonable discretion; provided, however, the
annual bonus would in no event to be less than $2,000,000 nor greater than
$4,000,000. The Marcus employment agreement provides that, on the effective date
of the employment agreement and on each of the four anniversaries of the
employment agreement on which Mr. Marcus remained employed by Chancellor Media,
Mr. Marcus would be granted options to purchase 200,000 shares of the common
stock. If Mr. Marcus' employment was terminated without "cause," as defined in
the Marcus employment agreement, or if Mr. Marcus terminated 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
agreement, Mr. Marcus would receive on such termination date a number of options
equal to 1,000,000 minus the number of options previously granted to Mr. Marcus
under the preceding sentence prior to that date. The Marcus employment

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agreement provided that all options granted under the Marcus employment
agreement would be exercisable for ten years from the date of grant of the
options, notwithstanding any termination of employment, at a price per share
equal to the market price for the common stock at the close of trading on the
day immediately preceding the date of the grant; provided, however, that with
respect to any options the grant of which is accelerated because Mr. Marcus'
employment was terminated as the result of a "change of control," the exercise
price of such options would be the lower of

- - the exercise price equal to the market price of the common stock at the close
of the trading day immediately preceding the date of grant.

Under the Marcus employment agreement, Mr. Marcus was also granted options to
purchase 1,250,000 shares of common stock, one-half of which would vest on the
date of the grant and one-half of which would vest on the 18th month anniversary
of the date of the grant if and to the extent that a termination of employment
had not occurred, provided that in the event of a termination of employment by
Chancellor Media without "cause" or by Mr. Marcus for "good reason," all such
options would vest and become exercisable on the date of such termination of
employment. Each such option would be exercisable for ten years from the date of
grant of those options, notwithstanding any termination of employment, at a
price of $42.125 per share. The Marcus employment agreement also provided that,
in the event of termination of Mr. Marcus's employment by Chancellor Media
without "cause" or by Mr. Marcus with "good reason," Chancellor Media would 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 Chancellor Media of excise
taxes imposed by Section 4999 of the Code with respect to that payment, to the
extent applicable, shall equal $6,250,000.

The Marcus employment agreement further provided 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 Chancellor Media to terminate employment or to become
employed by any other radio station, Chancellor Media would continue to pay Mr.
Marcus his applicable base salary through the fifth anniversary of the effective
date. In the event of termination of Mr. Marcus' employment for other than "good
reason," Chancellor Media also had the right, in exchange for the payment at the
end of each calendar year until through December 31, 2003, of an amount equal to
Mr. Marcus' average bonus, and on the last day of the calendar year which
included the fifth anniversary of the Marcus employment agreement, make a
payment equal to the product of Mr. Marcus's average bonus multiplied by the
fraction of each 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 Chancellor Media, 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 Chancellor Media has significant
involvement, subject to certain exceptions. The Marcus employment agreement
further provided that if Mr. Marcus's employment was terminated

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by reason of expiration or non-renewal of the Marcus employment agreement,
Chancellor Media would 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
employment terminated. The Marcus employment agreement also provided that Mr.
Marcus would be entitled to receive personal security services, to be paid for
by Chancellor Media, and certain other customary benefits and perquisites.

In connection with Mr. Marcus' resignation as President and Chief Executive
Officer of Chancellor Media and CMCLA in March 1999, Mr. Marcus, his spouse, and
Chancellor Media and CMCLA entered into a termination agreement dated as of
March 15, 1999. Pursuant to that agreement, Mr. Marcus resigned as President and
Chief Executive Officer and from any other appointments or positions which he
may have held with Chancellor Media or any of its subsidiaries; provided,
however, that Mr. Marcus did not resign has positions as a director of each of
Chancellor Media, Chancellor Mezzanine Holdings Corporation and CMCLA. In
addition, the agreement provides, among other things, that

- - Mr. Marcus received a one-time cash severance payment of $6,250,000, a
pro-rated bonus for the fiscal year of Chancellor Media ended December 31,
1998 of $2,333,333, and all accrued and unpaid base salary earned up to and
including March 15, 1999, in each case net of applicable employee withholding
taxes,

- - Mr. Marcus was granted options to purchase 800,000 shares of common stock at
an exercise price of $47.0625 per share, and

- - unvested options to acquire 625,000 shares of common stock granted to Mr.
Marcus under his employment agreement automatically vested and became
immediately exercisable.

The agreement further provides for mutual releases and other provisions
typically found in an employment termination agreement.

McMillin Employment Agreement

Prior to March 15, 1999, Mr. McMillin served as Senior Vice President and Chief
Financial Officer of Chancellor Media and CMCLA. On October 1, 1998, Chancellor
Media and CMCLA entered into an employment agreement with Mr. McMillin, that had
a term that extended through October 1, 2003, and provided 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 McMillin employment
agreement provided for Mr. McMillin to receive an annual bonus as determined by
Chancellor Media's Compensation Committee, based upon the recommendation of the
Chief Executive Officer. The McMillin employment agreement also provided that on
the agreement date and on each of the first four anniversaries of the employment
agreement on which Mr. McMillin remained employed by Chancellor Media, Mr.
McMillin would be granted options to purchase 40,000 shares of common stock. If
Mr. McMillin's employment was terminated without "cause," as defined in the
McMillin employment agreement, or if Mr. McMillin terminated his employment for
"good reason," as defined in the McMillin employment agreement, prior to the
fifth anniversary of the effective date of the McMillin employment agreement,
Mr. McMillin would receive on the termination date a number of options equal to
200,000 minus the number of options previously granted to Mr. McMillin under to
the preceding sentence prior to that date. In addition, as an execution bonus,
Chancellor

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Media granted to Mr. McMillin options to purchase 200,000 shares of common stock
at a price of $29.875 per share, 25% of which would vest on the effective date
of the employment agreement and 25% of which would vest on each of the three
anniversaries of the date of grant. Chancellor Media also paid to Mr. McMillin a
one-time execution bonus in the gross amount of $1,000,000. The McMillin
employment agreement provided that all options granted under the McMillin
employment agreement would be exercisable for ten years from the date of grant
of the option, notwithstanding any termination of employment. The annual option
grant would be at a price per share equal to the market price for the common
stock at the close of trading on the day immediately preceding the date of the
grant. The McMillin employment agreement provided that, in the event of
termination of Mr. McMillin's employment by Chancellor Media without "cause" or
by Mr. McMillin with "good reason," Chancellor Media would make a one-time cash
payment to Mr. McMillin in a gross amount so that the net payments retained by
Mr. McMillin, after payment by Chancellor Media of any excise taxes imposed by
Section 4999 of the Code with respect to that payment, would equal two times Mr.
McMillin's base salary then in effect.

The McMillin employment agreement further provided that, in the event of
termination of Mr. McMillin's employment by Mr. McMillin for other than "good
reason," in exchange for Mr. McMillin's agreement not to induce any employee of
any media company owned by Chancellor Media to terminate employment or to become
employed by any other media company, Chancellor Media would continue to pay Mr.
McMillin one-half of 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. In the event of termination of Mr. McMillin's
employment other than for "good reason," Chancellor Media also had the right, in
exchange for the payment at the end of each calendar year preceding the earlier
of the fifth anniversary of the effective date or the second anniversary of
termination, of one-half of Mr. McMillin's average bonus, and on the last day of
the calendar year that included the earlier of the fifth anniversary of the
effective date or the second anniversary of termination, of an amount equal to
the product of one-half of Mr. McMillin's average bonus multiplied by the
fraction of each calendar year which preceded the earlier of the fifth
anniversary of the effective date or the second anniversary of termination, to
require that Mr. McMillin 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 Chancellor Media.

In January 1999, Mr. McMillin's employment agreement was amended by Chancellor
Media and CMCLA. The amended agreement changed Mr. McMillin's title and duties
to Senior Vice President and Chief Financial Officer, increased his annual
option grants to 50,000 shares of common stock, and provided for an additional
option grant of 60,000 shares as of the effective date of the amendment at an
exercise price of $46.125 per share. In addition, as a result of the increase in
annual option grants, if Mr. McMillin's employment was terminated without
"cause" or if Mr. McMillin terminated his employment for "good reason" prior to
the fifth anniversary of the effective date of the McMillin employment
agreement, Mr. McMillin would receive on the termination date a number of
options equal to 240,000 minus the number of options previously granted.

In connection with Mr. McMillin's resignation as Senior Vice President and Chief
Financial Officer of Chancellor Media and CMCLA in March 1999, Mr. McMillin, his
spouse, and Chancellor Media and CMCLA entered into a termination agreement
dated as

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of March 15, 1999. Pursuant to that agreement, Mr. McMillin resigned as Senior
Vice President and Chief Financial Officer and from any other appointments or
positions which he may have held with Chancellor Media or any of its
subsidiaries. In addition, the agreement provides, among other things, that

- - Mr. McMillin received a one-time cash severance payment of $1,000,000, a
pro-rated bonus for the fiscal year of Chancellor Media ended December 31,
1998 of $125,000, and all accrued and unpaid base salary earned up to and
including March 15, 1999, in each case net of applicable employee withholding
taxes,

- - Mr. McMillin was granted options to purchase 200,000 shares of common stock at
an exercise price of $47.0625 per share, and

- - unvested options to acquire 237,500 shares of common stock granted to Mr.
McMillin under his employment agreement automatically vested and became
immediately exercisable.

The agreement further provides for mutual releases and other provisions
typically found in an employment termination agreement.

Neuman Employment Agreement

Prior to March 15, 1999, Mr. Neuman served as Senior Vice President -- Strategic
Development of Chancellor Media and CMCLA. On October 1, 1998, Chancellor Media
and CMCLA entered into an amended and restated employment agreement with Mr.
Neuman, which was effective as of July 1, 1998, that had a term that extended
through July 1, 2003, and provided for an annual base salary of $500,000 for the
first year of the employment agreement, to be increased each year by $25,000.
The Neuman employment agreement provided for Mr. Neuman to receive an annual
bonus as determined by Chancellor Media's Compensation Committee, based upon the
recommendation of the Chief Executive Officer; provided, however, that the bonus
would in no event be less than $500,000 nor greater than $1,500,000. The Neuman
employment agreement provided that on the agreement date and on each of the
first four anniversaries of the effective date of the employment agreement on
which Mr. Neuman remained employed by Chancellor Media, Mr. Neuman would be
granted options to purchase 100,000 shares of common stock. If Mr. Neuman's
employment was terminated without "cause," as defined in the Neuman employment
agreement, or if Mr. Neuman terminated 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 would receive
on the termination date a number of options equal to 500,000 minus the number of
options previously granted to Mr. Neuman under the preceding sentence prior to
that date. In addition, as an execution bonus, Chancellor Media granted to Mr.
Neuman options to purchase 300,000 shares of common stock at a price of $42.3125
per share. The Neuman employment agreement provided that all options granted
under the Neuman employment agreement would be exercisable for ten years from
the date of grant of the option, notwithstanding any termination of employment.
The annual option grant would 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; provided, however, that with respect to any options the grant
of which was accelerated because

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<PAGE> 82

Mr. Neuman's employment was terminated as the result of a "change of control,"
the exercise price of such options would be the lower of

- - the exercise price equal to the market price of the common stock at the close
of the trading day immediately preceding the date of grant.

The Neuman employment agreement provided that, in the event of termination of
Mr. Neuman's employment by Chancellor Media without "cause" or by Mr. Neuman
with "good reason," Chancellor Media would make a one-time cash payment to Mr.
Neuman in a gross amount so that the net payments retained by Mr. Neuman, after
payment by Chancellor Media of any excise taxes imposed by Section 4999 the Code
with respect to that payment, shall equal $2,000,000.

The Neuman employment agreement further provided 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 Chancellor Media to terminate employment or to become
employed by any other media company, Chancellor Media would continue to pay Mr.
Neuman his applicable base salary through the earlier of the fifth anniversary
of the effective date of the employment agreement or the second anniversary of
the termination of employment. In the event of termination of Mr. Neuman's
employment other than for "good reason," Chancellor Media also had the right, in
exchange for the payment at the end of each calendar year preceding the earlier
of the fifth anniversary of the effective date or the second anniversary of
termination, an amount equal to Mr. Neuman's average bonus, and on the last day
of the calendar year which included the earlier of the fifth anniversary of the
effective date or the second anniversary of termination, an amount equal to the
product of Mr. Neuman's average bonus multiplied by the fraction of such
calendar year which precedes the earlier of the fifth anniversary of the
effective date or the second anniversary of termination, 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 Chancellor Media. The Neuman employment agreement further
provided that if Mr. Neuman's employment was terminated by reason of expiration
or non-renewal of the Neuman employment agreement, Chancellor Media would 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 his employment terminated. The Neuman
employment agreement provided that if Chancellor Media provided employment
related benefits in an aggregate amount greater than or on more favorable terms
as were granted to any other senior executives, except for benefits and
employment inducements provided to the Chief Executive Officer or Chief
Financial Officer of Chancellor Media, the President of the Chancellor Radio
Group, or the Vice Chairman of the public company resulting from the merger with
Capstar, Mr. Neuman would be provided benefits in a substantially comparable
amount and/or under substantially comparable terms, on an aggregate basis.

In connection with Mr. Neuman's resignation as Senior Vice
President -- Strategic Development of Chancellor Media and CMCLA in March 1999,
Mr. Neuman, his spouse, and Chancellor Media and CMCLA entered into a
termination agreement dated as of March 15, 1999. Pursuant to that agreement,
Mr. Neuman resigned as Senior Vice

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<PAGE> 83

President -- Strategic Development and from any other appointments or positions
which he may have held with Chancellor Media or any of its subsidiaries. In
addition, the agreement provides, among other things, that

- - Mr. Neuman received a one-time cash severance payment of $2,000,000, a
pro-rated bonus for the fiscal year of Chancellor Media ended December 31,
1998 of $750,000, and all accrued and unpaid base salary earned up to and
including March 15, 1999, in each case net of applicable employee withholding
taxes, and

- - Mr. Neuman was granted options to purchase 400,000 shares of common stock at
an exercise price of $47.0625 per share.

The agreement further provides for mutual releases and other provisions
typically found in an employment termination agreement.

Devine Employment Agreement

Prior to January 6, 1999, Matthew E. Devine served as Senior Vice President and
Chief Financial Officer of Chancellor Media and CMCLA. In May 1998, Chancellor
Media and CMCLA entered into a new employment agreement with Mr. Devine. The
Devine employment agreement, which had a term that extended through April 17,
2003, provided 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 provided for an annual bonus based upon a
percentage of the amount by which Chancellor Media exceeded an annual
performance target which was defined in the Devine employment agreement. The
Devine employment agreement provided that, on the effective date of the
employment agreement and on each of the first four anniversaries of the
employment agreement on which Mr. Devine remained employed by Chancellor Media,
Mr. Devine would be granted options to purchase 120,000 shares of common stock.
If Mr. Devine's employment was terminated without "cause," as defined in the
Devine employment agreement, or if Mr. Devine terminated 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 would receive on the termination date a number of options equal to
600,000 minus the number of options previously granted to Mr. Devine under the
preceding sentence prior to that date. In addition, the Devine employment
agreement provided

- - for a signing bonus in the gross amount of $1,000,000;

- - that Chancellor Media would make a one-time cash payment to Mr. Devine of
$2,000,000 less applicable employee withholding taxes; and

- - that Chancellor Media would grant to Mr. Devine stock options to purchase
600,000 shares of common stock at a price of $42.125 per share.

The Devine employment agreement provided that all options granted pursuant to
the Devine employment agreement would be exercisable for ten years from the date
of grant of the option, notwithstanding any termination of employment. The
annual option grant was to 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 provided that, in the event of
termination of Mr. Devine's employment by Chancellor Media without "cause" or by
Mr. Devine with "good reason," Chancellor Media was to make a one-time cash
payment to Mr. Devine in a gross amount so that the

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<PAGE> 84

net payments retained by Mr. Devine would equal $2,000,000 less applicable
employee withholding taxes.

The Devine employment agreement further provided 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 Chancellor Media to terminate employment or to become
employed by any other radio station, Chancellor Media would 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. In the event of termination of Mr.
Devine's employment for other than "good reason," Chancellor Media also had the
right, in exchange for the payment at the end of each calendar year through the
year which includes the earlier of the fifth anniversary of the effective date
or the second anniversary of termination of an annual amount equal to the
product of Mr. Devine's average bonus multiplied by the fraction of each
calendar year which precedes the earlier of the fifth anniversary of the
effective date or the second anniversary of termination, 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 Chancellor Media. The Devine employment agreement
further provided that if Mr. Devine's employment was terminated by reason of
expiration or non-renewal of the Devine employment agreement, Chancellor Media
would 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
terminated. The Devine employment agreement provided that if Chancellor Media
provided 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 provided to the Chief Executive Officer or
Chief Operating Officer, Mr. Devine would be provided benefits in substantially
comparable amount and/or substantially comparable terms, on an aggregate basis.

In connection with Mr. Devine's resignation as Senior Vice President and Chief
Financial Officer, Mr. Devine, his spouse, and Chancellor Media and CMCLA
entered into a termination agreement dated as of January 6, 1999. Pursuant to
that agreement, Mr. Devine resigned as Senior Vice President and Chief Financial
Officer and from any other appointments or positions which he may have held with
Chancellor Media or any of its subsidiaries. In addition, the agreement provides
that

- - Mr. Devine shall receive a one-time cash payment of $2,000,000 net of
applicable employee withholding taxes; and

- - Mr. Devine shall be granted options to purchase 480,000 shares of common stock
at an exercise price of $46.125.

The agreement further provides for non-solicitation covenants by Mr. Devine
through April 17, 2000, 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. Devine.

Ginsburg Employment Agreement

Prior to April 14, 1998, Scott K. Ginsburg served as the President and Chief
Executive Officer of Chancellor Media and CMCLA. On September 4, 1997,
Chancellor Media

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entered into a new employment agreement with Mr. Ginsburg, which was effective
as of the closing date of the merger with Chancellor Broadcasting Company. The
Ginsburg employment agreement, which had a term that extended 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 Chancellor Media in relation to
certain annual performance targets which were defined in the Ginsburg employment
agreement. The Ginsburg employment agreement provided that, on the closing date
of the merger with Chancellor Broadcasting Company and on each of the first four
anniversaries of that closing on which Mr. Ginsburg remained employed by
Chancellor Media, 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 merger with Chancellor Broadcasting Company, Mr. Ginsburg would receive
on the 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 that date. In addition, in recognition of Mr. Ginsburg's rights under
his prior employment agreement, Chancellor Media granted Mr. Ginsburg an option
to acquire an additional 300,000 shares of common stock on the closing date of
the merger with Chancellor Broadcasting Company. 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 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
Chancellor Media without "cause" or by Mr. Ginsburg with "good reason,"
Chancellor Media would make a one-time cash payment to Mr. Ginsburg in a gross
amount so 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, Chancellor Media 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 Broadcasting Company immediately prior to the consummation of the
merger with Chancellor Broadcasting Company. Under the Ginsburg employment
agreement, Chancellor Media 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 March 31, 1999, Mr.
Ginsburg has borrowed $3,500,000 under the loan and has accrued interest payable
to Chancellor Media of $267,524.

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On April 14, 1998, Mr. Ginsburg resigned as President and Chief Executive
Officer of Chancellor Media, and on April 20, 1998, Mr. Ginsburg resigned as
director of Chancellor Media and CMCLA and from all appointments and positions
with their respective subsidiaries. On April 20, 1998, Chancellor Media and
CMCLA entered into a separation and consulting agreement with Mr. Ginsburg. The
Ginsburg separation and consulting agreement provides for

- - 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 Chancellor Media "without
cause," and

- - a grant to Mr. Ginsburg of stock options to acquire 800,000 shares of common
stock, 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 Chancellor Media "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 one third at
April 14, 1998, 1999 and 2000, respectively.

Previously granted stock options were unaffected by the Ginsburg separation and
consulting agreement. The Ginsburg separation and consulting agreement also
provides that Chancellor Media shall retain Mr. Ginsburg as a consultant through
April 13, 2003, and Mr. Ginsburg will be compensated for such consulting
services in an amount equal to $2,500,000 for each full year of consulting
services. Mr. Ginsburg received $1,770,833 for such services between April 14,
1998 and December 31, 1998. 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.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee of Chancellor Media are Messrs. Thomas
O. Hicks, Hodson, Jordan, Winters and Lewis. Mr. Thomas O. Hicks serves as
Chairman of the Compensation Committee, and also serves as Chairman of the Board
and Chief Executive Officer of Chancellor Media, Chancellor Mezzanine Holdings
Corporation and CMCLA.

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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, of Chancellor Media on April 14, 1999 by

- - each director and executive officer of Chancellor Media and their affiliates
on April 14, 1999,

- - all directors and executive officers as a group and
- - each person known to own beneficially more than 5% of the Chancellor Media
common stock.

As of April 14, 1999, 1,000 shares of our common stock are held beneficially and
of record by Chancellor Mezzanine Holdings, and 40 shares are held beneficially
and of record by a wholly-owned subsidiary of Chancellor Mezzanine Holdings. As
of April 14, 1999, all of the common stock of Chancellor Mezzanine Holdings is
held beneficially and of record by Chancellor Media.

<TABLE>
<CAPTION>
NAME OF STOCKHOLDER SHARES PERCENT(1)
- ------------------- ---------- ----------
<S> <C> <C>
Hicks Muse Parties(2).................................. 25,387,371 17.7%
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Putnam Investments, Inc.(3)............................ 17,314,508 12.1%
One Post Office Square
Boston, Massachusetts 02109
Janus Capital Corporation(4)........................... 11,846,915 8.3%
100 Fillmore Street
Denver, Colorado 80206-4923
Thomas O. Hicks........................................ 25,387,371(5) 17.4%
James E. de Castro..................................... 2,565,000(6) 1.8%
R. Steven Hicks........................................ -- --
James A. McLaughlin.................................... 75,000(7) *
Kenneth J. O'Keefe..................................... 504,000(8) *
D. Geoffrey Armstrong.................................. -- --
William S. Banowsky, Jr. .............................. -- --
Steven Dinetz.......................................... 1,561,379(9) 1.1%
Thomas J. Hodson....................................... 50,833(10) *
Vernon E. Jordan, Jr. ................................. 20,833(11) *
Michael J. Levitt...................................... 8,333(12) *
Perry J. Lewis......................................... 154,058(13) *
Jeffrey A. Marcus...................................... 2,455,902(14) 1.7%
John H. Massey......................................... 61,857(15) *
Lawrence D. Stuart, Jr. ............................... 19,625(16) *
J. Otis Winters........................................ 8,333(17) *
All directors and executive officers as a group (16
persons)............................................. 32,872,524(18) 21.9%
</TABLE>

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<PAGE> 88

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

* Less than one percent (1%)

(1) Assumes that 143,063,179 shares of common stock of Chancellor Media were
issued and outstanding as of March 31, 1999.

(2) Consists of 1,278,969 shares owned of record by Mr. Thomas O. Hicks,
346,736 shares owned of record by Mr. Thomas O. Hicks as trustee for
certain trusts of which his children are beneficiaries and 20,816 shares
owned of record by Mr. Thomas O. Hicks as co-trustee of a trust for the
benefit of unrelated parties. Also includes 23,740,850 shares owned by four
limited partnerships of which the ultimate general partners are entities
controlled by Mr. Thomas O. Hicks or Hicks Muse. Mr. Thomas O. 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.
Thomas O. 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. Thomas O. Hicks the power to vote or dispose of shares held by such
partnerships. Messrs. Thomas O. 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 February
4, 1999 of Schedule 13G under the Exchange Act.

(4) Includes 5,906,880 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 February 12,
1999 of Schedule 13G under the Exchange Act.

(5) Consists of 1,278,969 shares owned of record by Mr. Thomas O. Hicks,
346,736 shares owned of record by Mr. Thomas O. Hicks as trustee for
certain trusts of which his children are beneficiaries and 20,816 shares
owned of record by Mr. Thomas O. Hicks as co-trustee of a trust for the
benefit of unrelated parties. Also includes 23,740,850 shares owned by four
limited partnerships of which the ultimate general partners are entities
controlled by Mr. Thomas O. Hicks and Hicks Muse. Mr. Thomas O. 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. Thomas O. 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.
Thomas O. Hicks disclaims beneficial ownership of shares not owned of
record by him.

(6) Consists of options that are exercisable within 60 days of the date hereof
to purchase 2,565,000 shares.

(7) Consists of options that are exercisable within 60 days of the date hereof
to purchase 75,000 shares.

(8) Includes options that are exercisable within 60 days of the date hereof to
purchase 500,000 shares.

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<PAGE> 89

(9) Includes:

- 171,818 shares owned of record by Mr. Steven Dinetz,

- options that are exercisable within 60 days of the date hereof to
purchase 1,387,471 shares,

- 1,090 shares held by an individual retirement account for the benefit of
Mr. Dinetz and

- 1,000 shares held by Mr. Dinetz' daughter. Mr. Dinetz disclaims
beneficial ownership of the shares of Common Stock that are not owned by
him of record.

(10) Consists of options that are exercisable within 60 days of the date hereof
to purchase 50,833 shares.

(11) Consists of options that are exercisable within 60 days of the date hereof
to purchase 20,833 shares.

(12) Includes options that are exercisable within 60 days of the date hereof to
purchase 8,333 shares.

(13) Includes options that are exercisable within 60 days of the date hereof to
purchase 50,833 shares.

(14) Includes options that are exercisable within 60 days of the date hereof to
purchase 2,286,742 shares.

(15) Consists of options that are exercisable within 60 days of the date hereof
to purchase 45,075 shares and 16,782 shares held by Mr. Massey's wife as
her separate property.

(16) Includes options that are exercisable within 60 days of the date hereof to
purchase 8,333 shares.

(17) Includes options that are exercisable within 60 days of the date hereof to
purchase 8,333 shares.

(18) Includes options to purchase 7,006,786 shares.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of April 14, 1999, Mr. Thomas O. Hicks and affiliates of Hicks Muse
beneficially owned an aggregate of 25,387,371 shares of Chancellor Media common
stock. Mr. Thomas O. Hicks is Chairman of the Board and Chief Executive Officer
of Chancellor Media.

Chancellor Media is subject to a financial monitoring and oversight agreement,
dated April 1, 1996, as amended on September 4, 1997 with Hicks, Muse & Co.
Partners, L.P., an affiliate of Hicks Muse. In connection with the financial
monitoring and oversight agreement, Chancellor Media 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 the time Thomas O. Hicks
and his affiliates collectively cease to beneficially own at least two-thirds of
the number of shares of the Chancellor Media common stock beneficially owned by
them, collectively, at the effective time of the merger with Chancellor
Broadcasting Company in September 1997. Chancellor Media paid Hicks Muse
Partners a total of $1.0 million in 1998 in connection with the financial
monitoring and oversight agreement. Effective March 15, 1999, Hicks Muse
Partners has agreed to waive the annual fee payment under the financial
monitoring and oversight agreement, although it will still be entitled to the
reimbursement of certain expenses incurred and the benefit of certain indemnity
obligations of Chancellor Media in connection with the performance of its
obligations thereunder.

In connection with the consummation of the merger with Chancellor Broadcasting
Company in September 1997, a financial advisory agreement among Chancellor
Broadcasting Company, Chancellor Radio Broadcasting Company and HM2/Management
Partners, L.P., 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 such merger,
HM2/Management was paid a fee of $10.0 million in cash upon consummation of the
transaction which was accounted for as a direct acquisition cost. As part of the
termination of the financial advisory agreement, Chancellor Media paid Hicks
Muse Partners $1.5 million for financial advisory services in connection with
the acquisition of Katz Media Group, Inc. in 1997 which was accounted for as a
direct acquisition cost.

Upon consummation of the merger with Capstar, Capstar will make aggregate
payments to Hicks Muse Partners of $31.7 million in connection with the
termination of monitoring and oversight and financial advisory agreements with
Capstar and its subsidiaries and in satisfaction of the services performed by
Hicks Muse Partners in connection with the merger. In 1998, Capstar paid Hicks
Muse Partners approximately $819,000 of monitoring and oversight fees and $49.5
million of financial advisory fees.

Vernon E. Jordan, Jr., a director of Chancellor Media, 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, was engaged by Chancellor Media in January 1999 as a financial
advisor to explore strategic alternatives in an effort to maximize shareholder
value. In addition, affiliates of Bankers Trust Company

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and Bankers Trust Corporation have in the past provided a variety of commercial
banking, investment banking and financial advisory services to Chancellor Media,
and expect to continue to provide services to Chancellor Media in the future.
Fees paid to BT Alex. Brown Incorporated in 1998 were approximately $10.3
million.

Chancellor Media is subject to an Amended and Restated Stockholders Agreement,
dated as of February 14, 1996, as amended on September 4, 1997, among Chancellor
Media and certain holders of Chancellor Media's common stock held by former
stockholders of Chancellor Broadcasting Company, which provides for registration
rights for the shares of Chancellor Media's common stock held by such holders.
The stockholders agreement relates to shares of Chancellor Media's common stock
held by certain affiliates of Hicks Muse and will apply to shares of Chancellor
Media's common stock received in the merger with Capstar.

As part of the merger with Chancellor Broadcasting Company in September 1997,
Chancellor Media made selected cash payments and accelerated the vesting of
selected stock options previously granted by Chancellor Broadcasting Company to
Steven Dinetz, a director of Chancellor Media and CMCLA.

In connection with the Capstar/SFX Transaction, Chancellor Media

- - began programming ten radio stations owned by Capstar under time brokerage
agreements effective May 29, 1998 and paid fees of $28.8 million to Capstar
related to these agreements during 1998 and

- - provided a loan to Capstar in the principal amount of $150.0 million.

Interest income on this note receivable was $10.6 million during 1998. CMCLA
also began operating Capstar's WKNR-AM in Cleveland under a time brokerage
agreement effective February 1, 1999.

Chancellor Media recorded revenue of $6.8 million for the year ended December
31, 1998 for providing media representation services to Capstar. Chancellor
Media paid or accrued $11.2 million in 1998 in connection with Capstar's
participation in Chancellor Media's AMFM Radio Networks and other transactions.
Chancellor Media had a net payable to Capstar of $162,000 at December 31, 1998.
Affiliates of Hicks Muse have a controlling interest in Capstar and a
substantial investment in Chancellor Media.

On July 7, 1998, Chancellor Media entered into a merger agreement with the
indirect parent of LIN, to acquire LIN in a stock-for-stock transaction.
Effective March 15, 1999, LIN and Chancellor Media agreed to terminate the LIN
merger agreement. Affiliates of Hicks Muse have a controlling interest in LIN
and a substantial investment in Chancellor Media.

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. In 1998, Capstar paid Katz approximately $4.4 million for media
representation services. Additionally, Capstar's radio stations are affiliated
with The AMFM Radio Networks and receive a portion of advertising revenues
generated by the network. In 1998, Capstar recorded approximately $8.3 million
in revenue from The AMFM Radio Networks. In addition, certain television
stations owned by LIN have engaged Katz to sell national advertising time, and
such stations pay customary commissions to Katz for such services.

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In October and November 1998, LIN purchased two airplanes and subsequently
entered into two lease agreements with respect to those airplanes with
Chancellor Media. The leases expire in October 1999 and 2003, respectively, and
in 1998, Chancellor Media paid to LIN approximately $415,000 under the leases.

In connection with our acquisition of various billboard and outdoor displays
from Triumph in January 1999, we paid approximately $1.0 million to an entity
controlled by James A. McLaughlin, the President and Chief Operating Officer of
the Chancellor Outdoor Group. An additional $0.7 million that may be paid to
such entity is currently held in escrow, subject to satisfaction of indemnity
claims, if any. The aggregate purchase price for the assets we acquired from
Triumph was approximately $37.0 million, and such amount was negotiated on our
behalf by Eric C. Neuman, then our Senior Vice President -- Strategic
Development.

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THE EXCHANGE OFFER

PURPOSE AND EFFECT

We sold the old notes on November 12, 1998. In connection with that placement,
we entered into the registration rights agreement, which requires us to file the
registration statement under the Securities Act with respect to the new notes.
Upon the effectiveness of the registration statement, we will offer you and the
other holders of the old notes the opportunity to exchange your old notes for
new notes of the same principal amount. The new notes will be issued without a
restrictive legend and generally may be reoffered and resold by you without
registration under the Securities Act. The registration rights agreement further
provides that we must use our reasonable best efforts to:

- - cause the registration statement with respect to the exchange offer to be
declared effective on or before May 11, 1999; and

- - consummate the exchange offer on or before June 25, 1999.

Except as provided below, upon the completion of the exchange offer, our
obligations with respect to the registration of the old notes and the new notes
will terminate. We filed a copy of the registration rights agreement as an
exhibit to the registration statement, of which this prospectus is a part. The
summary in this prospectus of the material provisions of the registration rights
agreement does not purport to be complete and is qualified in its entirety by
reference to the registration rights agreement. As a result of the timely filing
and the effectiveness of the registration statement, we will not owe certain
liquidated damages provided for in the registration rights agreement. Following
the completion of the exchange offer, except as set forth in the paragraph
immediately below, any old notes you do not tender will not have any further
registration rights and your old notes will continue to be subject to particular
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, you must represent to us and the
guarantors, among other things, that:

- - the new notes acquired in connection with the exchange offer are being
obtained in the ordinary course of your business;

- - you are not engaging in and do not intend to engage in a distribution of the
new notes;

- - you do not have an arrangement or understanding with any person to participate
in a distribution of the new notes; and

- - you are not our "affiliate," as defined in Rule 405 under the Securities Act,
or an "affiliate" of the guarantors.

Under the registration rights agreement, if:

- - we determine that we are not permitted to effect the exchange offer as
contemplated because of a change in applicable law or SEC policy; or

- - any holder of Transfer Restricted Securities notifies us prior to the 20th day
following consummation of the exchange offer that:

(a) it is prohibited by law or SEC policy from participating in the exchange
offer,

(b) 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

- - it is a broker-dealer and owns old notes acquired directly from us or our
affiliate,

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we are required to file a "shelf" registration statement for a continuous
offering under 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:

- - the date on which the old note has been exchanged by a person other than a
broker-dealer for a new note in the exchange offer;

- - following the exchange by a broker-dealer in the exchange offer of an old note
for an new note, the date on which the new note is sold to a purchaser who
receives from the broker-dealer on or prior to the date of the sale a copy of
this prospectus;

- - the date on which the old note is electively registered under the Securities
Act and disposed of in accordance with the "shelf" registration statement; or

- - the date on which the old note is distributed to the public under Rule 144 of
the Securities Act or may be distributed to the public under Rule 144(k) of
the Securities Act.

Other than set forth in this paragraph, you will not have the right to
participate in the "shelf" registration statement nor otherwise require that we
register your old notes under the Securities Act. See "-- Procedures for
Tendering."

Based on interpretations of the SEC's staff set forth in no-action letters
issued to third parties unrelated to us and the guarantors, we believe that,
with the exceptions set forth below, your new notes issued in connection with
the exchange offer in exchange for your old notes may be offered for resale,
resold, and otherwise transferred by you without compliance with the
registration and prospectus delivery requirements of the Securities Act if:

- - the new notes acquired in connection with the exchange offer are being
obtained in the ordinary course of your business;

- - you are not engaging in and do not intend to engage in a distribution of the
new notes;

- - you do not have an arrangement or understanding with any person to participate
in a distribution of the new notes; and

- - you are not our "affiliate," as defined in Rule 405 under the Securities Act,
or an "affiliate" of the guarantors.

If you tender in the exchange offer for the purpose of participating in a
distribution of the new notes, you 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. If you are a broker-dealer that receives the new notes for your own
account in exchange for old notes, where such old notes were acquired by you as
a result of market making activities or other trading activities, you must
acknowledge that you will deliver a prospectus in connection with any resale of
your new notes. See "Plan of Distribution." If you are a broker-dealer who
acquired old notes directly from us and not as a result of market-making
activities or other trading activities, you may not rely on the SEC'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 your new notes.

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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, any old notes you do not
tender will not have any further registration rights and your old notes will
continue to be subject to particular restrictions on transfer. Accordingly, the
liquidity of the market for your old notes could be adversely affected upon
completion of the exchange offer if you do 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, we will accept any and all old notes that you validly
tender and do not withdraw prior to 12:00 midnight, New York City time, on
, 1999, or such date and time to which we extend the offer. We
will issue to you $1,000 principal amount of new notes in exchange for each
$1,000 principal amount of outstanding of your old notes we accept in the
exchange offer. You may tender some or all of your old notes in connection with
the exchange offer. However, you may only tender your old notes 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 in
connection with, and entitled to the benefits of, the indenture pursuant to
which your old notes were issued.

As of the date of this prospectus, 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 DTC's nominee and to others believed to have beneficial
interests in the old notes. We intend to conduct the exchange offer in
accordance with the applicable requirements of the Securities Act and the rules
and regulations of the SEC under the Securities Act.

We shall be deemed to have accepted validly tendered old notes when, as, and if
we have given oral or written notice of our acceptance to the exchange agent.
The exchange agent will act as agent for you for the purpose receiving your new
notes from us. If your tendered old notes are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth in this
prospectus or otherwise, certificates for any of your unaccepted old notes will
be returned, without expense, to you as promptly as practicable after 1999,
unless we extend the exchange offer.

If you participate in the exchange offer, you 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 your old notes in
connection with the exchange offer. We will pay all charges and expenses, other
than particular applicable taxes, in connection with the exchange offer. See
"-- Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The expiration date shall be 12:00 midnight, New York City time, on
, 1999, unless we, in our sole discretion, extend 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

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to extend the exchange offer, we 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. We reserve the right, in our discretion, 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 -- terminate the exchange offer, by giving oral or written
notice of such delay, extension or termination to the exchange agent; or

- - amend the terms of the exchange offer in any manner.

In the event that we make a material or fundamental change to the terms of the
exchange offer, we will file a post-effective amendment to the registration
statement.

PROCEDURES FOR TENDERING

Except as set forth under "-- Book Entry Transfer," to tender in the exchange
offer you must complete, sign, and date the letter of transmittal, or a copy of
the letter of transmittal, have the signatures 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:

- - certificates for your old notes must be received by the exchange agent along
with the letter of transmittal prior to the expiration date;

- - a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation")
of your old notes, if that procedure is available, into the exchange agent's
account at DTC (the "Book-Entry Transfer Facility") in accordance with to the
procedure for book-entry transfer described below, must be received by the
exchange agent prior to the expiration date; or

- - you 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.

A tender of your old notes that is not withdrawn before the expiration date will
constitute your agreement with us to be bound by the terms and subject to the
conditions of this prospectus and the letter of transmittal.

THE METHOD OF DELIVERY OF YOUR OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. DO NOT SEND THE
LETTER OF TRANSMITTAL OR YOUR OLD NOTES TO US. YOU MAY REQUEST THAT YOUR BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE EFFECT THESE TRANSACTIONS FOR
YOU.

If you want to tender and your old notes are registered in the name of a broker,
dealer, commercial bank, trust company, or other nominee, you should contact the
registered holder promptly and instruct the registered holder to tender on your
behalf. If you want to tender on your own behalf, you must, prior to completing
and executing the letter of transmittal and delivering your old notes, either
make appropriate arrangements to register

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ownership of the old notes in the your name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may take
considerable time.

Unless you are a registered holder who requests that the new notes be mailed to
you and issued in your name or you are a member of or participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program, the Stock Exchange Medallion Program, or an
"Eligible Guarantor Institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, each an "Eligible Institution", an
Eligible Institution must guarantee your signature on a letter of transmittal or
a notice of withdrawal.

If the letter of transmittal is signed by a person other than the registered
holder of your old notes listed in the letter of transmittal, your 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 a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or other person acting in a fiduciary or representative capacity
signs the letter of transmittal or any notes or bond powers on your behalf, that
person must indicate their capacity when signing, and submit satisfactory
evidence to us with the letter of transmittal demonstrating their authority to
act on your behalf.

We will decide all questions as to the validity, form, eligibility, acceptance,
and withdrawal of tendered old notes, and our determination will be final and
binding. We reserve the absolute right to reject any and all old notes not
properly tendered or the acceptance of which would be unlawful in the opinion of
our counsel. We also reserve the right to waive any defects, irregularities, or
conditions of tender particular to your old notes. Our interpretation of the
terms and conditions of the exchange offer, including the instructions in a
letter of transmittal, will be final and binding on all parties. You must cure
any defects or irregularities in connection with tenders of old notes within
such time as we shall determine. Although we intend to notify you of defects or
irregularities with respect to tender of your old notes, we, the exchange agent,
or any other person shall not incur any liability for failure to give such
notification. Tender of your old notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any of your 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 you, unless otherwise provided in the letter
of transmittal, as soon as practicable following the expiration date.

We reserve the right to purchase or make offers for any old notes that remain
outstanding after the expiration date or to terminate the exchange offer and, to
the extent permitted by law, purchase old notes in the open market, in privately
negotiated transactions or otherwise. The terms of any purchases or offers could
differ from the terms of the exchange offer.

By tendering, you will represent to us and the guarantors that, among other
things:

- - the new notes acquired in connection with the exchange offer are being
obtained in the ordinary course of your business, whether or not you are the
registered holder;

- - you are not engaging in and do not intend to engage in a distribution of the
new notes;

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- - you do not have an arrangement or understanding with any person to participate
in the distribution of the new notes; and

- - you are not our "affiliate," as defined under Rule 405 of the Securities Act,
or an "affiliate" of the guarantors.

In all cases, issuance of new notes for your old notes we accept for exchange in
connection with the exchange offer will be made only after timely receipt by the
exchange agent of:

- - certificates for your old notes or a timely Book-Entry Confirmation of your
old notes into the exchange agent's account at the Book-Entry Transfer
Facility;

- - a properly 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 your tendered old notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if your old notes are submitted
for a greater principal amount than you desire to exchange, your unaccepted or
non-exchanged old notes will be returned without expense to you or, in the case
of old notes tendered by book-entry transfer into the exchange agent's account
at the Book-Entry Transfer Facility in accordance with 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.

If you are a broker-dealer that receives new notes for your own account in
exchange for your old notes, where you acquired your old notes as a result of
market-making activities or other trading activities, you must acknowledge that
you will deliver a prospectus in connection with any resale of your new notes.
See "Plan of Distribution."

BOOK-ENTRY TRANSFER

The exchange agent will make requests to establish accounts at the Book-Entry
Transfer Facility for purposes of the exchange offer within two business days
after the date of this prospectus. If you are a financial institution that is a
participant in the Book-Entry Transfer Facility's systems, you may make
book-entry delivery of your old notes being tendered by causing the Book-Entry
Transfer Facility to transfer your old notes into the exchange agent's account
at the Book-Entry Transfer Facility in accordance with the appropriate
procedures for transfer. However, although you may deliver your old notes
through book-entry transfer at the Book-Entry Transfer Facility, a letter of
transmittal or copy of the letter of transmittal, with any required signature
guarantees and any other required documents, must, except as set forth in the
following paragraph, be transmitted to and received by the exchange agent on or
prior to the expiration date or the guaranteed delivery 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 instead of sending a signed, hard copy letter of
transmittal. DTC is obligated to communicate those electronic instructions to
the exchange agent. To tender notes through ATOP, the electronic instructions
sent to DTC and transmitted by DTC to the exchange

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agent must contain the participant's acknowledgment of its receipt of and
agreement to be bound by the letter of transmittal for the notes.

GUARANTEED DELIVERY PROCEDURES

If you are the registered holder of old notes and desire to tender your old
notes and your old notes are not immediately available, time will not permit
your old notes or other required documents to reach the exchange agent before
the expiration date or you cannot complete the procedure for book-entry transfer
on a timely basis, you may tender your old notes if:

- - the tender is made through an Eligible Institution;

- - prior to the expiration date, the exchange agent received from such Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery, in the form provided by us; and

- - the letter of transmittal and certificates for all physically tendered old
notes, in proper form for transfer, or a Book-Entry Confirmation and all other
documents required by the applicable letter of transmittal are received by the
exchange agent within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery shall state your name and address and the
amount of old notes tendered, that the tender is being made thereby and
guaranteeing that within three NYSE trading days after the date of execution of
the Notice of Guaranteed Delivery, the letter of transmittal and certificates
for all physically tendered old notes, in proper form for transfer, or a
Book-Entry Confirmation and any other documents required by the applicable
letter of transmittal will be deposited by the Eligible Institution with the
exchange agent.

WITHDRAWAL RIGHTS

You may withdraw your tender of your old notes at any time prior to midnight,
New York City time, on the expiration date.

For your withdrawal to be effective, a written or, for a DTC participant,
electronic ATOP transmission notice of withdrawal must be received by the
exchange agent at its address set forth in this prospectus prior to 12:00
midnight, New York City time, on the expiration date.

Your notice of withdrawal must:

- - specify your name;

- - identify your old notes to be withdrawn, including the certificate number or
numbers and principal amount of your old notes;

- - be signed by you in the same manner as the original signature on the letter of
transmittal by which your old notes were tendered or be accompanied by
documents of transfer sufficient to have the trustee of your old notes
register the transfer of your old notes into your name; and

- - specify the name in which any such old notes are to be registered, if you do
not want your old notes registered in your name.

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We will determine all questions as to the validity, form, and eligibility of
your notice and our determination shall be final and binding on all you. Any old
notes you withdraw will not be considered to have been validly tendered. We will
return your old notes which have been tendered but not exchanged without cost to
the you as soon as practicable after withdrawal, rejection of tender, or
termination of the exchange offer. You may retender your properly withdrawn old
notes by following one of the above procedures before the expiration date.

CONDITIONS TO THE EXCHANGE OFFER

Notwithstanding any other provision of the exchange offer, we shall not be
required to accept for exchange, or to issue new notes in exchange for, any of
your old notes and may terminate or amend the exchange offer if at any time
before the acceptance of your old notes for exchange or the exchange of the new
notes for such old notes, we determine that the exchange offer violates
applicable law, any applicable interpretation of the staff of the SEC or any
order of any governmental agency or court of competent jurisdiction.

The foregoing conditions are for our sole benefit and we may assert the
foregoing conditions regardless of the circumstances giving rise to the
conditions. We may waive in whole or in part at any time and from time to time
these conditions in our sole discretion. Our failure 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, we will not accept for exchange any of your old notes tendered, and
no new notes will be issued in exchange for any your 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 we are required to use every reasonable effort to obtain the withdrawal of
any stop order at the earliest possible time.

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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

We 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
our officers and employees.

We will pay estimated cash expenses in the aggregate of $700,000 incurred in
connection with the exchange offer. These expenses include fees and expenses of
the exchange agent, accounting, legal, printing, and related fees and expenses.

TRANSFER TAXES

You will not be obligated to pay any transfer taxes in connection with the
exchange offer, unless you request that we 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, in which case
you will be responsible for the payment of any applicable transfer tax on the
notes.

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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% Senior Subordinated Notes due 2007 (the "8 1/8%
Notes") and the 9% Senior Subordinated Notes due 2008 (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% Senior
Subordinated Notes due 2004 (the "9 3/8% Notes"), the 8 3/4% Senior Subordinated
Notes due 2004 (the "8 3/4% Notes"), the 10 1/2% Senior Subordinated Notes due
2007 (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
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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.

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 greater than zero, 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

"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.

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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.

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

- - certain transactions with Permitted Holders (as defined below) and

- - 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,

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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.

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

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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 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

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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 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;

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(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 (9) and 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.

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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 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");

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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 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,

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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 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,

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(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 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,

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(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 under the laws of the United States, any
state thereof or the District of Columbia and such surviving or
transferee Person expressly

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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.

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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 (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)

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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 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

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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 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.

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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 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

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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.

"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.

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"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,

(d) any Contract Buy Out.

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"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.

"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

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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") (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),

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(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),

(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

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(y) the net income of such 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,

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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.

"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,

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(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 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

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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.

"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),

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(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

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in which such Person becomes a Subsidiary of the Company) engaged in the
broadcast business 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; 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

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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.

"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
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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, 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

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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.

"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

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(ii) the number of years (calculated to the nearest one-twelfth) which
will elapse between such date and the making of such payment.

"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, your new notes will be represented by one or more
permanent global certificates in definitive, fully registered form. The global
certificate will be deposited with, or on behalf of, DTC and registered in the
name of a nominee of DTC. Persons who have accounts with the DTC are referred to
herein as participants.

The Global Certificate. We expect that pursuant to procedures established by DTC

- - 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 your
beneficial interest represented by these global securities to your account if
you have an account with the DTC and

- - your ownership of a beneficial interest in the global certificate will be
shown on, and the transfer of your ownership will be effected only through,
records maintained by DTC or its nominee, if you are a participant, and the
records of participants, if you hold your interest through a participant.

You may own a beneficial interest in the global certificate only if you have an
account with DTC or if you hold your interest through a person with an account
with DTC.

So long as DTC, or its nominee, is the registered owner or holder of the new
notes, DTC or its nominee, as the case may be, will be considered the sole owner
or holder of your new notes represented by the global certificate for all
purposes. If you have an interest in the global certificate, you will not 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, premium, if any, and interest on the global
certificate will be made by to DTC or its nominee, as the case may be, as the
registered owner of the global certificate. Neither we, the trustee, the paying
agent nor the registrar will have any responsibility or liability for any aspect
of the records relating to or payments made on account of your interest in the
global certificate or for maintaining, supervising or reviewing any records
relating to your interest.

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We expect 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
your account, if are a participant, with payments proportionate to your
beneficial interest in the principal amount of the global certificate as shown
on the records of DTC or its nominee. We also expect that, if you hold your
beneficial interest in the global certificate through a participant, payments to
you 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. These payments will be the responsibility of participants who
hold your interest.

If you have are a participant and transfer your new notes to a participant, the
transaction will effected in the ordinary way in accordance with DTC rules and
will be settled in clearinghouse funds. If you require 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 your
securities, you must transfer your 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 us that it will take any action permitted to be taken by you,
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 as to the notes specified by the
participants.

DTC has advised us 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 17 A 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 the accounts of participants, 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.

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

Certificated Securities. If at any time DTC is unwilling or unable to continue
as depositary for the global certificate and we do not appoint a successor
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, we closed our 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:

- - a $900.0 million term loan facility (the "Term Loan Facility") and

- - 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
us 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:

- - from 9/30/00 through and including 6/30/01, 15.00%;

- - from 9/30/01 through and including 6/30/02, 20.00%;

- - from 9/30/02 through and including 6/30/03, 20.00%;

- - from 9/30/03 through and including 6/30/04, 20.00%; and

- - from 9/30/04 through and including 6/30/05, 25.00%.

Mandatory or optional prepayments we make 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:

- - from 9/30/00 through and including 6/30/01, 15.00%;

- - from 9/30/01 through and including 6/30/02, 20.00%;

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- - from 9/30/02 through and including 6/30/03, 20.00%;

- - from 9/30/03 through and including 6/30/04, 20.00%; and

- - from 9/30/04 through and including 6/30/05, 25.00%.

Voluntary reductions of the Revolving Loan Commitment we make shall not affect
the reduction percentages set forth above.

ADDITIONAL FACILITY INDEBTEDNESS

We have the ability to incur additional indebtedness ("Additional Facility
Indebtedness") in a principal amount not to exceed $250.0 million from one or
more of 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, we have not
requested, and no Lender has issued, any commitment to extend such Additional
Facility Indebtedness to us.

INTEREST RATE

The Loans bear interest at a rate equal to, at our option,

- - the Prime Rate (as defined in the Senior Credit Facility) in effect from time
to time plus the Applicable Margin (as defined) or

- - 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.

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

We are 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

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<PAGE> 137

Administrative Agent will also receive such other customary fees as have been
separately agreed to with us. We also are 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:

- - a pledge of all capital stock we own and our subsidiaries;

- - a pledge of all of our capital stock;

- - a non-recourse pledge of all capital stock of Chancellor Mezzanine Holdings
Corporation owned by Chancellor Media;

- - a pledge of all debt and equity securities of persons engaged in any Non-Core
Business (as defined in the Senior Credit Facility) we purchase;

- - a collateral assignment of all partnership interests held by our subsidiaries;

- - a collateral assignment of all trust interests held by our subsidiaries;

- - a collateral assignment of all limited liability company interests we hold;

- - a downstream guarantee provided by Chancellor Mezzanine Holdings Corporation
and its wholly owned subsidiary; and

- - upstream guarantees provided by our subsidiaries.

COVENANTS

The Senior Credit Facility contains customary restrictive covenants, which,
among other things and with certain exceptions, limit our ability 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, we are 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, we 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>

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<PAGE> 138

Under the Senior Credit Facility, we may not, as of the end of any fiscal
quarter, allow our 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, we also are 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 our election, to the Term Loan Facility or the Revolving Loan Facility or any
combination thereof. In the alternative, we may elect to make an acquisition
with the Net Proceeds, so long as we have entered into a contract for such
acquisition within 12 months from the date of such Permitted Asset Sale and have
concluded the purchase with 18 months from the date of such Permitted Asset
Sale. In addition, 50% of Net Proceeds from any Subordinated Indebtedness we
issue, other than the assumption or refinancing of the 9 3/8% Notes and the
8 3/4% Notes, may be applied, at our election, to the Term Loan Facility or the
Revolving Loan Facility or any combination thereof. To the extent that we elect
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 us.

EVENTS OF DEFAULT

The Senior Credit Facility contains customary events of default, including:

- - 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;

- - the default in the payment of any principal amount when due;

- - the default in the performance or observance of certain representations,
warranties, covenants and agreements contained in the Senior Credit Facility;

- - a Senior Credit Facility Change of Control (as defined below);

- - 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, Chancellor Mezzanine Holdings Corporation or us;

- - the voluntary commencement by us 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 us, which are not diligently
contested or which continue undismissed for a period of 45 consecutive days;

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<PAGE> 139

- - the entry of a judgment against us which, individually or when aggregated with
other such judgments, exceeds $10 million;

- - the failure to satisfy certain minimum employee benefit funding standards;

- - the acceleration of the maturity of
(a) our Subordinated Indebtedness or
(b) any of our other indebtedness in an aggregate principal amount exceeding
$3 million;

- - 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;

- - any event which does not permit acceleration of such Subordinated Indebtedness
or such other indebtedness but requires us to purchase or acquire such
Subordinated Indebtedness or such other indebtedness;

- - 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;

- - the issuance by the FCC of a revocation order based on alleged alien ownership
of us;

- - the final, non-appealable termination or revocation of any material FCC
license or failure to renew any such license;

- - the failure of any security document or note under the Senior Credit Facility
to be in effect; or

- - the breach by Chancellor Mezzanine Holdings Corporation 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:

- - 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

- - Chancellor Mezzanine Holdings Corporation shall, directly or indirectly, cease
to own all of our issued and outstanding common stock.

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 our unsecured obligations, ranking subordinate in right of payment to all of
our Senior Debt (as defined in the indenture governing the 9 3/8% Notes (the
"9 3/8% Indenture")), 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 our 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

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<PAGE> 140

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 our Senior Debt.

The 9 3/8% Notes are redeemable, at our 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, we 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. Our 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 we
may redeem.

Under the 9 3/8% Indenture, in the event we have a change of control (as defined
in the 9 3/8% Indenture), each holder of 9 3/8% Notes will have the right to
require us 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 us with respect
to:

- - 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;

- - the incurrence of additional indebtedness;

- - the incurrence of subsidiary indebtedness;

- - the repayment of redemption of subordinated indebtedness other than in
accordance with its scheduled repayment;

- - sales of assets by us;

- - asset swaps;

- - transactions with stockholders and affiliates;

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<PAGE> 141

- - the restriction of certain payments by subsidiaries to their respective
parents;

- - the creation of liens on our assets or its subsidiaries;

- - the incurrence of indebtedness senior to the 9 3/8% Notes and subordinate to
our other indebtedness;

- - investments by us or its subsidiaries;

- - the issuance of preferred stock by any of our subsidiaries;

- - sales and leasebacks by us or its subsidiaries;

- - the guarantee of indebtedness;

- - the conduct of business other than the ownership and operation of radio
broadcast stations and businesses reasonably related thereto; and

- - the merger or sale of all or substantially all our assets.

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.

We may terminate our 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. We, at our option,

- - 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 of our obligations 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

- - need not comply with certain of the restrictive covenants with respect to the
9 3/8% Indenture, in each case, if we, 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.

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<PAGE> 142

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 our unsecured obligations, ranking subordinate in right of payment to all of
our Senior Debt (as defined in the indenture governing the 8 3/4% Notes (the
"8 3/4% Indenture")), 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 our 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 is subordinated to each guarantor's Senior Debt, including
the guarantees, on the same terms as the 8 3/4% Notes are subordinated to our
Senior Debt.

The 8 3/4% Notes are redeemable, at our 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, we 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. Our 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 we may redeem.

Under the 8 3/4% Indenture, in the event we have a change of control (as defined
in the 8 3/4% Indenture), each holder of 8 3/4% Notes will have the right to
require 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 us with respect
to:

- - the incurrence of additional indebtedness;

- - the incurrence of subsidiary indebtedness;

- - the repayment or redemption of subordinated indebtedness other than in
accordance with its scheduled repayment;

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- - sales of assets by us;

- - asset swaps;

- - transactions with stockholders and affiliates;

- - the restriction of certain payments by subsidiaries to their respective
parents;

- - the creation of liens on our assets or our subsidiaries;

- - the incurrence of indebtedness senior to the 8 3/4% Notes and subordinate to
our other indebtedness;

- - investments by us or our subsidiaries;

- - the issuance of preferred stock by any of our subsidiaries;

- - sales and leasebacks by us or our subsidiaries;

- - the guarantee of indebtedness;

- - the conduct of business other than the ownership and operation of radio
broadcast stations and businesses reasonably related thereto; and

- - the merger or sale of all or substantially all of our assets.

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 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.

We may terminate our 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. We, at our option,

- - 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 of our obligations 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

- - need not comply with certain of the restrictive covenants with respect to the
8 3/4% Indenture, in each case, if we, in addition to satisfying certain other
obligations, deposit 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

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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 our unsecured obligations, ranking subordinate in right of
payment to all of our Senior Debt (as defined in the indenture governing the
10 1/2% Notes (the "10 1/2% Indenture")), 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 our 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 our Senior Debt.

Except as described in the immediately following paragraph, the 10 1/2% Notes
may not be redeemed at our option 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 our option, 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 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, we 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. Our 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 we
may redeem.

Under the 10 1/2% Indenture, in the event we have a change of control (as
defined in the 10 1/2% Indenture), we 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.

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The 10 1/2% Indenture contains certain restrictive covenants which, among other
things, impose limitations (subject to certain exceptions) on us with respect
to:

- - the incurrence of additional indebtedness;

- - the incurrence of subsidiary indebtedness;

- - the repayment or redemption of subordinated indebtedness other than in
accordance with its scheduled repayment;

- - sales of assets by us;

- - asset swaps;

- - transactions with stockholders and affiliates;

- - the restriction of certain payments by subsidiaries to their respective
parents;

- - the creation of liens on our assets or our subsidiaries;

- - the incurrence of indebtedness senior to the 10 1/2% Notes and subordinate to
our other indebtedness;

- - investments by us or our subsidiaries;

- - the issuance of preferred stock by any of our subsidiaries;

- - sales and leasebacks by us or our subsidiaries;

- - the guarantee of indebtedness;

- - 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

- - the merger or sale of all or substantially all of our assets.

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 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.

We 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

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outstanding 10 1/2% Notes of the appropriate series to the appropriate trustee
for cancellation and paying all sums payable by it thereunder. We at our option,

- - 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 of our obligations 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

- - need not comply with certain of the restrictive covenants with respect to the
10 1/2% Indenture, in each case, if we in addition to satisfying certain other
obligations, deposit 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 our unsecured obligations, ranking subordinate in right of payment to
all of our Senior Debt (as defined in the indenture governing the 8 1/8% Notes
(the "8 1/8% Indenture")), 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 our 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 our
Senior Debt.

The 8 1/8% Notes are redeemable, at our 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>

In addition, on or prior to December 15, 2000, we 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. Our ability to
optionally redeem the 8 1/8% Notes are subject to

142
<PAGE> 147

restrictions contained in the Senior Credit Facility, which limits the amount of
debt subordinate to the indebtedness under the Senior Credit Facility that we
may redeem.

Under the 8 1/8% Indenture, in the event we have a change of control (as defined
in the 8 1/8% Indenture),

- - we 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

- - if we do 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 us 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 us with respect
to:

- - the incurrence of additional indebtedness;

- - the incurrence of subsidiary indebtedness;

- - the repayment or redemption of subordinated indebtedness other than in
accordance with its scheduled repayment;

- - sales of assets by us;

- - asset swaps;

- - transactions with stockholders and affiliates;

- - the restriction of certain payments by subsidiaries to their respective
parents;

- - the creation of liens on our assets or our subsidiaries;

- - the incurrence of indebtedness senior to the 8 1/8% Notes and subordinate to
our other indebtedness;

- - investments by us or our subsidiaries;

- - the issuance of preferred stock by any of our subsidiaries;

- - sales and leasebacks by us or its subsidiaries;

- - the guarantee of indebtedness;

- - the conduct of business other than the ownership and operation of broadcast
businesses or businesses reasonably related thereto; and

- - the merger or sale of all or substantially all of our assets.

143
<PAGE> 148

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.

We 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 outstanding 8 1/8% Notes of the appropriate series to the
appropriate trustee for cancellation and paying all sums payable by it
thereunder. We, at our option,

- - 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 of our obligations 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

- - need not comply with certain of the restrictive covenants with respect to the
8 1/8% Indenture, in each case, if we, in addition to satisfying certain other
obligations, deposit 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 our unsecured
obligations, ranking subordinate in right of payment to all of our Senior Debt
(as defined in the indenture governing the 9% Notes (the "9% Indenture")),
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 our 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 our Senior
Debt.

The 9% Notes are redeemable, at our 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

144
<PAGE> 149

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, we may, at our 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 equal at least 75% of the aggregate principal
amount of the notes originally issued. Our 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 we may redeem.

Under the 9% Indenture, in the event we have a change of control (as defined in
the 9% Indenture),

- we 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

- if we do 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 us 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 us with respect
to:

- 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;

- the incurrence of additional indebtedness;

- the incurrence of subsidiary indebtedness;

- the repayment or redemption of subordinated indebtedness other than in
accordance with its scheduled repayment;

- sales of assets by us;

- asset swaps;

- transactions with stockholders and affiliates;

145
<PAGE> 150

- the restriction of certain payments by subsidiaries to their respective
parents;

- the creation of liens on our assets or our subsidiaries;

- the incurrence of indebtedness senior to the 9% Notes and subordinate to
our other indebtedness;

- investments by us or our subsidiaries;

- the issuance of preferred stock by any of our subsidiaries;

- sales and leasebacks by us or our subsidiaries;

- the guarantee of indebtedness;

- the conduct of business other than the ownership and operation of
broadcast businesses or businesses reasonably related thereto; and

- the merger or sale of all or substantially all of our assets.

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.

We 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. We, at
our option,

- 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 of our obligations to register the transfer or exchange of such
9% Notes, replace stolen, lost or mutilated 9% Notes, maintain paying
agencies and hold moneys for payment in trust) or

- need not comply with certain of the restrictive covenants with respect to
the 9% Indenture, in each case, if we, 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.

146
<PAGE> 151

MATERIAL FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of the material federal income tax considerations
relevant to the exchange of your old notes for new notes. The discussion is
based upon the Internal Revenue Code of 1986, 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 you. The description does not consider the
effect of any applicable foreign, state, local or other tax laws or estate or
gift tax considerations.

YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO
YOU OF EXCHANGING YOUR 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 your old notes for new notes pursuant to the exchange offer
should not constitute a sale or an exchange for federal income tax purposes. You
will have a basis for the new notes equal to the basis of your old notes and
your holding period for the new notes will include the period during which your
old notes were held. Accordingly, such exchange should have no federal income
tax consequences to you.

PLAN OF DISTRIBUTION

If you are a broker-dealer that receives new notes for your own account in
exchange for your old notes pursuant to the exchange offer, where your old notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, you must acknowledge that you will deliver a
prospectus in connection with any resale of your new notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by you in
connection with resales of new notes received in exchange for your old notes
where your old notes were acquired as a result of market-making activities or
other trading activities. We have agreed that, for a period of 180 days after
the consummation of the exchange offer, we will make this prospectus, as amended
or supplemented, available to you for use in connection with any such resale. In
addition, until , 1999, if you effect a transaction in the new notes
you may be required to deliver a prospectus.

Neither we nor the guarantors will receive any proceeds from any sale of new
notes by broker-dealers. If you are a broker-dealer, new notes you receive for
your 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. You may
make resales 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. If you are a
broker-dealer that resells new notes that were received by you for your own
account pursuant to the exchange offer and you participate in a distribution of
your new notes, you may be deemed to be an

147
<PAGE> 152

"underwriter" within the meaning of the Securities Act, and any profit on any
resale of new notes and any commissions or concessions received by you may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that you will deliver and by delivering
a prospectus, you will not be deemed to admit that you are an "underwriter"
within the meaning of the Securities Act.

For a period of 180 days after the registration statement is declared effective,
we will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to you, if you are a broker-dealer that requests
these documents in the Letter of Transmittal or otherwise. We have 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 you (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 us by Weil,
Gotshal & Manges LLP, Dallas, Texas and New York, New York.

EXPERTS

The consolidated financial statements and financial statement schedule of CMCLA
and subsidiaries as of December 31, 1997 and 1998 and for the years then ended
included in this registration statement, have been so included in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.

The consolidated financial statements of CMCLA and subsidiaries, the financial
statements of WLIT Inc., and the combined financial statements of KYSR Inc. and
KIBB Inc., have been audited by KPMG LLP, independent certified public
accountants, to the extent and for the periods indicated in their reports
thereon, which reports are included herein. Such financial statements are
included herein in reliance upon the reports of KPMG LLP 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 so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.

The combined statement of assets acquired as of April 3, 1998 and the related
combined statements of revenues and direct operating expenses of KBIG-FM,
KLDE-FM and WBIX-FM (formerly WNSR-FM) for each of the three years ended
December 31, 1997 included in this registration statement, have been so included
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.

148
<PAGE> 153

The statement of assets acquired as of May 29, 1998 and the related statements
of revenues and direct operating expenses of KODA-FM for each of the two years
ended December 31, 1997 included in this registration statement, have been so
included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.

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, and are included in reliance upon the
authority of said firm as experts in auditing and accounting.

The financial statements of Martin Media as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997, included in
this registration statement, 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 Martin & MacFarlane, Inc. as of December 31, 1997
and 1996 and for each of the two years in the period ended December 31, 1997 and
the six month period ended December 31, 1995, included in this registration
statement, 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 Martin & MacFarlane, Inc. as of June 30, 1995 and
for the year ended June 30, 1995, included in this registration statement, have
been audited by Barbich Longcrier Hooper & King Accountancy Corporation,
independent auditors, 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 Broadcast Group, Inc. as of December 31, 1998
and 1997 and for the years then ended included in this registration statement
have been included herein in reliance on the report of Kleiman, Carney &
Greenbaum, independent accountants, given on the authority of said firm as
experts in accounting and auditing.

149
<PAGE> 154

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 1998 and 1999 and the
elimination of the consolidated historical data of the stations disposed in the
transactions completed by the Company during 1998 and 1999. The unaudited pro
forma condensed combined balance sheet data at December 31, 1998 presents
adjustments for the transactions completed in 1999 and the Pending Transactions,
as if each such transaction had occurred at December 31, 1998. The unaudited pro
forma condensed combined statement of operations data for the twelve months
ended December 31, 1998 presents adjustments for the transactions completed by
the Company in 1998 and 1999, the 1998 Financing Transactions and the Pending
Transactions, as if each such transaction occurred on January 1, 1998.

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 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 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> 155

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES

UNAUDITED PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA COMPANY
ADJUSTMENTS AS ADJUSTED PRO FORMA
COMPANY FOR THE FOR THE ADJUSTMENTS FOR
HISTORICAL COMPLETED COMPLETED THE PENDING COMPANY
AT 12/31/98 TRANSACTIONS(1) TRANSACTIONS TRANSACTION(2) PRO FORMA
----------- --------------- ------------ --------------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets........................... $ 424,811 $ 12,564 $ 437,375 $ -- $ 437,375
Property and equipment, net.............. 1,388,156 18,168 1,406,324 1,771 1,408,095
Intangible assets, net................... 5,056,047 332,169 5,388,216 88,229 5,476,445
Other assets............................. 358,893 -- 358,893 -- 358,893
---------- -------- ---------- ------- ----------
Total assets................... $7,227,907 $362,901 $7,590,808 $90,000 $7,680,808
========== ======== ========== ======= ==========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Current liabilities...................... $ 236,618 $ 2,585 $ 239,203 $ -- $ 239,203
Long-term debt, excluding current
portion................................ 4,096,000 307,962 4,403,962 90,000 4,493,962
Deferred tax liabilities................. 453,134 42,858 495,992 -- 495,992
Other liabilities........................ 50,325 250 50,575 -- 50,575
---------- -------- ---------- ------- ----------
Total liabilities.............. 4,836,077 353,655 5,189,732 90,000 5,279,732
STOCKHOLDER'S EQUITY:
Common stock............................. 1 -- 1 1
Additional paid in capital............... 2,670,510 -- 2,670,510 -- 2,670,510
Accumulated deficit...................... (278,681) 9,246 (269,435) -- (269,435)
---------- -------- ---------- ------- ----------
Total stockholder's equity..... 2,391,830 9,246 2,401,076 -- 2,401,076
---------- -------- ---------- ------- ----------
Total liabilities and
stockholder's equity......... $7,227,907 $362,901 $7,590,808 $90,000 $7,680,808
========== ======== ========== ======= ==========
</TABLE>

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements

P-2
<PAGE> 156

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR THE COMPANY AS
COMPANY COMPANY ADJUSTED COMPANY
COMPLETED AND THE FOR THE PRO FORMA
YEAR ENDED COMPANY TRANSACTIONS COMPLETED COMPLETED PENDING COMPANY
DECEMBER 31, 1998 HISTORICAL HISTORICAL(3) TRANSACTIONS TRANSACTIONS TRANSACTION(11) PRO FORMA
- ----------------- ---------- ------------- ------------ ------------ --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues....................... $1,440,357 $261,292 $ -- $1,701,649 $12,052 $1,713,701
Less: agency commissions............. (166,501) (28,372) -- (194,873) (1,329) (196,202)
---------- -------- --------- ---------- ------- ----------
Net revenues......................... 1,273,856 232,920 -- 1,506,776 10,723 1,517,499
Operating expenses excluding
depreciation and amortization...... 682,061 118,666 -- 800,727 6,150 806,877
Depreciation and amortization........ 446,338 51,201 22,736(4) 578,345 5,984 584,329
58,070(5)
Corporate general and
administrative..................... 36,722 12,775 (570)(6) 48,927 -- 48,927
Non-cash and non-recurring charges... 63,661 2,164 (2,164)(7) 63,661 -- 63,661
---------- -------- --------- ---------- ------- ----------
Operating income (loss).............. 45,074 48,114 (78,072) 15,116 (1,411) 13,705
Interest expense..................... 217,136 13,762 131,973(8) 362,871 6,632 369,503
Interest income...................... (15,650) (643) -- (16,293) -- (16,293)
Gain on disposition of assets........ (123,845) (3,158) -- (127,003) -- (127,003)
Gain on disposition of representation
contracts.......................... (32,198) -- -- (32,198) -- (32,198)
Other (income) expense............... (3,221) (692) -- (3,913) -- (3,913)
---------- -------- --------- ---------- ------- ----------
Income (loss) before income taxes.... 2,852 38,845 (210,045) (168,348) (8,043) (176,391)
Income tax expense (benefit)......... 33,751 -- (79,433)(9) (45,682) (3,378) (49,060)
---------- -------- --------- ---------- ------- ----------
Net income (loss).................... (30,899) 38,845 (130,612) (122,666) (4,665) (127,331)
Preferred stock dividends............ 17,601 -- (17,601)(10) -- -- --
---------- -------- --------- ---------- ------- ----------
Income (loss) attributable to common
stock.............................. $ (48,500) $ 38,845 $(113,011) $ (122,666) $(4,665) $ (127,331)
========== ======== ========= ========== ======= ==========
</TABLE>

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements

P-3
<PAGE> 157

ADJUSTMENTS TO THE UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED
TO THE COMPLETED TRANSACTIONS

(1) Reflects the Completed Transactions that were completed after December
31, 1998 as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION
--------------------------------------------------------------------------------------------------------
PROPERTY AND DEFERRED
COMPLETED PURCHASE CURRENT EQUIPMENT, INTANGIBLE CURRENT TAX OTHER ACCUMULATED
TRANSACTIONS PRICE ASSETS NET ASSETS, NET LIABILITIES LIABILITIES LIABILITIES DEFICIT
- ------------ -------- ------- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outdoor
Acquisitions(a).... $ 45,204 $ 2,346 $18,335 $ 25,110 $ (337) $ -- $(250) $ --
Cleveland
Acquisitions(b).... 283,758 10,218 2,047 309,903 (2,248) (36,162)(c) -- --
Chicago
Disposition(d)..... (21,000) -- (2,214) (2,844) -- (6,696) -- (9,246)
-------- ------- ------- -------- ------- -------- ----- -------
$307,962 $12,564 $18,168 $332,169 $(2,585) $(42,858) $(250) $(9,246)
======== ======= ======= ======== ======= ======== ===== =======

<CAPTION>
FINANCING
-----------
INCREASE IN
COMPLETED LONG-TERM
TRANSACTIONS DEBT
- ------------ -----------
<S> <C>
Outdoor
Acquisitions(a).... $ 45,204
Cleveland
Acquisitions(b).... 283,758
Chicago
Disposition(d)..... (21,000)
--------
$307,962
========
</TABLE>

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

(a) Subsequent to January 1, 1999, the Company acquired approximately
4,500 outdoor display faces from Triumph Outdoor Holdings and certain
affiliated companies ("Triumph") for approximately $37,006 in cash
including working capital and acquired approximately 100 additional
billboards and outdoor displays in various transactions for
approximately $8,198. The outdoor acquisitions aggregate purchase
price of $45,204 has been allocated to property and equipment and
intangible assets based upon a preliminary appraisal for Triumph and
historical information from prior outdoor acquisitions. The amounts
allocated to property and equipment consist primarily of advertising
structures with an estimated average life of 15 years. The amounts
allocated to intangible assets represent goodwill with an estimated
average life of 40 years.

(b) On January 28, 1999, the Company acquired Wincom Broadcasting
Corporation which owns WQAL-FM in Cleveland. The Company had
previously been operating WQAL-FM under a time brokerage agreement
effective October 1, 1998. On February 2, 1999, the Company acquired
five additional radio stations in Cleveland including (i) WDOK-FM and
WRMR-AM from Independent Group Limited Partnership, (ii) WZAK-FM from
Zapis Communications and (iii) Zebra Broadcasting Corporation which
owns WZJM-FM and WJMO-AM. The six Cleveland stations were acquired
for an aggregate purchase price of $283,758 in cash including working
capital, subject to certain adjustments. 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 and are based on information provided by management of the
respective companies acquired. The Company, on a preliminary basis,
has allocated the intangible assets to broadcast licenses with an
estimated average life of 15 years based upon historical information
from prior radio acquisitions.

(c) Reflects a deferred tax liability related to the difference between
the financial statement carrying amount and the tax basis of assets
acquired in the stock acquisitions of Wincom Broadcasting Corporation
and Zebra Broadcasting Corporation.

(d) On April 16, 1999, the Company sold WMVP-AM in Chicago to ABC, Inc.
for $21,000 in cash. The Company had previously entered into a time
brokerage agreement to sell substantially all of the broadcast time
of WMVP-AM effective September 10, 1998. The amounts allocated to
accumulated deficit and deferred tax liabilities represent the gain
on the disposition of WMVP-AM of $15,942 net of taxes of $6,696.

P-4
<PAGE> 158

ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE PENDING TRANSACTION

(2) Reflects the Pending Transaction as follows:

<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION FINANCING
----------------------------------- ---------
PROPERTY INCREASE
AND INTANGIBLE IN
PURCHASE EQUIPMENT, ASSETS, LONG-TERM
PENDING TRANSACTION PRICE NET(A) NET(B) DEBT
------------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Phoenix Acquisition(c)...................................... $90,000 $1,771 $88,229 $90,000
</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 Transaction.

(b) The Company, on a preliminary basis, has allocated the intangible assets 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 acquisitions.

(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 Company began
operating KKFR-FM and KFYI-AM under a time brokerage agreement effective
November 5, 1998.

P-5
<PAGE> 159

ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
RELATED TO THE COMPLETED TRANSACTIONS HISTORICAL

(3) The Completed Transactions historical condensed combined statement of
operations for the year ended December 31, 1998 are summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS
-----------------------------------------------------------------------------------------
MARTIN AS
ADJUSTED FOR OTHER
CAPSTAR/SFX COMPLETED PRIMEDIA WHITECO OUTDOOR
TRANSACTIONS WWDC-FM/AM MARTIN ACQUISITION ACQUISITION ACQUISITIONS
YEAR ENDED HISTORICAL HISTORICAL TRANSACTIONS HISTORICAL HISTORICAL HISTORICAL
DECEMBER 31, 1998 1/1-12/31 (a) 1/1-6/1 (b) 1/1-7/31 (c) 1/1-10/23 (d) 1/1-12/1 (e) 1/1-12/31 (f)
----------------- ------------- ----------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues........... $34,324 $4,273 $54,472 $12,797 $128,565 $ 7,022
Less: agency
commissions............. (4,302) (528) (5,768) (3,358) (8,973) (2,319)
------- ------ ------- ------- -------- -------
Net revenues............. 30,022 3,745 48,704 9,439 119,592 4,703
Operating expenses
excluding depreciation
and amortization........ 18,464 2,158 23,751 5,363 60,587 3,983
Depreciation and
amortization............ 21,435 45 16,068 2,350 10,342 692
Corporate general and
administrative.......... -- -- 924 2,794 6,759 1,817
Profit participation
fee..................... -- -- -- -- 2,164 --
------- ------ ------- ------- -------- -------
Operating income
(loss).................. (9,877) 1,542 7,961 (1,068) 39,740 (1,789)
Interest expense......... -- 62 11,189 1,972 35 197
Interest income.......... -- (18) (381) -- (58) (4)
Gain on disposition of
assets.................. -- -- -- -- -- (3,158)
Other (income) expense... -- (49) (557) 24 (1,082) 105
------- ------ ------- ------- -------- -------
Income (loss) before
income taxes............ (9,877) 1,547 (2,290) (3,064) 40,845 1,071
Income tax expense....... -- -- -- -- -- --
------- ------ ------- ------- -------- -------
Net income (loss)........ (9,877) 1,547 (2,290) (3,064) 40,845 1,071
Preferred stock
dividends............... -- -- -- -- -- --
------- ------ ------- ------- -------- -------
Income (loss)
attributable to common
stock................... $(9,877) $1,547 $(2,290) $(3,064) $ 40,845 $ 1,071
======= ====== ======= ======= ======== =======

<CAPTION>
ACQUISITIONS DISPOSITIONS
------------- ----------------------------
WBAB-FM
WBLI-FM
CLEVELAND WGBB-AM CHICAGO COMPANY
ACQUISITIONS WHFM-FM DISPOSITION COMPLETED
YEAR ENDED HISTORICAL HISTORICAL HISTORICAL TRANSACTIONS
DECEMBER 31, 1998 1/1-12/31 (g) 1/1-5/29 (h) 1/1-12/31 (i) HISTORICAL
----------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Gross revenues........... $36,432 $(5,063) $(11,530) $261,292
Less: agency
commissions............. (4,859) 514 1,221 (28,372)
------- ------- -------- --------
Net revenues............. 31,573 (4,549) (10,309) 232,920
Operating expenses
excluding depreciation
and amortization........ 20,962 (3,331) (13,271) 118,666
Depreciation and
amortization............ 861 -- (592) 51,201
Corporate general and
administrative.......... 481 -- -- 12,775
Profit participation
fee..................... -- -- -- 2,164
------- ------- -------- --------
Operating income
(loss).................. 9,269 (1,218) 3,554 48,114
Interest expense......... 307 -- -- 13,762
Interest income.......... (182) -- -- (643)
Gain on disposition of
assets.................. -- -- (3,158)
Other (income) expense... 867 -- -- (692)
------- ------- -------- --------
Income (loss) before
income taxes............ 8,277 (1,218) 3,554 38,845
Income tax expense....... -- -- -- --
------- ------- -------- --------
Net income (loss)........ 8,277 (1,218) 3,554 38,845
Preferred stock
dividends............... -- -- -- --
------- ------- -------- --------
Income (loss)
attributable to common
stock................... $ 8,277 $(1,218) $ 3,554 $ 38,845
======= ======= ======== ========
</TABLE>

P-6
<PAGE> 160

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

(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-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 Company also provided a loan to Capstar in
the principal amount of $150,000 as part of the Capstar/SFX Transaction.
The Capstar/SFX Stations were acquired by Capstar as part of Capstar's
acquisition of SFX on May 29, 1998. This adjustment reflects the following
aspects of the Capstar/SFX Transaction:

(i) On May 29, 1998, the Company exchanged WAPE-FM and WFYV-FM in
Jacksonville (valued at $53,000) for Capstar station KODA-FM in
Houston. As part of the KODA-FM transaction, the Company also paid
cash of $90,250 to the owners of KVET-AM, KVET-FM and KASE-FM, who
simultaneously transferred such stations to Capstar. Thus, this
adjustment records the results of operations of KODA-FM for the
period January 1, 1998 to May 29, 1998. Chancellor entered into a
time brokerage agreement to sell substantially all of the broadcast
time of WAPE-FM and WFYV-FM effective July 1, 1996. Therefore, the
results of operations of WAPE-FM and WFYV-FM are not included in the
Company's historical condensed statement of operations for the year
ended December 31, 1998.

(ii) The Company began operating the remaining ten Capstar/SFX stations
under time brokerage agreements effective May 29, 1998 pending the
consummation of the Capstar merger. Thus, this adjustment records the
results of operations of the ten Capstar/SFX stations and the related
LMA fee payment to Capstar of $20,594 for the period January 1, 1998
to May 29, 1998.

(iii) On February 1, 1999, the Company began operating WKNR-FM in Cleveland
under a time brokerage agreement with Capstar, pending the
consummation of the Capstar merger. WKNR-FM was acquired by Capstar
as part of Capstar's acquisition of SFX on May 29, 1998. Therefore,
in addition to the above items, this adjustment records the results
of operations of WKNR-FM for the year ended December 31, 1998.

The Capstar stations currently operated under time brokerage agreements
will be acquired by Chancellor Media as part of its pending merger with
Capstar. The Company intends to continue operating these stations under
time brokerage agreements and paying LMA fees to Capstar subsequent to
consummation of Chancellor Media's merger with Capstar.

(b) 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.

(c) On July 31, 1998, the Company acquired Martin Media and certain affiliated
companies for a total purchase price of $615,117 which consisted of
$612,848 in cash including various other direct acquisition costs and the
assumption of notes payable of $2,270. Martin is an outdoor advertising
company with over 13,700 billboards and outdoor displays in 12 states
serving 23 markets. As part of the Martin transaction, the Company acquired
an asset purchase agreement with Kunz & Company and paid an additional
$6,000 in cash for a purchase option deposit previously paid by Martin.

Martin's historical condensed combined statements of operations for the
year ended December 31, 1998 and pro forma adjustments related to the
significant transactions completed by Martin prior to the acquisition of
Martin (the "Completed Martin Transactions") are summarized below.

P-7
<PAGE> 161

<TABLE>
<CAPTION>
OTHER PRO FORMA MARTIN AS
COMPLETED ADJUSTMENTS ADJUSTED
MARTIN MARTIN FOR THE FOR
ACQUISITION ACQUISITIONS COMPLETED COMPLETED
HISTORICAL HISTORICAL MARTIN MARTIN
YEAR ENDED DECEMBER 31, 1998 1/1-7/31 1/1-7/31(i) TRANSACTIONS TRANSACTIONS
---------------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross revenues.................................. $52,345 $2,127 $ -- $54,472
Less: agency commissions........................ (5,612) (156) -- (5,768)
------- ------ ------ -------
Net revenues.................................... 46,733 1,971 -- 48,704
Operating expenses excluding depreciation and
amortization.................................. 22,845 906 -- 23,751
Depreciation and amortization................... 14,694 88 1,286(ii) 16,068
Corporate general and administrative............ 2,919 -- (1,995)(iii) 924
------- ------ ------ -------
Operating income................................ 6,275 977 709 7,961
Interest expense................................ 10,781 -- 408(iv) 11,189
Interest income................................. (381) -- -- (381)
Other (income) expense.......................... (571) 14 -- (557)
------- ------ ------ -------
Net income (loss)............................... $(3,554) $ 963 $ 301 $(2,290)
======= ====== ====== =======
</TABLE>

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

(i) Prior to July 31, 1998, Martin acquired approximately 1,636 billboards
and outdoor displays in various transactions for approximately $12,246.

(ii) Reflects the adjustment to record incremental amortization of $1,286 for
the period January 1, 1998 to July 31, 1998 related to the Completed
Martin Transactions based upon an estimated average life of 5 years used
by Martin for intangible assets. 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.

(iii)On July 31, 1997, Martin paid $6,000 to Kunz 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. Reflects the
elimination of management fees paid by Martin to Kunz of $1,995 for the
period January 1, 1998 through July 31, 1998.

(iv) Reflects the adjustment to increase interest expense by $408 in
connection with the consummation of the Completed Martin Transactions
based upon additional bank borrowings of $12,246 at 8.5%.

(d) 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 a purchase price of $75,619 including various other direct
acquisition costs.

(e) On December 1, 1998, the Company acquired the assets and working capital of
the outdoor advertising division of Whiteco Industries, Inc., including
approximately 22,500 billboards and outdoor displays in 34 states, for
$981,698 in cash including various other direct acquisition costs.

(f) Other outdoor acquisitions consist of (i) approximately 670 billboards and
outdoor displays acquired in 1998 for approximately $23,582; (ii)
approximately 4,500 outdoor display faces acquired from Triumph for
approximately $37,006 in cash including working capital in January and
February 1999 and (iii) approximately 100 additional billboards and outdoor
displays acquired for approximately $8,198 subsequent to January 1, 1999.

(g) On January 28, 1999, the Company acquired Wincom Broadcasting Corporation
which owns WQAL-FM in Cleveland. The Company had previously been operating
WQAL-FM under a time brokerage agreement effective October 1, 1998. On
February 2, 1999, the Company acquired five

P-8
<PAGE> 162

additional radio stations in Cleveland including (i) WDOK-FM and WRMR-AM
from Independent Group Limited Partnership, (ii) WZAK-FM from Zapis
Communications and (iii) Zebra Broadcasting Corporation which owns WZJM-FM
and WJMO-AM. The six Cleveland stations were acquired for an aggregate
purchase price of $283,758 in cash including working capital, subject to
certain adjustments.

(h) Chancellor began programming WBAB-FM, WBLI-FM, WGBB-AM and WHFM-FM in Long
Island under a time brokerage agreement effective July 1, 1996. 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
Company's historical condensed statement of operations for the year ended
December 31, 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.

(i) On April 16, 1999, the Company sold WMVP-AM in Chicago to ABC, Inc. for
$21,000 in cash. The Company entered into a time brokerage agreement to
sell substantially all of the broadcast time of WMVP-AM effective September
10, 1998.

(4) Reflects incremental amortization related to the Completed Transactions and
is based on the following allocation to intangible assets:

<TABLE>
<CAPTION>
ADJUSTMENT
INCREMENTAL HISTORICAL FOR NET
AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION INCREASE
YEAR ENDED DECEMBER 31, 1998 PERIOD(A) ASSETS, NET EXPENSE EXPENSE (DECREASE)
---------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Denver Acquisition(b)............................ 1/1-1/30 $ 24,589 $ 137 $ -- $ 137
Bonneville Option(b)............................. 1/1-4/3 186,349 3,209 -- 3,209
KODA-FM(b)....................................... 1/1-5/29 93,294 2,574 656 1,918
WWDC-FM/AM(b).................................... 1/1-6/1 64,338 1,799 -- 1,799
Martin Acquisitions(c)........................... 1/1-7/31 264,803 6,618 12,994 (6,376)
Other 1998 Outdoor Acquisitions(c)............... 1/1-8/31 8,782 146 -- 146
Primedia Acquisition(b).......................... 1/1-10/23 69,361 3,763 1,765 1,998
Kunz Option(c)................................... 1/1-11/13 13,414 292 -- 292
Whiteco Acquisition(c)........................... 1/1-12/1 212,044 4,874 5,826 (952)
Other 1999 Outdoor Acquisitions(c)............... 1/1-12/31 25,110 628 162 466
Cleveland Acquisitions(b)........................ 1/1-12/31 309,903 20,660 561 20,099
---------- ------- ------- -------
Total.................................... $1,271,987 $44,700 $21,964 $22,736
========== ======= ======= =======
</TABLE>

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

(a) The incremental amortization period represents the period of the year
that the acquisition was not completed. Actual amortization may differ
based upon final purchase price allocations.

(b) Intangible assets for the radio acquisitions consist primarily of FCC
licenses which are amortized on a straight-line basis over an estimated
average life of 15 years.

(c) Intangible assets for the outdoor acquisitions consist primarily of
goodwill which is amortized on a straight-line basis over an estimated
average life of 40 years, except for the acquisition of Martin which
includes non-compete agreements of $27,000 which are amortized on a
straight-line basis over 5 years. The Martin goodwill of $237,803
includes $98,042 resulting from the recognition of deferred tax
liabilities.

(5) Historical depreciation expense of the completed radio acquisitions is
assumed to approximate depreciation expense on a pro forma basis. Actual
depreciation may differ based upon final purchase price allocations. The
following adjustments reflect incremental depreciation related to the
completed outdoor acquisitions and are based on the following allocation to
property and equipment:

P-9
<PAGE> 163

<TABLE>
<CAPTION>
INCREMENTAL PROPERTY AND HISTORICAL ADJUSTMENT
DEPRECIATION EQUIPMENT, DEPRECIATION DEPRECIATION FOR NET
YEAR ENDED DECEMBER 31, 1998 PERIOD(A) NET(A) EXPENSE(A) EXPENSE INCREASE
---------------------------- ------------ -------------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Martin Acquisition............................ 1/1-7/31 $ 431,253 $16,771 $3,074 $13,697
Kunz Option................................... 1/1-11/13 26,849 1,556 -- 1,556
Other 1998 Outdoor Acquisitions............... 1/1-11/17 14,815 734 -- 734
Whiteco Acquisition........................... 1/1-12/1 748,940 45,907 4,516 41,391
Other 1999 Outdoor Acquisitions............... 1/1-12/31 18,335 1,222 530 692
---------- ------- ------ -------
Total................................. $1,240,192 $66,190 $8,120 $58,070
========== ======= ====== =======
</TABLE>

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

(a) Property and equipment consists primarily of advertising structures and
is depreciated on a straight-line basis over an estimated average 15
year life. The incremental depreciation period represents the period of
the year that the acquisition was not completed.

(6) Reflects the elimination of management fees paid by the Company to Kunz of
$570 for the period August 1, 1998 through September 30, 1998 in connection
with the Kunz Option.

(7) Reflects the elimination of the profit participation fee paid by Whiteco to
Metro Management Associates of $2,164 for the year ended December 31, 1998.

(8) Reflects the adjustment to interest expense in connection with the
consummation of the Completed Transactions, the Company's 1998 Equity
Offering completed on March 13, 1998, the repurchase of CMCLA's 12%
exchange debentures on June 10, 1998, the repurchase of CMCLA's 12 1/4%
exchange debentures on August 19, 1998, the offering by CMCLA of the 9%
Notes on September 30, 1998 and the offering by CMCLA of the 8% Senior
Notes on November 17, 1998:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998
------------
<S> <C>
Additional bank borrowings related to completed
acquisitions.............................................. $2,292,899
==========
Interest expense at 7.0%.................................... $ 123,693
Less: historical interest expense related to completed
acquisitions.............................................. (13,762)
----------
Net increase in interest expense............................ 109,931
Reduction in interest expense on bank debt related to the
application of net proceeds of the following at 7.0%:
Proceeds from the March 13, 1998 equity offering used to
reduce bank borrowings by $673,000..................... (9,553)
CMCLA 9% Senior Subordinated Notes issuance on September
30, 1998 for net proceeds of $730,000.................. (38,325)
CMCLA 8% Senior Notes issuance on November 17, 1998 for
net proceeds of $730,000............................... (44,996)
Interest expense on borrowings of $262,495 to finance the
repurchase of CMCLA's 12% exchange debentures on June 10,
1998...................................................... 8,167
Interest expense on borrowings of $143,836 to finance the
repurchase of CMCLA's 12 1/4% exchange debentures on
August 19, 1998........................................... 6,405
Interest expense on CMCLA's $750,000 9% Senior Subordinated
Notes issued September 30, 1998........................... 50,625
Interest expense on CMCLA's $750,000 8% Senior Notes issued
November 17, 1998......................................... 52,833
Elimination of historical interest expense on the CMCLA 12%
Subordinated Exchange Debentures from May 13, 1998 through
June 10, 1998............................................. (1,976)
Elimination of historical interest expense on the CMCLA
12 1/4% Subordinated Exchange Debentures from July 23,
1998 through August 19, 1998.............................. (1,138)
----------
Total adjustment for net increase in interest expense....... $ 131,973
==========
</TABLE>

(9) Reflects the tax effect of the pro forma adjustments.

P-10
<PAGE> 164

(10) Reflects the elimination of preferred stock dividends on the 12% Preferred
Stock and the 12 1/4% Preferred Stock of $17,601 for the year ended
December 31, 1998, 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 TRANSACTION

(11) The detail of the historical financial data of the company to be acquired
in the Pending Transaction for the year ended December 31, 1998 has been
obtained from the historical financial statements of the respective
companies and is summarized below:

<TABLE>
<CAPTION>
PRO FORMA
PHOENIX ADJUSTMENTS COMPANY
ACQUISITION FOR THE PRO FORMA
YEAR ENDED HISTORICAL PENDING PENDING
DECEMBER 31, 1998 1/1 - 12/31(A) TRANSACTION TRANSACTION
----------------- -------------- ------------ ------------
<S> <C> <C> <C>
Gross revenues.......................................... $12,052 $ -- $12,052
Less: agency commissions................................ (1,329) -- (1,329)
------- -------- -------
Net revenues............................................ 10,723 -- 10,723
Operating expenses excluding depreciation and
amortization.......................................... 6,150 -- 6,150
Depreciation and amortization........................... 188 5,796(b) 5,984
------- -------- -------
Operating income (loss)................................. 4,385 (5,796) (1,411)
Interest expense........................................ 332 6,300(c) 6,632
------- -------- -------
Income (loss) before income taxes....................... 4,053 (12,096) (8,043)
Income tax expense (benefit)............................ -- (3,378)(d) (3,378)
------- -------- -------
Net income (loss)....................................... $ 4,053 $ (8,718) $(4,665)
======= ======== =======
</TABLE>

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

(a) 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. The Company began operating KKFR-FM and KFYI-AM under a time
brokerage agreement effective November 5, 1998.

(b) Reflects incremental amortization related to the assets acquired in the
Pending Transaction and is based on the allocation of the total
consideration as follows:

<TABLE>
<CAPTION>
PENDING TRANSACTION INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
YEAR ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
DECEMBER 31, 1998 PERIOD(I) NET EXPENSE(I) EXPENSE INCREASE
- ------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix Acquisition........... 1/1-12/31 $88,229 $5,882 $ 86 $5,796
------- ------ ---- ------
</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 acquisition was not
completed.

P-11
<PAGE> 165

Historical depreciation expense of the Pending Transaction is assumed to
approximate depreciation expense on a pro forma basis. Actual depreciation
and amortization may differ based upon final purchase price allocations.

<TABLE>
<CAPTION>
YEAR
ENDED
DECEMBER 31,
1998
------------
<S> <C>
Additional bank borrowings related to:
Pending Acquisition....................................... $ 90,000
--------
Interest expense at 7.0%.................................. $ 6,300
========
</TABLE>

(d) Reflects the tax effect of the pro forma adjustments.

P-12
<PAGE> 166

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
Report of Independent Accountants......................... F-4
Independent Auditors' Report.............................. F-5
Consolidated Balance Sheets as of December 31, 1997 and
1998................................................... F-6
Consolidated Statements of Operations for the years ended
December 31, 1996, 1997 and 1998....................... F-7
Consolidated Statements of Stockholder's Equity for the
years ended December 31, 1996, 1997, and 1998.......... F-8
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1997
and 1998............................................... F-9
Notes to Consolidated Financial Statements................ F-10
Schedule II -- Valuation and Qualifying Accounts.......... F-38

CHANCELLOR RADIO BROADCASTING COMPANY AND SUBSIDIARIES
Report of Independent Accountants......................... F-39
Consolidated Balance Sheets as of December 31, 1995 and
1996................................................... F-40
Consolidated Statements of Operations for the years ended
December 31, 1994, 1995 and 1996....................... F-41
Consolidated Statements of Changes in Common Stockholder's
Equity for the years ended December 31, 1994, 1995 and
1996................................................... F-42
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996....................... F-43
Notes to Consolidated Financial Statements................ F-44

Consolidated Balance Sheets as of December 31, 1996 and
June 30, 1997 (unaudited).............................. F-60
Consolidated Statements of Operations for the three months
ended June 30, 1996 and 1997 and the six months ended
June 30, 1996 and 1997 (unaudited)..................... F-61
Consolidated Statement of Changes in Stockholder's Equity
for the period ended June 30, 1997 (unaudited)......... F-62
Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and 1997 (unaudited)............... F-63
Notes to Consolidated Financial Statements (unaudited).... F-64

OUTDOOR ADVERTISING DIVISION OF WHITECO INDUSTRIES, INC.
Independent Auditors' Report.............................. F-70
Balance Sheets as of December 31, 1996 and 1997 and
September 30, 1998 (unaudited)......................... F-71
Statements of Income for the years ended December 31,
1995, 1996, 1997 and the nine months ended September
30, 1997 and 1998 (unaudited).......................... F-72
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-73
Notes to Financial Statements (unaudited)................. F-74

MARTIN MEDIA
Report of Independent Public Accountants.................. F-77
Balance Sheets as of December 31, 1997 and 1996........... F-78
Statements of Operations for each of the years ended
December 31, 1997, 1996 and 1995....................... F-79
Statements of Partners' Capital (Deficit) for each of the
years ended December 31, 1997, 1996 and 1995........... F-80
Statements of Cash Flows for each of the years ended
December 31, 1997, 1996 and 1995....................... F-81
Notes to Financial Statements............................. F-82
Statements of Operations for the six months ended June 30,
1998 and 1997 (unaudited).............................. F-91
Statements of Cash Flows for the six months ended June 30,
1998 and 1997 (unaudited).............................. F-92
Note to Financial Statements.............................. F-93
</TABLE>

F-1
<PAGE> 167

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
MARTIN & MACFARLANE, INC.
Report of Independent Public Accountants.................. F-94
Balance Sheets as of December 31, 1997 and 1996........... F-95
Statements of Income for each of the years ended December
31, 1997 and 1996 and six month period ended December
31, 1995............................................... F-96
Statements of Retained Earnings for each of the years
ended December 31, 1997 and 1996 and six month period
ended December 31, 1995................................ F-97
Statements of Cash Flows for each of the years ended
December 31, 1997 and 1996 and six month period ended
December 31, 1995...................................... F-98
Notes to Financial Statements............................. F-99
Independent Auditors' Report.............................. F-109
Balance Sheet as of June 30, 1995......................... F-110
Statement of Income for the year ended June 30, 1995...... F-111
Statement of Retained Earnings for the year ended June 30,
1995................................................... F-112
Statement of Cash Flows for the year ended June 30,
1995................................................... F-113
Notes to Financial Statements............................. F-114
Statements of Operations for the six months ended June 30,
1998 and 1997 (unaudited).............................. F-121
Statements of Cash Flows for the six months ended June 30,
1998 and 1997 (unaudited).............................. F-122
Note to Financial Statements.............................. F-123

KYSR INC. AND KIBB INC.
Independent Auditors' Report.............................. F-124
Combined Balance Sheets as of December 31, 1995 and 1996
and June 30, 1997 (unaudited).......................... F-125
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-126
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-127
Notes to Combined Financial Statements.................... F-128

WLIT INC.
Independent Auditors' Report.............................. F-133
Balance Sheets as of December 31, 1995 and 1996 and June
30, 1997 (unaudited)................................... F-134
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-135
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-136
Notes to Financial Statements............................. F-137

KBIG-FM, KLDE-FM AND WBIX-FM (FORMERLY WNSR-FM)
Report of Independent Accountants......................... F-142
Combined Statement of Assets Acquired as of April 3,
1998................................................... F-143
Combined Statements of Revenues and Direct Operating
Expenses for the years ended December 31, 1995, 1996
and 1997 and the three months ended March 31, 1997 and
1998 (unaudited)....................................... F-144
Notes to the Combined Financial Statements................ F-145

KODA-FM
Report of Independent Accountants......................... F-147
Statement of Assets Acquired as of May 29, 1998........... F-148
Statements of Revenues and Direct Operating Expenses for
the years ended December 31, 1996 and 1997 and the
three months ended March 31, 1997 and 1998
(unaudited)............................................ F-149
Notes to the Financial Statements......................... F-150
</TABLE>

F-2
<PAGE> 168

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE BROADCAST GROUP, INC.
Independent Auditors' Report.............................. F-152
Balance Sheets as of December 31, 1998 and 1997........... F-153
Statements of Stockholder's Equity (Deficit) for the years
ended December 31, 1998 and 1997....................... F-154
Statements of Income for the years ended December 31, 1998
and 1997............................................... F-155
Statements of Cash Flows for the years ended December 31,
1998 and 1997.......................................... F-156
Notes to Financial Statements as of December 31, 1998 and
1997................................................... F-157
</TABLE>

F-3
<PAGE> 169

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Shareholder of
Chancellor Media Corporation of Los Angeles:

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, stockholder's equity and cash
flows present fairly, in all material respects, the financial position of
Chancellor Media Corporation of Los Angeles and its subsidiaries at December 31,
1997 and 1998, and the results of their operations and their cash flows for each
of the two years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule listed in the accompanying index presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP

Dallas, Texas
February 10, 1999, except as to Note 16,
which is as of March 15, 1999

F-4
<PAGE> 170

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Chancellor Media Corporation of Los Angeles:

We have audited the accompanying consolidated statements of operations,
stockholder's equity and cash flows of Chancellor Media Corporation of Los
Angeles (formerly Evergreen Media Corporation of Los Angeles) and subsidiaries
for the year ended December 31, 1996. In connection with our audit of the
consolidated financial statements, we have also audited the financial statement
schedule for the year ended December 31, 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
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 results of operations and cash
flows of Chancellor Media Corporation of Los Angeles and subsidiaries for the
year ended December 31, 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, present fairly, in all material respects, the information set forth
therein.

KPMG LLP

Dallas, Texas
January 31, 1997

F-5
<PAGE> 171

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 16,584 $ 12,256
Accounts receivable, less allowance for doubtful accounts
of $12,651 in 1997 and $15,580 in 1998................. 239,744 352,646
Other current assets (note 3)............................. 34,811 59,909
---------- ----------
Total current assets.............................. 291,139 424,811
Property and equipment, net (note 4)........................ 159,797 1,388,156
Intangible assets, net (note 5)............................. 4,404,443 5,056,047
Other assets, net (note 3).................................. 113,496 358,893
---------- ----------
$4,968,875 $7,227,907
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses (note 6)............ $ 178,415 $ 236,618
Long-term debt (note 7)..................................... 2,573,000 4,096,000
Deferred tax liabilities (note 10).......................... 361,640 453,134
Other liabilities........................................... 44,405 50,325
---------- ----------
Total liabilities................................. 3,157,460 4,836,077
---------- ----------
Commitments and contingencies (notes 2, 7 and 11)
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. 1,040 shares authorized,
issued and outstanding................................. 1 1
Paid-in capital........................................... 1,637,628 2,670,510
Accumulated deficit....................................... (157,422) (278,681)
---------- ----------
Total stockholder's equity........................ 1,480,207 2,391,830
---------- ----------
$4,968,875 $7,227,907
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 172

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- ----------
<S> <C> <C> <C>
Gross revenues.............................................. $337,405 $663,804 $1,440,357
Less agency commissions................................... 43,555 81,726 166,501
-------- -------- ----------
Net revenues........................................... 293,850 582,078 1,273,856
-------- -------- ----------
Operating expenses:
Operating expenses, excluding depreciation and
amortization........................................... 174,344 316,248 682,061
Depreciation and amortization............................. 93,749 185,982 446,338
Corporate general and administrative...................... 7,797 21,442 36,722
Executive severance charge (note 13)...................... -- -- 63,661
-------- -------- ----------
Operating expenses..................................... 275,890 523,672 1,228,782
-------- -------- ----------
Operating income....................................... 17,960 58,406 45,074
-------- -------- ----------
Other (income) expense:
Interest expense.......................................... 37,527 85,017 217,136
Interest income........................................... (477) (1,922) (15,650)
Gain on disposition of assets (note 2).................... -- (18,380) (123,845)
Gain on disposition of representation contracts........... -- -- (32,198)
Other (income) expense, net............................... -- 383 (3,221)
-------- -------- ----------
Other (income) expense, net............................ 37,050 65,098 42,222
-------- -------- ----------
Income (loss) before income taxes and extraordinary
item................................................. (19,090) (6,692) 2,852
Income tax expense (benefit) (note 10)...................... (2,896) 7,802 33,751
-------- -------- ----------
Loss before extraordinary item......................... (16,194) (14,494) (30,899)
Extraordinary loss, net of income tax benefit (notes 7 and
8)........................................................ -- 4,350 47,089
-------- -------- ----------
Net loss............................................... (16,194) (18,844) (77,988)
Preferred stock dividends (note 8).......................... -- 12,901 17,601
-------- -------- ----------
Net loss attributable to common stock............. $(16,194) $(31,745) $ (95,589)
======== ======== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE> 173

CHANCELLOR CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
--------------- PAID-IN ACCUMULATED STOCKHOLDERS'
AMOUNT SHARES CAPITAL DEFICIT EQUITY
------ ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
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
Net capital contributed by Parent........ -- -- 1,032,882 -- 1,032,882
Dividend to Parent....................... -- -- -- (25,670) (25,670)
Net loss................................. -- -- -- (95,589) (95,589)
----- ---------- --------- ----------
Balances at December 31, 1998............ $1 1,040 $2,670,510 $(278,681) $2,391,830
== ===== ========== ========= ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-8
<PAGE> 174

CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1997 1998
--------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $ (16,194) $ (18,844) $ (77,988)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation....................................... 7,707 14,918 47,027
Amortization of goodwill, intangible assets and
other assets..................................... 86,042 171,064 399,311
Executive severance................................ -- -- 16,000
Provision for doubtful accounts.................... 2,179 5,174 5,684
Deferred income tax expense (benefit).............. (4,353) (3,829) 28,718
Gain on sale of representation contracts........... -- -- (32,198)
Gain on disposition of assets...................... -- (18,380) (123,845)
Extraordinary loss, net of income tax benefit...... -- 4,350 47,089
Changes in certain assets and liabilities, net of
effects of acquisitions:
Accounts receivable.............................. (28,146) (29,977) (89,392)
Other current assets............................. (2,804) 733 (7,964)
Accounts payable and accrued expenses............ 3,991 20,004 58,027
Other assets..................................... (354) (4,283) (6,461)
Other liabilities................................ (587) (1,416) 3,623
--------- ----------- -----------
Net cash provided by operating activities..... 47,481 139,514 267,631
--------- ----------- -----------
Cash flows from investing activities:
Acquisitions, net of cash acquired.................... (458,332) (1,631,505) (1,995,991)
Issuance of note receivable........................... -- -- (150,000)
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) (32,410)
Payments for cost basis investments................... -- -- (30,000)
Payments received on sales of representation
contracts.......................................... -- 9,296 26,500
Capital expenditures.................................. (6,543) (11,666) (43,461)
Other................................................. (12,063) (22,273) (65,807)
--------- ----------- -----------
Net cash used by investing activities......... (461,938) (1,423,009) (2,291,169)
--------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.............. 447,750 2,945,250 3,596,000
Principal payments on long-term debt.................. (290,750) (1,901,250) (2,073,000)
Net proceeds from issuance of common stock, preferred
stock and warrants................................. 264,938 293,158 1,003,784
Dividends to parent................................... (3,820) (10,914) (25,670)
Dividends on preferred stock.......................... -- (3,658) (31,369)
Payments for debt issuance costs...................... (3,941) (25,567) (47,318)
Redemption of exchange debentures..................... -- -- (403,217)
Redemption of preferred stock......................... (90) -- --
--------- ----------- -----------
Net cash provided by financing activities..... 414,087 1,297,019 2,019,210
--------- ----------- -----------
Increase (decrease) in cash and cash equivalents........ (370) 13,524 (4,328)
Cash and cash equivalents at beginning of year.......... 3,430 3,060 16,584
--------- ----------- -----------
Cash and cash equivalents at end of year................ $ 3,060 $ 16,584 $ 12,256
========= =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-9
<PAGE> 175

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"), (together with its
subsidiaries, the "Company") is a diversified media company with operations in
radio broadcasting, outdoor advertising and media representation. As of December
31, 1998, the Chancellor Radio Group portfolio (including 13 stations operated
under time brokerage agreements) consisted of 119 radio stations (89 FM and 30
AM) concentrated in the top 30 markets in the United States and in Puerto Rico
and a national radio network, the AMFM Radio Networks, which broadcasts
advertising and syndicated programming shows to a national audience of
approximately 66 million listeners in the United States (including approximately
39 million listeners from the Company's portfolio of stations). As of December
31, 1998, Chancellor Outdoor Group operated approximately 38,000 outdoor
advertising display faces in 37 states. The media representation business
consists of Katz Media Group, Inc. ("Katz"), a full-service media representation
firm that sells national spot advertising time for clients in the radio and
television industries throughout the United States and for the Company's
portfolio of stations.

(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.

The majority of the Company's outdoor advertising structures are located on
leased land. Land rent is typically paid in advance for periods ranging from one
to twelve months. Prepaid land leases are expensed ratably over the related
rental term.

(d) Property and Equipment

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 as
incurred.

(e) Intangible Assets

Intangible assets consist primarily of broadcast licenses, goodwill 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 one to 40 years. The Company continually evaluates the
propriety of the carrying amount of goodwill and other intangible assets and
related amortization periods to determine whether current events or
circumstances warrant adjustments to the carrying value and/or revised estimates
of amortization periods. These evaluations consist of the projection of
undiscounted cash flows over the remaining amortization periods of the related
intangible assets. The projections are based on historical trend lines of actual
results, adjusted for expected changes in operating results. To the extent such
projections indicate that undiscounted cash flows 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 impairment of goodwill or other intangible assets has occurred
and that no revisions to the amortization periods are warranted.

F-10
<PAGE> 176
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(f) Debt Issuance Costs

Costs related to the issuance of debt are capitalized and amortized over
the terms of the related debt. In 1996, 1997 and 1998, the Company recorded
amortization of debt issuance costs of $1,113, $1,337 and $3,768 respectively,
which amounts are included in depreciation and amortization expense.

(g) Barter Transactions

The Company trades commercial air time and outdoor advertising space 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 or outdoor advertising space is
utilized. 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.

(h) 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 amounts 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.

(i) Revenue Recognition

Radio broadcast revenue is derived from the sale of advertising time to
local and national advertisers and is recognized as advertisements are
broadcast. Outdoor advertising revenue is derived from contracts with
advertisers for the rental of outdoor advertising space and is recognized on an
accrual basis ratably over the terms of the contracts, which generally cover
periods of one month up to five years. Media representation revenue is derived
from commissions on sales of advertising time for radio and television stations
under representation contracts by the Company's media representation firm, Katz,
and is recognized as advertisements are broadcast.

Fees received or paid pursuant to time brokerage agreements are recognized
as gross revenues or amortized to expense, respectively, over the term of the
agreement.

(j) 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, a buyout agreement is typically
entered into for the purchase of such contracts by the successor representation
firm. The purchase price paid by the successor representation firm is based upon
the historical commission income projected over the remaining contract period,
including the evergreen or notice period, plus two months.

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 was $380 and $10,862 for the
years ended December 31, 1997 and 1998, respectively. Gains on the disposition
of representation contracts are recognized on the effective date of the buyout
agreement as a component of other (income) expense.

F-11
<PAGE> 177
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(k) 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 $37,042, $84,610 and $191,674 for interest
in 1996, 1997 and 1998, respectively. Cash payments (refunds) for income taxes
were $733, $11,079 and ($79) for 1996, 1997 and 1998, respectively.

(l) Derivative Financial Instruments

The Company's derivative financial instruments are used to manage
well-defined interest rate risks related to interest on the Company's
outstanding debt and are not used for trading purposes.

As interest rates change under interest rate swap and collar agreements,
the differential to be paid or received is recognized as an adjustment to
interest expense. The Company's exposure to credit loss is minimal as its
interest rate swap agreements are with the participating banks under the
Company's senior credit facility.

(m) 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, 1998.

(n) 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, 1997 and
1998, no receivable from any customer exceeded 5% of stockholders' equity and no
customer accounted for more than 10% of net revenues in 1996, 1997 or 1998.

(o) 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 the Company. Chancellor
Media accounts for its stock-based award plans in accordance with Accounting
Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations, under which compensation expense is
recorded to the extent that the current market price of the underlying stock
exceeds the exercise price. Note 9(b) provides pro forma net income and pro
forma earnings per share disclosures as if the stock-based awards had been
accounted for using the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation.

F-12
<PAGE> 178
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(p) Recently Issued Accounting Principle

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 and
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.

(q) 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

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.

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

F-13
<PAGE> 179
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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

F-14
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CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

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 KISQ (formerly 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) for $13,000 and KDFC-AM in San
Francisco for $5,000 to affiliates of Douglas Broadcasting ("Douglas") for a
total sales price of $18,000 in the form of a note receivable. The note
receivable 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 ("CBC"), CRBC, Evergreen Media Corporation ("Evergreen"), Evergreen
Mezzanine Holdings Corporation ("EMHC") and Evergreen Media Corporation of Los
Angeles ("EMCLA"), (i) CBC 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

F-15
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CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 CBC 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 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 CBC'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 CBC 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, 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 Katz 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 Katz and its subsidiaries of $222,000 which
included $122,000 of borrowings outstanding under the Katz senior credit
facility and $100,000 of 10 1/2% Senior Subordinated Notes due 2007 of Katz
Media Corporation (a subsidiary of Katz) and (iii) estimated acquisition costs
of $7,500.

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 for $26,000 in cash plus various other direct acquisition costs, of
which $1,655 was previously paid by the Company as escrow funds and are
classified as other assets at December 31, 1997. The Company had previously been
programming 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 $63,000 in cash (including $3,000
previously paid by the Company as escrow funds and classified as other assets at
December 31, 1997) to Bonneville for WTJM-FM in New York, KLDE-FM in Houston and
KBIG-FM in Los Angeles and recognized a gain of $123,845. The Company had
previously operated KLDE-FM and KBIG-FM under time brokerage agreements since
October 1, 1997 and WTJM-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 May 29, 1998, as part of the Capstar/SFX Transaction (defined below),
the Company exchanged WAPE-FM and WFYV-FM in Jacksonville (valued at $53,000)
for Capstar Broadcasting Corporation (together with its subsidiaries, "Capstar")
station KODA-FM in Houston (the "Houston Exchange"). As part of the transaction,
the Company also paid cash of $90,250 to the owners of KVET-AM, KVET-FM and
KASE-FM, who simultaneously transferred such stations to Capstar.
F-16
<PAGE> 182
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

On June 15, 1998, the Company's national radio network, The AMFM Radio
Networks, acquired the syndicated programming shows of Global Satellite Network
for $14,000 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, the Company acquired Martin Media L.P., Martin &
MacFarlane, Inc. and certain affiliated companies ("Martin") for a total
purchase price of $615,117 which consisted of $612,848 in cash including various
other direct acquisition costs and the assumption of notes payable of $2,270.
Martin is an outdoor advertising company with over 13,700 billboards and outdoor
displays in 12 states serving 23 markets. As part of the Martin transaction, the
Company acquired an asset purchase agreement with Kunz & Company and paid an
additional $6,000 in cash for a purchase option deposit previously paid by
Martin.

On August 28, 1998, the Company 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 payable due August 2000. The note is payable in
two equal annual installments of $3,500 each on August 28, 1999 and August 28,
2000.

On October 23, 1998, the Company acquired Primedia Broadcast Group, Inc.
and certain of its affiliates, which own and operate eight FM radio stations in
Puerto Rico, for a purchase price of $75,619 including various other direct
acquisition costs.

On November 13, 1998, the Company acquired approximately 1,000 billboards
and outdoor display faces from Kunz & Company for $40,264 in cash, of which
$6,000 was previously paid as a purchase option deposit in connection with the
Martin acquisition on July 31, 1998. The Company had previously been operating
these properties under a management agreement effective July 31, 1998.

On December 1, 1998, the Company acquired the assets and working capital of
the outdoor advertising division of Whiteco Industries, Inc. ("Whiteco"),
including approximately 22,500 billboards and outdoor displays in 34 states, for
$981,698 in cash including various other direct acquisition costs.

Between September and December 1998, the Company acquired approximately 670
additional billboards and outdoor displays in various markets for approximately
$23,582 in cash.

The acquisitions discussed above were accounted for as purchases, and are
subject to certain adjustments. Accordingly, the accompanying consolidated
financial statements include the results of operations of the acquired entities
accounted for as purchases from the dates of acquisition.

F-17
<PAGE> 183
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the net assets acquired follows:

<TABLE>
<CAPTION>
1996 1997 1998
-------- ---------- ----------
<S> <C> <C> <C>
Cash and cash equivalents......................... $ 1,011 $ 9,724 $ 7,826
Accounts receivable, net.......................... 13,618 129,907 31,223
Other current assets.............................. 1,125 27,596 16,098
Property and equipment............................ 11,519 118,371 1,238,365
Assets held for sale.............................. 32,000 131,000 --
Intangible assets................................. 465,824 3,823,746 1,133,062
Other assets...................................... -- 26,742 1,195
Accounts payable and accrued expenses............. (4,536) (100,422) (14,973)
Deferred tax liabilities.......................... (61,218) (279,371) (98,042)
Other liabilities................................. -- (39,681) (12)
-------- ---------- ----------
Total net assets acquired............... 459,343 3,847,612 2,314,742
Less:
Cash and cash equivalents acquired.............. 1,011 9,724 7,826
Prior year escrow payments...................... -- 17,000 4,655
Notes payable................................... -- -- 9,270
Long-term debt assumed.......................... -- 1,171,000 --
Redeemable preferred stock issued............... -- 335,787 --
Preferred stock issued.......................... -- 111,048 --
Common stock issued............................. -- 536,571 --
Stock options assumed........................... -- 34,977 --
Gain on exchange................................ -- -- 123,845
Assets transferred in exchange.................. -- -- 173,155
-------- ---------- ----------
Cash paid for acquisitions........................ $458,332 $1,631,505 $1,995,991
======== ========== ==========
</TABLE>

The pro forma consolidated condensed results of operations data for 1997
and 1998, as if the 1997 and 1998 acquisitions and dispositions discussed above,
the 8 1/8% Notes offering described in note 7(f), the 9% Notes offering
described in note 7(g), the 8% Senior Notes offering described in note 7(b) and
the amendment and restatement of the Senior Credit Facility described in note
7(a) occurred at January 1, 1997, follow:

<TABLE>
<CAPTION>
UNAUDITED
-----------------------
1997 1998
---------- ----------
<S> <C> <C>
Net revenues................................................ $1,227,083 $1,460,968
Net loss.................................................... (200,485) (92,054)
</TABLE>

The pro forma results are not necessarily indicative of the financial
results which would have occurred if the transactions had been in effect for the
entire periods presented.

On January 21, 1999 and February 9, 1999, the Company acquired
approximately 4,500 outdoor display faces from Triumph Outdoor Holdings and
certain affiliated companies for $36,345 in cash including working capital and
various other direct acquisition costs and is subject to certain adjustments.

On January 28, 1999, the Company acquired Wincom Broadcasting Corporation
which owns WQAL-FM in Cleveland. The Company had previously been operating
WQAL-FM under a time brokerage agreement effective October 1, 1998. On February
2, 1999, the Company acquired five additional radio stations in Cleveland
including (i) WDOK-FM and WRMR-AM from Independent Group Limited Partnership,
(ii) WZAK-FM from Zapis Communications and (iii) Zebra Broadcasting Corporation
which

F-18
<PAGE> 184
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

owns WZJM-FM and WJMO-AM. The six Cleveland stations were acquired for an
aggregate purchase price of $282,970 in cash including working capital and is
subject to certain adjustments.

Subsequent to January 1, 1999, the Company acquired approximately 100
additional billboards and outdoor displays in various markets for approximately
$8,178 in cash.

(b) Pending Transactions

On August 14, 1998, the Company entered into an agreement to sell WMVP-AM
in Chicago to ABC, Inc. for $21,000 in cash. 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 disposition of WMVP-AM will be consummated in the second
quarter of 1999.

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. 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.

On February 20, 1998, Chancellor Media, parent company of 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,
Chancellor Media completed the Houston Exchange (defined above) and began
programming the remaining ten Capstar/SFX Stations under time brokerage
agreements. The purchase price for the remaining ten Capstar/SFX Stations will
be approximately $494,250. Chancellor Media is currently assessing whether the
terms of the Capstar/SFX Transaction will be modified upon the consummation of
the Capstar Merger.

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 (the "Capstar Merger"). Pursuant to this agreement, as
amended, Chancellor Media will acquire Capstar in a merger of Capstar into a
wholly-owned subsidiary of Chancellor Media. Each share of Chancellor Media
common stock will represent one share in the combined entity. Each share of
Capstar common stock will entitle the holder thereof to 0.4955 of a share of
common stock of Chancellor Media. Upon consummation of its pending transactions,
Capstar will own and operate or program approximately 340 radio stations serving
81 mid-sized markets nationwide. On February 1, 1999, the Company began
operating WKNR-AM in Cleveland, a station owned by Capstar, under a time
brokerage agreement. The Capstar Merger is subject to stockholder approval of
both Chancellor Media and Capstar. Although there can be no assurance,
Chancellor Media expects that the Capstar Merger will be consummated in the
second quarter or early third quarter of 1999.

Consummation of each of the transactions discussed above is subject to
various conditions, including, in most cases, approval from the FCC and the
expiration or early termination of any waiting period required under the HSR
Act. 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.

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
F-19
<PAGE> 185
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 applicable
interest (the "WFLN Settlement"), and Secret received the balance of $550, plus
applicable interest.

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 $1,730.

(3) OTHER ASSETS

Other current assets consist of the following at December 31, 1997 and
1998:

<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Prepaid expenses and other.................................. $18,348 $42,451
Representation contracts receivable......................... 16,463 17,458
------- -------
$34,811 $59,909
======= =======
</TABLE>

Other assets consist of the following at December 31, 1997 and 1998:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Note receivable -- Capstar(a)............................... $ -- $150,000
Note receivable -- Douglas (note 2)......................... 18,000 18,000
Deferred debt issuance costs, less accumulated amortization
of $943 in 1997 and $4,711 in 1998........................ 24,624 66,959
Deferred costs on purchases of representation contracts,
less accumulated amortization of $380 in 1997 and $11,242
in 1998................................................... 35,411 56,719
Investments at cost(b)...................................... -- 30,000
Representation contracts receivable......................... 12,187 14,181
Escrow deposits (note 2).................................... 4,655 --
Other....................................................... 18,619 23,034
-------- --------
$113,496 $358,893
======== ========
</TABLE>

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

(a) On May 29, 1998, the Company provided a loan (the "Capstar Loan") to Capstar
in the principal amount of $150,000 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.

(b) On October 9, 1998, the Company acquired a non-voting interest in Z-Spanish
Media Corporation for $25,000 in cash, which is accounted for under the cost
method. Z-Spanish Media is the owner and

F-20
<PAGE> 186
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

operator of 22 Hispanic format radio stations in California, Texas, Arizona
and Illinois and provides Hispanic format network programming to an
additional 28 affiliated radio stations. Also, on December 18, 1998, the
Company acquired an interest in USA Digital Radio for $5,000 in cash, which
is accounted for under the cost method. USA Digital Radio is a leading
developer of In-Band On-Channel(TM) AM and FM digital audio broadcasting
technology, which is designed to allow radio broadcasters to transmit both
analog and digital signals simultaneously using existing frequency spectrum
allocations.

(4) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1997 and
1998:

<TABLE>
<CAPTION>
ESTIMATED USEFUL LIFE 1997 1998
--------------------- -------- ----------
<S> <C> <C> <C>
Advertising structures....................... 15 years $ -- $1,178,751
Transmitter and studio equipment............. 3-20 years 90,493 96,515
Buildings and improvements................... 3-35 years 36,914 58,491
Land......................................... -- 23,122 46,062
Furniture and fixtures....................... 5-7 years 15,554 24,765
Construction in progress..................... -- -- 13,114
Vehicles..................................... 5-7 years 2,870 7,625
Other equipment.............................. Various 23,576 35,914
-------- ----------
192,529 1,461,237
Less accumulated depreciation................ 32,732 73,081
-------- ----------
$159,797 $1,388,156
======== ==========
</TABLE>

(5) INTANGIBLE ASSETS

Intangible assets consist of the following at December 31, 1997 and 1998:

<TABLE>
<CAPTION>
ESTIMATED USEFUL LIFE 1997 1998
--------------------- ---------- ----------
<S> <C> <C> <C>
Broadcast licenses......................... 15-40 years $3,593,384 $4,110,469
Goodwill................................... 15-40 years 631,739 1,086,083
Other...................................... 1-40 years 491,272 532,011
---------- ----------
4,716,395 5,728,563
Less accumulated amortization.............. 311,952 672,516
---------- ----------
$4,404,443 $5,056,047
========== ==========
</TABLE>

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), (v) premium audience growth pattern (the value of expected
above-average population growth in a given market) and (vi) the fair market
value of media representation contracts acquired in connection with the
acquisition of Katz.

F-21
<PAGE> 187
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(6) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following at December
31, 1997 and 1998:

<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Accounts payable............................................ $ 78,990 $113,362
Accrued interest............................................ 18,130 43,221
Accrued payroll............................................. 34,274 36,858
Representation contracts payable............................ 21,680 24,859
Notes payable............................................... -- 4,198
Accrued dividends........................................... 16,120 2,353
Other accrued expenses...................................... 9,221 11,767
-------- --------
$178,415 $236,618
======== ========
</TABLE>

(7) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1997 and 1998:

<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Senior Credit Facility(a)................................... $1,573,000 $1,596,000
8% Senior Notes(b).......................................... -- 750,000
9 3/8% Notes(c)............................................. 200,000 200,000
8 3/4% Notes(d)............................................. 200,000 200,000
10 1/2% Notes(e)............................................ 100,000 100,000
8 1/8% Notes(f)............................................. 500,000 500,000
9% Notes(g)................................................. -- 750,000
---------- ----------
Total long-term debt.............................. $2,573,000 $4,096,000
========== ==========
</TABLE>

(a) Senior Credit Facility

The Company's senior credit facility, as amended on November 9, 1998 (the
"Senior Credit Facility") provides for aggregate commitments under a revolving
loan facility and a term loan facility of $1,600,000 and $900,000, respectively.
In connection with the amendment and restatement of the Senior Credit Facility
on April 25, 1997, 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 in 1997.

Borrowings under the Senior Credit Facility bear interest at a rate which,
at the option of the Company, is based 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 facility at December 31, 1998 was 7.31%, based
on Eurodollar rates, and the interest rate on the $680,000 and $16,000 of
advances outstanding under the revolving loan facility were 7.31% on a blended
basis and 8.5%, respectively, at December 31, 1998, 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, 1998,
interest rate swap agreements covering a notional balance of $1,810,000 were
outstanding. These outstanding swap agreements mature from 1999 through 2002 and
require the Company to pay fixed rates of 4.70% to 6.63%

F-22
<PAGE> 188
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

while the counterparty pays a floating rate based on the three-month London
Interbank Borrowing Offered Rate ("LIBOR"). During the years ended December 31,
1996, 1997 and 1998, the Company recognized charges under its interest rate swap
agreements of $111, $2,913 and $5,134 respectively. The Company's exposure to
credit loss is minimal as its interest rate swap agreements are with the
participating banks under the senior credit facility.

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 domestic subsidiaries have guaranteed those obligations.

(b) 8% Senior Notes

On November 17, 1998, the Company issued $750,000 aggregate principal
amount of 8% Senior Notes due 2008 (the "8% Senior Notes") for estimated net
proceeds of $730,000 in a private placement. Interest on the 8% Senior Notes is
payable semiannually, commencing on May 1, 1999. The 8% Senior Notes mature on
November 1, 2008 and are redeemable, in whole or in part, at the option of the
Company at a redemption price equal to 100% plus the Applicable Premium (as
defined in the indenture governing the 8% Senior Notes) plus accrued and unpaid
interest. In addition, on or prior to November 1, 2001, the Company may redeem
up to 25% of the original aggregate principal amount of the 8% Senior Notes at a
redemption price equal to 108% plus accrued and unpaid interest with the net
proceeds of one or more public equity offerings of Chancellor Media, CMHC or the
Company. Upon the occurrence of a change in control (as defined in the indenture
governing the 8% Senior Notes), the holders of the 8% Senior Notes have the
right to require the Company to repurchase all or any part of the 8% Senior
Notes at a purchase price equal to 101% plus accrued and unpaid interest.

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
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

F-23
<PAGE> 189
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 in a private placement and subsequently
registered the 8 1/8% Notes on May 8, 1998. 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 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) 9% Notes

On September 30, 1998, the Company issued $750,000 aggregate principal
amount of 9% Senior Subordinated Notes due 2008 (the "9% Notes") for estimated
net proceeds of $730,000 in a private placement and subsequently registered the
9% Notes on December 10, 1998. Interest on the 9% Notes is payable semiannually,
commencing on April 1, 1999. The 9% Notes mature on October 1, 2008 and are
redeemable, in whole or in part, at the option of the Company on and after
October 1, 2003, at redemption prices ranging from 106.5% at October 1, 2003 and
declining to 100% on October 1, 2008, plus in each case accrued and unpaid
interest. In addition, on or prior to October 1, 2000, the Company may redeem up
to 25%
F-24
<PAGE> 190
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of the original aggregate principal amount of the 9% Notes at a redemption price
of 109% plus accrued and unpaid interest with the net proceeds of one or more
public equity offerings of Chancellor Media, CMHC or the Company. Upon the
occurrence of a change in control (as defined in the indenture governing the 9%
Notes), the 9% Notes may be redeemed, on or prior to October 1, 2000, 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 9% Notes) and accrued and
unpaid interest. Upon the occurrence of a change in control after October 1,
2000, the holders of the 9% Notes have the right to require the Company to
repurchase all or any part of the 9% Notes at a purchase price equal to 101%
plus accrued and unpaid interest.

(h) Summarized Financial Information of Subsidiary Guarantors

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 "Subordinated Notes") are unsecured obligations
of the Company, subordinated in right of payment to all existing and any future
senior indebtedness of the Company. The 8% Senior Notes are unsecured
obligations of the Company, ranking equal in right of payment to all of the
Company's existing and future indebtedness that is not expressly subordinate in
right of payment, including indebtedness under the Senior Credit Facility. The
Subordinated Notes and 8% Senior 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, 1998 and for the year ended December 31, 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 the Company.

<TABLE>
<CAPTION>
1998
----------
<S> <C>
Current assets........................................... $ 376,217
Noncurrent assets........................................ 5,530,190
Current liabilities...................................... 133,872
Noncurrent liabilities................................... 5,744,413

Net revenues............................................. 1,118,527
Operating income......................................... 111,152
Net income............................................... 62,971
</TABLE>

(i) Other

The Senior Credit Facility and the indentures governing the 8% Senior Notes
and the Subordinated 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, 1998
follows:

<TABLE>
<S> <C>
1999........................................................ $ --
2000........................................................ 67,500
2001........................................................ 157,500
2002........................................................ 180,000
2003........................................................ 316,000
Thereafter.................................................. 3,375,000
</TABLE>

F-25
<PAGE> 191
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 was $119.445 plus accrued and unpaid
dividends of $1,829 at December 31, 1997. The dividend rate on the 12 1/4%
Preferred Stock was 12.25% per annum of the liquidation preference and was
payable quarterly.

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 $170 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 $143,836 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 July 23, 1998 through August 19, 1998 of $1,138 and (iv)
estimated transaction costs of $570. In connection with the 12 1/4% Debentures
Tender Offer, the Company 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.

(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 was $100.00 plus
accrued and unpaid dividends of $11,756 at December 31, 1997. The dividend rate
on the 12% Preferred Stock was 12% per annum of the liquidation preference and
was payable semi-annually.

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 $270 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 $262,495 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 13,
1998 through June 10, 1998 of $1,976 and (iv) estimated transaction costs of
$958. In connection with the 12% Debentures Tender Offer, the Company recorded
an extraordinary charge of $31,865 (net of a tax benefit of $17,158) consisting
of the

F-26
<PAGE> 192
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

(9) STOCKHOLDERS' EQUITY

(a) Chancellor Media Common Stock Issuance

On March 13, 1998, Chancellor Media completed an offering of 21,850,000
shares of its Common Stock for net proceeds of approximately $994,642. The net
proceeds were contributed to the Company by Chancellor Media and 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 certain acquisitions
and exchanges.

(b) Stock Options

Chancellor Media has established the 1992, 1993, 1995 and 1998 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 15,105,000 shares of Chancellor Media 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, 1995 and 1998 Employee
Option Plans are required to have exercise prices equal to or in excess of the
fair market value of Chancellor Media's Common Stock on the date of issuance
unless approved by the Compensation Committee of the Company's Board of
Directors.

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 900,000 shares of Chancellor Media Common
Stock. Options issued under the Director Plan have exercise prices equal to the
fair market value of Chancellor Media's 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's 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's 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 CBC.

The total options available for grant were 1,115,894 and 2,171,939 at
December 31, 1997 and 1998, respectively.

F-27
<PAGE> 193
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Following is a summary of activity in the employee option plans and
agreements discussed above for the years ended December 31, 1996, 1997 and 1998:

<TABLE>
<CAPTION>
1996 1997 1998
-------------------- -------------------- ---------------------
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..................... 2,579,748 $ 3.46 3,559,984 $ 5.97 8,826,696 $12.98
Granted.................... 1,174,500 11.56 2,773,590 22.89 7,392,000 39.28
Assumed in acquisitions.... -- -- 3,526,112 9.29 -- --
Exercised.................. (166,806) 4.27 (994,526) 5.43 (1,075,860) 9.55
Canceled................... (27,458) 4.96 (38,464) 19.46 (316,847) 20.82
--------- --------- ----------
Outstanding at end of
year..................... 3,559,984 $ 5.97 8,826,696 $12.98 14,825,989 $26.03
========= ========= ==========
Options exercisable at year
end...................... 1,935,484 5,687,960 10,211,090
========= ========= ==========
</TABLE>

The following table summarizes information about stock options outstanding
at December 31, 1998:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------------- --------------------------------
NUMBER NUMBER
OUTSTANDING AT WEIGHTED AVERAGE WEIGHTED EXERCISABLE AT WEIGHTED
RANGE OF DECEMBER 31, REMAINING AVERAGE DECEMBER 31, AVERAGE
EXERCISE PRICES 1998 CONTRACTUAL LIFE EXERCISE PRICE 1998 EXERCISE PRICE
--------------- -------------- ---------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
$0.01................ 645,000 3.6 years $ 0.01 645,000 $ 0.01
$4.13 to 6.17........ 1,850,688 5.5 years 4.60 1,850,688 4.60
$10.67 to 15.81...... 2,121,349 7.2 years 11.50 1,537,488 11.49
$17.05 to 24.13...... 3,459,002 8.6 years 22.26 2,639,914 22.16
$26.38 to 32.13...... 1,095,000 9.5 years 30.26 338,000 29.31
$37.31 to 48.38...... 5,654,950 9.4 years 42.96 3,200,000 41.96
---------- ----------
14,825,989 $26.03 10,211,090 $22.42
========== ==========
</TABLE>

The weighted-average fair value of options granted during 1996, 1997 and
1998 which have exercise prices equal to or in excess of the market value of the
Company's common stock on the date of issuance was $5.25, $10.25 and $17.50,
respectively. The weighted-average fair value of options granted during 1998
which have exercise prices less than the market value of the Company's common
stock on the date of issuance was $28.19.

Chancellor Media applies APB Opinion No. 25 in accounting for its Employee
Option Plans and, accordingly, no compensation cost is recognized in the
consolidated financial statements for stock options which have exercise prices
equal to or in excess of the market value of Chancellor Media's Common Stock on
the date of issuance. A charge for stock compensation expense of $16,000 is
included in executive severance charge for the year ended December 31, 1998 (see
note 13). Had Chancellor Media determined compensation cost based on the fair
value at the grant date for 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>
1996 1997 1998
-------- -------- ---------
<S> <C> <C> <C>
Net loss:
As reported....................................... $(16,194) $(31,745) $ (95,589)
Pro forma......................................... (19,249) (44,639) (160,687)
</TABLE>

F-28
<PAGE> 194
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Pro forma net loss reflects only options granted subsequent to December 31,
1994. 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.

The fair value for the stock options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1996, 1997 and 1998: expected stock volatility ranging from
39.9% to 44.5%; risk-free interest rates ranging from 4.8% to 6.0%; dividend
yields of 0%; and expected lives ranging from three to seven years.

(10) INCOME TAXES

Income tax expense (benefit) from continuing operations consists of the
following:

<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Current tax expense:
Federal............................................... $ 485 $ 6,840 $ --
State................................................. 972 4,791 5,033
------- ------- -------
Total current tax expense............................... 1,457 11,631 5,033
Deferred tax expense (benefit).......................... (4,353) (3,829) 28,718
------- ------- -------
Total income tax expense (benefit)...................... $(2,896) $ 7,802 $33,751
======= ======= =======
</TABLE>

During 1997 and 1998, the Company incurred extraordinary losses in
connection with various refinancings. The tax benefit related to the
extraordinary losses were approximately $2,343 and $25,357 for the years ended
December 31, 1997 and 1998, respectively. This tax benefit, which reduced
current taxes payable, is separately allocated to the extraordinary item. See
Note 7(a) and Note 8. During 1998, the Company reduced current taxes payable by
$13,098 due to a tax benefit received from the exercise of certain stock
options.

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, 1996, 1997 and 1998 as a
result of the following:

<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)............... $(6,682) $(2,342) $ 998
Amortization of goodwill................................ 2,477 5,744 11,728
State income taxes, net of federal benefit.............. 632 2,533 4,919
Non-deductible executive compensation................... -- -- 13,221
Non-deductible meals and entertainment.................. 729 1,028 2,312
Other, net.............................................. (52) 839 573
------- ------- -------
$(2,896) $ 7,802 $33,751
======= ======= =======
</TABLE>

F-29
<PAGE> 195
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1997 and
1998 are presented below:

<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss and credit carryforwards............... $ 38,552 $ 76,755
Accrued executive compensation and stock options.......... 1,720 10,452
Differences in book and tax bases related to media
representation contracts............................... 39,908 27,233
Differences in book and tax bases of lease liabilities.... 4,727 4,727
Other..................................................... 3,147 1,754
--------- ---------
Total deferred tax assets......................... 88,054 120,921
--------- ---------
Deferred tax liabilities:
Property and equipment and intangibles, primarily related
to acquisitions........................................ (445,992) (567,221)
Other..................................................... (3,702) (6,834)
--------- ---------
Total deferred tax liabilities.................... (449,694) (574,055)
--------- ---------
Net deferred tax liability........................ $(361,640) $(453,134)
========= =========
</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, 1998 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, 1998, the Company has net operating loss carryforwards
available to offset future taxable income of approximately $176,600, expiring
from 2001 to 2018 and has alternative minimum tax credit carryforwards of
approximately $4,700 that do not expire. Approximately $102,800 and $2,800 of
the net operating loss and tax credit carryforwards, respectively, at December
31, 1998 are subject to annual use limitations under tax rules governing changes
of ownership.

(11) COMMITMENTS AND CONTINGENCIES

The Company has long-term operating leases for office space, certain
broadcasting facilities and equipment and the majority of the land occupied by
its outdoor advertising structures. The leases expire at various dates,
generally during the next ten years, and have varying options to renew and
cancel. Rental expense for operating leases (excluding those with lease terms of
one month or less that were not renewed) was approximately $5,462, $10,913 and
$39,427 for 1996, 1997 and 1998, respectively. Future minimum lease

F-30
<PAGE> 196
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

payments under noncancelable operating leases (with initial or remaining lease
terms in excess of one year) as of December 31, 1998 are as follows:

<TABLE>
<S> <C>
Year ending December 31:
1999...................................................... $ 67,218
2000...................................................... 66,957
2001...................................................... 64,904
2002...................................................... 63,501
2003...................................................... 62,992
Thereafter................................................ 1,501,398
</TABLE>

In July 1998, a stockholder derivative action was commenced in the Delaware
Court of Chancery by a stockholder purporting to act on behalf of the Company.
The defendants in the case include Hicks, Muse, Tate & Furst Incorporated
("Hicks Muse"), LIN Television and some of Chancellor Media's directors. The
plaintiff alleges that, among other things, (1) Hicks Muse allegedly caused the
Company to pay too high of a price for LIN because Hicks Muse had allegedly paid
too high of a price when it acquired LIN; 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 the Company, and the directors of the
Company 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. Plaintiff, defendants and the Company had reached a
tentative settlement of this lawsuit. However, as a result of the decision by
the Boards of Directors of the Company and LIN to terminate the LIN Merger, the
settlement will not proceed as planned.

On July 10, 1998, the Company entered into an agreement to acquire a 50%
economic interest in Grupo Radio Centro, S.A. de C.V., an owner and operator of
radio stations in Mexico, for approximately $120,500 in cash and $116,500 in
Chancellor Media common stock. On October 15, 1998, the Company announced that
it had provided notice to Grupo Radio that it was terminating the acquisition
agreement in accordance with its terms. The Company has received notice from
Grupo Radio requesting arbitration under the terms of the acquisition agreement
of allegations that Chancellor Media wrongfully terminated that agreement, and
the parties have commenced the arbitration process. The Company believes that it
had a proper basis for terminating the agreement in accordance with its terms
and intends to contest these allegations vigorously.

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

F-31
<PAGE> 197
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company offers substantially all of its employees voluntary
participation in a 401(k) Plan. The Company may make discretionary contributions
to the plans; however, no such contributions were made by the Company during
1996, 1997 or 1998.

(12) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

(a) Interest Rate Risk Management

The Company enters into interest rate swaps and collars to diversify its
risk associated with interest rate fluctuations. Under interest rate swaps, the
Company agrees with other parties to exchange, at specified intervals, the
difference between fixed rate and floating rate interest amounts calculated by
reference to an agreed notional principal amount.

Under interest rate collars, the Company agrees with other parties to
exchange, at specified intervals and interest rate levels, the difference
between fixed rate and floating rate interest amounts calculated by reference to
an agreed notional principal amount. If the index rate is between the cap rate
and floor rate, the Company does not receive or make any payments.

(b) 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, 1997 and 1998. 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>
1997 1998
------------------------ ------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Notes receivable.......................... $ 18,000 $ 18,000 $ 168,000 $ 182,600
Long-term debt -- Senior Credit
Facility................................ 1,573,000 1,573,000 1,596,000 1,596,000
Long-term debt -- 8% Senior Notes......... -- -- 750,000 761,250
Long-term debt -- 9 3/8% Notes............ 200,000 209,000 200,000 208,000
Long-term debt -- 8 3/4% Notes............ 200,000 205,000 200,000 204,000
Long-term debt -- 10 1/2% Notes........... 100,000 110,000 100,000 110,000
Long-term debt -- 8 1/8% Notes............ 500,000 500,000 500,000 495,000
Long-term debt -- 9% Notes................ -- -- 750,000 787,500
Interest rate swaps and collars
liability............................... -- 3,919 -- 12,799
Redeemable preferred stock -- 12 1/4%
Preferred Stock......................... 119,445 133,000 -- --
Redeemable preferred stock -- 12%
Preferred Stock......................... 211,763 239,821 -- --
</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.

Notes receivable: The fair value of notes receivable is estimated by
discounting the expected future cash flows at interest rates commensurate
with the creditworthiness of the third party.

Long-term debt: The fair values of the Company's 8% Senior Notes,
9 3/8% Notes, 8 3/4% Notes, 10 1/2% Notes, 8 1/8% Notes, and 9% Notes are
based on quoted market prices at December 31, 1997 and 1998. As amounts
outstanding under the Company's Senior Credit Facility agreements bear
interest at current market rates, their carrying amounts approximate fair
market value.
F-32
<PAGE> 198
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Interest rate swaps and collars: The fair value of the interest rate
swap and collar 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 either party.

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.

(13) RELATED PARTY AND OTHER TRANSACTIONS

As of December 31, 1998, Thomas O. Hicks and affiliates of Hicks Muse
beneficially owned an aggregate 16,944,371 shares of Common Stock of Chancellor
Media. Mr. Hicks is Chairman of the Board and a director of the Company.

The Company is subject to a financial monitoring and oversight agreement,
dated April 1, 1996, as amended on September 4, 1997, with Hicks, Muse & Co.
Partners, L.P. ("Hicks Muse Partners"), an affiliate of Hicks Muse. In
connection with the financial monitoring and oversight agreement, 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 the 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, at the effective time of the
Chancellor Merger. The Company paid Hicks Muse Partners $333 and $1,019 in 1997
and 1998, respectively, in connection with the financial monitoring and
oversight agreement which is included in corporate general and administrative
expense.

In connection with the consummation of the Chancellor Merger, a financial
advisory agreement among CBC, 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 in 1997 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 $1,500 for financial advisory services in
connection with the acquisition of Katz in 1997 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 Corporation. BT Alex.
Brown Incorporated, an affiliate of Bankers Trust Company and Bankers Trust
Corporation, was engaged by the Company in January 1999 as a financial advisor
to explore strategic alternatives in an effort to maximize shareholder value. 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
services to the Company in the future. Fees paid to BT Alex. Brown in 1998 were
approximately $10,275.

In connection with the Capstar/SFX Transaction, the Company (i) began
programming ten radio stations owned by Capstar under time brokerage agreements
effective May 29, 1998 and paid fees of $28,831 to Capstar related to these
agreements during 1998 and (ii) provided a loan to Capstar in the principal
amount of $150,000 (see note 3). Interest income on this note receivable was
$10,600 during 1998. The Company also began operating Capstar's WKNR-AM in
Cleveland under a time brokerage agreement effective February 1, 1999.

The Company recorded revenue of $365 for the period October 28, 1997 to
December 31, 1997 and $6,836 for the year ended December 31, 1998 for providing
media representation services to Capstar. The
F-33
<PAGE> 199
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company paid or accrued $11,157 in 1998 in connection with Capstar's
participation in the Company's AMFM Radio Networks and other transactions. The
Company had a net receivable balance from Capstar of $748 at December 31, 1997
and a net payable to Capstar of $162 at December 31, 1998.

In October and November 1998, LIN purchased two airplanes and subsequently
entered into two lease agreements with respect to those airplanes with the
Company. The leases expire in October 1999 and 2003, respectively, and in 1998,
the Company paid approximately $415 to LIN under the leases.

On April 14, 1998, Scott K. Ginsburg resigned as President and Chief
Executive Officer of the Company, and on April 20, 1998, Mr. Ginsburg resigned
as director of the Company and from all appointments and positions with its
respective subsidiaries. On April 20, 1998, Mr. Ginsburg and the Company entered
into a separation and consulting agreement. Following Mr. Ginsburg's
resignation, the Company entered into new employment agreements with James E. de
Castro, the Company's Chief Operating Officer, and Matthew E. Devine, the
Company's Chief Financial Officer, each effective April 17, 1998. On April 29,
1998, Jeffrey A. Marcus was named President and Chief Executive Officer, and the
Company entered into an employment agreement with Mr. Marcus effective June 1,
1998. In connection with Mr. Ginsburg's resignation, the Company incurred a
one-time executive severance charge of $59,475 which consists of (i) a lump sum
severance payment of $20,000 to Mr. Ginsburg; (ii) compensation expense of
$16,000 related to the grant of 800,000 stock options to Mr. Ginsburg at an
exercise price of $23.25 per share, (iii) consulting fees of $12,500 to be paid
to Mr. Ginsburg over five years, (iv) one-time cash payments of $5,000 and
$2,000 to Mr. de Castro and Mr. Devine, respectively, (v) execution bonuses of
$1,000 each paid to Mr. de Castro, Mr. Devine and Mr. Marcus and (vi) other
costs incurred in connection with Mr. Ginsburg's resignation of $975.
Subsequently, Matthew E. Devine resigned as Senior Vice President and Chief
Financial Officer of the Company and from all appointments and positions with
its respective subsidiaries and entered into a termination agreement with the
Company. In connection with Mr. Devine's resignation, the Company incurred a
one-time executive severance charge of $4,186 which consists of (i) a one-time
cash payment of $2,000, (ii) bonus payments totaling $2,033 and (iii) other
costs of $153.

(14) SEGMENT DATA

The Company adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, effective January 1, 1998. This statement
supersedes SFAS No. 14, Financial Reporting for Segments of a Business
Enterprise, replacing the "industry segment" approach with the "management"
approach. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. SFAS No. 131 also requires
disclosures about products and services, geographic areas, and major customers.
The adoption of SFAS No. 131 did not affect the results of operations or
financial position of the Company, but did affect the disclosure of segment
information. Certain information disclosed in the prior year has been restated
to conform to the provisions of SFAS No. 131. Intersegment revenue is included
in the segment totals for internal reporting. This intercompany revenue is
eliminated in consolidation. The accounting policies of the segments are the
same as those described in note 1.

The Company conducts business in three distinct operating segments
consisting of radio broadcasting, outdoor advertising and media representation.
Information about each of the operating segments follows:

(a) Chancellor Radio Group -- radio broadcasting

The Chancellor Radio Group portfolio consisted of 119 radio stations (89 FM
and 30 AM) concentrated in the top 30 markets in the United States and in Puerto
Rico at December 31, 1998, including 13 stations operated under time brokerage
agreements. As of December 31, 1998, the Chancellor Radio Group owned
superduopolies (clusters of four or five FM stations) in 11 of the nation's 15
largest radio markets - New York, Los Angeles, Chicago, San Francisco,
Philadelphia, Detroit, Dallas/Ft. Worth, Washington, D.C.,
F-34
<PAGE> 200
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Houston, Puerto Rico and Phoenix and in four other large markets -
Minneapolis-St. Paul, Pittsburgh, Denver and Orlando. The Chancellor Radio Group
also operates a national radio network, the AMFM Radio Networks, which
broadcasts advertising and syndicated programming shows to a national audience
of approximately 66 million listeners in the United States (including
approximately 39 million listeners from the Company's portfolio of stations).

(b) Chancellor Outdoor Group -- outdoor advertising

The Chancellor Outdoor Group owned and operated approximately 38,000
outdoor advertising billboards and display faces in 37 states at December 31,
1998. The Company entered into the outdoor advertising business with the
acquisition of Martin on July 31, 1998 and further expanded its outdoor
advertising segment with the acquisition of Whiteco on December 1, 1998. The
Chancellor Outdoor Group segment data includes the results of operations of each
of the acquired entities from the date of acquisition.

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 that sells national spot advertising time for its clients in
the radio, television and cable industries throughout the United States. 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. The media representation segment data includes
the results of operations of Katz from the date of acquisition.

Separate financial data for each of the Company's three business segments
is provided below. The Company evaluates the performance of its segments based
on the following:

<TABLE>
<CAPTION>
1996 1997 1998
-------- ---------- ----------
<S> <C> <C> <C>
Chancellor Radio Group -- radio broadcasting:
Net revenues.................................... $293,850 $ 548,856 $1,057,044
Operating expenses.............................. 174,344 297,085 551,037
Depreciation and amortization................... 83,765 168,597 376,833
Operating income................................ 32,493 75,450 122,188
Capital expenditures............................ 6,015 10,544 18,736
Identifiable assets............................. 875,768 4,265,038 4,649,127
Chancellor Outdoor Group -- outdoor advertising:
Net revenues.................................... -- -- 47,605
Operating expenses.............................. -- -- 23,505
Depreciation and amortization................... -- -- 25,986
Operating loss.................................. -- -- (3,871)
Capital expenditures............................ -- -- 5,344
Identifiable assets............................. -- -- 1,743,254
Katz -- media representation:
Net revenues.................................... -- 35,901 192,794
Operating expenses.............................. -- 21,842 131,106
Depreciation and amortization................... -- 4,210 29,630
Operating income................................ -- 8,399 25,299
Capital expenditures............................ -- 436 15,190
Identifiable assets............................. -- 495,951 528,238
</TABLE>

F-35
<PAGE> 201
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The segment financial data includes intersegment revenues and expenses
which must be excluded to reconcile to the Company's consolidated financial
statements. In addition, certain depreciation and amortization expenses,
corporate general and administrative expenses, executive severance expenses,
corporate capital expenditures and general corporate assets were not allocated
to business segments and must be included to reconcile to the Company's
consolidated financial statements. Reconciling financial data is provided below:

<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- -------
<S> <C> <C> <C>
Intersegment net revenues............................. $ -- $ 2,679 $23,587
Intersegment operating expenses....................... -- 2,679 23,587
Unallocated depreciation and amortization............. 9,984 13,175 13,889
Unallocated corporate general and administrative
expenses............................................ 4,549 12,268 20,992
Unallocated executive severance....................... -- -- 63,661
Unallocated corporate capital expenditures............ 528 686 4,191
Unallocated general corporate assets.................. 145,191 207,886 307,288
</TABLE>

(15) QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
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 (6,000) (25,254)
Net income (loss) attributable to common
stockholders.................................. (6,011) 4,821 (11,049) (31,671)
1998:
Net revenues..................................... $233,557 $321,710 $343,829 $374,760
Operating income (loss).......................... (13,201) (18,072) 38,010 38,337
Income (loss) before extraordinary item.......... (68,571) 40,401 6,262 (26,592)
Net income (loss) attributable to common
stockholders.................................. (74,988) 2,118 (15,379) (33,010)
</TABLE>

(16) SUBSEQUENT EVENTS

LIN Merger Termination. On July 7, 1998, the Company entered into a merger
agreement with the indirect parent of LIN Television Corporation ("LIN") to
acquire LIN in a stock for stock transaction (the "LIN Merger"). On March 15,
1999, the Boards of Directors of the Company and LIN agreed to terminate the LIN
merger agreement.

On April 8, 1998, the Company entered into an agreement to acquire Petry
Media Corporation, an independent television representation firm, for
approximately $127,000 in cash and on September 3, 1998, the Company entered
into an agreement to acquire Pegasus Broadcasting of San Juan, L.L.C., a
television broadcasting company, for approximately $69,600 in cash. In
connection with the termination of the LIN merger, on March 15, 1999, the
Company's Board of Directors approved the negotiation of the assignment of the
Company's agreements to acquire Petry and Pegasus to LIN Television Corporation.
The assignment of these agreements is subject to negotiation of definitive
documentation, third-party approval and various other conditions, including
governmental approvals and, accordingly, there can be no assurance that such
agreements will be assigned by the Company at all.

F-36
<PAGE> 202
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Executive Management Realignment. On March 15, 1999, the Company announced
the following executive management changes:

- the appointments of Thomas O. Hicks as Chief Executive Officer of the
Company, of James E. de Castro as President and Chief Executive Officer
of a newly created Chancellor Radio and Outdoor Group and of R. Steven
Hicks, currently President and Chief Executive Officer of Capstar, as
President and Chief Executive Officer of the newly created Chancellor
Media Services Group;

- the creation of an Office of the Chairman of the Company's Board of
Directors, in which Mr. de Castro and Mr. Steven Hicks will join the
Company's Chairman, Mr. Thomas Hicks, as Vice Chairmen;

- the resignation of Jeffrey A. Marcus as the Company's President and Chief
Executive Officer effective March 15, 1999;

- the appointments of Kenneth J. O'Keefe as Chief Operating Officer of
Chancellor Radio Group and James A. McLaughlin as President and Chief
Operating Officer of Chancellor Outdoor Group;

- the appointment of D. Geoffrey Armstrong, currently Chief Operating
Officer of Capstar, as acting Chief Financial Officer, replacing Thomas
P. McMillin, who also resigned from his executive positions with the
Company effective March 15, 1999;

- the resignation of Eric C. Neuman as the Company's Senior Vice
President -- Strategic Development effective March 15, 1999;

- the appointment of William S. Banowsky, Jr., currently Executive Vice
President and General Counsel of Capstar, as the Company's General
Counsel, replacing Richard A. B. Gleiner, who also resigned from his
executive positions with the Company effective March 15, 1999.

The Company is expected to record a significant non-recurring charge in the
first quarter of 1999 in connection with the termination of the LIN Merger and,
if completed, assignment of the Petry Media Corporation and Pegasus Broadcasting
purchase agreements to LIN and the executive management realignment discussed
above.

See note 11 for the current status of certain litigation related to the LIN
Merger.

F-37
<PAGE> 203

SCHEDULE II
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(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, 1998............. $12,651 $5,684 $3,827(1) $6,582 $15,580
======= ====== ====== ====== =======
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
======= ====== ====== ====== =======
</TABLE>

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

(1) Additions result from the application of purchase accounting relating to the
Pyramid Acquisition in 1996, the Chancellor Merger, the Viacom Acquisition
and the Katz Acquisition in 1997 and the acquisitions of WWDC-FM/AM, Martin
Media, Primedia and the Outdoor Advertising Division of Whiteco in 1998.

F-38
<PAGE> 204

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.

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 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-39
<PAGE> 205

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-40
<PAGE> 206

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-41
<PAGE> 207

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-42
<PAGE> 208

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-43
<PAGE> 209

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-44
<PAGE> 210
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-45
<PAGE> 211
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-46
<PAGE> 212
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-47
<PAGE> 213
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-48
<PAGE> 214
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-49
<PAGE> 215
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-50
<PAGE> 216
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-51
<PAGE> 217
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-52
<PAGE> 218
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-53
<PAGE> 219
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-54
<PAGE> 220
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-55
<PAGE> 221
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-56
<PAGE> 222
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-57
<PAGE> 223
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-58
<PAGE> 224
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-59
<PAGE> 225

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-60
<PAGE> 226

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-61
<PAGE> 227

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-62
<PAGE> 228

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-63
<PAGE> 229

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-64
<PAGE> 230
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-65
<PAGE> 231
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-66
<PAGE> 232
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-67
<PAGE> 233
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-68
<PAGE> 234
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-69
<PAGE> 235

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-70
<PAGE> 236

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-71
<PAGE> 237

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-72
<PAGE> 238

OUTDOOR ADVERTISING DIVISION OF
WHITECO INDUSTRIES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS 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-73
<PAGE> 239

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-74
<PAGE> 240
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 $494,000 and $509,000 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-75
<PAGE> 241
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-76
<PAGE> 242

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
Martin Media:

We have audited the accompanying balance sheets of Martin Media (a
California limited partnership) as of December 31, 1997 and 1996 and the related
statements of operations, partners' capital (deficit), and cash flows for each
of the three years in the period ended December 31, 1997 (included at F-78
through F-90). These financial statements are the responsibility of the
Partnership'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 Martin Media, as of December
31, 1997 and 1996, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Bakersfield, California
February 13, 1998

F-77
<PAGE> 243

MARTIN MEDIA

BALANCE SHEETS
DECEMBER 31, 1997 AND 1996

ASSETS

<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Current Assets
Cash and equivalents...................................... $ 23,254 $ 2,661,610
Trade accounts receivable, net of allowance for doubtful
accounts of $142,515 and $100,000 as of December 31,
1997 and 1996, respectively............................ 5,658,379 4,726,301
Current maturities of long-term notes receivable, limited
partners............................................... 136,030 132,956
Other receivables......................................... 113,514 100,892
Inventories, raw materials................................ 520,725 209,323
Prepaid expenses.......................................... 1,566,582 1,085,324
------------ -----------
Total current assets.............................. 8,018,484 8,916,406
------------ -----------
Long-Term Notes Receivable, limited partners, less current
maturities................................................ 281,279 317,309
Property and Equipment, net of accumulated depreciation..... 74,863,597 52,367,653
Intangible Assets, net of accumulated amortization.......... 58,446,919 15,872,530
Deposit on purchase option.................................. 463,800 --
------------ -----------
$142,074,079 $77,473,898
============ ===========

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Current Liabilities
Current maturities of long-term debt...................... $ 3,690,436 $ 5,339,365
Current maturities of capital lease obligations........... 214,380 135,586
Accounts payable.......................................... 627,590 928,712
Accrued expenses.......................................... 8,112,132 1,569,048
Unearned income........................................... 219,022 112,961
------------ -----------
Total current liabilities......................... 12,863,560 8,085,672
------------ -----------
Long-Term Liabilities
Long-term debt, less current maturities................... 109,232,810 66,752,424
Capital lease obligations, less current maturities........ 447,865 662,245
------------ -----------
Total long-term liabilities....................... 109,680,675 67,414,669
------------ -----------
Commitments (Note 10)
Mandatorily Redeemable
Preferred partnership units............................... 25,000,000 --
------------ -----------
Partners' Capital (Deficit)................................. (5,470,156) 1,973,557
------------ -----------
$142,074,079 $77,473,898
============ ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-78
<PAGE> 244

MARTIN MEDIA

STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Income................................................ $48,106,851 $42,359,472 $33,732,821
Cost of sales......................................... 6,091,333 5,745,308 4,459,240
----------- ----------- -----------
Gross profit................................ 42,015,518 36,614,164 29,273,581
Managers' controlled operating expenses............... 21,201,914 20,929,536 16,861,406
----------- ----------- -----------
Income from managers' operations............ 20,813,604 15,684,628 12,412,175
----------- ----------- -----------
Other operating expenses:
Depreciation and amortization....................... 9,282,574 5,364,835 3,339,377
Management fees..................................... 1,937,326 1,277,431 1,111,350
Refinance and acquisition........................... 9,644,819 3,822,894 --
----------- ----------- -----------
20,864,719 10,465,160 4,450,727
----------- ----------- -----------
Operating income (loss)..................... (51,115) 5,219,468 7,961,448
----------- ----------- -----------
Nonoperating income (expenses):
Interest income..................................... 66,260 96,103 116,154
Interest expense.................................... (8,023,704) (6,022,001) (5,030,100)
Miscellaneous income................................ 1,077,184 252,653 283,597
Miscellaneous expense............................... -- (11,437) (92,682)
Loss on disposal of assets.......................... (512,338) (458,464) (378,358)
----------- ----------- -----------
(7,392,598) (6,143,146) (5,101,389)
----------- ----------- -----------
Net income (loss)........................... $(7,443,713) $ (923,678) $ 2,860,059
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-79
<PAGE> 245

MARTIN MEDIA
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Balance, beginning of year............................ $ 1,973,557 $ 3,184,665 $ 822,406
Issuance of partnership units....................... -- 5,300,000 --
Redemption of partnership units..................... -- (5,260,230) --
Distributions....................................... -- (327,200) (497,800)
Net income (loss)................................... (7,443,713) (923,678) 2,860,059
----------- ----------- -----------
Balance, end of year.................................. $(5,470,156) $ 1,973,557 $ 3,184,665
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-80
<PAGE> 246

MARTIN MEDIA

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................. $ (7,443,713) $ (923,678) $ 2,860,059
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization................ 9,282,574 5,364,835 3,339,377
Loss on disposal of assets................... 512,338 458,464 378,358
Changes in operating assets and liabilities
(exclusive of acquisitions):
Increase in accounts receivable........... (932,078) (1,047,834) 223,315
Increase in other receivables............. (12,622) (72,759) 24,091
(Increase) decrease in inventories, raw
materials............................... (311,402) 105,466 35,645
Increase in prepaid expenses.............. (481,258) (136,610) 53,372
Decrease in accounts payable.............. (301,122) (7,055) (195,463)
Increase in accrued expenses.............. 6,543,084 793,490 24,624
Increase in unearned income............... 106,061 84,915 (14,020)
------------ ------------ -----------
Net cash provided by operating
activities.............................. 6,961,862 4,619,234 6,729,358
------------ ------------ -----------
Cash flows from investing activities:
Principal payments on notes receivable............ 32,956 374,740 20,692
Issuance of notes receivable...................... -- (400,000) --
Proceeds from sale of property and equipment...... 49,460 63,801 79,236
Cash paid for acquisitions........................ (67,164,295) (17,200,000) (1,575,000)
Capital expenditures.............................. (7,750,411) (7,114,708) (1,762,978)
Proceeds from sale of investment.................. -- -- 970,482
Purchase option deposit........................... (463,800) -- --
------------ ------------ -----------
Net cash used in investing activities..... (75,296,090) (24,276,167) (2,267,568)
------------ ------------ -----------
Cash flows from financing activities:
Net (payments)/borrowings on line-of-credit....... -- (1,395,052) 601,324
Proceeds from issuance of long-term debt.......... 41,014,131 75,915,869 1,006,400
Principal payments on long-term debt.............. (318,259) (57,059,619) (3,522,394)
Distributions to partners......................... -- (327,200) (497,800)
Redemption of partnership units................... -- (5,260,230) --
Issuance of mandatorily redeemable preferred
partnership units.............................. 25,000,000 -- --
Issuance of partnership units..................... -- 5,000,000 --
------------ ------------ -----------
Net cash provided (used) by financing
activities.............................. 65,695,872 16,873,768 (2,412,470)
------------ ------------ -----------
Net increase (decrease) in cash and cash
equivalents....................................... (2,638,356) (2,783,165) 2,049,320
Cash and cash equivalents at beginning of year...... 2,661,610 5,444,775 3,395,455
------------ ------------ -----------
Cash and cash equivalents at end of year............ $ 23,254 $ 2,661,610 $ 5,444,775
============ ============ ===========
Supplemental disclosures of cash flow
information:
Interest paid................................ $ 8,085,486 $ 6,357,207 $ 5,036,375
============ ============ ===========
Income taxes paid............................ $ -- $ 7,349 $ 800
============ ============ ===========
</TABLE>

Supplemental disclosures of noncash investing and financing activities:

During the year ended December 31, 1997 long-term debt in the amount
of $84,845,560 was refinanced.

During the year ended December 31, 1996 long-term debt in the amount
of $1,684,215 was incurred to purchase fixed assets and intangible assets.

During the year ended December 31, 1996 notes receivables to
shareholders in the amount of $300,000 were issued for partnership units.

During the year ended December 31, 1995 long-term debt in the amount
of $318,900 was incurred to purchase sign structures.

The accompanying notes are an integral part of these statements.

F-81
<PAGE> 247

MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of business

Martin Media, a California limited partnership (the Company), was formed in
December, 1984 and operated under the name of Colorado River Markets until
August, 1991. The Company has operating divisions located in Pennsylvania, Ohio,
Connecticut, Washington, D.C., Arizona and Nevada.

The Company owns and leases billboards on a contractual basis nationwide
for the purpose of providing outdoor advertising services. The Company extends
credit in the form of accounts receivable on a short-term basis to businesses
and advertisers doing business in the above noted areas.

Significant accounting policies

Basis of accounting

The financial statements are prepared on an accrual basis, which recognizes
income when earned and expenses when incurred.

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,
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers cash and cash equivalents to be all highly liquid
investments purchased with a maturity of three months or less.

Inventories, raw materials

Inventories are stated at the lower of cost or market using the first in,
first out (FIFO) cost method.

Property and equipment

Property and equipment are stated at cost and depreciated over estimated
useful lives primarily using the straight-line method. Repairs and maintenance
and small equipment purchases are expensed as incurred. Expenditures which
significantly increase asset values or extend useful lives are capitalized.
Estimated useful lives are as follows:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements.................................. 15-31
Posters..................................................... 25
Bulletins................................................... 25
Shop equipment.............................................. 3-10
Office furniture and equipment.............................. 5-10
Auto and trucks............................................. 5-7
</TABLE>

F-82
<PAGE> 248
MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income taxes

Under provision of the Internal Revenue Code and the respective state
Taxation Codes, partnerships are not subject to income taxes; any income or loss
realized is taxed to the individual partners. Certain states do impose a minimum
tax (franchise fee).

Intangible assets

Covenants not to compete are recorded at cost and are amortized using the
straight-line method over the contractual period specified.

Organization costs, advertising rights, permits and licenses, acquisition
fees, lease rights and goodwill are recorded at cost and are amortized using the
straight-line method over five years.

Loan fees are amortized over the life of the loan to which they are
associated.

Profit sharing plan

The Company adopted a profit sharing plan which is a qualified pension
trust under Section 401(k) of the Internal Revenue Code. All full-time employees
with twelve months of service who are 18 years old or older are eligible to
participate. Each employee may voluntarily contribute up to the lesser of 15% of
their pay or $9,500. The Company has made no contributions to the plan.

Fair value of financial instruments

The carrying amount of the long-term debt approximates fair value.

Reclassifications

Certain prior year amounts have been reclassified to conform with the
current year presentation.

2. LONG-TERM NOTES RECEIVABLE, LIMITED PARTNERS

Notes receivable, limited partners at December 31, 1997 and 1996 consisted
of the following:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Barry Heffner, Manager of Pittsburgh Division, prime plus
2%, collateralized by subscription of one unit of Martin
Media, payable $717 per month including interest, due
September 27, 2001........................................ $ 18,758 $ 25,036
Mary Ellen Coleman, Manager of Scranton Division, prime plus
2%, collateralized by subscription of one unit of Martin
Media, payable $717 per month including interest, due
September 27, 2001........................................ 18,975 25,229
Brent Baer, Manager of Washington D.C. Division, 8%,
collateralized by 1/4 of one partnership unit, payable
$838 per month including interest, due December 28,
2001...................................................... 69,894 75,000
Thomas Jones, Manager of Las Vegas Division, 8%,
collateralized by 1/4 of one partnership unit, payable
$838 per month including interest, due December 28,
2001...................................................... 69,894 75,000
David Lamberger, National Sales Manager, 8%, collateralized
by 1/4 of one partnership unit, payable $838 per month
including interest, due December 28, 2001................. 69,894 75,000
</TABLE>

F-83
<PAGE> 249
MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Lynn Terlaga, Manager of Hartford Division, 8%,
collateralized by 1/4 of one partnership unit, payable
$838 per month including interest, due December 28,
2001...................................................... $ 69,894 $ 75,000
David Weyrich, 10%, unsecured, payable $833 per month
interest only, due November 27, 1997, paid in full
subsequent to December 31, 1997........................... 100,000 100,000
-------- --------
417,309 450,265
Less current maturities..................................... 136,030 132,956
-------- --------
$281,279 $317,309
======== ========
</TABLE>

Prime rate was 8.5% and 8.25% at December 31, 1997 and 1996, respectively.

NOTE 3. ACQUISITIONS

During 1997, the Company purchased substantially all the assets and assumed
certain liabilities of three outdoor advertising companies; during 1996, the
Company purchased substantially all of the assets and assumed certain
liabilities of one outdoor advertising company and exchanged partnership
interests and other consideration for substantially all of the assets, and
assumed certain liabilities, for another outdoor advertising company (the
"Exchange"). Funds used to make the acquisitions and facilitate the Exchange
were provided through the Company's credit facility. The majority of the
intangible assets acquired through the acquisitions and Exchange are being
amortized over a five year period. See Note 10 for acquisitions included above
which were acquired from a related party. Acquisitions during 1995 were not
significant.

The acquisitions were accounted for using the purchase method of accounting
and the purchase price was allocated to the various tangible and intangible
assets acquired. For the Exchange, the Company recorded the assets acquired and
liabilities assumed based on the fair value of the partnership interests
granted. Accordingly, the results of operations for the acquisitions, and the
Exchange, have been included in the results of the Company from the respective
effective dates.

A summary of the cash consideration and allocation of the purchase price as
of the acquisition dates are as follows:

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Fair value of tangible assets acquired..................... $20,293,392 $ 8,420,000
Fair value of intangible assets acquired................... 46,870,903 11,870,455
Liabilities assumed........................................ -- (2,790,455)
Book value of partnership interests granted................ -- (300,000)
----------- -----------
Cash paid.................................................. $67,164,295 $17,200,000
=========== ===========
</TABLE>

Of the cash paid in 1996, approximately $5 million was utilized to redeem
existing partnership units in connection with the Exchange.

F-84
<PAGE> 250
MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. PREPAID EXPENSES

Prepaid expenses at December 31, 1997 and 1996 consisted of the following:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Leases...................................................... $1,279,243 $ 903,154
Insurance................................................... 41,541 32,545
Other....................................................... 196,064 124,726
Deposits.................................................... 49,734 24,899
---------- ----------
$1,566,582 $1,085,324
========== ==========
</TABLE>

5. PROPERTY AND EQUIPMENT

Major classes of property and equipment and accumulated depreciation at
December 31, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Land....................................................... $10,578,202 $ 936,954
Buildings and improvements................................. 5,349,404 218,947
Posters.................................................... 26,855,790 25,114,090
Bulletins.................................................. 44,189,355 36,314,244
Shop equipment............................................. 722,278 519,319
Office furniture and equipment............................. 649,696 449,391
Autos and trucks........................................... 1,951,625 1,662,820
Construction in process.................................... 402,892 215,744
----------- -----------
90,699,242 65,431,509
Less accumulated depreciation.............................. 15,835,645 13,063,856
----------- -----------
$74,863,597 $52,367,653
=========== ===========
</TABLE>

See Note 7 for collateralization of property and equipment.

Depreciation expense for the years ended December 31, 1997, 1996 and 1995
was $2,943,826, $2,624,212 and $2,392,186.

During the years ended December 31, 1997, 1996 and 1995, the Company took
down a number of boards located in the Pittsburgh, Scranton, Hartford, Las Vegas
and Cincinnati divisions. These disposals were initiated by management due to
high operating costs and/or high site lease costs, which resulted in marginal
operating results. Losses on board disposals amounted to $515,056, $440,746 and
$418,957 in the years ended December 31, 1997, 1996 and 1995.

F-85
<PAGE> 251
MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. INTANGIBLE ASSETS

Intangible assets and accumulated amortization at December 31, 1997 and
1996 are as follows:

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Organization costs......................................... $ 1,238,376 $ 1,238,376
Covenants not to compete................................... 2,452,096 2,452,096
Advertising rights......................................... 2,925,800 1,291,338
Permits and licenses....................................... 10,705,122 2,547,274
Lease rights............................................... 14,307,733 11,970,722
Goodwill................................................... 33,979,535 220,453
Acquisition fees........................................... 3,718,759 1,053,423
Loan fees.................................................. 359,398 1,577,500
----------- -----------
69,686,819 22,351,182
Less accumulated amortization.............................. 11,239,900 6,478,652
----------- -----------
$58,446,919 $15,872,530
=========== ===========
</TABLE>

See Note 7 for collateralization of intangible assets.

Amortization expense for the years ended December 31, 1997, 1996 and 1995
was $6,338,748, $2,740,623 and $947,191.

7. LONG-TERM DEBT

Long-term debt at December 31, 1997 and 1996 consisted of the following:

<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Canadian Imperial Bank of Commerce, As administrative
agent for lenders, under the Credit Agreement dated July
31, 1997, Term A loan, interest at LIBOR plus 2%,
collateralized by accounts receivable, inventory, sign
structures, and intangible assets, payable quarterly,
due June 2004**......................................... $ 60,000,000 $ --
Canadian Imperial Bank of Commerce, As administrative
agent for lenders, under the Credit Agreement dated July
31, 1997, Term B loan, interest at LIBOR plus 2.25%,
collateralized by accounts receivable, inventory, sign
structures, and intangible assets, payable quarterly,
due December 2005**..................................... 35,000,000 --
Canadian Imperial Bank of Commerce, As administrative
agent for lenders, under the Credit Agreement dated July
31, 1997, Revolving Line of Credit, interest ranging
from prime plus 2% LIBOR plus 2.75%, collateralized by
accounts receivable, inventory, sign structures, and
intangible assets, payable quarterly, due June 2004**... 17,300,000 --
Jackson Poster Advertising, 8%, collateralized by sign
structures, payable $912 per month including interest,
due December 2000....................................... 29,124 37,381
Dominion Signs, 8%, collateralized by sign structures and
personally guaranteed by E. Thomas Martin, payable
$68,475 plus interest annually, due August 1999......... 136,950 205,425
Elaine Perlroth, 7%, collateralized by mortgage, payable
$989 monthly including interest, due November 2008...... 90,381 95,715
</TABLE>

F-86
<PAGE> 252
MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Ronco Media, non-interest bearing, uncollateralized,
payable $3,000 monthly, due April 2001.................. $ 120,000 $ 156,000
Ronald Rieger, non-interest bearing, uncollateralized,
payable $167 monthly, due July 2001..................... 6,667 8,667
Rose Marie Rieger, non-interest bearing, uncollateralized,
payable $167 monthly, due April 2001.................... 6,667 8,667
Daniel H. Bradley, non-interest bearing, uncollateralized,
payable $1,667 monthly, due April 2001.................. 66,667 86,667
Pamela Lynn Rieger, non-interest bearing,
uncollateralized, payable $1,667 monthly, due April
2001.................................................... 66,667 86,667
Kory William Rieger, non-interest bearing,
uncollateralized, payable $1,667 monthly, due April
2001.................................................... 66,667 86,667
Rembrandt Outdoor Services, non-interest bearing,
uncollateralized, payable $608 monthly, due July 2001... 33,456 34,065
Canadian Imperial Bank of Commerce, as administrative
agent for Lenders under the Credit Agreement dated July
15, 1996, Term A Loan, interest at LIBOR plus 2.5%,
collateralized by accounts receivable, inventory, sign
structures, and intangible assets, payable quarterly,
due March 2003**........................................ -- 40,000,000
Canadian Imperial Bank of Commerce, as administrative
agent for Lenders under the Credit Agreement dated July
15, 1996, Term B Loan, interest at LIBOR plus 3%,
collateralized by accounts receivable, inventory, sign
structures, and intangible assets, payable quarterly,
due December 2004**..................................... -- 15,000,000
Canadian Imperial Bank of Commerce, as administrative
agent for Lenders under the Credit Agreement dated July
15, 1996, Revolving Line of Credit, interest ranging
from prime plus 1.25% to LIBOR plus 2.50%,
collateralized by accounts receivable, inventory, sign
structures, and intangible assets, payable annually, due
March 2003**............................................ -- 16,285,868
------------ -----------
112,923,246 72,091,789
Less current maturities................................... 3,690,436 5,339,365
------------ -----------
$109,232,810 $66,752,424
============ ===========
</TABLE>

Aggregate maturities of long-term debt at December 31, 1997 were as
follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1998........................................................ $ 3,690,436
1999........................................................ 7,691,592
2000........................................................ 13,124,365
2001........................................................ 14,545,258
2002........................................................ 15,007,561
Thereafter.................................................. 58,864,034
------------
$112,923,246
============
</TABLE>

F-87
<PAGE> 253
MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

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

** Loan has varying interest rates based on Company performance and indexes
found in Credit Agreement dated July 31, 1997. At December 31, 1997 effective
interest rates ranged from 7.1875% to 8.5%.

The Company has entered into interest rate caps primarily to protect
against rising interest exposure of its floating rate long-term debt. The
difference to be paid or received on the cap is included in interest expense as
payments are made or received. At December 31, 1997, the Company had outstanding
interest rate cap agreements with two commercial bank, having a total notional
principal amount of $135,000,000. This agreement effectively changes the
Company's interest exposure on up to $135,000,000 of floating rate debt to a
fixed 6.5% with a floor of 5.5%. The interest rate cap agreements mature
September 1998 ($35,000,000) and September 2000 ($100,000,000).

During 1997, the Company sold an interest rate floor for a gain of
$440,000. This gain is included in other income.

The counterparties to the Company's derivative financial instrument
contract are substantial and creditworthy commercial banks which are recognized
market makers. Neither the risks of counterparty nonperformance nor the economic
consequence of counterparty nonperformance associated with these contracts were
considered by the Company to be material.

Interest expense consists of interest on notes payable and the cost
associated with the purchased of the interest rate cap instrument.

Prime rate was 8.5% and 8.25% at December 31, 1997 and 1996, respectively.

LIBOR rate was 5.9% and 6.5% at December 31, 1997 and 1996, respectively.

8. LONG-TERM CAPITAL LEASE OBLIGATIONS

The Company leases certain sign structures with lease terms through July
2000. Obligations under capital leases have been recorded in the accompanying
financial statements at the discounted present value of future minimum lease
payments. The cost and accumulated amortization for such equipment as of
December 31, 1997 was $1,029,200 and $58,321, respectively. Amortization
included in depreciation expense for the year ended December 31, 1997 was
$41,168. Interest paid on these leases was $130,118 for the year ended December
31, 1997.

The future minimum lease payments under these capital leases and the net
present value of the future minimum lease payments are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31:
- ------------
<S> <C>
1998........................................................ $316,628
1999........................................................ 399,627
2000........................................................ 113,280
--------
Total future minimum lease payments......................... 829,535
Less amount representing interest........................... 167,290
--------
Present value of future minimum lease payment............... 662,245
Less current portion........................................ 214,380
--------
Long-term portion........................................... $447,865
========
</TABLE>

F-88
<PAGE> 254
MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

9. RELATED PARTY TRANSACTIONS

Transactions occurring between the Company and a related party, which are
not presented elsewhere in these financial statements, are as follows:

Martin and MacFarlane, Inc., a California Corporation (M&M, Inc.), which
has stockholders who are also partners in the Company, performed substantially
all administrative functions for the partnership during the year ended December
31, 1995 and January 1996. Beginning February 1, 1996, administrative functions
were performed by MW Sign Co., the general partner. The partnership pays
management fees approximating 3% of gross revenue, refinancing fees of 4% of all
debt refinanced and acquisition fees of 4% of the purchased price of acquired
companies. On January 1, 1997, management fees increased to 4% of gross revenue.
Total fees paid to M&M, Inc. for the years ended December 31, 1997 and 1996
amounted to $-0- and $78,263, respectively. Total fees paid/accrued to MW Sign
Co. for the years ended December 31, 1997 and 1996 amounted to $11,231,815 and
$5,050,039. Total fees paid to M&M, Inc. and MW Sign Co. for the year ended
December 31, 1995 amounted to $1,111,350.

10. COMMITMENTS

Leases

The Company leases land, buildings, and equipment in connection with its
outdoor advertising business under operating leases. The leasing of land relates
to the posters and bulletins. The Company also leases property, equipment and
buildings to house and support division administrative and field offices.

Future minimum lease payments under cancelable and noncancelable leases at
December 31, 1997 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING POSTERS,
DECEMBER 31, BULLETINS BUILDINGS TOTAL
- ------------ ---------- ---------- ----------
<S> <C> <C> <C>
1998............................................. $1,199,353 $ 229,539 $1,428,892
1999............................................. 1,219,818 205,164 1,424,982
2000............................................. 1,244,566 193,264 1,437,830
2001............................................. 1,270,536 183,836 1,454,372
2002............................................. 1,295,506 173,628 1,469,134
Thereafter....................................... 1,670,042 289,380 1,959,422
---------- ---------- ----------
$7,899,821 $1,274,811 $9,174,632
========== ========== ==========
</TABLE>

Certain of the Company's noncancelable lease payments are based on a
percentage of revenue generated from the poster or bulletin rather than having a
minimum rental. The percentage of rent ranges from 15% to 20% of revenue. An
estimate of the future payments under these leases has been included in the
above table under posters, bulletins. Historically, rental payments under these
leases have approximated $1,180,000 annually.

Lease expense for the years ended December 31, 1997, 1996 and 1995 was as
follows:

<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Land for posters and bulletins................... $8,042,746 $6,817,196 $5,226,956
Buildings........................................ 518,306 549,069 406,277
Equipment, other................................. 27,041 28,198 31,881
---------- ---------- ----------
$8,588,093 $7,394,463 $5,665,114
========== ========== ==========
</TABLE>

F-89
<PAGE> 255
MARTIN MEDIA

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Acquisition, purchase and purchase option

On July 31, 1997 the Company entered into an agreement with Martin &
MacFarlane, Inc. (related party), relative to an agreement Martin & MacFarlane,
Inc. had with another company to purchase certain assets, to acquire certain
assets including sign structures, equipment, and related intangibles located in
the Las Vegas and Colorado River markets for a total purchase price of
$14,350,400. This purchase agreement has two segments, the first of which
provided for the purchase of assets during the year ending December 31, 1997 for
$11,273,400. The second segment of the agreement provides an option to the
Company to purchase additional assets for $3,077,000. Upon execution of the
option agreement, the Company deposited $463,800 in good faith with Martin &
MacFarlane, Inc. The option agreement can only be exercised upon Martin &
MacFarlane, Inc. exercising its option to purchase those assets and other assets
it has under option with the seller; the option agreement expires October 1,
1998.

Preferred partnership units

On December 23, 1997, the Company entered into an agreement to sell
preferred limited partnership units (PPU's), warrants and warrant units to a
select group of purchasers. The Company issued 25,000 PPU's at $1,000 each
($25,000,000), calling for the holders of the PPU's to receive an initial 14%
preferred rate of return, which escalates on certain dates to a maximum of 20%.
The Company can redeem PPU's for 102% of the PPU's capital account amount until
September 23, 1998 and thereafter for 100% of the PPU's capital account amount.
The Company is obligated under the agreement to redeem all outstanding PPU's on
December 23, 2006. Warrants to purchase additional PPU's, based upon terms of
the agreement, shall be issuable upon the 270th day following the purchase date
(December 23, 1997) and quarterly thereafter, if any PPU's shall then be
outstanding.

Credit facilities

On December 23, 1997, the Company entered into an agreement with Canadian
Imperial Bank of Commerce in which their Term B loan maximum borrowing limit was
increased to $40,000,000. As of December 31, 1997, the Company had $5,000,000
available under the term of the loan.

On July 31, 1997, the Company entered into an agreement with Canadian
Imperial Bank of Commerce, as administrative agent for Lenders under the credit
agreement dated July 31, 1997. Under the terms of this agreement, Swing Loan is
available in the amount of $5,000,000. As of December 31, 1997, the Company's
outstanding obligation was $-0-.

11. SUBSEQUENT EVENTS

Subsequent to December 31, 1997, the Company acquired substantially all of
the assets and assumed certain liabilities of three outdoor advertising
companies at an aggregate purchase price of $18,350,000. Funds used to make the
purchase were provided through the Company's credit facility.

F-90
<PAGE> 256

MARTIN MEDIA

STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Income...................................................... $29,335,986 $22,639,673
Cost of sales............................................... 3,554,778 2,860,922
----------- -----------
Gross profit...................................... 25,781,208 19,778,751
Managers' controlled operating expenses..................... 11,498,736 10,024,800
----------- -----------
Income from managers' operations.................. 14,282,472 9,753,951
----------- -----------
Other operating expenses:
Depreciation and amortization............................. 4,935,039 3,192,484
Management fees........................................... 1,465,200 1,332,688
Refinance and acquisition................................. 324,477 59,665
----------- -----------
6,724,716 4,584,837
----------- -----------
Operating income.................................. 7,557,756 5,169,114
----------- -----------
Nonoperating income (expenses):
Interest income........................................... 17,234 36,266
Interest expense.......................................... (7,056,690) (2,952,027)
----------- -----------
(7,039,456) (2,915,761)
----------- -----------
Net income........................................ $ 518,300 $ 2,253,353
=========== ===========
</TABLE>

The accompanying note is an integral part of these statements.

F-91
<PAGE> 257

MARTIN MEDIA

STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)

<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 518,300 $ 2,253,353
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 4,935,039 3,192,484
Changes in operating assets and liabilities (exclusive
of acquisitions):
Increase in accounts receivable...................... (1,467,442) (579,923)
Decrease (increase) in other receivables............. 28,509 (339,238)
Increase in inventories, raw materials............... (755,168) (775,387)
Increase in prepaid expenses......................... (355,358) (241,092)
Decrease in accounts payable......................... (196,683) (13,949)
Decrease in accrued expenses......................... (4,717,062) (693,027)
------------ -----------
Net cash provided (used) by operating
activities..................................... (2,009,865) 2,803,221
------------ -----------
Cash flows from investing activities:
Decrease in notes receivable.............................. 17,492 450,569
Cash paid for acquisitions................................ (15,453,324) (1,863,034)
Capital expenditures...................................... (9,522,314) (4,521,138)
------------ -----------
Net cash used in investing activities............. (24,958,146) (5,933,603)
------------ -----------
Cash flows from financing activities:
Proceeds from long-term debt.............................. 25,450,460 956,013
Distributions to partners................................. 1,387,288 (37,565)
------------ -----------
Net cash provided by investing activities......... 26,837,748 918,448
------------ -----------
Net decrease in cash........................................ (130,263) (2,211,934)
Cash at beginning of year................................... 23,254 2,361,610
------------ -----------
Cash at end of period....................................... $ (107,009) $ 149,676
============ ===========
Supplemental disclosures of cash flow information:
Interest paid........................................ $ 5,313,150 $ 2,952,027
============ ===========
</TABLE>

The accompanying note is an integral part of these statements.

F-92
<PAGE> 258

MARTIN MEDIA

NOTE TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial information with respect to the six months ended June 30,
1998 and 1997 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.

F-93
<PAGE> 259

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors
Martin & MacFarlane, Inc.:

We have audited the accompanying balance sheets of Martin & MacFarlane,
Inc. (a California corporation) as of December 31, 1997 and 1996, and the
related statements of income, retained earnings and cash flows for each of the
two years in the period ended December 31, 1997 and six months in the period
ended December 31, 1995 (included at F-95 through F-108). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 financial statements referred to above present fairly,
in all material respects, the financial position of Martin & MacFarlane, Inc. as
of December 31, 1997 and 1996 and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1997 and six
months in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Bakersfield, California
February 13, 1998

F-94
<PAGE> 260

MARTIN & MACFARLANE, INC.

BALANCE SHEETS
DECEMBER 31, 1997 AND 1996

ASSETS

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Current Assets
Cash and equivalents...................................... $ 138,294 $ 10,519
Trade accounts receivable, less allowance for doubtful
accounts of $96,051 and $100,000 at December 31, 1997
and 1996............................................... 2,973,646 1,836,944
Current maturity of note receivable....................... 6,856 6,206
Other receivables......................................... 78,723 331,419
Inventories............................................... 1,764,872 1,104,190
Prepaid expenses.......................................... 928,416 565,971
Current deferred income taxes............................. 1,441 1,500
----------- -----------
5,892,248 3,856,749
----------- -----------
Note Receivable............................................. 24,381 31,083
Property and Equipment, net of accumulated depreciation..... 23,527,457 20,187,460
Intangible Assets, net of accumulated amortization.......... 11,053,092 3,007,566
Other Assets
Deposits.................................................. 24,197 22,047
Deposit on Purchase Option................................ 5,536,200 --
----------- -----------
5,560,397 22,047
----------- -----------
$46,057,575 $27,104,905
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank overdraft............................................ $ 166,083 $ 523,360
Current maturities of long-term debt...................... 690,718 7,460,727
Note payable, bank........................................ -- 800,000
Accounts payable.......................................... 543,648 465,372
Accrued expenses.......................................... 391,069 444,798
Distributions payable..................................... 61,832 61,658
Unearned income........................................... 506,348 84,530
Income taxes payable...................................... 6,408 33,205
----------- -----------
2,366,106 9,873,650
----------- -----------
Long-Term Debt, less current maturities..................... 36,041,494 6,835,699
----------- -----------
Deferred Income Taxes....................................... 102,375 111,008
----------- -----------
Commitments (Note 13)
Stockholders' Equity
Common stock, no par or stated value, authorized 150,000
shares, issued and outstanding 82,443 shares, stated
at..................................................... 1,113,070 1,113,070
Retained earnings......................................... 6,434,530 9,171,478
----------- -----------
7,547,600 10,284,548
----------- -----------
$46,057,575 $27,104,905
=========== ===========
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-95
<PAGE> 261

MARTIN & MACFARLANE, INC.

STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997 AND 1996 AND SIX MONTH PERIOD ENDED DECEMBER 31,
1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- ----------
<S> <C> <C> <C>
Revenues............................................... $22,535,117 $16,994,368 $8,311,295
Cost of sales.......................................... 2,476,991 2,155,013 1,065,709
----------- ----------- ----------
Gross profit................................. 20,058,126 14,839,355 7,245,586
Managers' controlled operating expenses................ 11,318,791 9,534,848 4,982,152
----------- ----------- ----------
Income from managers' operations............. 8,739,335 5,304,507 2,263,434
----------- ----------- ----------
Other operating expenses
Depreciation and amortization expense................ 2,902,472 1,316,520 575,291
Management fees...................................... 2,210,351 472,931 --
Refinance and acquisitions........................... 884,083 85,175 --
----------- ----------- ----------
5,996,906 1,874,626 575,291
----------- ----------- ----------
Operating income............................. 2,742,429 3,429,881 1,688,143
----------- ----------- ----------
Other income (expense)
Interest income...................................... 15,302 9,773 --
Interest expense..................................... (2,537,908) (1,115,772) (552,412)
Other income......................................... 414,138 117,025 125,286
Loss on disposition of assets........................ (207,372) (136,875) (1,744)
----------- ----------- ----------
(2,315,840) (1,125,849) (428,870)
----------- ----------- ----------
Income before income taxes............................. 426,589 2,304,032 1,259,273
Income tax (expense) benefit........................... (23,458) (57,653) 2,972,317
----------- ----------- ----------
Net income................................... $ 403,131 $ 2,246,379 $4,231,590
=========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-96
<PAGE> 262

MARTIN & MACFARLANE, INC.

STATEMENTS OF RETAINED EARNINGS
YEARS ENDED DECEMBER 31, 1997 AND 1996 AND SIX MONTH PERIOD ENDED DECEMBER 31,
1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- ----------
<S> <C> <C> <C>
Balance, beginning of period........................... $ 9,171,478 $ 8,526,046 $4,418,120
Net income........................................... 403,131 2,246,379 4,231,590
Dividends............................................ (3,140,079) (1,600,947) (123,664)
----------- ----------- ----------
Balance, end of period................................. $ 6,434,530 $ 9,171,478 $8,526,046
=========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-97
<PAGE> 263

MARTIN & MACFARLANE, INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996 AND SIX MONTH PERIOD ENDED DECEMBER 31,
1995

<TABLE>
<CAPTION>
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 403,131 $ 2,246,379 $ 4,231,590
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 2,902,472 1,316,520 575,291
Loss on disposition of assets................... 207,372 136,875 1,744
Changes in operating assets and liabilities
(exclusive of acquisitions):
Increase in accounts receivable................. (1,136,702) (410,142) 119,579
(Increase) decrease in other receivables........ 252,697 (312,755) 59,985
Increase in inventory........................... (660,682) (220,401) (115,754)
Increase in prepaid expenses.................... (362,445) (135,739) 200,316
Decrease in deferred income tax asset........... 59 -- --
(Increase) decrease in other
assets -- deposits............................ (2,150) (5,000) 3,124
Increase (decrease) in bank overdraft........... (357,277) 523,360 --
Increase (decrease) in accounts payable......... 78,276 (60,260) (126,935)
Increase (decrease) in accrued expenses......... (53,555) 169,057 (8,073)
Increase (decrease) in unearned income.......... 421,818 1,185 (73,536)
Increase (decrease) in income taxes payable..... (26,797) 9,835 (868,116)
Increase (decrease) in deferred income taxes.... (8,633) 7,826 (2,961,731)
------------ ----------- -----------
Net cash provided by operating
activities............................... 1,657,584 3,266,740 1,037,484
------------ ----------- -----------
Cash flows from investing activities:
Increase in purchase option deposit................ (5,536,200) -- --
Proceeds from certificates of deposit.............. -- -- 200,000
Proceeds from sale of investments.................. -- 11,859 --
Proceeds from sale of property and equipment....... 107,400 217,320 14,082
Cash paid for acquisitions......................... (10,723,930) (5,849,000) (240,000)
Capital expenditures............................... (2,646,168) (748,741) (201,925)
Issuance of notes receivable....................... -- (38,901) (50,000)
Principal payments on notes receivable............. 6,052 1,612 --
Principal payments on notes receivable,
shareholder..................................... -- 50,000 --
------------ ----------- -----------
Net cash used in investing activities...... (18,792,846) (6,355,851) (277,843)
------------ ----------- -----------
Cash flows from financing activities:
Proceeds from notes payable........................ 21,459,216 5,500,000 809,400
Net (payments) borrowings on line of credit........ (950,000) 800,000 (50,000)
Principal payments on notes payable................ (106,100) (1,975,159) (1,677,500)
Distributions to shareholders...................... (3,140,079) (1,600,947) (123,664)
------------ ----------- -----------
Net cash provided by (used in) financing
activities............................... 17,263,037 2,723,894 (1,041,764)
------------ ----------- -----------
Net increase (decrease) in cash and cash
equivalents........................................ 127,775 (365,217) (282,123)
Cash and cash equivalents at beginning of year....... 10,519 375,736 657,859
------------ ----------- -----------
Cash and cash equivalents at end of year............. $ 138,294 $ 10,519 $ 375,736
============ =========== ===========
Supplemental disclosures of cash flow information:
Interest paid...................................... $ 2,634,036 $ 1,093,501 $ 563,494
============ =========== ===========
Payment of income taxes............................ $ 50,255 $ 47,818 $ 857,530
============ =========== ===========
</TABLE>

Supplemental disclosures of non cash financing activities:

During the year ended December 31, 1997 long term debt in the amount
of $18,245,035 was refinanced.

The accompanying notes are an integral part of these statements.

F-98
<PAGE> 264

MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of business

Martin & MacFarlane, Inc. (the Company) was incorporated December 2, 1971.
The Company owns, leases, and manages billboards on a contractual basis
nationwide for the purpose of providing outdoor advertising services. The
Company also owns and operates a small winery located in Paso Robles,
California. The Company extends short-term credit in the form of accounts
receivable to businesses and advertisers doing business in the above noted
areas.

Significant accounting policies

BASIS OF ACCOUNTING

The financial statements are prepared on an accrual basis, which recognizes
income when earned and expenses when incurred.

CHANGE IN ACCOUNTING PERIOD

Pursuant to the adoption by the Company of S Corporation status for income
tax purposes, the Company changed from a fiscal year end to a calendar year end
for the period ending December 31, 1995, as required by the Internal Revenue
Service, to coincide with shareholders' tax year end. Therefore, the reporting
periods for the financial statements cover the years ended December 31, 1997 and
1996 and six month period ended December 31, 1995.

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, liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers cash and cash equivalents to be all highly liquid
investments purchased with a maturity of three months or less. Throughout the
year, the Company may have amounts in banks in excess of federally insured
limits and as of December 31, 1997, the Company held funds in one financial
institution in excess of federally insured limits in the amount of $115,360.

INVENTORY

Inventory is valued at the lower of cost or market. Valuation is determined
using the first-in, first-out method.

PROPERTY AND EQUIPMENT

F-99
<PAGE> 265
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Expenditures which significantly increase asset values or extend useful lives
are capitalized. Estimated useful lives in years are as follows:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements.................................. 15-31
Posters..................................................... 7-25
Bulletins................................................... 7-25
Shop equipment.............................................. 3-10
Office furniture and equipment.............................. 5-10
Autos and trucks............................................ 3-7
Irrigation equipment........................................ 7-30
Vineyards................................................... 10-25
</TABLE>

INTANGIBLE ASSETS

Goodwill is amortized using the straight-line method over primarily five
year periods.

Covenants not to compete are amortized using the straight-line method over
the contractual period specified, which ranges from five to ten years.

Advertising rights, permits and licenses, and lease rights are amortized
using the straight-line method over five years.

INCOME TAXES

Effective July 1, 1995, the Company's shareholders elected to be taxed
under the provisions of Subchapter S of the Internal Revenue Code. Under such
election, the shareholders of an "S" Corporation are taxed individually on their
proportionate share of the Company's taxable income. Therefore, no provision or
liability for federal income tax has been included in these financial
statements. State income taxes are provided based on statutory rates. State
income taxes currently payable and deferred relate primarily to temporary
differences from the use of accelerated methods of depreciation and the direct
write-off method of accounting for bad debts.

PROFIT SHARING PLAN

The Company adopted a profit sharing plan which is a qualified pension
trust under Section 401(k) of the Internal Revenue Code. All full time employees
with twelve months of service who are 19 year old or older are eligible to
participate. Each employee may voluntarily contribute up to the lesser of 15% of
their pay or $9,500. The Company has made no matching contributions to the plan.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of the long-term debt approximates fair value.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the
current year presentation.

2. ACQUISITIONS

During 1997, the Company purchased substantially all of the assets and
assumed certain liabilities of three outdoor advertising companies; during 1996,
the Company purchased substantially all of the assets and assumed certain
liabilities of four outdoor advertising companies. Concurrently with one of the
1996

F-100
<PAGE> 266
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

acquisitions, the Company exchanged the assets acquired and liabilities assumed
for similar assets and liabilities of another outdoor advertising company to
enable the Company to expand its existing market share in that locality. The
exchange was recorded at the fair market value of the assets acquired. Funds
used to make the acquisitions were provided through the Company's credit
facility. The majority of the intangible assets acquired are being amortized
over a five year period. See Note 13 for acquisitions included above, which also
includes a related party.

The acquisitions were accounted for using the purchase method of accounting
and the purchase price was allocated to the various tangible and intangible
assets acquired. Accordingly, the results of operations for the various
acquisitions have been included in the results of the Company from the
respective effective dates.

A summary of the cash consideration and allocation of the purchase price as
of the acquisition dates are as follows:

<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Fair value of tangible assets acquired...................... $ 2,756,703 $3,302,000
Fair value of intangible assets acquired.................... 9,199,897 2,597,000
Liabilities assumed......................................... (1,232,670) (50,000)
----------- ----------
Cash paid................................................... $10,723,930 $5,849,000
=========== ==========
</TABLE>

3. NOTE RECEIVABLE

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Ferguson Henderson Investments, 10%, secured by real
property, payable $806 monthly, due November 10, 2001..... $31,237 $37,289
Less current maturity....................................... 6,856 6,206
------- -------
$24,381 $31,083
======= =======
</TABLE>

4. INVENTORIES

Inventories are as follows at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Raw material................................................ $ 244,328 $ 139,309
Winery:
Materials and grape production costs...................... 198,033 138,266
In process................................................ 746,996 494,817
Finished goods............................................ 529,953 299,240
Tasting room, miscellaneous and resale.................... 45,562 32,558
---------- ----------
$1,764,872 $1,104,190
========== ==========
</TABLE>

5. PREPAID EXPENSES

Prepaid expenses consist of the following at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Leases...................................................... $798,887 $505,539
Insurance................................................... 15,256 13,258
Miscellaneous............................................... 114,273 47,174
-------- --------
$928,416 $565,971
======== ========
</TABLE>

F-101
<PAGE> 267
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. PROPERTY AND EQUIPMENT

Major classes of property and equipment and accumulated depreciation are as
follows at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Outdoor Advertising
Buildings and improvements............................... $ 870,719 $ 593,537
Posters.................................................. 8,072,315 7,510,907
Bulletins................................................ 18,486,149 15,656,034
Shop equipment........................................... 458,691 329,493
Office furniture and equipment........................... 224,069 211,215
Autos and trucks......................................... 1,414,986 1,268,485
Land..................................................... 838,807 571,107
Construction in process, boards.......................... 363,913 178,736
----------- -----------
30,729,649 26,319,514
Less accumulated depreciation............................ 9,497,838 8,334,374
----------- -----------
21,231,811 17,985,140
----------- -----------
Winery
Buildings and improvements............................... $ 864,672 $ 844,850
Irrigation and wells..................................... 45,752 45,752
Vineyards................................................ 316,981 278,219
Landscaping.............................................. 26,194 26,194
Auto..................................................... 23,800 19,500
Vineyard equipment....................................... 129,356 125,502
Winery equipment......................................... 859,375 707,482
Office furniture and equipment........................... 50,349 40,749
Land..................................................... 376,133 376,133
----------- -----------
2,692,612 2,464,381
Less accumulated depreciation............................ 992,798 873,402
----------- -----------
1,699,814 1,590,979
----------- -----------
Corporate
Buildings and improvements............................... $ 699,474 $ 689,293
Office furniture and equipment........................... 18,647 18,647
Land..................................................... 41,448 42,783
----------- -----------
759,569 750,723
Less accumulated depreciation............................ 163,737 139,382
----------- -----------
595,832 611,341
----------- -----------
$23,527,457 $20,187,460
=========== ===========
</TABLE>

Depreciation expense for the years ended December 31, 1997 and 1996 and the
six months ended December 31, 1995 was $1,468,013, $1,086,108, and $522,293,
respectively.

F-102
<PAGE> 268
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. INTANGIBLE ASSETS

Intangible assets and accumulated amortization are as follows at December
31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Loans fees.................................................. $ 278,750 $ --
Goodwill.................................................... 5,339,883 438,965
Covenants not to compete.................................... 353,079 203,079
Advertising rights.......................................... 1,553,639 708,100
Permits and licenses........................................ 2,365,719 377,567
Lease rights................................................ 3,193,624 1,877,001
----------- ----------
13,084,694 3,604,712
Less accumulated amortization............................... 2,031,602 597,146
----------- ----------
$11,053,092 $3,007,566
=========== ==========
</TABLE>

Amortization expense for the years ended December 31, 1997 and 1996 and the
six months ended December 31, 1995 was $1,434,459, $230,412, and $52,998,
respectively.

8. LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Canadian Imperial Bank of Commerce, as administrative
agent for lenders under the Credit Agreement dated July
31, 1997, Term A loan, interest at LIBOR plus 2.75%,
collateralized by accounts receivable, inventory, sign
structures, and intangible assets, payable quarterly,
due June 2004**......................................... $30,000,000 $ --
Canadian Imperial Bank of Commerce, as administrative
agent for lenders under the Credit Agreement dated July
31, 1997, Revolving Line of Credit, interest ranging
from prime plus 2% or LIBOR plus 2.75%, collateralized
by accounts receivable, inventory, sign structures, and
intangible assets, payable quarterly, due June 2004**... 3,400,000 --
Canadian Imperial Bank of Commerce, as administrative
agent for lenders under the Credit Agreement dated July
31, 1997, Swing Loan, interest ranging from prime plus
2% or LIBOR plus 2.75%, collateralized by accounts
receivable, inventory, sign structures, and intangible
assets, payable at termination date, due June 2004**.... 1,455,565 --
Palmer Outdoor Advertising, Inc., 10.5%, collateralized by
sign structures, equipment, and inventory, payable
$10,266 monthly including interest, due January 2002.... 406,349 --
Anthony E. and Laverne L. Brum, 7%, collateralized by deed
of trust, payable $1,742 monthly including interest, due
August 2004............................................. 111,067 --
American Commercial Bank, 8%, collateralized by vehicle,
payable $394 monthly including interest, due March
2001.................................................... 13,443 --
</TABLE>

F-103
<PAGE> 269
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
American Commercial Bank, 8%, collateralized by vehicle,
payable $474 monthly including interest, due March
2001.................................................... 16,176 --
William H. and Jannette L. Kunz, 12.25%, uncollateralized,
payable $6,631 monthly including interest, due May
2010.................................................... 505,043 --
LarMark, Inc., non-interest bearing, unsecured, due
January 1998............................................ 425,000 --
Virgil and Ruth Rose, 7%, collateralized by deed of trust,
payable $931 monthly including interest, due February
2026.................................................... 137,315 138,822
Paragon Outdoor Advertising, non-interest bearing,
uncollateralized, payable $608 monthly, due July 2001... 26,157 33,456
Gaechter Outdoor Advertising, non-interest bearing,
uncollateralized, payable in decreasing annual
installments ranging from $28,000 to $21,600, due August
2001.................................................... 96,000 124,000
Ken Lyons and Michael Burkett, non-interest bearing,
uncollateralized, payable $710 monthly, due May 2001.... 29,097 37,613
Pesenti Winery, noninterest bearing, collateralized by
sign structure, payable $1,500 per year, due December
2003.................................................... 9,000 10,500
Advanced Outdoor, noninterest bearing, collateralized by
sign structures, payable $9,500 per month, due December
1998.................................................... 102,000 214,000
Antelope Valley Bank, 8.5%, collateralized by vehicle,
payable $466 monthly including interest, payable August
2001.................................................... -- 21,471
Don Enger and Clayton Enger, 8.5%, collateralized by deed
of trust, payable $256 monthly including interest, due
July 2001............................................... -- 11,648
Massachusetts Mutual Life Insurance Co., 11.05%,
unsecured, payable $500,000 per year beginning November
11, 1994, interest payable quarterly, due November
1999.................................................... -- 1,500,000
Massachusetts Mutual Life Insurance Co., 10.9%, unsecured,
payable $687,500 per year, interest payable quarterly,
due August 1999......................................... -- 2,062,500
Massachusetts Mutual Life Insurance Company, 11.55%,
unsecured, payable $500,000 per year beginning June 1,
1996, interest payable quarterly, due June 2002......... -- 3,000,000
Bank of Santa Maria, interest at prime plus 2.5%,
collateralized by deed of trust, payable $1,188 per
month including interest, due May 2002.................. -- 119,695
Bank of Santa Maria, 9.5%, collateralized by vehicle,
payable $1,168 per month including interest, due August
1997.................................................... -- 4,244
Alta and Fred Higginbotham, 8%, collateralized by deed of
trust, payable $150 per month, due January 2000......... -- 6,771
Estates Trust, Inc., 9%, collateralized by deed of trust
and personally guaranteed by E. Thomas Martin, payable
$862 per month including interest, due October 2009..... -- 78,578
</TABLE>

F-104
<PAGE> 270
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Barbara Lehmann, 10%, collateralized by deed of trust,
interest payable monthly, due March 1998................ -- 20,000
Christine and Alice Henderson, 9%, collateralized by deed
of trust, payable $805 per month including interest, due
April 2011.............................................. -- 96,034
Central Coast Federal Land Bank, 7.5%, collateralized by
winery deed of trust, products and crops inventory and
accounts receivable, payable $7,126 per month including
interest, due November 2015............................. -- 797,081
Central Coast Production Credit Association, 9.75%,
collateralized by winery accounts receivable and
inventory, interest payable quarterly, due January
1999.................................................... -- 150,000
Canadian Imperial Bank of Commerce, interest at LIBOR plus
2.5%, collateralized by the Amarillo Division's accounts
receivable, inventory, sign structures and intangible
assets and personally guaranteed by E. Thomas Martin and
David Weyrich, interest payable monthly, due May
1997**.................................................. -- 5,500,000
Central Coast Production Credit Association, interest at
prime plus 1.5%, collateralized by winery equipment,
payable $5,590 monthly including interest, due August
2000.................................................... -- 198,165
Homer Hensley and Rick Hensley, 8.5%, collateralized by
deed of trust, payable $1,231 monthly including
interest, due January 2001.............................. -- 50,813
Paragon Outdoor Advertising, 8%, collateralized by sign
structures, payable $2,636 monthly including interest,
due July 2001........................................... -- 121,035
----------- -----------
36,732,212 14,296,426
Less current maturities................................... 690,718 7,460,727
----------- -----------
$36,041,494 $ 6,835,699
=========== ===========
</TABLE>

Aggregate maturities of long-term debt at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1998........................................................ $ 690,718
1999........................................................ 5,676,502
2000........................................................ 6,189,260
2001........................................................ 6,937,451
2002........................................................ 10,084,059
Thereafter.................................................. 7,154,222
-----------
$36,732,212
===========
</TABLE>

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

** Loan has varying interest rates based on Company performance and indexes
found in the Credit Agreement dated July 31, 1997. At December 31, 1997 the
effective interest rates ranged from 7.1875% to 8.5%.

The Company has entered into an interest rate cap primarily to protect
against rising interest exposure of its floating rate long-term debt. The
difference to be paid or received on the cap is included in interest expense

F-105
<PAGE> 271
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

as payments are made or received. At December 31, 1997, the Company had
outstanding interest rate cap agreements with two commercial banks having a
total notional principal amount of $50,000,000. This agreement effectively
changes the Company's interest exposure on $50,000,000 of floating rate debt to
a fixed 6.5% with a floor of 5.5%. The interest rate cap agreement matures
September 18, 2000.

During 1997, the Company sold an interest rate floor for a gain of
$220,000. This gain is included in other income.

Interest expense consists of interest on notes payable, management fees and
the cost associated with the purchase of the interest rate cap instrument.

Prime rate was 8.5% and 8.25% at December 31, 1997 and 1996, respectively.

LIBOR rate was 5.938% and 5.625% at December 31, 1997 and 1996,
respectively.

9. NOTE PAYABLE, BANK

Note payable, bank is as follows at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
---- --------
<S> <C> <C>
Heritage Oaks Bank, interest at prime plus .5%,
uncollateralized, interest payable monthly, due May
1997...................................................... $ -- $800,000
==== ========
</TABLE>

Prime rate was 8.25% at December 31, 1996.

10. DISTRIBUTIONS

In January, May, August, and October 1997 and January, May, August, and
October 1996 and in July and October 1995, the Company declared a $.75 per share
cash distribution for 82,443 shares outstanding. At December 31, 1997 and 1996,
$61,832 and $61,658 were payable January 1, 1998 and 1997, respectively.
Subsequent to conversion of the Company to an S-corporation, effective July 1,
1995, the Company began making distributions equal to approximately 49% of
estimated taxable income to its' shareholders to cover their tax liabilities.
Distributions during the year ended December 31, 1997, amounted to $3,140,079,
including a $2,000,000 special distribution occurring as a result of an
acquisition. Distributions during the year ended December 31, 1996, related to
1995 and 1996 taxable income, amounted to $1,353,618.

11. DEFERRED INCOME TAXES

For state tax purposes, the applicable states do recognize "S" Corporation
status; however, they still impose a tax at the corporate level, generally at a
rate significantly lower than the regular corporate rate. Deferred tax assets
and liabilities relate to temporary differences associated with state income
taxes.

Income tax expense (benefit) for the years ended December 31, 1997 and 1996
and six months ended June 30, 1995 consisted of the following:

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -----------
<S> <C> <C> <C>
Current.............................................. $23,458 $49,827 $ 24,170
Deferred............................................. -- 7,826 (2,996,487)
------- ------- -----------
Income tax expense (benefit)......................... $23,458 $57,653 $(2,972,317)
======= ======= ===========
</TABLE>

F-106
<PAGE> 272
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Components of deferred income tax balances at December 31, 1997 and 1996
consisted of:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Current deferred tax assets................................. $ 1,441 $ 1,500
======== ========
Long-term deferred tax liabilities.......................... $102,375 $111,008
======== ========
</TABLE>

Deferred income taxes arise primarily from temporary differences due to use
of accelerated depreciation methods for income tax purposes and the
straight-line method and the use of the allowance method of accounts receivable
for financial reporting purposes.

12. RELATED PARTY TRANSACTIONS

Through February 1, 1996 the Company provided management services to Martin
Media, a company having common shareholders/partners, at a rate approximating 3%
of Martin Media's gross revenue. Management fees of $78,263 were received by the
Company from Martin Media during the year ended December 31, 1996.

Subsequent to December 31, 1995, and effective February 1, 1996, the
Company divested itself of all management and administrative employees and
contracted with M.W. Sign Company, a company wholly owned by E. Thomas Martin
and David Weyrich, to provide the Company with management services at 3% of
gross revenue. As of January 1, 1997, management fees increased to 4% of gross
revenue. Management fees of $895,281 and $472,931 were paid to M.W. Sign Company
during the years ended December 31, 1997 and 1996, respectively.

13. COMMITMENTS

Leases:

The Company leases land in connection with its outdoor advertising posters
and panels as well as for office and yard space. The Company also leases office
and shop buildings which are located in different geographic areas within the
various divisions. A portion of these are long-term leases.

Lease expense for the years ended December 31, 1997 and 1996 and six months
ended December 31, 1995 was $4,748,420, $2,333,218 and $1,064,875, respectively.

Future minimum lease payments under noncancellable leases at December 31,
1997 are as follows:

<TABLE>
<CAPTION>
POSTERS,
YEARS ENDING DECEMBER 31, BUILDINGS BULLETINS TOTAL
- ------------------------- --------- ---------- ----------
<S> <C> <C> <C>
1998.............................................. $ 19,533 $ 162,400 $ 181,933
1999.............................................. 19,944 162,400 182,344
2000.............................................. 19,944 162,400 182,344
2001.............................................. 21,285 162,400 183,685
2002.............................................. 21,732 162,400 184,132
Thereafter........................................ 48,897 454,400 503,297
-------- ---------- ----------
$151,335 $1,266,400 $1,417,735
======== ========== ==========
</TABLE>

On August 1, 1995, the Company entered into a lease with Outdoor Systems
Company of Kansas City. Under the terms of the lease Outdoor Systems leased 87
outdoor advertising structures from the Company for $12,500 per month. The
agreement terminated December 31, 1997.

F-107
<PAGE> 273
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Acquisition, purchase and sales options

On July 31, 1997, the Company entered into an agreement with another
company to acquire certain assets, including sign structures, equipment, and
related intangibles located in Nevada, Arizona, and California for a total
purchase price of $60,000,000. This purchase agreement has two segments, the
first of which provided for the purchase of assets totaling $20,500,000.
Simultaneously, and as part of the master agreement, the Company entered into an
agreement with Martin Media (related party) to sell them those assets located in
their geographical service area, primarily the Las Vegas and Colorado River
markets, for $11,273,400. The Company's net acquisition price under the first
segment of the agreement was $9,226,600.

The second segment of the agreement provides an option for the Company to
purchase additional assets for $39,500,000. As part of this transaction, the
Company has also provided Martin Media with an option to purchase the assets
located in the Las Vegas and Colorado River markets for $3,077,000. The
Company's net acquisition price for assets to be received under the second
segment of the agreement will be $36,423,000.

Upon execution of the option agreement, the Company deposited $6,000,000 in
good faith with the seller. Similarly, Martin Media deposited $463,800 with the
Company resulting in a net deposit of $5,536,200. The option agreement expires
October 1, 1998. Should the Company not exercise the option, the seller holds an
option agreement whereby it can repurchase the assets originally sold to the
Company and assets owned by the Company in and around the Bakersfield area.

As part of the option agreement, the Company will manage those assets
covered by the option agreement. The payment for the use of these assets through
the option period will approximate $285,000 per month. Revenue earned through
the managed assets is subject to the 4% management fee paid to M.W. Sign, Inc.

Credit facility

On July 31, 1997, the Company entered into an agreement with Canadian
Imperial Bank of Commerce, as administrative agent for Lenders under the credit
agreement dated July 31, 1997. Under the terms of this agreement, the Term B
Loan is available to fund future acquisitions in the amount of $20,000,000. As
of December 31, 1997, the Company's outstanding obligation was $-0-.

14. SUBSEQUENT EVENTS

Subsequent to December 31, 1997, the Company acquired substantially all of
the assets and assumed certain liabilities of one outdoor advertising company at
an aggregate purchase price of $12,500,000. Funds used to make the purchase were
provided through the Company's existing credit facility.

F-108
<PAGE> 274

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Martin & MacFarlane, Inc.
Paso Robles, California

We have audited the accompanying balance sheet of Martin & MacFarlane, Inc.
as of June 30, 1995 and the related statements of income, retained earnings and
cash flows for the year then ended (included at F-110 through F-120). These
financial statements are the responsibility of Martin & MacFarlane, Inc.'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 Martin & MacFarlane, Inc. as
of June 30, 1995 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

BARBICH LONGCRIER HOOPER & KING
ACCOUNTANCY CORPORATION

By: /s/ GEOFFREY B. KING, CPA
--------------------------------
Geoffrey B. King, CPA

Bakersfield, California
August 25, 1995

F-109
<PAGE> 275

MARTIN & MACFARLANE, INC.

BALANCE SHEET
JUNE 30, 1995

ASSETS

<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Current Assets
Cash and equivalents (Note 7)............................. $ 351,705
Restricted cash (Note 6).................................. 306,154
Certificates of deposit................................... 200,000
Investments............................................... 8,400
Trade accounts receivable, less allowance for doubtful
accounts of $100,000................................... 1,546,381
Other receivables......................................... 78,649
Inventories (Note 2)...................................... 768,035
Prepaid expenses (Note 3)................................. 630,548
Current deferred income taxes (Note 10)................... 145,554
-----------
4,035,426
-----------
Property and Equipment, net of accumulated depreciation
(Notes 4, 6 and 7)........................................ 16,872,469
-----------
Intangible Assets, net of accumulated amortization (Note
5)........................................................ 764,898
-----------
Other Assets................................................ 20,171
-----------
$21,692,964
===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt (Note 6)............. $ 1,848,465
Note payable, bank (Note 7)............................... 200,000
Accounts payable.......................................... 652,567
Accrued expenses.......................................... 319,021
Dividends payable (Note 9)................................ 26,451
Unearned income........................................... 156,881
Income taxes payable (Note 10)............................ 891,486
-----------
4,094,871
-----------
Long-Term Debt, less current maturities (Note 6)............ 8,857,936
-----------
Long-Term Deferred Income Taxes (Note 10)................... 3,208,967
-----------
Commitments (Note 13)
Stockholders' Equity
Common stock, no par or stated value, authorized 150,000
shares, issued and outstanding 82,443 shares (Note
9)..................................................... 1,113,070
Retained earnings......................................... 4,418,120
-----------
5,531,190
-----------
$21,692,964
===========
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-110
<PAGE> 276

MARTIN & MACFARLANE, INC.

STATEMENT OF INCOME
YEAR ENDED JUNE 30, 1995

<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Revenues.................................................... $16,168,763
Cost of sales............................................... 2,045,552
-----------
Gross profit...................................... 14,123,211
Managers' controlled operating expenses..................... 10,070,408
-----------
Income from managers' operations.................. 4,052,803
-----------
Other operating expenses
Depreciation and amortization expense..................... 1,100,305
-----------
Operating income.................................. 2,952,498
-----------
Other income (expense)
Interest expense.......................................... (1,313,456)
Other income.............................................. 152,804
Gain on disposition of assets............................. 2,405,522
Employee separation expense............................... (269,803)
-----------
Income before income taxes.................................. 3,927,565
Income tax expense (Note 10)........................... 1,519,542
-----------
Net income........................................ $ 2,408,023
===========
</TABLE>

The accompanying notes are an integral part of this statement.

F-111
<PAGE> 277

MARTIN & MACFARLANE, INC.

STATEMENT OF RETAINED EARNINGS
YEAR ENDED JUNE 30, 1995

<TABLE>
<CAPTION>
1995
----------
<S> <C>
Balance, beginning of year.................................. $2,195,593
Net income................................................ 2,408,023
Dividends (Note 9)........................................ (185,496)
----------
Balance, end of year........................................ $4,418,120
==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-112
<PAGE> 278

MARTIN & MACFARLANE, INC.

STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 1995

<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Cash flows from operating activities:
Net income................................................ $ 2,408,023
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,100,305
Gain on disposition of assets.......................... (2,405,522)
Increase in deferred income taxes...................... 469,749
Changes in operating assets and liabilities:
Increase in accounts receivable........................ (57,463)
Increase in other receivables.......................... (66,187)
Decrease in inventory.................................. 11,117
Decrease in prepaid expenses........................... 34,520
Increase in other assets............................... (9,065)
Increase (decrease) in accounts payable................ 5,887
Increase (decrease) in accrued liabilities............. (176,570)
Increase in unearned income............................ 30,106
Increase (decrease) in income taxes payable............ 820,732
-----------
Net cash provided by operating activities......... 2,165,632
-----------
Cash flows from investing activities:
Proceeds from sale of investments......................... 5,000
Increase in certificates of deposit....................... (200,000)
Proceeds from sale of fixed assets........................ 2,656,384
Capital expenditures...................................... (736,258)
Construction of capital improvements...................... (281,102)
Principal payments on loans and notes receivable.......... 32,000
Purchase of intangible assets............................. (310,001)
-----------
Net cash provided by investing activities......... 1,166,023
-----------
Cash flows from financing activities:
Proceeds from notes payable............................... 1,007,317
Principal payments on notes payable....................... (3,946,286)
Dividends paid............................................ (185,496)
-----------
Net cash used in financing activities............. (3,124,465)
-----------
Net increase in cash and cash equivalents................... 207,190
Cash and cash equivalents at beginning of year.............. 450,669
-----------
Cash and cash equivalents at end of year.................... $ 657,859
===========
Unrestricted cash........................................... $ 351,705
Restricted cash............................................. 306,154
-----------
$ 657,859
===========
Supplemental disclosures of cash flow information:
Interest paid............................................. $ 1,339,278
===========
Payment of income taxes................................... $ 229,061
===========
</TABLE>

Schedule of noncash investing:

The Company entered into an exchange agreement with National Outdoor
Media (3M) during the year ended June 30, 1995. In accordance with the
terms of the exchange agreement, the Company traded boards in Kansas City,
Missouri to 3M in exchange for posters and bulletins in Bakersfield,
California and Kansas at a value of $1,033,850 and $2,614,150 cash.

The accompanying notes are an integral part of this statement.

F-113
<PAGE> 279

MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of business

Martin & MacFarlane, Inc. (the Company) was incorporated December 2, 1971.
The Company owns, leases, and manages billboards on a contractual basis
nationwide for the purpose of providing outdoor advertising services. The
Company also owns and operates a small winery located in Paso Robles,
California. The Company extends credit in the form of accounts receivable to
businesses and advertisers doing business in the above noted areas.

Significant accounting policies

BASIS OF ACCOUNTING

The financial statements are prepared on an accrual basis, which recognizes
income when earned and expenses when incurred.

CASH AND CASH EQUIVALENTS

The Company considers cash and cash equivalents to be all highly liquid
investments purchased with a maturity of three months or less. As of June 30,
1995, the Company held funds of $646,293 in one financial institution.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Bad debts are recognized under the allowance method of accounting which is
based on an average of actual write-offs in past years.

INVESTMENTS

Investments in marketable equity securities are carried at the lower of
cost or market. Decline in market values below cost, which are temporary in
nature, are not recognized as losses until the decline in value is deemed
permanent or until the security is sold.

INVENTORY

Inventory is valued at the lower of cost or market. Valuation is determined
using the first-in, first-out method.

F-114
<PAGE> 280
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated over estimated
useful lives on a straight-line or accelerated basis. Repairs and maintenance
and small equipment purchases are expensed as incurred. Expenditures which
significantly increase asset values or extend useful lives are capitalized.
Estimated useful lives in years are as follows:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements.................................. 15-31
Posters..................................................... 7-25
Bulletins................................................... 7-25
Shop equipment.............................................. 3-10
Office furniture and equipment.............................. 5-10
Autos and trucks............................................ 3-7
Irrigation equipment........................................ 7-30
Vineyards................................................... 10-25
</TABLE>

INTANGIBLE ASSETS

Goodwill is recorded at cost and is amortized using the straight-line
method over a forty year period.

Covenants not to compete are recorded at cost and are amortized using the
straight-line method over the contractual period specified, which ranges from
five to ten years.

INCOME TAXES

Effective July 1, 1993, as required by professional standards, the Company
adopted Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. Deferred income taxes are provided on timing differences between
financial statement and taxable incomes. Timing differences arise primarily from
the use of the accelerated methods of depreciation, the direct write-off method
of accounting for bad debts, and the carryforward of net operating losses for
income tax purposes. Determination of current or long-term status of the asset
or liability is based upon when the particular timing difference reverses.

2. INVENTORIES

Inventories are as follows at June 30, 1995:

<TABLE>
<CAPTION>
1995
--------
<S> <C>
Raw material................................................ $ 84,383
Winery:
Materials and grape production costs...................... 141,255
In process................................................ 162,669
Finished goods............................................ 359,060
Tasting room, miscellaneous and resale.................... 20,668
--------
$768,035
========
</TABLE>

F-115
<PAGE> 281
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. PREPAID EXPENSES

Prepaid expenses consist of the following at June 30, 1995:

<TABLE>
<CAPTION>
1995
--------
<S> <C>
Leases...................................................... $519,079
Insurance................................................... 36,600
Miscellaneous............................................... 74,869
--------
$630,548
========
</TABLE>

4. PROPERTY AND EQUIPMENT

Major classes of property and equipment and accumulated depreciation are as
follows at June 30, 1995:

<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Outdoor Advertising
Buildings and improvements................................ $ 500,731
Posters................................................... 5,987,468
Bulletins................................................. 13,850,302
Shop equipment............................................ 278,749
Office furniture and equipment............................ 191,692
Autos and trucks.......................................... 1,063,156
Land...................................................... 414,472
Construction in process, boards........................... 69,038
-----------
22,355,608
Less accumulated depreciation............................. 7,105,290
-----------
15,250,318
-----------
Winery
Buildings and improvements................................ 664,515
Irrigation and wells...................................... 45,752
Vineyards................................................. 278,219
Landscaping............................................... 26,194
Auto...................................................... 19,500
Vineyard equipment........................................ 119,142
Winery equipment.......................................... 320,720
Office furniture and equipment............................ 37,604
Land...................................................... 206,133
-----------
1,717,779
Less accumulated depreciation............................. 755,093
-----------
962,686
-----------
</TABLE>

F-116
<PAGE> 282
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Corporate
Buildings and improvements................................ $ 654,970
Office furniture and equipment............................ 267,308
Land...................................................... 42,783
-----------
965,061
Less accumulated depreciation............................. 305,596
-----------
659,465
-----------
$16,872,469
===========
</TABLE>

Depreciation expense for the year ended June 30, 1995 was $1,021,709.

5. INTANGIBLES

Intangible assets and accumulated amortization are as follows at June 30,
1995:

<TABLE>
<CAPTION>
1995
----------
<S> <C>
Goodwill.................................................... $ 438,965
Covenants not to compete.................................... 69,000
Advertising rights.......................................... 136,100
Permits and licenses........................................ 168,567
Lease rights................................................ 335,001
----------
1,147,633
Less accumulated amortization............................... 382,735
----------
$ 764,898
==========
</TABLE>

Amortization expense for the year ended June 30, 1995 was $78,596.

6. RESTRICTED CASH

Restricted cash at June 30, 1995 consisted of the following:

<TABLE>
<CAPTION>
1995
--------
<S> <C>
Cash, interest bearing account, holdback account, held for
the mutual benefit of the Company and National Advertising
Company, by Chicago Title & Trust Company, until released
by joint order of the parties. Cash is to be released
within twelve months of the June 30, 1995 balance sheet
date. Cash subsequently received July 7, 1995............. $306,154
========
</TABLE>

F-117
<PAGE> 283
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. LONG-TERM DEBT

Long-term debt consists of the following at June 30, 1995:

<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Federal Land Bank, 5.75% and 6.73%, at 1995 and 1994,
collateralized by first trust deed, payable $3,510 per
month including interest, due May 1, 2011................. $ 410,068
Massachusetts Mutual Life Insurance Co., 11.05%, unsecured,
payable $500,000 per year beginning November 11, 1994,
interest payable quarterly, due November 15, 1999......... 2,500,000
Massachusetts Mutual Life Insurance Co., 10.9%, unsecured,
payable $687,500 per year beginning August 15, 1992,
interest payable quarterly, due August 15, 1999........... 3,437,500
Massachusetts Mutual Life Insurance Company, 11.55%,
unsecured, payable $500,000 per year beginning June 1,
1995, interest payable quarterly, due June 1, 2002........ 3,500,000
Boatmen's First National Bank, interest at prime plus 1.5%,
collateralized by first deed of trust, payable $1,420 per
month including interest, due July 8, 2002................ 91,056
Citizens Bank of Paso Robles, interest at prime plus 2.5%,
collateralized by first trust deed, payable $1,188 per
month including interest, due May 13, 2002................ 124,134
Sierra Outdoor, 8%, collateralized by bulletins, payable
$940 per month including interest, due April 15, 1996..... 9,065
Citizens Bank of Paso Robles, interest at 9.5%,
collateralized by vehicle, payable $555 per month
including interest, due August 15, 1997................... 12,962
Citizens Bank of Paso Robles, interest at 9.5%,
collateralized by vehicle, payable $613 per month
including interest, due August 15, 1997................... 14,206
Alta and Fred Higginbotham, 8%, collateralized by deed of
trust, payable $150 per month, due January 1, 2000........ 8,544
Estates Trust, Inc., 9%, collateralized by deed of trust,
payable $862 per month including interest, due October 1,
2009...................................................... 82,916
Barbara Lehmann, 10%, collateralized by deed of trust,
interest payable monthly, due March 30, 1998.............. 20,000
Christine and Alice Henderson, 9%, collateralized by deed of
trust, payable $805 per month including interest, due
April 8, 2011............................................. 97,450
Pesenti Winery, non-interest bearing, collateralized by sign
structure, payable $1,500 per year, due December 15,
2003...................................................... 13,500
Advanced Outdoor, non-interest bearing, collateralized by
sign structures, payable $8,500 per month, due December
10, 1998.................................................. 357,000
Advanced Outdoor, non-interest bearing, collateralized by
sign structures, payable $1,000 per month, due October 1,
1997...................................................... 28,000
-----------
10,706,401
Less current maturities..................................... 1,848,465
-----------
$ 8,857,936
===========
</TABLE>

Prime rate was 9% at June 30, 1995.

F-118
<PAGE> 284
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Aggregate maturities of long-term debt at June 30, 1995 are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
JUNE 30,
------------
<S> <C>
1996........................................................ $ 1,848,465
1997........................................................ 1,853,095
1998........................................................ 1,850,465
1999........................................................ 1,775,319
2000........................................................ 1,728,146
Thereafter.................................................. 1,650,911
-----------
$10,706,401
===========
</TABLE>

8. NOTE PAYABLE, BANK

Note payable, bank is as follows at June 30, 1995:

<TABLE>
<CAPTION>
1995
--------
<S> <C>
Citizens Bank of Paso Robles, interest at 8.5%,
collateralized by certificate of deposit, annually
renewable on April 3, interest payable monthly, due April
3, 1996................................................... $200,000
========
</TABLE>

Prime rate was 9% at June 30, 1995.

9. DIVIDENDS PAYABLE

In January 1995, the Company declared a $.50 per share cash dividend, for
82,443 shares outstanding. In May 1995 the Company declared a $.75 per share
dividend, for 82,443 shares outstanding. At June 30, 1995 $26,451 was payable
July 1, 1995.

10. DEFERRED INCOME TAXES

Income tax expense for the year ended June 30, 1995 is computed under SFAS
109 and consisted of the following:

<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
---------- -------- ----------
<S> <C> <C> <C>
Current........................................... $ 808,602 $241,191 $1,049,793
Deferred.......................................... 657,023 100,162 757,185
Tax benefit of net operating loss carryforward.... (251,439) (35,997) (287,436)
---------- -------- ----------
Income tax expenses............................... $1,214,186 $305,356 $1,159,542
========== ======== ==========
</TABLE>

Components of deferred income tax balances at June 30, 1995 consisted of:

<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
----------- -------- ----------
<S> <C> <C> <C>
Current deferred tax assets....................... $ 136,254 $ 9,300 $ 145,554
========== ======== ==========
Long-term deferred tax liabilities................ $2,539,860 $669,107 $3,208,967
========== ======== ==========
</TABLE>

Deferred income tax liabilities arise primarily from timing differences due
to use of accelerated depreciation methods for income tax purposes and the
straight-line method for financial reporting purposes. Deferred income tax
assets arise primarily from the application of federal and state net operating
loss carryovers.

At June 30, 1995, the Company had alternative minimum tax credits in the
amount of $16,837, available to offset future taxes. Tax credits are included in
deferred tax assets.

F-119
<PAGE> 285
MARTIN & MACFARLANE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

11. RELATED PARTY TRANSACTIONS

The following transaction occurring between the Company and a related
party, which is not presented elsewhere in these financial statements, is as
follows:

Martin Media, which has partners who are also stockholders in the Company,
contracts the Company to perform management duties. Martin Media pays a
management fee to the Company which is approximately 3% of Martin Media's gross
revenue. Management fees of $986,356 were received from the partnership during
the fiscal year ending June 30, 1995.

12. PROFIT SHARING PLAN

Discretionary contributions under a defined contribution profit sharing
plan, which are determined by the Company's Board of Directors, have been
accrued to a trust for the benefit of qualified employees in the amount of
$50,000 for the year ended June 30, 1995. All costs are funded currently.

13. COMMITMENTS

The Company leases land in connection with its outdoor advertising posters
and panels as well as for office and yard spaces. These are long-term operating
leases which the Company and lessor have the option to terminate with thirty
days notice.

Lease expense for the year ended June 30, 1995 was $2,218,480.

The Company leases office and shop buildings which are located at various
divisions. A portion of these are long-term leases.

Future minimum lease payments under noncancellable leases at June 30, 1995
are as follows:

<TABLE>
<S> <C>
Years ending June 30,
1996...................................................... $ 47,747
1997...................................................... 22,665
1998...................................................... 18,711
1999...................................................... 19,944
2000...................................................... 19,944
Thereafter................................................ 121,830
--------
$250,841
========
</TABLE>

On August 1, 1995, the Company entered into a lease with Gannett Outdoor
Company of Kansas City. Under the terms of the lease, Gannett Outdoor is leasing
87 outdoor advertising structures from the Company for $12,500 per month. The
agreement will terminate on December 31, 1997. In addition, Gannett Outdoor
shall have the right to exercise an option to purchase these structures at any
time on or after November 2, 1995 and prior to June 30, 1997 for the option
price of $1,030,000.

F-120
<PAGE> 286

MARTIN & MACFARLANE, INC.

STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)

<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
Income...................................................... $16,352,832 $9,717,160
Cost of sales............................................... 1,620,010 1,151,641
----------- ----------
Gross profit...................................... 14,732,822 8,565,519
Managers' controlled operating expenses..................... 8,323,130 5,033,818
----------- ----------
Income from managers' operations.................. 6,409,692 3,531,701
Other operating expenses:
Depreciation and amortization............................. 1,676,518 909,068
Management fees........................................... 1,672,981 98,132
Refinance and acquisition................................. 103,614 39,801
----------- ----------
3,453,113 1,047,001
Operating income.................................. 2,956,579 2,484,700
Nonoperating income (expenses):
Interest expense.......................................... (1,928,998) (796,203)
----------- ----------
(1,928,998) (796,203)
----------- ----------
Income before income taxes.................................. 1,027,581 1,688,497
Income tax expense.......................................... (9,992) --
----------- ----------
Net income........................................ $ 1,017,589 $1,688,497
=========== ==========
</TABLE>

The accompanying note is an integral part of these statements.

F-121
<PAGE> 287

MARTIN & MACFARLANE, INC.

STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)

<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 1,017,589 $ 1,688,497
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,676,518 909,068
Changes in operating assets and liabilities (exclusive
of acquisitions):
Increase in accounts receivable...................... (1,111,203) (118,870)
Increase in other receivables........................ (6,167) 279,700
Decrease in inventories, raw materials............... 75,728 117,325
Increase in prepaid expenses......................... (334,730) (225,219)
Decrease in deferred income tax asset................ 59 --
Increase in other assets............................. (125,142) (1,442,229)
Decrease in accounts payable......................... (711,997) 4,494,655
Decrease in accrued expenses......................... (121,962) (152,733)
Decrease in accrued income........................... (10,788) (64,230)
------------ -----------
Net cash provided (used) by operating
activities..................................... 347,905 5,485,964
Cash flows from investing activities:
Decrease (increase) in notes receivable................... 29,722 (22,129)
Change in intangible assets............................... (10,768,268) (810,001)
Capital expenditures...................................... (4,879,517) (1,821,808)
------------ -----------
Net cash used in investing activities............. (15,618,063) (2,653,938)
------------ -----------
Cash flows from financing activities:
Proceeds (payments) on long-term debt..................... 16,476,756 (325,153)
Distributions to partners................................. (463,235) (1,051,176)
------------ -----------
Net cash provided by investing activities......... 16,013,521 (1,376,329)
------------ -----------
Net decrease in cash........................................ 743,363 1,455,697
Cash at beginning of year................................... (27,790) (529,763)
------------ -----------
Cash at end of period....................................... $ 715,573 $ 925,934
============ ===========
Supplemental disclosures of cash flow information:
Interest paid........................................ $ 1,912,798 $ 796,203
============ ===========
Payment of income taxes.............................. $ 3,584 $ --
============ ===========
</TABLE>

The accompanying note is an integral part of these statements.

F-122
<PAGE> 288

MARTIN & MACFARLANE, INC.

NOTE TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

F-123
<PAGE> 289

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-124
<PAGE> 290

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-125
<PAGE> 291

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-126
<PAGE> 292

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-127
<PAGE> 293

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

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-128
<PAGE> 294
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

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 advertiser accounted for more than 10% of net revenues in
1994, 1995, or 1996. Certain

F-129
<PAGE> 295
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.

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.

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-130
<PAGE> 296
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>

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. Deferred tax assets and
liabilities relating to state income taxes are not material.

(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.

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.

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-131
<PAGE> 297
KYSR INC. AND KIBB INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(8) 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....................... $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-132
<PAGE> 298

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-133
<PAGE> 299

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-134
<PAGE> 300

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-135
<PAGE> 301

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-136
<PAGE> 302

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.

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

F-137
<PAGE> 303
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

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 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-139
<PAGE> 305
WLIT INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(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. Accordingly, the Company's financial statements
include no charges for interest.

(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.

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.

(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-140
<PAGE> 306
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-141
<PAGE> 307

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
Chancellor Media Corporation of Los Angeles:

We have audited the accompanying combined statement of assets acquired as
of April 3, 1998 and the related combined statements of revenues and direct
operating expenses of KBIG-FM, KLDE-FM, and WBIX-FM (formerly WNSR-FM),
(collectively, the "Company"), for each of the three years ended December 31,
1997. 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 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 combined statement of assets acquired and
the combined statements of revenues and direct operating expenses 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.

The accompanying combined financial statements reflect the assets acquired
and the revenues and direct operating expenses attributable to the Company as
described in Note 1 and are not intended to be a complete presentation of the
assets or revenues and expenses of the Company.

In our opinion, the combined statement of assets acquired and statements of
revenues and direct operating expenses present fairly, in all material respects,
the assets described in Note 1 as of April 3, 1998 and the revenues and direct
operating expenses as described in Note 1 for each of the three years ended
December 31, 1997, in conformity with generally accepted accounting principles.

PRICEWATERHOUSECOOPERS LLP

Dallas, Texas
February 16, 1999

F-142
<PAGE> 308

KBIG-FM, KLDE-FM AND WBIX-FM (FORMERLY WNSR-FM)

COMBINED STATEMENT OF ASSETS ACQUIRED
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
APRIL 3,
1998
--------
<S> <C>
Property and equipment, net................................. $5,699
Broadcast licenses.......................................... --
------
$5,699
======
</TABLE>

The accompanying notes are an integral part of the financial statements

F-143
<PAGE> 309

KBIG-FM, KLDE-FM, AND WBIX-FM (FORMERLY WNSR-FM)

COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- -------------------
1995 1996 1997 1997 1998
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total revenue................................ $55,125 $55,286 $44,738 $ 9,870 $10,109
Less agency commissions...................... (9,252) (8,485) (6,290) (1,521) (1,398)
------- ------- ------- ------- -------
Net revenue........................ 45,873 46,801 38,448 8,349 8,711
------- ------- ------- ------- -------
Direct operating expenses:
Programming, technical and news............ 7,933 7,081 6,906 1,820 1,690
Sales and promotion........................ 15,720 13,187 10,536 3,294 2,293
Station general and administrative......... 4,981 5,437 5,064 1,754 1,674
Depreciation expense....................... 976 975 1,000 250 185
------- ------- ------- ------- -------
Total.............................. 29,610 26,680 23,506 7,118 5,842
------- ------- ------- ------- -------
Excess of net revenues over direct operating
expenses................................... $16,263 $20,121 $14,942 $ 1,231 $ 2,869
======= ======= ======= ======= =======
</TABLE>

The accompanying notes are an integral part of the financial statements

F-144
<PAGE> 310

KBIG-FM, KLDE-FM, AND WBIX-FM (FORMERLY WNSR-FM)

NOTES TO THE COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

(1) ORGANIZATION AND BASIS OF PRESENTATION

The accompanying combined financial statements include the accounts of
KBIG-FM, KLDE-FM and WBIX-FM (formerly WNSR-FM), (collectively, the "Company").
The Company operates three commercial radio stations, KBIG-FM in Los Angeles,
KLDE-FM in Houston and WBIX-FM in New York. The Company is wholly owned by
Bonneville International Corporation. Bonneville Holding Company is the licensee
of the Company pursuant to certain licenses and authorizations issued by the
Federal Communications Commission.

On April 3, 1998, Bonneville International Corporation and Bonneville
Holding Company (together, "Bonneville") exchanged KBIG-FM, KLDE-FM and WBIX-FM
for Chancellor Media Corporation of Los Angeles ("CMCLA") stations WTOP-AM in
Washington, KZLA-FM in Los Angeles and WGMS-FM in Washington plus $63,000 in
cash under an asset exchange agreement. No liabilities were assumed by CMCLA in
the transaction. The accompanying financial statements do not reflect any
adjustments relating to this transaction. CMCLA operated KBIG-FM and KDLE-FM
under time brokerage agreements from October 1, 1997 to April 3, 1998 and
WBIX-FM from October 10, 1997 to April 3, 1998. Revenues and direct operating
expenses of the Company included in the Combined Statements of Revenues and
Direct Operating Expenses and recognized by CMCLA in its Consolidated Statement
of Operations amounted to net revenue of approximately $9,959 and direct
operating expenses of approximately $4,229 for the period ended December 31,
1997 and net revenue of approximately $8,711 and direct operating expenses of
approximately $5,657 for the period ended March 31, 1998.

The accompanying statement of assets acquired and statements of revenues
and direct operating expenses have been prepared in accordance with generally
accepted accounting principles and were derived from the historical accounting
records of the Company. Significant intercompany balances and transactions have
been eliminated in combination.

The statement of assets acquired includes the assets of the Company, which
were acquired by Chancellor Media Corporation of Los Angeles on April 3, 1998.
This statement does not include cash, accounts receivable, prepaid or other
assets, accounts payable, accrued expenses or other borrowings.

The statements of revenues and direct operating expenses include the
revenues and direct expenses directly attributable to each station. The
statements do not include amortization expense, corporate general and
administrative costs, interest expense, income taxes or the LMA fees earned by
Bonneville pursuant to the time brokerage agreements.

Complete financial statements, including historical balance sheets and
statements of cash flows, were not prepared as Bonneville has not segregated
indirect corporate operating cost information or related assets and liabilities
for the Company in its accounting records.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Property and Equipment

Property and equipment are stated at cost less accumulated depreciation
which approximates the appraised value of the assets at the date of exchange.
The Company continually evaluates the propriety of the carrying amount of
property and equipment to determine whether current events or circumstances
warrant adjustment to the carrying value. Repairs and maintenance costs are
charged to expense when incurred.

F-145
<PAGE> 311
KBIG-FM, KLDE-FM AND WBIX-FM (FORMERLY WNSR-FM)

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(b) Broadcast Licenses

Broadcast licenses are stated at zero as Bonneville has not segregated the
cost basis of such licenses to the station level. The Company continually
evaluates the propriety of the carrying amount of broadcast licenses to
determine whether current events or circumstances warrant adjustment to the
carrying value.

Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.

(d) 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 the
reported amounts of revenues and expenses. Actual results could differ from
those estimates.

(e) Unaudited Interim Financial Information

In the opinion of management, the unaudited interim combined statements of
revenues and direct operating expenses for the three months ended March 31, 1998
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 period presented. The results for the interim periods are not
necessarily indicative of results to be expected for any other interim periods
or for the full year.

F-146
<PAGE> 312

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
Chancellor Media Corporation of Los Angeles:

We have audited the accompanying statement of assets acquired as of May 29,
1998 and the related statements of revenues and direct operating expenses of
KODA-FM, (the "Company"), for each of the two years ended December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets acquired and the
statements of revenues and direct operating expenses 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.

The accompanying financial statements reflect the assets acquired and the
revenues and direct operating expenses attributable to the Company as described
in Note 1 and are not intended to be a complete presentation of the assets or
revenues and expenses of the Company.

In our opinion, the statement of assets acquired and statements of revenues
and direct operating expenses present fairly, in all material respects, the
assets described in Note 1 as of May 29, 1998 and the revenues and direct
operating expenses as described in Note 1 for each of the two years ended
December 31, 1997, in conformity with generally accepted accounting principles.

PRICEWATERHOUSECOOPERS LLP

Dallas, Texas
February 16, 1999

F-147
<PAGE> 313

KODA-FM

STATEMENT OF ASSETS ACQUIRED
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
MAY 29,
1998
-------
<S> <C>
Property and equipment, net................................. $391
Broadcast license........................................... --
----
$391
====
</TABLE>

The accompanying notes are an integral part of the financial statements

F-148
<PAGE> 314

KODA-FM

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
----------------- ---------------
1996 1997 1997 1998
------- ------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C>
Total revenue............................................ $18,950 $20,869 $4,440 $5,044
Less agency commissions.................................. (2,605) (2,889) (608) (691)
------- ------- ------ ------
Net revenue.................................... 16,345 17,980 3,832 4,353
------- ------- ------ ------
Direct operating expenses:
Programming, technical and news........................ 1,012 960 359 412
Sales and promotion.................................... 4,269 4,539 790 754
Station general and administrative..................... 2,125 2,036 529 465
Depreciation expense................................... 183 185 46 47
------- ------- ------ ------
Total.......................................... 7,589 7,720 1,724 1,678
------- ------- ------ ------
Excess of net revenues over direct operating expenses.... $ 8,756 $10,260 $2,108 $2,675
======= ======= ====== ======
</TABLE>

The accompanying notes are an integral part of the financial statements

F-149
<PAGE> 315

KODA-FM

NOTES TO THE FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

(1) ORGANIZATION AND BASIS OF PRESENTATION

The accompanying financial statements include the accounts of KODA-FM, (the
"Company"). The Company operates a commercial radio station, KODA-FM in Houston.
The Company is wholly owned by Capstar Broadcasting Corporation ("Capstar") and
formerly owned by SFX Broadcasting, Inc. ("SFX") prior to Capstar's acquisition
of SFX.

On May 29, 1998, Capstar exchanged KODA-FM for Chancellor Media Corporation
of Los Angeles ("CMCLA") stations WAPE-FM and WFYV-FM in Jacksonville under an
asset exchange agreement. As part of the transaction, CMCLA also paid cash of
$90,250 to the owners of KVET-AM, KVET-FM and KASE-FM, who simultaneously
transferred such stations to Capstar. No liabilities were assumed by CMCLA in
the transaction. The accompanying financial statements do not reflect any
adjustments relating to this transaction.

The statement of assets acquired includes the assets of the Company, which
were acquired by Chancellor Media Corporation of Los Angeles on May 29, 1998.
This statement does not include cash, accounts receivable, prepaid or other
assets, accounts payable, accrued expenses or other borrowings.

Complete financial statements, including historical balance sheets and
statements of cash flows, were not prepared as Capstar and SFX had not
segregated indirect corporate operating cost information or related assets and
liabilities for the Company in its accounting records.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Property and Equipment

(b) Broadcast Licenses

Broadcast licenses are stated at zero as Capstar has not segregated the
cost basis of such licenses to the station level. The Company continually
evaluates the propriety of the carrying amount of broadcast licenses to
determine whether current events or circumstances warrant adjustment to the
carrying value.

Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.

F-150
<PAGE> 316
KODA-FM

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

(d) 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 the
reported amounts of revenues and expenses. Actual results could differ from
those estimates.

(e) Unaudited Interim Financial Information

In the opinion of management, the unaudited interim statements of revenues
and direct operating expenses for the three months ended March 31, 1998 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
period presented. The results for the interim periods are not necessarily
indicative of results to be expected for any other interim periods or for the
full year.

F-151
<PAGE> 317

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
The Broadcast Group, Inc.
Detroit, Michigan

We have audited the accompanying balance sheets of The Broadcast Group,
Inc. as of December 31, 1998 and 1997, and the related statements of
stockholder's equity (deficit), income, and cash flows for the years 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Broadcast Group, Inc. as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.

KLEIMAN, CARNEY & GREENBAUM
Certified Public Accountants

February 18, 1999, except
the third paragraph of
Note 1 as to which the
date is April 23, 1999

F-152
<PAGE> 318

THE BROADCAST GROUP, INC.

BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997

ASSETS

<TABLE>
<CAPTION>
1998 1997
---------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash...................................................... $ 15,864 $ 157,168
Accounts receivable (less allowance for uncollectible
accounts of $259,182 and $343,000, respectively)....... 1,096,779 2,429,832
Prepaid expenses and deposits............................. 35,856 112,168
---------- -----------
Total Current Assets.............................. 1,148,499 2,699,168
---------- -----------
PROPERTY AND EQUIPMENT
Land...................................................... 1,225,800 1,225,800
Buildings and improvements................................ 724,117 713,070
Broadcast equipment....................................... 1,092,151 1,090,911
Office furniture and equipment............................ 807,873 765,791
---------- -----------
3,849,941 3,795,572
Less: Accumulated depreciation......................... 2,078,969 1,994,509
---------- -----------
1,770,972 1,801,063
---------- -----------
OTHER ASSETS
Licenses, goodwill and network affiliation costs.......... 2,911,200 2,911,200
Lease acquisition costs................................... 775,000 775,000
---------- -----------
3,686,200 3,686,200
Less: Accumulated amortization......................... 1,829,656 1,726,441
---------- -----------
1,856,544 1,959,759
---------- -----------
TOTAL ASSETS...................................... $4,776,015 $ 6,459,990
========== ===========

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

CURRENT LIABILITIES
Note payable -- parent company (due on demand with
interest at 5.56%)..................................... $3,229,341 $ 7,984,408
Accounts payable.......................................... 105,285 266,841
Accrued expenses
Salaries and commissions............................... 113,807 113,770
Taxes, other than income............................... 18,441 23,403
Profit sharing plan contribution....................... 21,000 36,000
---------- -----------
Total Current Liabilities......................... 3,487,874 8,424,422
---------- -----------
STOCKHOLDER'S EQUITY (DEFICIT)
Common stock, $1 par value, 10,000 shares authorized,
issued and outstanding................................. 10,000 10,000
Excess of amount paid in over par value of stock.......... 1,280,972 1,280,972
Deficit................................................... (2,831) (3,255,404)
---------- -----------
Total Stockholder's Equity (Deficit).............. 1,288,141 (1,964,432)
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
(DEFICIT)....................................... $4,776,015 $ 6,459,990
========== ===========
</TABLE>

See accompanying Notes to Financial Statements

F-153
<PAGE> 319

THE BROADCAST GROUP, INC.

STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1997 1998
----------------------------------------------------- -------------------------
STOCK
BALANCE, REDEMPTION BALANCE BALANCE
JANUARY 1, AND NET DECEMBER 31, NET DECEMBER 31,
1997 RETIREMENT INCOME 1997 INCOME 1998
----------- ----------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Preferred stock................. $ 20,000 $ (20,000) $ -- $ -- $ -- $ --
Common stock.................... 10,000 -- -- 10,000 -- 10,000
Excess of amount paid in over
par value of stock............ 9,545,380 (8,264,408) -- 1,280,972 -- 1,280,972
Deficit......................... (6,329,466) -- 3,074,062 (3,255,404) 3,252,573 (2,831)
----------- ----------- ---------- ----------- ---------- ----------
TOTAL STOCKHOLDER'S EQUITY
(DEFICIT)................. $ 3,245,914 $(8,284,408) $3,074,062 $(1,964,432) $3,252,573 $1,288,141
=========== =========== ========== =========== ========== ==========
</TABLE>

See accompanying Notes to Financial Statements

F-154
<PAGE> 320

THE BROADCAST GROUP, INC.

STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
REVENUE
AM and FM sales........................................... $11,828,487 $13,404,597
Time brokerage fees....................................... 1,049,067 --
Barter sales.............................................. 223,875 391,032
----------- -----------
Total Revenue.......................................... 13,101,429 13,795,629
Less: Commissions -- agencies and representatives......... 1,328,941 1,656,154
----------- -----------
Net Revenue....................................... 11,772,488 12,139,475
----------- -----------
OPERATING EXPENSES
Technical................................................. 223,470 212,528
Program................................................... 2,230,239 2,582,531
Selling................................................... 2,532,026 3,141,371
General and administrative................................ 1,164,505 1,195,355
Amortization.............................................. 103,215 103,215
Depreciation.............................................. 84,460 80,413
----------- -----------
Total Operating Expenses.......................... 6,337,915 7,315,413
----------- -----------
INCOME BEFORE INTEREST AND INCOME TAXES........... 5,434,573 4,824,067
----------- -----------
Interest.................................................... 332,000 --
----------- -----------
INCOME BEFORE INCOME TAXES........................ 5,102,573 4,824,062
Income Taxes................................................ 1,850,000 1,750,000
----------- -----------
NET INCOME........................................ $ 3,252,573 $ 3,074,062
=========== ===========
</TABLE>

See accompanying Notes to Financial Statements

F-155
<PAGE> 321

THE BROADCAST GROUP, INC.

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 3,252,573 $ 3,074,062
Depreciation and amortization, charged to net income, not
requiring the use of cash.............................. 187,675 183,628
Changes in operating assets and liabilities that provide
(use) cash
Accounts receivable.................................... 1,333,053 (104,671)
Prepaid expenses and deposits.......................... 76,312 (27,479)
Accounts payable....................................... (161,556) (126,758)
Accrued expenses....................................... (19,925) (68,381)
----------- -----------
Cash Provided by Operating Activities............. 4,668,132 2,930,401
----------- -----------
INVESTING ACTIVITIES
Purchases of property and equipment....................... (54,369) (81,679)
FINANCING ACTIVITIES
Payments on note payable to parent company................ (4,755,067) (300,000)
Repayment of loans payable to parent company.............. -- (2,523,670)
----------- -----------
Cash Used by Financing Activities................. (4,755,067) (2,823,670)
INCREASE (DECREASE) IN CASH....................... (141,304) 25,052
CASH, BEGINNING OF YEAR..................................... 157,168 132,116
----------- -----------
CASH, END OF YEAR................................. $ 15,864 $ 157,168
=========== ===========
SUPPLEMENTAL DISCLOSURE
Cash paid during the year for income taxes................ $ 1,850,000 $ 1,750,000
=========== ===========
Cash paid during the year for interest.................... $ 332,000 $ --
=========== ===========
SCHEDULE OF SIGNIFICANT NON-CASH FINANCING TRANSACTIONS
Demand promissory note exchanged for redemption and
retirement of preferred stock.......................... $ -- $ 8,284,408
=========== ===========
</TABLE>

See accompanying Notes to Financial Statements

F-156
<PAGE> 322

THE BROADCAST GROUP, INC.

NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997

NOTE 1 -- SIGNIFICANT EVENT

In September, 1998, the Company entered into an agreement to sell all of
its operating assets to Chancellor Media Corporation ("Chancellor") at a price
substantially in excess of net book value. The sale is expected to close during
the second quarter of 1999.

In conjunction with the pending sale, the Company also entered into a "time
brokerage agreement" with Chancellor that commenced on November 5, 1998. This
agreement transfers substantially all the operations of the Company to
Chancellor, until the sale is consummated, for a monthly payment of $562,000.

The results of operations for the stations from November 5 through December
31, 1998 recognized by Chancellor are as follows:

<TABLE>
<S> <C>
Total Revenue............................................... $2,307,845
Less Commissions............................................ 256,942
----------
Net Revenue....................................... 2,050,903
Direct Operating Expenses
Technical................................................. 21,041
Program................................................... 363,842
Selling................................................... 419,142
General and Administrative................................ 150,952
----------
Total Operating Expenses.......................... 954,977
----------
Excess of net revenue over direct operating expenses........ $1,095,926
==========
</TABLE>

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) Business Activity

The Company operated two radio stations, one AM and one FM in Phoenix,
Arizona. Both stations received revenues from local, regional and national
advertisers.

(b) Cash

The Company maintains cash accounts in a financial institution which, at
times, exceed federally insured amounts.

All tangible property is recorded at cost. Expenditures for maintenance and
repairs are charged to operations in the year incurred. For financial statement
purposes, property is depreciated using the straight line method over the
following estimated useful lives:

<TABLE>
<S> <C>
Buildings and improvements.............................. 10-33 years
Broadcast equipment..................................... 10 years
Office furniture and equipment.......................... 5-7 years
</TABLE>

(d) Other Assets

The following costs are being amortized using the straight line method over
the following lives:

<TABLE>
<S> <C>
Licenses, goodwill and network affiliation costs........... 40 years
Lease acquisition costs.................................... 23 years
</TABLE>

F-157
<PAGE> 323
THE BROADCAST GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(e) Income Taxes

The Broadcast Group, Inc. is a wholly owned subsidiary of The Wolpin Co.
and files a consolidated income tax return with its Parent. Differences in
financial and tax reporting for depreciation, amortization and accrued expenses
are not significant and, accordingly, no deferred income tax expense or
liability is reflected herein.

(f) Profit Sharing Plan

The Company established a 401(k) employee elective wage deferral plan with
a matching employer contribution. A matching contribution and administration fee
of $25,148 and $43,275 were expensed for the years ended December 31, 1998 and
1997, respectively.

The 1998 employer matching contribution was significantly reduced by the
termination of substantially all of the Company's employees on November 5, 1998.
(See Note 1).

(g) Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.

NOTE 3 -- ASSETS PLEDGED

Substantially all of the Company's assets are pledged as collateral under
the terms of a bank debt agreement entered into by the Parent Company.

NOTE 4 -- RELATED ENTITY TRANSACTIONS

Shareholders of the parent company, The Wolpin Co., are active in the
administration and management of The Broadcast Group, Inc. The Parent Company
charged administration and management fees of $350,000 for their services in
each of the years ended December 31, 1998 and 1997.

NOTE 5 -- STOCKHOLDER'S EQUITY (DEFICIT)

On December 31, 1997, the Company redeemed, from its Parent Company, all
2,000 outstanding shares of its non-voting preferred stock. The redemption price
of $8,284,408 represents the original issue price plus an 11% accumulated
dividend.

The Company executed a demand promissory note with interest at 5.56% in
exchange for the shares.

F-158
<PAGE> 324

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

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 OF THIS PROSPECTUS. 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.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 1
Risk Factors............................... 15
Use of Proceeds............................ 21
Capitalization............................. 21
Business................................... 22
Where You Can Find More Information........ 47
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 48
Management and Board of Directors.......... 56
Security Ownership of Certain Beneficial
Owners and Management.................... 83
Certain Relationships and Related
Transactions............................. 86
The Exchange Offer......................... 89
Description of the New Notes............... 98
Book-Entry; Delivery and Form.............. 129
Description of Certain Indebtedness........ 131
Material Federal Income Tax
Considerations........................... 147
Plan of Distribution....................... 147
Legal Matters.............................. 148
Experts.................................... 148
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> 325

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.

Our Certificate of Incorporation, as amended, provides that none of our
directors shall be liable to us or our stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability:

- - for any breach of the director's duty of loyalty to us or our stockholders,

- - for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,

- - under Section 174 of the DGCL, or

- - for any transaction from which the director derived an improper personal
benefit.

Our Certificate of Incorporation also provides that we 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> 326

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).
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.
</TABLE>

II-2
<PAGE> 327

<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 11, 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.
</TABLE>

II-3
<PAGE> 328

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
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.
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.
</TABLE>

II-4
<PAGE> 329

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
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(ddd) -- Agreement and Plan of Merger among Chancellor Media
Corporation, Capstar Broadcasting Corporation and CBC
Acquisition Company, Inc., dated as of August 26, 1998.
2.53(zz) -- 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(zz) -- Certificate of Incorporation of Chancellor Media of the
Lone Star State.
3.6(zz) -- Bylaws of Chancellor Media Corporation of the Lone Star
State.
3.7(zz) -- Certificate of Incorporation of KZPS/KDGE License Corp.
3.8(zz) -- Bylaws of KZPS/KDGE License Corp.
3.9(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of California.
3.10(zz) -- Bylaws of Chancellor Media Corporation of California.
3.11(zz) -- Certificate of Incorporation of KIOI License Corp.
3.12(zz) -- Bylaws of KIOI License Corp.
3.13(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of Illinois.
3.14(zz) -- Bylaws of Chancellor Media Corporation of Illinois.
3.21(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of Massachusetts.
3.22(zz) -- Bylaws of Chancellor Media Corporation of Massachusetts.
3.23(zz) -- Certificate of Incorporation of Chancellor Media
Pennsylvania License Corp.
3.24(zz) -- Bylaws of Chancellor Media Pennsylvania License Corp.
3.25(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of Miami.
3.26(zz) -- Bylaws of Chancellor Media Corporation of Miami.
3.29(zz) -- Agreement of Limited Partnership of Chancellor Media
Corporation of Houston Limited Partnership.
</TABLE>

II-5
<PAGE> 330

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.30(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of Houston.
3.31(zz) -- Bylaws of Chancellor Media Corporation of Houston.
3.32(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of the Keystone State.
3.33(zz) -- Bylaws of Chancellor Media Corporation of the Keystone
State.
3.34(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of New York.
3.35(zz) -- Bylaws of Chancellor Media Corporation of New York.
3.36(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of Charlotte.
3.37(zz) -- Bylaws of Chancellor Media Corporation of Charlotte.
3.38(zz) -- Certificate of WIOQ License Corp.
3.39(zz) -- Bylaws of WIOQ License Corp.
3.40(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of Washington, D.C.
3.41(zz) -- Bylaws of Chancellor Media Corporation of Washington,
D.C.
3.42(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of St. Louis.
3.43(zz) -- Bylaws of Chancellor Media Corporation of St. Louis.
3.44(zz) -- Certificate of Incorporation of Chancellor Media
Corporation of Michigan.
3.45(zz) -- Bylaws of Chancellor Media Corporation of Michigan.
3.46(zz) -- Certificate of Incorporation of Chancellor Media/WAXQ
Inc.
3.47(zz) -- Bylaws of Chancellor Media/WAXQ Inc.
3.48(zz) -- Certificate of WAXQ License Corp.
3.49(zz) -- Bylaws of WAXQ License Corp.
3.52(zz) -- Certificate of Incorporation of Chancellor
Media/Riverside Broadcasting Co., Inc.
3.53(zz) -- Bylaws of Chancellor Media/Riverside Broadcasting Co.,
Inc.
3.54(zz) -- Certificate of Incorporation of WLTW License Corp.
3.55(zz) -- Bylaws of WLTW License Corp.
3.60(zz) -- Certificate of Incorporation of Chancellor Media Licensee
Company.
3.61(zz) -- Bylaws of Chancellor Media Licensee Company.
3.64(zz) -- Certificate of Incorporation of Chancellor Media/Shamrock
Broadcasting, Inc.
3.65(zz) -- Amended and Restated Bylaws of Chancellor Media/Shamrock
Broadcasting, Inc.
3.70(zz) -- Articles of Incorporation of Chancellor Media/Shamrock
Broadcasting of Texas, Inc.
3.71(zz) -- Amended and Restated Bylaws of Chancellor Media/Shamrock
Broadcasting of Texas, Inc.
3.72(zz) -- Limited Liability Company Agreement of Chancellor
Media/Shamrock Radio Licenses, LLC.
3.73(zz) -- Certificate of Incorporation of Chancellor Media Outdoor
Corporation.
3.74(zz) -- Bylaws of Chancellor Media Outdoor Corporation.
3.75(zz) -- Certificate of Incorporation of Chancellor Media Nevada
Sign Corporation.
3.76(zz) -- Bylaws of Chancellor Media Nevada Sign Corporation.
3.77(zz) -- Certificate of Incorporation of Chancellor Media MW Sign
Corporation.
</TABLE>

II-6
<PAGE> 331

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.78(zz) -- Bylaws of Chancellor Media MW Sign Corporation.
3.79(zz) -- Certificate of Incorporation of Chancellor Media Martin
Corporation.
3.80(zz) -- Bylaws of Chancellor Media Martin Corporation.
3.81(zz) -- Articles of Incorporation of Western Poster, Inc.
3.82(zz) -- Bylaws of Western Poster, Inc.
3.83(zz) -- Certificate of Incorporation of The AMFM Radio Networks,
Inc.
3.84(zz) -- Bylaws of The AMFM Radio Networks, Inc.
3.85(zz) -- Certificate of Incorporation of Chancellor Media Air
Services Corporation.
3.86(zz) -- Bylaws of Chancellor Media Air Services Corporation.
3.87(zz) -- Certificate of Incorporation of Chancellor Media Whiteco
Outdoor Corporation.
3.88(zz) -- Bylaws of Chancellor Media Whiteco Outdoor Corporation.
3.91(zz) -- Articles of Organization of Broadcast Architecture, Inc.
3.92(zz) -- Bylaws of Broadcast Architecture, Inc.
3.93(zz) -- Agreement of Limited Partnership of Martin Media.
3.94(zz) -- Articles of Incorporation of Dowling Company
Incorporated.
3.95(zz) -- Bylaws of Dowling Company Incorporated.
3.102(zz) -- Certificate of Incorporation of Katz Media Corporation.
3.103(zz) -- Bylaws of Katz Media Corporation.
3.104(zz) -- Certificate of Incorporation of Katz Communications, Inc.
3.105(zz) -- Bylaws of Katz Communications, Inc.
3.106(zz) -- Certificate of Incorporation of Katz Millennium
Marketing, Inc.
3.107(zz) -- Bylaws of Katz Millennium Marketing, Inc.
3.108(zz) -- Certificate of Incorporation of Amcast Radio Sales, Inc.
3.109(zz) -- Bylaws of Amcast Radio Sales, Inc.
3.110(zz) -- Certificate of Incorporation of Christal Radio Sales,
Inc.
3.111(zz) -- Amended and Restated Bylaws of Christal Radio Sales, Inc.
3.112(zz) -- Certificate of Incorporation of Eastman Radio Sales, Inc.
3.113(zz) -- Bylaws of Eastman Radio Sales, Inc.
3.114(zz) -- Certificate of Incorporation of Seltel, Inc.
3.115(zz) -- Bylaws of Seltel, Inc.
3.116(zz) -- Certificate of Incorporation of Katz Cable Corporation.
3.117(zz) -- Amended and Restated Bylaws of Katz Cable Corporation.
3.118(zz) -- Certificate of Incorporation of The National Payroll
Company, Inc.
3.119(zz) -- Bylaws of The National Payroll Company, Inc.
3.120(zz) -- Limited Liability Company Agreement of Chancellor Media
Radio Licenses, LLC.
3.121(zz) -- Agreement of Limited Partnership of KLOL License Limited
Partnership.
3.122(zz) -- Agreement of Limited Partnership of WTOP License Limited
Partnership.
3.123(zz) -- Certificate of Formation of Radio 100, L.L.C.
3.124* -- Certificate of Incorporation of Chancellor Media
Corporation of Ohio.
3.125* -- Bylaws of Chancellor Media Corporation of Ohio.
3.126* -- Certificate of Formation of Cleveland Radio Licenses,
LLC.
3.126A* -- Cleveland Radio Licenses, LLC Limited Liability Company
Agreement.
3.127* -- Articles of Incorporation of Creative Resources, Inc.
3.128* -- Bylaws of Creative Resources, Inc.
3.131* -- Articles of Incorporation of Lindsay Outdoor, Inc.
</TABLE>

II-7
<PAGE> 332

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.132* -- Bylaws of Lindsay Outdoor, Inc.
3.133* -- Certificate of Formation of Outdoor Promotions West, LLC.
3.133A* -- Limited Liability Company Agreement of Outdoor Promotions
West, LLC.
3.134* -- Articles of Incorporation of Scenic Outdoor Marketing &
Consulting, Inc.
3.135* -- Bylaws of Scenic Outdoor Marketing & Consulting, Inc.
3.136* -- Certificate of Formation of Transit America Las Vegas,
LLC.
3.136A* -- Limited Liability Company Agreement of Transit America
Las Vegas, LLC
3.137* -- Certificate of Formation of Triumph Outdoor Holdings,
LLC., f/k/a Transit America Holdings LLC
3.137A* -- Operating Agreement of Triumph Outdoor Holdings, LLC,
f/k/a Transit America Holdings, LLC
3.138* -- Certificate of Formation of Triumph Outdoor Louisiana,
LLC
3.138A* -- Limited Liability Company Agreement of Triumph Outdoor
Louisiana, LLC
3.139* -- Certificate of Formation of Triumph Outdoor Rhode Island,
LLC.
3.139A* -- Limited Liability Company Agreement of Triumph Outdoor
Rhode Island, LLC
3.140* -- Certificate of Incorporation of Zebra Broadcasting
Corporation.
3.141* -- Bylaws of Zebra Broadcasting Corporation.
3.142* -- Articles of Incorporation of Hardin Development
Corporation, f/k/a St. Lucie Outdoor Advertising, Inc.
3.143* -- Bylaws of Hardin Development Corporation, f/k/a St. Lucie
Outdoor Advertising, Inc.
3.144* -- Articles of Incorporation of Parsons Development Company
3.145* -- Bylaws of Parsons Development Company
3.146* -- Articles of Incorporation of Revolution Outdoor
Advertising, Inc.
3.147* -- Bylaws of Revolution Outdoor Advertising, Inc.
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>

II-8
<PAGE> 333

<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.
4.25(qq) -- 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(qq) -- 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(qq) -- 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(qq) -- 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(qq) -- 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.
</TABLE>

II-9
<PAGE> 334

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.41(zz) -- Indenture, dated as of September 30, 1998, governing the
9% Senior Subordinated Notes due 2008 of CMCLA.
4.42(aaa) -- Seventh Amendment to Second Amended and Restated Loan
Agreement, dated November 9, 1998, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.43(zz) -- Indenture, dated as of November 17, 1998, governing the
8% Notes due 2008 of CMCLA.
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(qq) -- First Amendment to Employment Agreement dated March 1,
1997 by and between Evergreen Media Corporation and
Kenneth J. O'Keefe.
10.31(qq) -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Scott K. Ginsburg.
10.32(qq) -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and James de Castro.
10.33(qq) -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Matthew E. Devine.
10.34(qq) -- 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, 1996 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, 1995 from
Chancellor Corporation to Steven Dinetz.
10.39(mm) -- Stock Option Grant Letter dated September 30, 1995 from
Chancellor Corporation to Eric W. Neuman.
10.40(nn) -- Stock Option Grant Letter dated September 30, 1995 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.
</TABLE>

II-10
<PAGE> 335

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
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
Ranger Equity Partners, L.P. dated as of July 7, 1998.
10.48(zz) -- 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(zz) -- 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(zz) -- 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(zz) -- 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.
10.52(bbb) -- Agreement, dated as of January 6, 1999, among Chancellor
Media Corporation, Chancellor Media Corporation of Los
Angeles, Matthew E. Devine and Vicki Devine.
10.53(ccc) -- Amended and Restated Employment Agreement, dated as of
October 1, 1998, by and among Chancellor Media
Corporation, Chancellor Media Corporation of Los Angeles
and Jeffrey A. Marcus.
10.54(ccc) -- Amended and Restated Employment Agreement, dated as of
October 1, 1998, by and among Chancellor Media
Corporation, Chancellor Media Corporation of Los Angeles
and James E. de Castro.
10.55(ccc) -- Amended and Restated Employment Agreement, dated as of
October 1, 1998, by and among Chancellor Media
Corporation, Chancellor Media Corporation of Los Angeles
and Eric C. Neuman.
10.56(ccc) -- Employment Agreement, dated as of October 1, 1998, by and
among Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Thomas P. McMillin.
10.57(ccc) -- Amendment No. 1 to Employment Agreement, dated as of
January 6, 1999, by and among Chancellor Media
Corporation, Chancellor Media Corporation of Los Angeles
and Thomas P. McMillin.
10.58(ccc) -- Amended and Restated Employment Agreement, dated as of
October 1, 1998, by and among Chancellor Media
Corporation, Chancellor Media Corporation of Los Angeles
and James A. McLaughlin, Jr.
10.59(ccc) -- Agreement, dated as of March 15, 1999, between Jeffrey A.
Marcus, Nancy Cain Marcus, Chancellor Media Corporation
and Chancellor Media Corporation of Los Angeles.
10.60(ccc) -- Agreement, dated as of March 15, 1999, between Eric C.
Neuman, Elizabeth M. Neuman, Chancellor Media Corporation
and Chancellor Media Corporation of Los Angeles.
</TABLE>

II-11
<PAGE> 336

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.61(ccc) -- Agreement, dated as of March 15, 1999, between Thomas P.
McMillin, Brigette McMillin, Chancellor Media Corporation
and Chancellor Media Corporation of Los Angeles.
12.1* -- Chancellor Media Corporation of Los Angeles 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 LLP, independent accountants.
23.4* -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.5* -- Consent of BDO Seidman, LLP, independent accountants.
23.6* -- Consent of Barbich Longcrier Hooper & King, independent
accountants.
23.7* -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.8* -- Consent of PricewaterhouseCoopers LLP, independent
accountants.
23.9* -- Consent of Kleiman, Carney & Greenbaum, independent
accountants.
23.10* -- Consent of Arthur Andersen LLP, independent accountants.
24.1 -- Powers of Attorney (included on the signature pages).
25.1* -- Statement of Eligibility and Qualification of The Bank of
New York, as trustee, under the Indenture listed as
Exhibit 4.43 hereto on Form T-1.
99.1* -- Form of Letter of Transmittal.
99.2* -- Form of Notice of Guaranteed Delivery.
</TABLE>

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

* 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
Evergreens Current Report on Form 8-K dated January 17, 1996.

(j) Incorporated by reference to the identically numbered exhibit to
Evergreens 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.

II-12
<PAGE> 337

(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.

(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 and Chancellor Radio Broadcasting
Company for the quarterly period ending March 31, 1997.

(ii) Incorporated by reference to Exhibit 10.6 to Chancellor Broadcasting
Company'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.

II-13
<PAGE> 338

(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
Current Report on Form 8-K of Chancellor Media and CMCLA, dated as of
September 23, 1997 and filed as of September 29, 1997.

(qq) 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.

(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.

(zz) Incorporated by reference to Exhibit 4.41 to CMCLA's Registration
Statement on Form S-4 (Reg. No. 333-66971), initially filed November 9,
1998, as amended.

(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 the
Current Report on Form 8-K of Chancellor Media and CMCLA, dated as of
January 7, 1999 and filed as of January 7, 1999.

(ccc) Incorporated by reference to the identically numbered exhibit to
Chancellor Media's Registration Statement on Form S-4 (Reg. No.
333-72481), dated as of February 17, 1999, as amended.

(ddd) 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 September 30, 1998.

(eee) Incorporated by reference to the Annual Report on Form 10-K of Chancellor
Media and CMCLA for the fiscal year ended December 31, 1998.

The Company hereby agrees to furnish supplementary a copy of any omitted
schedule or exhibit to the Securities and Exchange Commission upon request.

II-14
<PAGE> 339

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 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.

II-15
<PAGE> 340

(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-16
<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 May 5, 1999.

CHANCELLOR MEDIA CORPORATION
OF LOS ANGELES

By: /s/ D. GEOFFREY ARMSTRONG
--------------------------------------
D. Geoffrey Armstrong
Executive Vice President and
Chief Financial Officer

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>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

* Chairman of the Board and Chief May 5, 1999
- ------------------------------------------------ Executive Officer (Principal
Thomas O. Hicks Executive Officer)

* Vice Chairman, Chief Executive May 5, 1999
- ------------------------------------------------ Officer of the Chancellor Radio
James E. de Castro and Outdoor Group and Director

* Vice Chairman, Chief Executive May 5, 1999
- ------------------------------------------------ Officer of the Chancellor Media
R. Steven Hicks Services Group and Director

/s/ D. GEOFFREY ARMSTRONG Executive Vice President and Chief May 5, 1999
- ------------------------------------------------ Financial Officer (Principal
D. Geoffrey Armstrong Financial Officer)

* Vice President and Controller May 5, 1999
- ------------------------------------------------ (Principal Accounting Officer)
Andrea Archer Hulcy

* Director May 5, 1999
- ------------------------------------------------
Steven Dinetz

* Director May 5, 1999
- ------------------------------------------------
Thomas J. Hodson

* Director May 5, 1999
- ------------------------------------------------
Vernon E. Jordan, Jr.
</TABLE>

II-17
<PAGE> 342

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

* Director May 5, 1999
- ------------------------------------------------
Perry J. Lewis

Director
- ------------------------------------------------
Michael J. Levitt

* Director May 5, 1999
- ------------------------------------------------
Jeffrey A. Marcus

Director
- ------------------------------------------------
John H. Massey

* Director May 5, 1999
- ------------------------------------------------
Lawrence D. Stuart, Jr.

Director
- ------------------------------------------------
J. Otis Winters

*By: /s/ D. GEOFFREY ARMSTRONG
- ------------------------------------------------
D. Geoffrey Armstrong
Attorney-in-fact
</TABLE>

II-18
<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 May 5, 1999.

THE CO-REGISTRANTS LISTED ON
ATTACHMENT A HERETO

By: /s/ D. GEOFFREY ARMSTRONG
--------------------------------------
D. Geoffrey Armstrong
Executive Vice President
and Chief Financial Officer
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>

* President, Chief May 5, 1999
- --------------------------------------------------- Executive Officer and
James E. de Castro Director of Each
Co-Registrant
(Principal Executive
Officer of Each Co-
Registrant)

/s/ D. GEOFFREY ARMSTRONG Executive Vice May 5, 1999
- --------------------------------------------------- President, Chief
D. Geoffrey Armstrong Financial Officer and
Director of Each
Co-Registrant
(Principal Financial
Officer and Principal
Accounting Officer of
Each Co-Registrant)
</TABLE>

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<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

* Director of Each Co- May 5, 1999
- --------------------------------------------------- Registrant
R. Steven Hicks

Director of Each Co-
- --------------------------------------------------- Registrant
Kenneth J. O'Keefe

/s/ WILLIAM S. BANOWSKY, JR. Director of Each Co- May 5, 1999
- --------------------------------------------------- Registrant
William S. Banowsky, Jr.

*By: /s/ D. GEOFFREY ARMSTRONG
---------------------------------------------
D. Geoffrey Armstrong
Attorney-in-fact
</TABLE>

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<PAGE> 345

ATTACHMENT A

NAME

The AMFM Radio Networks, Inc.
Broadcast Architecture, Inc.
Chancellor Media Air Services Corporation
Chancellor Media Corporation of California
Chancellor Media Corporation of Charlotte
Chancellor Media Corporation of Houston
Chancellor Media Corporation of Illinois
Chancellor Media Corporation of the Keystone State
Chancellor Media Corporation of the Lone Star State
Chancellor Media Corporation of Massachusetts
Chancellor Media Corporation of Michigan
Chancellor Media Corporation of Miami
Chancellor Media Corporation of New York
Chancellor Media Corporation of Ohio
Chancellor Media Corporation of St. Louis
Chancellor Media Corporation of Washington, D.C.
Chancellor Media of Houston Limited Partnership
Chancellor Media Licensee Company
Chancellor Media Martin Corporation
Chancellor Media MW Sign Corporation
Chancellor Media Nevada Sign Corporation
Chancellor Media Outdoor Corporation
Chancellor Media Pennsylvania License Corp.
Chancellor Media Radio Licenses, LLC
Chancellor Media/Riverside Broadcasting Co., Inc.
Chancellor Media/Shamrock Broadcasting, Inc.
Chancellor Media/Shamrock Broadcasting of Texas, Inc.
Chancellor Media/Shamrock Radio Licenses, LLC
Chancellor Media/WAXQ Inc.
Chancellor Media Whiteco Outdoor Corporation
Cleveland Radio Licenses, LLC
Creative Resources
Dowling Company Incorporated

Hardin Development Corporation

KLOL License Limited Partnership
KZPS/KDGE License Corp.
Lindsay Outdoor, Inc.
Martin Media
Outdoor Promotions West, LLC
Parsons Development Company
Radio 100, L.L.C.
Revolution Outdoor Advertising, Inc.
Scenic Outdoor Marketing & Consulting, Inc.
Transit America Las Vegas, LLC
Triumph Outdoor Holdings, LLC
Triumph Outdoor Louisiana
Triumph Outdoor Rhode Island, LLC
WAXQ License Corp.
WIOQ License Corp.

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ATTACHMENT A -- (CONTINUED)

WLTW License Corp.
WTOP License Limited Partnership
Western Poster Service, Inc.
Zebra Broadcasting Corporation

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<PAGE> 347

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 May 5, 1999.

THE CO-REGISTRANTS LISTED ON
ATTACHMENT B HERETO.

By: /s/ D. GEOFFREY ARMSTRONG
--------------------------------------
D. Geoffrey Armstrong
Executive Vice President and
Chief Financial Officer
of Each Co-Registrant Listed on
Attachment B

POWERS OF ATTORNEY

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>

* President, Chief May 5, 1999
- --------------------------------------------------- Executive Officer and
R. Steven Hicks Director of Each
Co-Registrant
(Principal Executive
Officer of Each Co-
Registrant)

/s/ D. GEOFFREY ARMSTRONG Executive Vice May 5, 1999
- --------------------------------------------------- President, Chief
D. Geoffrey Armstrong Financial Officer and
Director of Each
Co-Registrant,
(Principal Financial
Officer and Principal
Accounting Officer)

* Director of each May 5, 1999
- --------------------------------------------------- Co-Registrant
James E. de Castro

Director of each
- --------------------------------------------------- Co-Registrant
Kenneth J. O'Keefe

/s/ WILLIAM S. BANOWSKY, JR. Director of each May 5, 1999
- --------------------------------------------------- Co-Registrant
William S. Banowsky, Jr.

*By: /s/ D. GEOFFREY ARMSTRONG
- ---------------------------------------------------
D. Geoffrey Armstrong
Attorney-in-Fact
</TABLE>

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ATTACHMENT B

Katz Media Corporation
Seltel, Inc.
Katz Cable Corporation
The National Payroll Company, Inc.
Katz Communications, Inc.
Christal Radio Sales, Inc.
Amcast Radio Sales, Inc.
Eastman Radio Sales, Inc.
Katz Millennium Marketing, Inc.
</TABLE>

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INDEX TO EXHIBITS

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<PAGE> 352

<PAGE> 353

<PAGE> 354

<PAGE> 355

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.132* -- Bylaws of Lindsay Outdoor, Inc.
3.133* -- Certificate of Formation of Outdoor Promotions West, LLC.
3.133A* -- Limited Liability Company Agreement of Outdoor Promotions
West, LLC.
3.134* -- Articles of Incorporation of Scenic Outdoor Marketing &
Consulting, Inc.
3.135* -- Bylaws of Scenic Outdoor Marketing & Consulting, Inc.
3.136* -- Certificate of Formation of Transit America Las Vegas,
LLC.
3.136A* -- Limited Liability Company Agreement of Transit America
Las Vegas, LLC
3.137* -- Certificate of Formation of Triumph Outdoor Holdings,
LLC, f/k/a Transit America Holdings LLC
3.137A* -- Operating Agreement of Triumph Outdoor Holdings, LLC,
f/k/a Transit America Holdings, LLC
3.138* -- Certificate of Formation of Triumph Outdoor Louisiana,
LLC
3.138A* -- Limited Liability Company Agreement of Triumph Outdoor
Louisiana, LLC
3.139* -- Certificate of Formation of Triumph Outdoor Rhode Island,
LLC.
3.139A* -- Limited Liability Company Agreement of Triumph Outdoor
Rhode Island, LLC
3.140* -- Certificate of Incorporation of Zebra Broadcasting
Corporation.
3.141* -- Bylaws of Zebra Broadcasting Corporation.
3.142* -- Articles of Incorporation of Hardin Development
Corporation, f/k/a St. Lucie Outdoor Advertising, Inc.
3.143* -- Bylaws of Hardin Development Corporation, f/k/a St. Lucie
Outdoor Advertising, Inc.
3.144* -- Articles of Incorporation of Parsons Development Company
3.145* -- Bylaws of Parsons Development Company
3.146* -- Articles of Incorporation of Revolution Outdoor
Advertising, Inc.
3.147* -- Bylaws of Revolution Outdoor Advertising, Inc.
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>

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