<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-44401
Information contained herein is subject to completion and amendment.
<TABLE>
<S> <C>
SUBJECT TO COMPLETION PROSPECTUS SUPPLEMENT TO
DATED FEBRUARY 20, 1998 PROSPECTUS DATED JANUARY 27, 1998
</TABLE>
16,000,000 SHARES
[CHANCELLOR MEDIA CORPORATION]
COMMON STOCK
---------------------
All of the shares of Common Stock, par value $.01 per share (the "Common
Stock"), offered hereby are being sold by Chancellor Media Corporation (the
"Company"). The Common Stock is traded on The Nasdaq National Market under the
symbol "AMFM." On February 19, 1998, the last reported sale price of the Common
Stock was $41.25 per share. See "Price Range of Common Stock."
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-13 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==========================================================================================================
UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC COMMISSIONS(1) COMPANY(2)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share................................. $ $ $
- ----------------------------------------------------------------------------------------------------------
Total(3).................................. $ $ $
==========================================================================================================
</TABLE>
(1) See "Underwriting" for information relating to the indemnification of the
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $1,000,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 2,400,000 additional shares of Common Stock on the terms set forth above
solely to cover over-allotments, if any. If such option is exercised in
full, the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
---------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of BT Alex. Brown Incorporated, Baltimore, Maryland, on or about March ,
1998.
---------------------
Joint Book-Running Managers
BT ALEX. BROWN GOLDMAN, SACHS & CO.
------------------
CREDIT SUISSE FIRST BOSTON MORGAN STANLEY DEAN WITTER SALOMON SMITH BARNEY
FURMAN SELZ NATIONSBANC MONTGOMERY SECURITIES LLC UBS SECURITIES
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH , 1998
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
OFFERED HEREBY, INCLUDING STABILIZING AND SYNDICATE COVERING TRANSACTIONS. THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICE OF THE COMMON STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus Supplement and the accompanying Prospectus and in
documents incorporated by reference herein and therein. As used herein, unless
the context otherwise requires, the term "Company" refers to Chancellor Media
Corporation and its subsidiaries. All share and per share data in this
Prospectus Supplement give effect to the Company's two-for-one common stock
split effected in the form of a stock dividend, paid on January 12, 1998 to
stockholders of record at the close of business on December 29, 1997. Unless
otherwise specified, information in this Prospectus Supplement assumes that the
Underwriters' over-allotment option is not exercised.
THE COMPANY
The Company is one of the largest radio broadcasting companies in the
United States. Upon consummation of the Bonneville Option (as defined) and the
SFX Exchange (as defined), but without giving effect to the recently announced
Capitol Broadcasting Acquisition (as defined) or the potential Capstar
Transaction (as defined), the Company will own and operate 99 radio stations (71
FM and 28 AM) in 21 large markets, including each of the nation's 12 largest
radio revenue markets. Based on the most recent industry data available to the
Company, the Company's portfolio includes the first or second ranked station
cluster in terms of revenue share in 15 markets. On a pro forma basis after
giving effect to the Completed Transactions (as defined) and the Bonneville
Option and the SFX Exchange, but without giving effect to the Capitol
Broadcasting Acquisition or the potential Capstar Transaction, the Company would
have had net revenue and broadcast cash flow (as defined) of approximately
$724.4 million and $303.5 million, respectively, for the nine months ended
September 30, 1997, and its pro forma broadcast cash flow margin for such period
would have been 42%.
The Company's strategy is to secure leading clusters of radio stations in
the largest markets in the United States. The Company's current station
portfolio includes 97 stations (69 FM and 28 AM) comprising a total of 11
station clusters of four or five FM stations ("superduopolies") in seven of the
12 largest radio markets -- Los Angeles, New York, Chicago, San Francisco,
Philadelphia, Washington, D.C. and Detroit -- and in four other large
markets -- Denver, Minneapolis/St. Paul, Phoenix and Orlando. Consummation of
the Bonneville Option and the SFX Exchange will result in a net increase of two
FM stations to the Company's portfolio. See "Recent Developments -- Pending
Transactions." Approximately 66% of pro forma net revenue for the nine months
ended September 30, 1997 would have been generated by the superduopoly markets.
In 1996 (the most recent period for which data is available to the
Company), the 12 largest radio markets in the United States generated
approximately $3.1 billion in radio advertising revenue, which represented
approximately 27% of all radio advertising dollars spent in the United States.
As a result of its large market focus, based on the most recent industry data
available to the Company, the Company's portfolio of stations, upon completion
of the Bonneville Option and the SFX Exchange, would reach an estimated 41.7
million listeners on a weekly basis, or approximately 16% of the population of
the United States. Management believes that the size and reach of the portfolio
will allow the Company to compete more effectively for advertising dollars with
other mass advertising media, such as television and newspapers, and will also
offer national advertisers an opportunity to reach a large segment of the U.S.
population on an efficient, cost-effective basis.
As a complement to its radio broadcasting operations, the Company has
recently formed a national radio network, The AMFM Radio Networks, which began
broadcasting advertising over the Company's portfolio of stations in January
1998. Management believes that The AMFM Radio Networks will allow the Company to
further leverage its broad station base, personalities and advertising inventory
by delivering a national base of approximately 41.7 million listeners to network
advertisers.
S-3
<PAGE> 4
The chart below ranks the nation's largest radio broadcasting groups based
on cumulative audience share, giving effect to transactions in the industry
announced prior to February 17, 1998:
<TABLE>
<CAPTION>
CUMULATIVE
RADIO GROUP AUDIENCE SHARE(1)
----------- -----------------
<S> <C>
CBS Radio................................................... 57,496,600
Chancellor Media............................................ 41,677,800
Jacor Communications........................................ 22,097,100
Capstar Broadcasting Partners............................... 20,157,100
Clear Channel Communications................................ 17,359,300
ABC Radio................................................... 12,726,100
Cox Radio................................................... 9,111,000
Emmis Broadcasting.......................................... 8,955,300
Sinclair Broadcast Group.................................... 6,743,500
Heftel Broadcasting......................................... 6,449,900
</TABLE>
- ---------------
(1) As reported in the industry publication "Who Owns What" as of February 17,
1998. Reflects number of listeners age 12+, Monday to Sunday, 6:00 a.m. to
midnight, that listened to a station operated by the applicable radio
broadcasting company for a period of 5 minutes or more at least one time per
week.
The Company's portfolio is geographically diversified and employs a wide
variety of programming formats, including adult contemporary, contemporary hit
radio, urban, jazz, country, oldies, news/talk, rock and sports. Each of the
Company's 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, the Company is not unduly reliant on the performance of any one
station or market. No single market to be served by the Company represented more
than 12% of the Company's pro forma broadcast cash flow for the nine months
ended September 30, 1997 (giving effect to the Bonneville Option and the SFX
Exchange, but without giving effect to the Capitol Broadcasting Acquisition and
the potential Capstar Transaction).
S-4
<PAGE> 5
The following table sets forth certain information regarding the Company's
portfolio and markets, assuming completion of the Bonneville Option and the SFX
Exchange (but without giving effect to the Capitol Broadcasting Acquisition or
the potential Capstar Transaction):
<TABLE>
<CAPTION>
RANKING OF STATIONS
MARKET BY 1996 MARKET --------- AUDIENCE
MARKET RADIO REVENUE(1) REVENUE(2) FM AM SHARE(%)(3)
------ ---------------- ----------- --- --- -----------
<S> <C> <C> <C> <C> <C>
Los Angeles................................... 1 $526,000 4 1 13.7
New York...................................... 2 475,000 5 -- 17.6
Chicago....................................... 3 337,600 5 2 26.6
San Francisco................................. 4 229,700 5 2 21.4
Dallas/Ft. Worth.............................. 5 218,000 3 1 14.1
Philadelphia.................................. 6 204,300 5 1 20.6
Houston....................................... 7 199,000 3 2 17.2
Washington, D.C............................... 8 195,600 4 2 19.1
Boston........................................ 9 194,000 2 1 14.6
Atlanta....................................... 10 192,200 1 -- 4.2
Detroit....................................... 11 180,000 5 2 28.5
Miami/Ft. Lauderdale.......................... 12 174,500 1 1 4.9
Denver........................................ 15 115,200 5 1 15.4
Minneapolis/St. Paul.......................... 16 112,400 5 2 31.2
Phoenix....................................... 17 106,300 4 2 22.2
Cincinnati.................................... 20 90,200 2 2 14.3
Pittsburgh.................................... 24 76,600 1 1 5.5
Sacramento.................................... 25 71,400 2 2 20.1
Orlando....................................... 26 70,700 4 -- 24.1
Nassau/Suffolk (Long Island)(4)............... 44 38,000 4 2 17.3
Riverside/San Bernardino...................... 64 26,400 1 1 7.5
-- --
Total............................... 71 28
== ==
</TABLE>
- ---------------
(1) Ranking of the principal radio market served by the Company's station(s)
among all U.S. radio markets ranked by 1996 gross radio broadcasting revenue
as reported by James H. Duncan, Duncan's Radio Market Guide (1997 ed.).
(2) Aggregate 1996 gross market radio revenues, in thousands, in the market as
reported by Duncan's Radio Market Guide (1997 ed.).
(3) Audience share data reflects the Company's listener share among listeners
age 12+, Monday to Sunday, 6:00 a.m. to midnight, within each market based
on information derived from The Arbitron Company, Fall 1997, Local Market
Reports. Copyright, The Arbitron Company.
(4) The acquisition of four stations (three FM and one AM) in Nassau/Suffolk
(Long Island) would not be consummated if the transactions contemplated by
the potential Capstar Transaction are consummated. See "-- Recent
Developments -- Potential Capstar Transaction" below.
The Company also owns Katz Media Group, Inc. ("KMG" and, together with its
operating subsidiaries, "Katz"), a full-service media representation firm
serving multiple types of electronic media, with a leading market share in the
representation of radio and television stations and cable television systems.
Katz is exclusively retained by radio stations, television stations and cable
television systems in over 200 designated market areas throughout the United
States, including at least one radio or television station in each of the 50
largest designated market areas, to sell national spot advertising air time.
The Company, formerly known as "Evergreen Media Corporation" ("Evergreen"),
was renamed Chancellor Media Corporation in connection with the merger on
September 5, 1997 of Evergreen and Chancellor Broadcasting Company
("Chancellor") and certain of their respective subsidiaries (the "Chancellor
Merger"). The Company's principal executive office is located at 433 East Las
Colinas Boulevard, Suite 1130, Irving, Texas 75039, and its telephone number is
(972) 869-9020.
S-5
<PAGE> 6
RECENT DEVELOPMENTS
FISCAL YEAR 1997 RESULTS
- - For the fiscal year ended December 31, 1997, the Company reported that
after tax cash flow increased 83.6% to $126.7 million, or $1.32 per share,
compared to $69.0 million for 1996. Consolidated net revenue increased
98.1% to $582.1 million, compared to $293.9 million in 1996, and broadcast
cash flow increased 122.4% to $265.8 million, compared to $119.5 million in
1996. Primarily as a result of increases in depreciation, amortization and
interest expense related to the Company's acquisition of radio stations
from Viacom International, Inc. and the Chancellor Merger, the Company
reported a net loss attributable to common stockholders of $43.9 million,
or $0.46 per share, for 1997, compared with a net loss attributable to
common stockholders of $20.0 million, or $0.33 per share, for 1996. For the
three months ended December 31, 1997, the Company's after tax cash flow
increased 52.1% to $43.3 million compared to $28.5 million, consolidated
net revenue increased 180.4% to $248.8 million compared to $88.7 million,
and broadcast cash flow increased 187.3% to $117.3 million compared to
$40.8 million, in each case, compared to the three months ended December
31, 1996. Primarily as a result of increases in depreciation, amortization
and interest expense related to the Company's acquisition of radio stations
from Viacom International, Inc. and the Chancellor Merger, the Company
reported a net loss attributable to common stockholders of $31.7 million,
or $0.27 per share, for the three months ended December 31, 1997, compared
with net income attributable to common stockholders of $0.9 million, or
$0.01 per share, for the three months ended December 31, 1996.
THE AMFM RADIO NETWORKS
- - In September 1997, the Company announced the formation of a national radio
network, The AMFM Radio Networks, and the appointment of David Kantor to
the position of Senior Vice President with responsibility for all of the
Company's radio network operations. Prior to joining the Company, Mr.
Kantor served as President of ABC Radio Networks, the largest commercial
radio network in the United States. Management believes that the network
will allow the Company to further leverage its broad station base,
personalities and advertising inventory by delivering a national base of
approximately 41.7 million listeners to network advertisers. See "Risk
Factors -- Integration of Operations; Operation of Katz and Radio Network."
COMPLETED TRANSACTIONS
- - Since January 1, 1997, the Company has completed (i) the Chancellor Merger,
which added 52 radio stations (36 FM and 16 AM) to the Company's portfolio
of stations, for a net purchase price of approximately $2.0 billion, (ii)
the acquisition of 23 radio stations for a net purchase price of
approximately $1.5 billion, (iii) the exchange of seven stations for five
stations and $6.0 million in cash, (iv) the sale or other disposition of 10
radio stations for $269.3 million in cash and a promissory note for $18.0
million and (v) the acquisition of Katz, a full service media
representation firm, for a net purchase price of approximately $379.1
million. These transactions, together with the acquisitions and
dispositions completed by the Company during 1996 and acquisitions and
dispositions completed by Chancellor during 1996 and 1997, are referred to
herein as the "Completed Transactions."
PENDING TRANSACTIONS
- - BONNEVILLE OPTION. On August 6, 1997, the Company paid $3.0 million to
Bonneville International Corporation ("Bonneville") for an option to
exchange three of the Company's stations in Los Angeles and Washington,
D.C. (2 FM and 1 AM) plus an additional $57.0 million in cash for three of
Bonneville's FM stations in New York, Los Angeles and Houston (the
"Bonneville Option"). The Bonneville Option was exercised on October 1,
1997 and definitive exchange documentation is presently being negotiated.
Although there can be no assurance, the Company expects that the
transactions contemplated by the Bonneville Option will be completed during
the first quarter of 1998.
- - CAPITOL BROADCASTING ACQUISITION. On February 17, 1998, the Company entered
into an agreement to acquire WWDC-FM/AM in Washington, D.C. from Capitol
Broadcasting Company and its affiliates for a purchase price of $72.0
million in cash (including $4.0 million paid by the Company in escrow) (the
S-6
<PAGE> 7
"Capitol Broadcasting Acquisition"), plus an amount equal to the value assigned
to certain accounts receivable for the stations. Consummation of the Capitol
Broadcasting Acquisition is conditioned, among other things, on the consummation
of the exchanges of the Company's Washington, D.C. stations that are
subject to the Bonneville Option. Although there can be no assurance, the
Company expects that the Capitol Broadcasting Acquisition will be
consummated in the second quarter of 1998.
- - SFX EXCHANGE. On July 1, 1996, Chancellor entered into an agreement
(assumed by the Company in the Chancellor Merger) to exchange two FM
stations in Jacksonville and $11.0 million in cash in return for four
stations (three FM and one AM) in Nassau/Suffolk (Long Island) (the "SFX
Exchange"). On November 6, 1997, the Antitrust Division of the United
States Department of Justice (the "DOJ") filed suit against the Company
seeking to enjoin under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") the acquisition of the four Long Island
properties under the SFX Exchange. If the Company is unable to acquire the
four Long Island properties, the SFX Exchange will not be consummated and
the Company will retain ownership of the two Jacksonville FM stations.
Furthermore, assuming a binding agreement is reached regarding the Capstar
Transaction (see "-- Potential Capstar Transaction" below), it is expected
that, upon consummation of Capstar Broadcasting Corporation's pending
acquisition of SFX, the SFX Exchange would be terminated. There can be no
assurance as to whether or when the SFX Exchange will ultimately be
consummated. The Company does not believe that failure to consummate the
SFX Exchange would have a material adverse effect on the Company's
business, results of operations or financial condition.
Further information regarding the Completed Transactions, the Bonneville
Option and the SFX Exchange, including information regarding the pro forma
effect thereof on the Company's results of operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997, is included in
the Company's Current Report on Form 8-K/A dated February 10, 1998, incorporated
by reference herein (the "Form 8-K/A").
POTENTIAL CAPSTAR TRANSACTION
On February 20, 1998, the Company reached an agreement to acquire from
Capstar Broadcasting Corporation (together with its subsidiaries, "Capstar")
certain radio stations in Dallas, Houston, San Diego and Pittsburgh (the
"Capstar/SFX Stations") for an aggregate purchase price of approximately $637.5
million (the "Capstar Transaction"). Hicks, Muse, Tate & Furst, Incorporated
("Hicks Muse"), which is a substantial shareholder of the Company, controls
Capstar, and certain directors of the Company are directors and/or executive
officers of Capstar and/or officers of Hicks Muse. See "Risk Factors -- Federal
Broadcasting Industry Subject to Federal Regulation," "Risk Factors -- Conflict
of Interest" and "Risk Factors -- Control of the Company." The Capstar/SFX
Stations are presently owned by SFX, and are expected to be acquired by Capstar
as part of Capstar's pending acquisition of SFX (the "Capstar/SFX Acquisition").
The Capstar/SFX Stations would be acquired by the Company in a series of
purchases and exchanges over a period of three years, and would be operated by
the Company under time brokerage agreements immediately upon the consummation of
the Capstar/SFX Acquisition. As part of the Capstar Transaction, the SFX
Exchange would, upon consummation of the Capstar/SFX Acquisition, be terminated.
As part of the proposed Capstar Transaction, the Company would, at the
consummation of the Capstar/SFX Acquisition, provide a subordinated loan to
Capstar in the principal amount of $250.0 million (the "Capstar Loan"). The
Capstar Loan would bear interest at the rate of 12% per annum (subject to
increase in certain circumstances), and would be secured by a senior pledge of
common stock of Capstar's direct subsidiaries, a senior pledge of a majority of
common stock of SFX, and a senior guarantee by SFX. A portion of the Capstar
Loan would be prepaid by Capstar in connection with the Company's acquisition
of, and the proceeds of such prepayment would be used by the Company as a
portion of the purchase price for, each Capstar/SFX Station. The Company's
obligation to provide the Capstar Loan is conditioned, among other things, on
Capstar's receipt of at least $650.0 million in equity investments that are
subordinate to the Capstar Loan between January 1, 1998 and the consummation of
the Capstar/SFX Acquisition.
S-7
<PAGE> 8
Effectiveness of the Capstar Transaction is subject to the conditions
precedent that the boards of directors of the Company and Capstar approve the
transaction (including approval by a majority of disinterested directors on the
Company's board and by an advisory committee to Capstar's board) and receipt by
the Company and Capstar of fairness opinions from nationally recognized
investment banking firms regarding the transaction. There can be no assurance
that such approvals will be granted or that such fairness opinions will be
obtained. Assuming that such approvals are granted and that such fairness
opinions are obtained, and the Capstar Transaction becomes effective,
consummation of the Capstar Transaction would be subject, among other things, to
approval by the Federal Communications Commission (the "FCC") and expiration or
termination of the waiting period required under the HSR Act. See "Risk
Factors -- Necessity of Governmental Reviews and Approvals Prior to Consummation
of the Pending Transactions."
Capstar has informed the Company that Capstar expects that the Capstar/SFX
Acquisition will be consummated in the second quarter of 1998.
COMPANY STRATEGY
The Company's senior management team, led by Scott K. Ginsburg, James de
Castro, Matthew E. Devine and Kenneth O'Keefe, has extensive experience in
acquiring and operating large market radio station groups. The Company's
business strategy is to assemble and operate radio station clusters in order to
maximize broadcast cash flow generated in each market. This strategy relies on
the following seven key elements.
Create Large Market Superduopolies. The Company seeks to be the owner and
operator of the leading superduopoly in the largest markets in the United
States. Management believes that the large revenue base in these markets, in
conjunction with operating synergies achievable through the operation of
multiple stations, will enable it to appeal to a wider universe of national and
local advertisers and to achieve a greater degree of profitability than that of
operators and broadcasters in smaller markets. The Bonneville Option, if
consummated, will complement the Company's existing stations in the Los Angeles,
New York and Houston markets. The Company expects to continue to selectively
pursue acquisition opportunities in the major markets in which it competes as
well as in other markets, with particular emphasis on the nation's largest 25
markets.
Maximize Superduopoly Revenue and Expense Synergies. The Company seeks to
capitalize on the revenue growth and expense savings opportunities of
superduopolies. Superduopolies have only been permissible since the passage of
the Telecommunications Act of 1996 (the "1996 Act"). Management believes that
substantial benefits can be derived from the successful integration of these
station cluster groups. Management also 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 continue to realize significant expense savings
through the consolidation of facilities and through the economies of scale
created in areas such as national representation commissions, employee benefits,
insurance premiums and other operating costs.
Establish Strong Listener Loyalty. Management believes that strong
listener familiarity with a given radio station produces listener loyalty.
Management seeks to establish this familiarity through a variety of programming
and marketing techniques, including the development of high-profile on-air
personalities and creative station-sponsored promotional events, all of which
are designed to secure heightened listener awareness. The Company also conducts
extensive market research to help identify programming format opportunities and
attract new listeners, as has been the case with WKTU-FM in New York. After
operating WKTU-FM for nine months under the call letters and country music
format inherited from a prior operator, in February 1996 the Company began to
operate WKTU-FM as a rhythmic contemporary hits station. According to Arbitron,
WKTU-FM was ranked eleventh in its target demographic group as a country
station, and was ranked first in several key demographic groups (including its
target demographic group) in the first full ranking period after the station
changed its format. The station has continued to rank among the top five
stations in its target demographic group in subsequent periods. Management
believes that institutionalizing its
S-8
<PAGE> 9
radio stations in their markets through programming, marketing and research
ensures steady long-term audience share ratings.
Maintain Strict Cost Controls. Management maintains a company-wide focus
on cost controls in an effort to maximize broadcast cash flow margins.
Management reviews station spending on a monthly basis. In addition, corporate
level employees maintain weekly sales reporting systems designed to enable
management to evaluate station performance on a current basis. The Company's
focus on maximizing superduopoly revenues and maintaining cost controls is
reflected by the fact that, during 1995 and 1996 and the nine months ended
September 30, 1997, the Company achieved historical broadcast cash flow margins
of 40% or more. The Company also carefully monitors capital expenditures.
Develop Experienced, Incentivized Management Team. The Company believes
that management depth is critical to achieving superior operating performance in
a portfolio as large as the Company's. The Company's senior management team of
Scott K. Ginsburg, James de Castro, Matthew Devine and Kenneth O'Keefe
collectively have an aggregate of more than 60 years of radio industry operating
experience. This senior management team is supported by an experienced team of
veteran group operators and station general managers. At the station level, the
Company seeks to incentivize its individual radio station managers and sales
forces to outperform revenue and broadcast cash flow budget expectations by
granting quarterly and annual performance measurement-based bonuses. The Company
believes that the incentives it offers to its employees, as well as its stature
in the radio industry, will enable it to continue to be successful in recruiting
top industry employees.
Maximize After Tax Cash Flow. By emphasizing the revenue and expense
synergies achievable through the assembly and operation of superduopolies and by
carefully monitoring operating costs, the Company seeks to maximize broadcast
cash flow and, ultimately, after tax cash flow (broadcast cash flow less
corporate general and administrative expenses, debt service, tax payments and
dividend requirements). This focus on after tax cash flow should facilitate
reduction of leverage without undue dependence on capital markets and position
the Company to pursue attractive acquisitions.
Related Business Expansion. In addition to the foregoing, the Company seeks
to further leverage its radio expertise by expanding into industries related to
the operation of radio stations. In this regard, the Company formed a national
radio network, The AMFM Radio Networks, in September 1997 and acquired Katz, a
full-service media representation firm in October 1997. The Company is also
exploring the acquisition of additional complementary media businesses,
particularly businesses with significant free cash flow generating potential and
with a large-market focus similar to the Company's.
S-9
<PAGE> 10
THE OFFERING
Common Stock to be offered
by the Company............. 16,000,000 shares
Common Stock to be
outstanding after the
Offering(1).............. 135,991,742 shares of Common Stock.
Use of Proceeds............ For general corporate purposes, including the
possible repurchase of the outstanding shares of
12% Exchangeable Preferred Stock (the "12%
Preferred Stock") and 12 1/4% Series A Senior
Cumulative Exchangeable Preferred Stock (the
"12 1/4% Preferred Stock") of Chancellor Media
Corporation of Los Angeles ("CMCLA"), the Company's
indirect wholly owned operating subsidiary. Pending
any such use, net proceeds will be used to reduce
borrowings under the Company's senior credit
facility with a syndicate of commercial banks and
other financial institutions (the "Senior Credit
Facility"). Amounts used to reduce borrowings and
not reborrowed in connection with the proposed
repurchase of the 12% Preferred Stock and the
12 1/4% Preferred Stock may be subsequently
reborrowed for general corporate purposes
(including financing of the Bonneville Option, the
SFX Exchange, the Capitol Broadcasting Acquisition,
and the Capstar Transaction, if the conditions
precedent to its effectiveness are satisfied),
subject to compliance with certain conditions. See
"Risk Factors -- Possible Non-Consummation of, or
Increased Cost of, Proposed Repurchase of 12 1/4%
Preferred Stock and 12% Preferred Stock" and "Use
of Proceeds."
Nasdaq National Market
Symbol of Common Stock..... AMFM
- ---------------
(1) Shares outstanding are as of January 31, 1998. Excludes (i) 6,678,866 shares
of Common Stock that may be issued from time to time upon the exercise of
vested employee and director stock options having exercise prices ranging
from $0.01 to $37.31 per share, (ii) 2,043,136 shares of Common Stock that
may be issued from time to time upon exercise of currently unvested employee
and director stock options having exercise prices ranging from $6.17 to
$37.31 per share (iii) 1,017,889 shares of Common Stock issuable upon
exercise of options authorized but not yet granted under the Company's
employee and director stock option plans, (iv) 11,980,000 shares of Common
Stock issuable upon conversion of the Company's $3.00 Convertible
Exchangeable Preferred Stock (the "$3.00 Convertible Preferred Stock") and
(v) 6,079,088 shares of Common Stock issuable upon conversion of the
Company's 7% Convertible Preferred Stock (the "7% Convertible Preferred
Stock").
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The summary pro forma financial information set forth below under Company
Pro Forma presents adjustments for (i) in the case of the Operating Data and
Other Data, the Completed Transactions, the Bonneville Option, the SFX Exchange
and financing transactions undertaken by the Company and Chancellor during 1996
and 1997, as if such transactions had occurred on January 1, 1996 and (ii) in
the case of the Balance Sheet Data, the Completed Transactions consummated after
September 30, 1997, the Bonneville Option, the SFX Exchange and the offering
(the "8 1/8% Notes Offering") in December 1997 of $500.0 million aggregate
principal amount of the Company's 8 1/8% Senior Subordinated Notes due 2007 (the
"8 1/8% Notes"), as if such transactions had occurred on September 30, 1997. For
information regarding the assumptions and adjustments used in preparing the
Company Pro Forma data, see the Form 8-K/A, incorporated by reference herein.
The summary pro forma financial information set forth below under Company
Pro Forma As Adjusted for the Offering presents adjustments for (i) in the case
of the Operating Data and Other Data, the Completed Transactions, the Bonneville
Option, the SFX Exchange, financing transactions undertaken by the Company and
Chancellor during 1996 and 1997, and the Offering and the application of the net
proceeds therefrom as described under "Use of Proceeds," as if such transactions
had occurred on January 1, 1996 and (ii) in the case of the Balance Sheet Data,
the Completed Transactions consummated after September 30, 1997, the Bonneville
Option, the SFX Exchange, the 8 1/8% Notes Offering and the Offering and the
application of the net proceeds therefrom as described under "Use of Proceeds,"
as if such transactions had occurred on September 30, 1997.
The information set forth under Company Pro Forma As Adjusted for the
Offering assumes that all of the outstanding shares of 12% Preferred Stock and
12 1/4% Preferred Stock will be repurchased and retired pursuant to a tender
offer, certain permitted redemptions, negotiated purchases or open-market
transactions. The pro forma data is based on assumed premiums (which includes
accrued and unpaid dividends) to be paid to holders of 12% Preferred Stock and
12 1/4% Preferred Stock, and other assumptions relating to such repurchases. No
assurance can be given that the actual premiums paid in connection with any such
repurchases made by the Company will not be greater, perhaps by a substantial
amount, than the amounts assumed in the pro forma data. In addition, there can
be no assurance that any shares of 12% Preferred Stock and 12 1/4% Preferred
Stock will be repurchased by the Company. See "Risk Factors -- Possible Non-
Consummation of, or Increased Cost of, Proposed Repurchase of 12 1/4% Preferred
Stock and 12% Preferred Stock" and "Use of Proceeds."
The summary pro forma financial information does not give effect to the
recently announced Capitol Broadcasting Acquisition or the potential Capstar
Transaction. See "Prospectus Supplement Summary -- Recent
Developments -- Pending Transactions -- Capitol Broadcasting Acquisition" and
"Prospectus Supplement Summary -- Recent Developments -- Potential Capstar
Transaction" for a description of these transactions.
The pro forma information set forth below is not necessarily indicative of
the operating results or financial position that would have been achieved had
such transactions actually been consummated on the dates specified nor is it
indicative of the Company's operating results or financial position for any
future periods or dates.
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<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997
------------------------------------ ----------------------------------------
COMPANY COMPANY
PRO FORMA PRO FORMA
AS ADJUSTED AS ADJUSTED
COMPANY COMPANY FOR THE COMPANY COMPANY FOR THE
HISTORICAL PRO FORMA OFFERING HISTORICAL(1) PRO FORMA OFFERING
---------- --------- ----------- ------------- ---------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AND MARGIN DATA)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net revenues............................ $ 293,850 $898,476 $ 898,476 $ 333,283 $ 724,397 $ 724,397
Operating expenses excluding
depreciation and amortization......... 174,344 533,865 533,865 184,713 420,879 420,879
Operating income (loss)................. 17,960 (19,825) (19,825) 32,538 14,107 14,107
Interest expense, net................... 37,050 204,877 188,630 45,036 153,658 141,473
Dividends and accretion on preferred
stock of subsidiary................... -- 38,400 -- 2,779 30,100 --
Net loss................................ (16,194) (202,004) (153,044) (6,491) (122,705) (84,684)
Preferred stock dividends............... 3,820 25,670 25,670 5,748 19,316 19,316
Net loss attributable to common
stockholders.......................... (20,014) (227,674) (178,714) (12,239) (142,021) (104,000)
Loss per common share................... $ (0.33) $ (1.91) $ (1.32) $ (0.14) $ (1.19) $ (0.77)
Weighted average common shares
outstanding........................... 60,414 118,927 134,927 87,690 119,102 135,102
OTHER DATA:
Broadcast cash flow(2).................. $ 119,506 $364,611 $ 364,611 $ 148,570 $ 303,518 $ 303,518
Broadcast cash flow margin.............. 41% 41% 41% 45% 42% 42%
EBITDA(2)............................... $ 111,709 $340,662 $ 340,662 $ 136,924 $ 277,410 $ 277,410
BALANCE SHEET DATA (END OF PERIOD):
Working capital, excluding current
portion of long-term debt............. $ 67,921 $ 123,805 $ 142,148 $ 142,148
Total assets............................ 1,020,959 4,213,376 5,115,612 5,115,612
Long-term debt (including current
portion)(3)........................... 358,000 1,857,000 2,678,601 2,446,508
Redeemable preferred stock.............. -- 338,566 338,566 --
Stockholders' equity.................... $ 549,411 $1,508,666 $1,508,666 $2,079,325
</TABLE>
- ---------------
(1) Certain reclassifications have been made to the Company's historical
financial statements for the nine months ended September 30, 1997 to conform
to the presentation which will be reflected in the Company's audited
financial statements for the year ended December 31, 1997.
(2) Broadcast cash flow consists of operating income excluding depreciation and
amortization, corporate general and administrative expense and other
non-cash and non-recurring charges. EBITDA consists of operating income
excluding depreciation and amortization and other non-cash and non-recurring
charges. Although broadcast cash flow and EBITDA are not calculated in
accordance with generally accepted accounting principles, the Company
believes that broadcast cash flow and EBITDA are widely used as a measure of
operating performance. Nevertheless, these measures should not be considered
in isolation or as a substitute for operating income, cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. Broadcast cash flow and EBITDA do
not take into account the Company's debt service requirements and other
commitments and, accordingly, broadcast cash flow and EBITDA are not
necessarily indicative of amounts that may be available for reinvestment in
the Company's business or other discretionary uses.
(3) The current portion of the Company's long-term debt at December 31, 1996 and
September 30, 1997 was $26,500 and $0, respectively.
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RISK FACTORS
Prospective investors should carefully consider, in addition to the other
information contained or incorporated by reference into this Prospectus
Supplement and the accompanying Prospectus, the following factors before
purchasing the shares of Common Stock offered hereby.
SUBSTANTIAL LEVERAGE; HISTORY OF NET LOSSES
The Company has consolidated indebtedness that is substantial in relation
to its stockholders' equity. The Company is subject to the terms of the Senior
Credit Facility, the indentures (the "Indentures") governing the Company's
9 3/8% Senior Subordinated Notes due 2004 (the "9 3/8% Notes"), 8 3/4% Senior
Subordinated Notes due 2007 (the "8 3/4% Notes"), 10 1/2% Senior Subordinated
Notes due 2007 (the "10 1/2% Notes"), and the 8 1/8% Notes, and the certificates
of designation governing the 12 1/4% Preferred Stock and the 12% Preferred
Stock. The Senior Credit Facility, the Indentures and such certificates of
designation limit, but do not prohibit, the incurrence of additional
indebtedness by the Company. As of September 30, 1997, the Company had
outstanding long-term indebtedness of approximately $1.86 billion and redeemable
preferred stock with an aggregate liquidation preference of $338.6 million, an
accumulated deficit of $125.8 million and stockholders' equity of $1.51 billion.
As of September 30, 1997, on a pro forma basis after giving effect to those
Completed Transactions consummated after such date, the Bonneville Option, the
SFX Exchange, the 8 1/8% Notes Offering and the Offering and the application of
the net proceeds therefrom (assuming that all of the outstanding shares of 12%
Preferred Stock and 12 1/4% Preferred Stock are repurchased by the Company), but
without giving effect to the Capitol Broadcasting Acquisition and the potential
Capstar Transaction, the Company would have had outstanding long term
indebtedness of approximately $2.45 billion, an accumulated deficit of $191.7
million and stockholders' equity of $2.08 billion. See "Prospectus Supplement
Summary -- Summary Historical and Pro Forma Financial Data," "Capitalization"
and "Use of Proceeds."
The degree to which the Company is leveraged could have material
consequences to the Company and the holders of Common Stock, including, but not
limited to the following: (i) its ability to obtain additional financing in the
future for acquisitions, working capital, capital expenditures, and general
corporate or other purposes may be impaired, (ii) a substantial portion of its
cash flow will be required for debt service under the Senior Credit Facility,
the 9 3/8% Notes, the 8 3/4% Notes, the 10 1/2% Notes, and the 8 1/8% Notes,
and, as a result, will not be available for other purposes, (iii) to the extent
the Company is not successful in repurchasing the 12% Preferred Stock and the
12 1/4% Preferred Stock, commencing in February 2001, the Company will have
substantial cash dividend requirements on the 12 1/4% Preferred Stock and,
commencing in January 2002, on the 12% Preferred Stock (the Company may, but is
not required to, pay cash dividends on such securities prior to such date, and
has paid the most recent dividends on such instruments in cash), (iv) the
Company's ability to declare and pay cash dividends on the $3.00 Convertible
Preferred Stock, the 7% Convertible Preferred Stock and the Common Stock will be
limited by the terms of the Senior Credit Facility, the Indentures and the
certificates of designation governing the 12% Preferred Stock and the 12 1/4%
Preferred Stock, (v) the Company's level of indebtedness could make it more
vulnerable to economic downturns, limit its ability to withstand competitive
pressures and reduce its flexibility in responding to changing business and
economic conditions, (vi) certain of the Company's borrowings are and will
continue to be at variable rates of interest, which causes the Company to be
vulnerable to increases in interest rates and (vii) the agreements governing its
long-term debt (and, to a lesser extent, the 12 1/4% Preferred Stock and the 12%
Preferred Stock) contain numerous restrictive operating and financial covenants
with which it must comply. The failure by the Company to comply with such
covenants in such debt instruments could result in an event of default
thereunder, which could permit acceleration of the obligations under such
instruments and in some cases acceleration of obligations under other
instruments that contain cross-default or cross-acceleration provisions.
The ability of the Company to pay cash dividends on the $3.00 Convertible
Preferred Stock, the 7% Convertible Preferred Stock and the Common Stock and to
satisfy its obligations under the Senior Credit Facility, the Indentures and the
certificates of designation governing the 12 1/4% Preferred Stock and the 12%
Preferred Stock will depend upon the Company's future operating performance.
Such operating performance will be affected by prevailing economic conditions
and financial, business and other factors, certain of which are beyond the
Company's control. The Company anticipates that its operating cash flow,
together with
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borrowings under the Senior Credit Facility, will be sufficient to meet its
operating expenses and to service its debt and preferred stock dividend
requirements as they become due. However, if the Company is unable to service
its indebtedness, whether upon acceleration of such indebtedness or in the
ordinary course of business, it will be forced to pursue one or more alternative
strategies such as selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all,
or that the approval of the Federal Communications Commission (the "FCC") could
be obtained on a timely basis, or at all, for the transfer of any of the
stations' licenses in connection with a proposed sale of assets.
The Company has historically experienced, on a consolidated basis, net
losses, principally as a result of significant interest charges, certain
non-recurring expenses and depreciation and amortization charges relating to the
acquisition of radio broadcasting stations. The Company's net loss attributable
to common stockholders for the years ended December 31, 1994, 1995 and 1996 and
for the nine months ended September 30, 1997 was $8.4 million, $10.7 million,
$20.0 million and $12.2 million, respectively. On a pro forma basis, after
giving effect to the Completed Transactions, the Bonneville Option, the SFX
Exchange, financing transactions undertaken by the Company and Chancellor during
1996 and 1997, and the Offering and the application of the net proceeds
therefrom (assuming that all of the outstanding shares of 12% Preferred Stock
and 12 1/4% Preferred Stock are repurchased by the Company), but without giving
effect to the Capitol Broadcasting Acquisition and the potential Capstar
Transaction, the Company's net loss attributable to common stockholders for the
year ended December 31, 1996 and the nine months ended September 30, 1997 would
have been $178.7 million and $104.0 million, respectively. The acquisition of
radio broadcasting stations and business related thereto has been and will
continue to be an important part of the Company's operating strategy, and the
Company expects that amortization charges and interest expenses relating to past
and possible future acquisitions will continue to have a significant adverse
effect on the Company's reported results.
POSSIBLE NON-CONSUMMATION OF, OR INCREASED COST OF, PROPOSED REPURCHASE OF FOR
12 1/4% PREFERRED STOCK AND 12% PREFERRED STOCK
Except under certain circumstances applicable to a portion of each issue,
neither the 12 1/4% Preferred Stock nor the 12% Preferred Stock is currently
redeemable at the option of the Company. The Company anticipates that it will
attempt to repurchase the non-redeemable portion of the 12 1/4% Preferred Stock
and the 12% Preferred Stock shortly after completion of the Offering. However,
the decision whether to sell shares of 12% Preferred Stock or 12 1/4% Preferred
Stock by the holders thereof will be entirely within the discretion of the
holders based on the price offered by the Company, the terms and conditions of
the offer and other factors deemed relevant by a holder. There can be no
assurance that the Company will be able to repurchase all shares of 12%
Preferred Stock or the 12 1/4% Preferred Stock, as to the amount of securities
of either series that may be repurchased or as to the prices at which any
repurchase will be made. In addition, the Company reserves the right not to seek
to repurchase either or both of the 12% Preferred Stock and 12 1/4% Preferred
Stock based on prevailing market prices for such preferred stock and other
factors which the Company deems relevant.
NECESSITY OF GOVERNMENTAL REVIEWS AND APPROVALS PRIOR TO CONSUMMATION OF THE
PENDING TRANSACTIONS
Approval of the FCC is required for the issuance, renewal or transfer of
radio broadcast station operating licenses. In addition, the consummation of
each of the Bonneville Option, the SFX Exchange and the Capitol Broadcasting
Acquisition is, and any future transactions undertaken by the Company (including
the potential Capstar Transaction, if the conditions precedent to its
effectiveness are satisfied) likely will be, conditioned upon the expiration or
termination of the applicable waiting period under the HSR Act. To date, (i) the
FCC has approved the SFX Exchange and such approval has become a final,
nonappealable order, (ii) the FCC has approved the transfer of two of the six
stations involved in the Bonneville Option, but such approvals have not become
final, nonappealable orders, (iii) the FCC's approval has not yet been sought
regarding the Capitol Broadcasting Acquisition and the potential Capstar
Transaction, (iv) the waiting period required under the HSR Act for the
Bonneville Option has expired or been terminated, (v) the waiting period
required under the HSR Act for SFX Exchange has not expired or been terminated
and (vi) the Company has not yet requested that the waiting period required
under the HSR Act for the Capitol Broadcasting Acquisition and the potential
Capstar Transaction expire or be terminated. See "-- Antitrust Matters" below.
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INTEGRATION OF ACQUISITIONS; OPERATION OF KATZ AND RADIO NETWORK
As a result of the Completed Transactions, the Company holds a
significantly larger portfolio of radio stations than the Company has held in
the past. In addition, management is regularly involved in discussions with
third parties regarding potential acquisitions, and the Company may pursue an
active acquisition strategy that could result in additional expansion in the
future. As a result of the Company's acquisition strategy, the Company's
management is required to manage a substantially larger radio station group than
historically has been the case. The Company's future operations and earnings
will be largely dependent on the Company's ability to integrate the stations
recently acquired and proposed to be acquired. The Company must, among other
things, integrate management and employee personnel and combine certain
administrative procedures. There can be no assurance that the Company will
successfully integrate the stations recently acquired and proposed to be
acquired, and the failure to do so could have a material adverse effect on the
Company's results of operations and financial condition. In addition, the need
to focus management's attention on the integration of these stations may limit
the ability of the Company to successfully pursue other opportunities for a
period of time.
The acquisition strategy of the Company involves numerous other risks,
including increasing leverage and debt service requirements, the diversion of
management's attention from other business concerns and the potential loss of
key employees of acquired stations. The availability of additional acquisition
financing cannot be assured, and depending on the terms of the proposed
acquisitions and financings, could be restricted by the terms of the Senior
Credit Facility, the Indentures, the certificates of designation for the 12 1/4%
Preferred Stock and the 12% Preferred Stock, and, to a lesser extent, the
certificates of designation for the Company's 7% Convertible Preferred Stock and
$3.00 Convertible Preferred Stock. There can be no assurance that any future
acquisitions will not have a material adverse effect on the Company's financial
condition and results of operations.
With the Company's acquisition of Katz, the Company has entered into a line
of business not previously undertaken by the Company on a national basis.
Although the media representation business is related to the radio broadcasting
business and the Company's subsidiaries have experience in certain aspects of
the media representation business at the local radio station level, the Company,
through its Katz subsidiaries, must operate the business of Katz and manage a
significantly larger base of management and employee personnel performing
national media representation functions. There can be no assurance that the
Company will be able to successfully operate Katz. In addition, the need to
focus management's attention on the operation of this business may limit the
ability of the Company to successfully pursue other opportunities for a period
of time.
The Company, through The AMFM Radio Networks, is operating a new national
radio network. Although certain of the Company's radio stations have syndicated
programs created locally in the past, the Company has not previously undertaken,
at the national level, a radio network. The Company will compete with a number
of established state and national radio network operators in this regard. There
can be no assurance that the Company will be successful in operating a new
national radio network.
COMPETITIVE NATURE OF RADIO BROADCASTING AND MEDIA REPRESENTATION
The radio broadcasting industry is a highly competitive business. The
success of each of the Company's stations is dependent, to a significant degree,
upon its audience ratings and share of the overall advertising revenue within
its market. The Company's stations compete for listeners and advertising revenue
directly with other radio stations, as well as with other media, within their
respective markets. The Company also competes with other broadcasting operators
for acquisition opportunities, and prices for radio stations in major markets
have increased significantly in recent periods. To the extent that the
consolidation in the radio broadcasting industry continues, certain competitors
may emerge with larger portfolios of major market radio stations, greater
ability to deliver large audiences to advertisers and more access to capital
resources than the Company. The audience ratings and market share for the
Company are and will be subject to change and any adverse change in a particular
market could have a material and adverse effect on the revenue of their stations
located in that market. There can be no assurance that any one of the Company's
stations will be able to maintain or increase its current audience ratings or
advertising revenue market share.
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The radio broadcasting industry is also subject to competition from new
media technologies that are being developed or introduced, such as the delivery
of audio programming by cable television systems, direct broadcast satellite
("DBS") systems and other digital audio broadcasting formats to local and
national audiences. In addition, the FCC has auctioned spectrum for a new
satellite-delivered Digital Audio Radio Service ("DARS"). These actions may
result in the introduction of several new national or regional multi-channel and
multi-format satellite radio services with sound quality equivalent to compact
discs. Another possible competitor to traditional radio is In Band On Channel
("IBOC") digital radio. IBOC could provide multi-channel, multi-format digital
radio services in the same band width currently occupied by traditional AM and
FM radio services. The Company cannot predict at this time the effect, if any,
that any such new technologies may have on the radio broadcasting industry.
The success of the Company's Katz media representation operations depends
on Katz' ability to maintain and acquire representation contracts with radio and
television stations and cable systems, the inventory of time Katz represents and
the experience of Katz' executive management and sales personnel. The media
representation business is highly competitive, both in terms of competition to
gain client stations and to sell air time to advertisers. Katz competes not only
with other independent and network media representatives but also with direct
national advertising. Katz also competes on behalf of its clients for
advertising dollars with other media such as newspapers and magazines, outdoor
advertising, transit advertising, direct response advertising, yellow page
directories and point of sale advertising.
ANTITRUST MATTERS
As a result of the recent consolidation of ownership in the radio broadcast
industry, the DOJ has been giving closer scrutiny to acquisitions in the
industry, including certain transactions involving the Company. The consummation
of each of the Bonneville Option, the SFX Exchange and the Capitol Broadcasting
Acquisition is, and any future transactions undertaken by the Company (including
the potential Capstar Transaction, if the conditions precedent to its
effectiveness are satisfied) likely will be, subject to notification filing
requirements, applicable waiting periods and possible review by the DOJ or the
United States Federal Trade Commission (the "FTC") under the HSR Act. The DOJ
has filed suit against the Company seeking to enjoin the SFX Exchange, and there
can be no assurance as to the outcome of this litigation. DOJ review of certain
transactions has caused, and may continue to cause, delays in anticipated
consummations of certain transactions and, in some cases, may result in attempts
by DOJ to enjoin such transactions or negotiate modifications of the proposed
transactions. Such delays, injunctions and modifications could have an adverse
effect on the Company and may result in the abandonment of some otherwise
attractive transactions.
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
the benchmarks. Although the Company does not believe that its acquisition
strategy as a whole will be adversely affected in any material respect by
antitrust review (including review under the HSR Act) or by additional
divestitures that the Company may have to make as a result of antitrust review,
there can be no assurance that this will be the case.
RADIO BROADCASTING INDUSTRY SUBJECT TO FEDERAL REGULATION
The radio broadcasting industry is subject to extensive regulation by the
FCC under the Communications Act of 1934, as amended (as amended by the 1996
Act, the "Communications Act"). Approval of the FCC is required for the
issuance, renewal or transfer of radio broadcast station operating licenses. See
"-- Necessity of Governmental Reviews and Approvals Prior to Consummation of the
Pending Transactions" above. In particular, the Company's business is dependent
upon its continuing to hold radio broadcasting licenses from the FCC that are
issued for terms of up to eight years. While in the vast majority of cases such
licenses are renewed by the FCC, there can be no assurance that any of the
stations' licenses will be renewed at their expiration dates, or that renewals,
if granted, will not include conditions or qualifications that could adversely
affect the Company's operations. In addition, the Communications Act and FCC
rules restrict alien ownership and voting of capital stock of, and
participations in the affairs of, the Company. Moreover, laws, regulations
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<PAGE> 17
and policies may be changed significantly over time and there can be no
assurance that such changes will not have a material adverse affect on the
business, financial condition and results of operations of the Company.
The 1996 Act, which amended the Communications Act in a number of important
respects, has created significant new opportunities for radio broadcasters, but
also has created uncertainties as to how the FCC and the courts will enforce and
interpret the 1996 Act. Although the 1996 Act eliminated the national ownership
ceiling previously applicable to radio broadcasters and also loosened
restrictions previously applicable to ownership within single markets,
significant restrictions remain on permitted levels of local ownership. In
markets with 45 or more stations, ownership is limited to eight stations, no
more than five of which can be FM or AM; in markets with 30-44 stations,
ownership is limited to seven stations, no more than four of which can be FM or
AM; in markets with 15-29 stations, ownership is limited to six stations, no
more than four of which can be FM or AM; and in markets with 14 or fewer
stations, ownership is limited to no more than 50% of the market's total and no
more than three AM or FM. Compliance with the FCC's multiple ownership rules is
expected to cause the Company and other radio broadcasters to forego acquisition
opportunities that they might otherwise wish to pursue. Compliance with these
rules by third parties may also have a significant impact on the Company as, for
example, in precluding the consummation of swap transactions that would cause
such third parties to violate multiple ownership rules.
Hicks Muse, through its ownership of a majority of outstanding capital
stock of Capstar, has an attributable interest in Capstar. In addition, four of
the Company's directors -- Thomas O. Hicks, Lawrence D. Stuart, Jr., Eric C.
Neuman and Steven Dinetz -- are directors and/or executive officers of Capstar
and therefore have attributable interests in Capstar, and Messrs. Hicks, Stuart
and Neuman are officers of Hicks Muse. Capstar presently owns or proposes to
acquire over 300 radio stations in numerous markets (mainly mid-size and small)
throughout the United States. Hicks Muse and Messrs. Hicks and Neuman also have
attributable interests in STC Broadcasting, Inc. ("STC"), which owns or proposes
to acquire six television stations in six markets. Hicks Muse and Messrs. Hicks
and Neuman also have attributable interests in an entity seeking to acquire
control of LIN Television Corporation ("LIN"), which would upon such acquisition
own eight television stations in eight markets. Under the FCC's rules, these
broadcast interests are attributed to the Company. If any such radio broadcast
interests overlap with the Company's directly-held radio broadcast interests in
the Company's markets, such interests are combined with the Company's interests
in such markets when determining compliance with the multiple ownership rules.
In addition, under the FCC's one-to-a-market rules, a party may not have
attributable interests in radio stations and a television station in the same
market unless a waiver is granted by the FCC. Although none of the television
stations owned or to be acquired through STC and LIN overlap with any of the
stations owned or to be acquired by the Company in any of its markets, there can
be no assurance that, in the future, such overlaps will not occur. As a result
of these attributable interests, the Company's future acquisition strategy may
be adversely affected. There can be no assurance that these additional
attributable interests will not have a material adverse effect on the Company's
future acquisition strategy or on the business, financial condition and results
of operations of the Company.
CONFLICT OF INTEREST
As described above (see "-- Radio Broadcasting Industry Subject to Federal
Regulation"), Hicks Muse and certain of the Company's directors have interests
in Capstar, which owns or proposes to acquire over 300 radio stations in a
number of states, in STC, which owns or proposes to acquire six television
stations in six markets, and in an entity seeking to acquire control of LIN,
which would upon such acquisition own eight television stations in eight
markets. Hicks Muse and these directors may in the future acquire interests in,
manage or otherwise control other radio or television stations or other
entertainment and communications media.
Directors of the Company who are also directors and/or executive officers
of Capstar, STC or the entity seeking to acquire control of LIN may have
conflicts of interest with respect to matters potentially or actually involving
or affecting the Company and Capstar, STC or the entity seeking to acquire
control of LIN, such as acquisitions, operations, financings and other corporate
opportunities that may be suitable for both the Company and Capstar, STC or the
entity seeking to acquire control of LIN. To the extent that such
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<PAGE> 18
opportunities arise, these directors may consult with their legal advisors and
make determinations with respect to such opportunities after consideration of a
number of factors, including whether such opportunities are presented to any
such director in his capacity as a director of the Company, whether such
opportunities are consistent with the Company's strategic objectives and whether
the Company will be able to undertake or benefit from such opportunities. In
addition, determinations may be made by the Company's Board of Directors, when
appropriate, by a vote of some or all of the disinterested directors only.
However, no assurances can be given that such disinterested director approval
will be sought or that any such conflicts will be resolved in favor of the
Company.
CONTROL OF THE COMPANY
After giving effect to the Offering, Thomas O. Hicks and affiliates of
Hicks Muse will hold approximately 12% of the outstanding primary shares of the
Common Stock of the Company, and Scott K. Ginsburg will hold approximately 3% of
the outstanding primary shares of the Common Stock of the Company. Additionally,
three directors of the Company are also principals or executive officers of
Hicks Muse. Accordingly, Mr. Hicks and Hicks Muse will have substantial
influence over the management and policies of the Company and on all matters
submitted to a vote of the holders of Common Stock of the Company, and the
combined voting power of Mr. Hicks, Hicks Muse and Mr. Ginsburg may have the
effect of discouraging certain types of transactions involving an actual or
potential change of control of the Company.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Senior Credit Facility, the Indentures and the certificates of
designations for the Company's preferred stock each contain certain covenants
that restrict, among other things, the Company's ability to incur additional
indebtedness, incur liens, pay dividends or make certain other restricted
payments, consummate certain asset sales, enter into certain transactions with
affiliates, impose restrictions on the ability of a subsidiary to pay dividends
or make certain payments to the Company, enter into sale and leaseback
transactions, conduct business other than the ownership and operation of radio
broadcast stations and businesses related thereto, merge or consolidate with any
other person or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of the assets of the Company. The Senior Credit
Facility requires the Company to maintain specified financial ratios and to
satisfy certain financial condition tests. The Company's ability to meet those
financial ratios and financial condition tests can be affected by events beyond
its control, and there can be no assurance that the Company will meet those
tests. A breach of any of these covenants could result in a default under the
Senior Credit Facility, the Indentures and other financial documents. In the
event of an event of default under the Senior Credit Facility or the Indentures,
the lenders thereunder could elect to declare all amounts outstanding
thereunder, together with accrued interest, to be immediately due and payable.
In the case of the Senior Credit Facility, if the Company were unable to repay
those amounts, the lenders thereunder could, subject to compliance with
applicable FCC rules, proceed against the collateral granted to them to secure
that indebtedness. If indebtedness under the Senior Credit Facility were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of the
Company.
LIMITATION ON ABILITY TO PAY DIVIDENDS
The Company is a holding company with no significant assets other than the
common stock of Chancellor Mezzanine Holdings Corporation, which is also a
holding company that owns, directly and indirectly, all of the outstanding
common stock of CMCLA. Consequently, the Company is ultimately dependent on
dividends and other funds from CMCLA to meet its obligations, including with
respect to dividends on the $3.00 Convertible Preferred Stock, the 7%
Convertible Preferred Stock and the Common Stock. The Senior Credit Facility,
the Indentures and the certificates of designation governing the 12% Preferred
Stock and the 12 1/4% Preferred Stock limit, but do not prohibit, the payment of
dividends by CMCLA.
In addition to these restrictions, under Delaware law, the Company is
permitted to pay dividends on its capital stock, including the $3.00 Convertible
Preferred Stock, the 7% Convertible Preferred Stock and the Common Stock, only
out of its surplus or, in the event that it has no surplus, out of its net
profits for the year in which a dividend is declared or for the immediately
preceding fiscal year. Surplus is defined as the excess of
S-18
<PAGE> 19
a company's total assets over the sum of its total liabilities plus the par
value of its outstanding capital stock. In order to pay dividends in cash, the
Company must have surplus or net profits equal to the full amount of the cash
dividend at the time such dividend is declared. In determining the Company's
ability to pay dividends, Delaware law permits the board of directors of the
Company to revalue the Company's assets and liabilities from time to time to
their fair market values in order to create surplus. The Company cannot predict
what the value of its assets or the amount of its liabilities will be in the
future and, accordingly, there can be no assurance that the Company will be able
to pay dividends on the $3.00 Convertible Preferred Stock, the 7% Convertible
Preferred Stock or the Common Stock. The Company intends to retain future
earnings for use in its business and does not anticipate paying any cash
dividends on shares of its Common Stock in the foreseeable future.
DEPENDENCE ON KEY PERSONNEL
The Company's business is dependent upon the performance of certain key
individuals, including Thomas O. Hicks, the Chairman of the Company; Scott K.
Ginsburg, the President and Chief Executive Officer of the Company; James de
Castro, the Chief Operating Officer of the Company; and Matthew E. Devine, the
Chief Financial Officer of the Company. The loss of the services of Mr. Hicks,
Mr. Ginsburg, Mr. de Castro or Mr. Devine could have a material and adverse
effect on the Company.
UNCERTAINTY AS TO MARKET PRICE OF THE COMMON STOCK
Because the market price of the Common Stock is subject to fluctuation, the
market value of the shares of the Common Stock may increase or decrease prior to
and following the consummation of the Offering. There can be no assurance that
at or after the consummation of the Offering the shares of the Common Stock will
trade at the prices at which such shares have traded in the past. The prices at
which the Common Stock trades after the consummation of the Offering may be
influenced by many factors, including the liquidity of the Common Stock,
investor perceptions of the Company and the radio broadcasting industry, the
operating results of the Company and its subsidiaries, the Company's dividend
policy, possible future changes in regulation of the radio broadcasting industry
and general economic and market conditions.
DILUTION
Persons purchasing shares of Common Stock at the offering price will incur
immediate dilution in net tangible book value per share of Common Stock. As of
September 30, 1997, after giving effect to the Completed Transactions, the
Bonneville Option, the SFX Exchange and the 8 1/8% Notes Offering, but without
giving effect to the Capitol Broadcasting Acquisition and the potential Capstar
Transaction, the Company would have had an adjusted consolidated negative net
tangible book value of approximately $3.10 billion, or $26.00 per share of
Common Stock. "Net Tangible Book Value" per share represents the total amount of
tangible assets of the Company, less the total amount of liabilities of the
Company, divided by the number of shares of Common Stock outstanding (excluding
for this purpose shares of Common Stock issuable upon exercise of outstanding
employee and director stock options and shares of Common Stock issuable upon
conversion of the Company's convertible preferred stock). After giving effect to
the Completed Transactions, the Bonneville Option, the SFX Exchange, the 8 1/8%
Notes Offering and the sale of 16,000,000 shares of Common Stock offered hereby
at an assumed public offering price of $41.25 per share, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses, but without giving effect to the Capitol Broadcasting Acquisition and
the potential Capstar Transaction, the Company's adjusted consolidated negative
net tangible book value at September 30, 1997, would have been approximately
$2.53 billion, or $18.70 per share of Common Stock. This represents an immediate
increase in net tangible book value of $7.30 per share to existing stockholders
and an immediate dilution of $59.95 per share to new investors purchasing shares
in this Offering. "Dilution" per share represents the difference between the
price per share to be paid by the new investors and the pro forma consolidated
negative net tangible book value per share at September 30, 1997.
S-19
<PAGE> 20
FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the accompanying Prospectus, including the
documents incorporated by reference herein and therein, 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.
Discussions containing such forward-looking statements may be found in the
material set forth under "Prospectus Supplement Summary," "Risk Factors," and
"Business," as well as within the Prospectus Supplement and the accompanying
Prospectus generally. In addition, when used in this Prospectus Supplement or
the accompanying Prospectus, the words "believes," "anticipates," "expects" and
similar expressions are intended to identify forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company, or industry results, to differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other important
factors include, among others: substantial leverage and the history of net
losses; the necessity of governmental approvals for certain pending
transactions; certain risks associated with the integration of acquisitions and
operation of related businesses; competition; government regulation; conflicts
of interest; general economic and business conditions; dependence on key
personnel; terms of the Company's indebtedness; limitations on the Company's
ability to pay dividends; and other factors included or incorporated by
reference in this Prospectus Supplement and the accompanying Prospectus. These
forward-looking statements speak only as of the date of this Prospectus
Supplement. The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement contained
or incorporated by reference in this Prospectus Supplement or the accompanying
Prospectus to reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
S-20
<PAGE> 21
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the Company
at September 30, 1997, (ii) the pro forma capitalization of the Company giving
effect to those Completed Transactions consummated since September 30, 1997, the
Bonneville Option, the SFX Exchange and the 8 1/8% Notes Offering and (iii) such
pro forma capitalization of the Company as further adjusted for the Offering and
the application of the net proceeds therefrom to repurchase all of the
outstanding shares of 12% Preferred Stock and the 12 1/4% Preferred Stock and to
reduce borrowings under the Senior Credit Facility. See "Risk Factors --
Possible Non-Consummation of, or Increased Cost of, Proposed Repurchase of
12 1/4% Preferred Stock and 12% Preferred Stock" and "Use of Proceeds." The
information in the following table does not give effect to the Capitol
Broadcasting Acquisition or the potential Capstar Transaction.
<TABLE>
<CAPTION>
COMPANY
PRO FORMA
AS ADJUSTED
COMPANY FOR THE
ACTUAL(1) PRO FORMA(2) OFFERING
---------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term Debt:
Senior Credit Facility(3)............................. $1,457,000 $1,678,601 $1,446,508
9 3/8% Senior Subordinated Notes due 2004............. 200,000 200,000 200,000
8 3/4% Senior Subordinated Notes due 2007............. 200,000 200,000 200,000
10 1/2% Senior Subordinated Notes due 2007(4)......... -- 100,000 100,000
8 1/8% Senior Subordinated Notes due 2007(5).......... -- 500,000 500,000
---------- ---------- ----------
Total Long-term Debt.......................... 1,857,000 2,678,601 2,446,508
Redeemable Preferred Stock:
12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock.................................... 121,233 121,233 --(6)
12% Exchangeable Preferred Stock...................... 217,333 217,333 --(6)
Stockholders' Equity(7):
7% Convertible Preferred Stock........................ 111,048 111,048 111,048
$3.00 Convertible Exchangeable Preferred Stock........ 299,500 299,500 299,500
Common Stock.......................................... 596 596 756
Additional Paid-in Capital............................ 1,223,273 1,223,273 1,859,673
Accumulated Deficit................................... (125,751) (125,751) (191,652)(6)
---------- ---------- ----------
Total Stockholders' Equity......................... 1,508,666 1,508,666 2,079,325
---------- ---------- ----------
Total Capitalization.......................... $3,704,232 $4,525,833 $4,525,833
========== ========== ==========
</TABLE>
- ---------------
(1) Certain reclassifications have been made to the Company's historical
financial statements for the nine months ended September 30, 1997 to conform
to the presentation which will be reflected in the Company's audited
financial statements for the year ended December 31, 1997.
(2) For information regarding the assumptions and adjustments used in preparing
the pro forma data set forth under Company Pro Forma, see the Form 8-K/A
incorporated by reference herein.
(3) The Senior Credit Facility 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.
(4) Represents the 10 1/2% Notes assumed by the Company upon consummation of the
acquisition of Katz on October 28, 1997.
(5) Represents the 8 1/8% Notes issued by the Company in the 8 1/8% Notes
Offering on December 22, 1997 for net proceeds of $485.0 million.
(6) Reflects the use of a portion of the proceeds of the Offering to pay
premiums and accrued and unpaid dividends on the repurchase of all of the
outstanding shares of 12% Preferred Stock and 12 1/4% Preferred Stock. No
assurance can be given that the actual premiums paid in connection with any
repurchase by the Company will not be greater, perhaps by a substantial
amount, than the amounts assumed in the pro forma data. In addition, there
can be no assurance that any shares of 12% Preferred Stock and 12 1/4%
Preferred Stock will be repurchased by the Company. See "Risk
Factors -- Possible Non-Consummation of, or Increased Cost of, Proposed
Repurchase of 12 1/4% Preferred Stock and 12% Preferred Stock" and "Use of
Proceeds."
(7) Assumes no exercise of the Underwriters' over-allotment option.
S-21
<PAGE> 22
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are expected to be approximately $636.6 million ($732.2 million
if the Underwriters' over-allotment option is exercised in full), assuming a
public offering price of $41.25 per share (the last reported sale price of the
Common Stock on February 19, 1998) and after deducting estimated underwriting
discounts and commissions and estimated expenses of the Offering. Initially,
such net proceeds will be used to repay borrowings under the revolving credit
portion of the Senior Credit Facility. At January 31, 1998, approximately $702.0
million was outstanding under the revolving credit portion of the Senior Credit
Facility, and the effective interest rate on such borrowings was 7.0% per annum.
These borrowings had been incurred to finance the Chancellor Merger, the
acquisition of Katz and other Completed Transactions.
Following consummation of the Offering, the Company anticipates that it
will attempt to repurchase all outstanding shares of 12% Preferred Stock and
12 1/4% Preferred Stock. Such repurchases may be effected through open market or
privately negotiated purchases, through a tender offer, through certain
redemption provisions contained in the certificates of designation for the 12%
Preferred Stock and 12 1/4% Preferred Stock, or through one or more combinations
of such methods. The Company may also explore the possibility of exchanging the
12% Preferred Stock and 12 1/4% Preferred Stock for exchange debentures pursuant
to and as permitted by the respective certificates of designation for such
preferred stock, and repurchasing such exchange debentures following such
exchange. The Company intends to finance any repurchase of shares of 12%
Preferred Stock and 12 1/4% Preferred Stock (or the related exchange debentures)
using borrowing capacity available under the revolving credit portion of the
Senior Credit Facility. The terms of any repurchase, if commenced by the
Company, have not been finalized, and there can be no assurance that any
repurchase program, whether through open market or privately negotiated
purchases, tender offer, redemption, or any combination thereof, will be
consummated.
Amounts repaid under the Senior Credit Facility and not used to repurchase
shares of 12% Preferred Stock and 12 1/4% Preferred Stock will be available,
subject to satisfaction of certain conditions, for re-borrowing by the Company
for general corporate purposes, including the repurchase of other debt and
equity securities of the Company, the financing of the Bonneville Option, the
SFX Exchange and the Capitol Broadcasting Acquisition, as well as future
acquisitions that may be undertaken by the Company and other uses. The Company
routinely reviews opportunities to acquire additional radio stations and related
or similar businesses. However, except for the Bonneville Option, the SFX
Exchange and the Capitol Broadcasting Acquisition, and except for the agreement
regarding the Capstar Transaction (see "Prospectus Supplement Summary -- Recent
Developments -- Potential Capstar Transaction"), the Company has no commitments
or understanding to acquire any specific radio station or other business.
S-22
<PAGE> 23
PRICE RANGE OF COMMON STOCK
The Common Stock is listed on The Nasdaq National Market under the symbol
"AMFM." The following table sets forth for the periods indicated the high and
low closing sale prices per share as reported on The Nasdaq National Market. The
closing sale prices have been adjusted retroactively for the two-for-one stock
split, effected in the form of a stock dividend, paid on January 12, 1998 and
for the three-for-two stock split, effected in the form of a stock dividend,
paid on August 26, 1996.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
TWELVE MONTHS ENDED DECEMBER 31, 1996:
First Quarter............................................. $12.25 $ 8.42
Second Quarter............................................ 14.75 10.92
Third Quarter............................................. 16.63 12.87
Fourth Quarter............................................ 16.13 11.75
TWELVE MONTHS ENDED DECEMBER 31, 1997:
First Quarter............................................. $17.00 $11.88
Second Quarter............................................ 22.31 14.31
Third Quarter............................................. 27.50 20.63
Fourth Quarter............................................ 37.31 25.81
TWELVE MONTHS ENDED DECEMBER 31, 1998:
First Quarter(1).......................................... $41.94 $32.69
</TABLE>
On January 31, 1998, there were approximately 220 holders of record of the
Common Stock.
- ---------------
(1) Data presented for the period January 1, 1998 through February 19, 1998.
DIVIDEND POLICY
The Company intends to retain future earnings for use in its business and
does not anticipate paying any cash dividends on shares of its Common Stock in
the foreseeable future. The Company is currently subject to restrictions under
terms of the Senior Credit Facility, the Indentures and the certificates of
designation governing the 12% Preferred Stock and the 12 1/4% Preferred Stock
that limit the amount of cash dividends that may be paid on its Common Stock.
The Company may pay cash dividends on its Common Stock in the future only if
certain financial tests set forth in the Senior Credit Facility and these
indentures and certificates are met and only if it fulfills its obligations to
pay dividends to the holders of its preferred stock. In addition, no dividends
may be paid on the Company's Common Stock if dividends are in arrears with
respect to the Company's $3.00 Convertible Preferred Stock or 7% Convertible
Preferred Stock.
S-23
<PAGE> 24
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The selected consolidated historical financial data presented below as of
and for each of the five years in the period ended December 31, 1996 have been
derived from the annual audited consolidated financial statements of the Company
and its subsidiaries, which consolidated financial statements have been audited
by KPMG Peat Marwick LLP, independent certified public accountants. The selected
consolidated historical financial data as of September 30, 1996 and 1997 and for
the nine months ended September 30, 1996 and 1997 have been derived from the
unaudited historical consolidated financial statements of the Company and its
subsidiaries. In the opinion of management of the Company, the unaudited
consolidated financial data reflect all adjustments, which are of a normal
recurring nature, necessary for a fair presentation of the financial position
and results of operations for the unaudited periods. The historical results of
operations for the nine months ended September 30, 1997, are not necessarily
indicative of the results to be expected for the full year. The consolidated
historical financial results of the Company and its subsidiaries are not
comparable from period to period because of the acquisition and disposition of
various radio stations and assets by the Company and its subsidiaries during the
periods covered. See the Form 8-K/A incorporated by reference herein. The
following data should be read in conjunction with the historical consolidated
financial statements of the Company and its subsidiaries and the related notes
thereto, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 and the Company's Quarterly Reports on Form
10-Q for the quarterly periods ended March 31, 1997, June 30, 1997 and September
30, 1997, each incorporated by reference herein, and the unaudited pro forma
condensed consolidated financial statements of the Company and the related notes
thereto included in the Form 8-K/A incorporated by reference herein. For summary
information regarding the Company's results of operations for the year ended
December 31, 1997, see "Prospectus Supplement Summary -- Recent
Developments -- Fiscal Year 1997 Results."
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------------------------ ---------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- ---------- -------- ----------
(IN THOUSANDS, EXCEPT MARGIN AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross Revenues.......................... $ 61,935 $106,813 $125,478 $186,365 $ 337,405 $234,910 $ 382,994
Net Revenues............................ 53,969 93,504 109,516 162,931 293,850 205,130 333,283
Operating expenses excluding
depreciation and amortization......... 34,968 60,656 68,852 97,674 174,344 126,444 184,713
Depreciation and amortization........... 11,596 33,524 30,596 47,005 93,749 65,148 104,386
Corporate general and administrative
expenses.............................. 1,717 2,378 2,672 4,475 7,797 5,348 11,646
Other nonrecurring costs(1)............. -- 7,002 -- -- -- -- --
-------- -------- -------- -------- ---------- -------- ----------
Operating income (loss)................. 5,688 (10,056) 7,396 13,777 17,960 8,190 32,538
Interest expense, net................... 10,009 13,730 13,718 19,144 37,050 29,212 45,036
Other (income) expense,
net(2)................................ 668 (3,037) (6,361) 291 -- -- (18,380)
-------- -------- -------- -------- ---------- -------- ----------
Income (loss) before income taxes and
extraordinary item.................... (4,989) (20,749) 39 (5,658) (19,090) (21,022) 5,882
Income tax expense (benefit)............ -- -- -- 192 (2,896) (3,734) 5,244
Dividends on preferred stock of
subsidiary(3)......................... -- -- -- -- -- -- 2,779
-------- -------- -------- -------- ---------- -------- ----------
Income (loss) before extraordinary
item.................................. (4,989) (20,749) 39 (5,850) (16,194) (17,288) (2,141)
Extraordinary loss on early
extinguishment of debt(4)............. 1,798 -- 3,585 -- -- -- 4,350
-------- -------- -------- -------- ---------- -------- ----------
Net loss................................ (6,787) (20,749) (3,546) (5,850) (16,194) (17,288) (6,491)
Preferred stock dividends(5)............ 741 4,756 4,830 4,830 3,820 3,619 5,748
Accretion of redeemable preferred stock
to mandatory redemption value,
including $17,506 related to early
redemption(6)......................... 276 18,823 -- -- -- -- --
-------- -------- -------- -------- ---------- -------- ----------
Net loss attributable to common
stockholders.......................... $ (7,804) $(44,328) $ (8,376) $(10,680) $ (20,014) $(20,907) $ (12,239)
======== ======== ======== ======== ========== ======== ==========
</TABLE>
S-24
<PAGE> 25
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------------------------ ---------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- ---------- -------- ----------
(IN THOUSANDS, EXCEPT MARGIN AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Loss per common share(6)................ $ (0.48) $ (2.24) $ (0.32) $ (0.26) $ (0.33) $ (0.37) $ (0.14)
Weighted average common shares
outstanding(7)........................ 16,306 19,780 26,004 41,442 60,414 56,184 87,690
OTHER DATA:
Broadcast cash flow(8).................. $ 19,001 $ 32,848 $ 40,664 $ 65,257 $ 119,506 $ 78,686 $ 148,570
Broadcast cash flow margin.............. 35% 35% 37% 40% 41% 38% 45%
EBITDA(8)............................... $ 17,284 $ 30,470 $ 37,992 $ 60,782 $ 111,709 $ 73,338 $ 136,924
Capital expenditures.................... 867 1,735 5,227 2,642 6,543 4,602 6,436
BALANCE SHEET DATA (END OF PERIOD)(9):
Working capital, excluding current
portion of long-term debt............. $ 13,456 $ 18,498 $ 19,952 $ 34,556 $ 67,921 $ 58,792 $ 123,805
Total assets............................ 234,852 283,505 297,990 552,347 1,020,959 979,155 4,213,376
Long-term debt (including current
portion).............................. 165,000 152,000 174,000 201,000 358,000 583,500 1,857,000
Redeemable preferred stock.............. -- -- -- -- -- -- 338,566
Stockholders' equity.................... $ 2,905 $120,968 $112,353 $304,577 $ 549,411 $284,357 $1,508,666
</TABLE>
- ---------------
(1) Consists of a non-cash charge resulting from the grant of employee stock
options prior to the Company's initial public offering.
(2) Includes gain on dispositions of assets of $3,392, $6,991 and $18,380 in
1993, 1994 and the nine months ended September 30, 1997 respectively.
(3) Represents preferred stock dividends on the 12% Preferred Stock and the
12 1/4% Preferred Stock for the period September 5, 1997 to September 30,
1997. Such preferred stock was issued by CMCLA on September 5, 1997 in
connection with the Chancellor Merger in exchange for substantially
identical securities originally issued by a subsidiary of Chancellor.
(4) In connection with its debt refinancing in 1992, 1994 and the nine months
ended September 30, 1997, the Company wrote off the unamortized balance of
deferred debt issuance costs of $1,798, $3,585 and $4,350, respectively, as
an extraordinary charge.
(5) For the years ended December 31, 1992, 1993, 1994, 1995 and 1996, represents
preferred stock dividends on the Company's formerly outstanding convertible
preferred stock. For the nine months ended September 30, 1997, represents
preferred stock dividends on the $3.00 Convertible Preferred Stock (issued
on June 16, 1997) and preferred stock dividends on the 7% Convertible
Preferred Stock for the period September 5, 1997 to September 30, 1997. The
7% Convertible Preferred Stock was issued by the Company on September 5,
1997 in connection with the Chancellor Merger in exchange for substantially
identical securities originally issued by Chancellor.
(6) Due to the early redemption of certain preferred stock in 1993, a one-time
accretion charge of approximately $17,506 was incurred which increased loss
per common share for 1993 by $0.89.
(7) Gives effect to the two-for-one common stock split effected in the form of a
stock dividend paid on January 12, 1998, retroactively for all periods
presented.
(8) Broadcast cash flow consists of operating income excluding depreciation and
amortization, corporate general and administrative expense and other
non-cash and non-recurring charges. EBITDA consists of operating income
excluding depreciation and amortization and other non-cash and non-recurring
charges. Although broadcast cash flow and EBITDA are not calculated in
accordance with generally accepted accounting principles, the Company
believes that broadcast cash flow and EBITDA are widely used as a measure of
operating performance. Nevertheless, these measures should not be considered
in isolation or as a substitute for operating income, cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. Broadcast cash flow and EBITDA do
not take into account the Company's debt service requirements and other
commitments and, accordingly, broadcast cash flow and EBITDA are not
necessarily indicative of amounts that may be available for reinvestment in
the Company's business or other discretionary uses.
(9) Certain reclassifications have been made to the Company's historical
financial statements for the nine months ended September 30, 1997 to conform
to the presentation which will be reflected in the Company's audited
financial statements for the year ended December 31, 1997.
S-25
<PAGE> 26
BUSINESS
The Company is one of the largest radio broadcasting companies in the
United States. Upon consummation of the Bonneville Option and the SFX Exchange,
but without giving effect to the Capitol Broadcasting Acquisition and the
potential Capstar Transaction, the Company will own and operate 99 radio
stations (71 FM and 28 AM) in 21 large markets, including each of the nation's
12 largest radio revenue markets. Based on the most recent industry data
available to the Company, the Company's portfolio includes the first or second
ranked station cluster in terms of revenue share in 15 markets. On a pro forma
basis after giving effect to the Completed Transactions, the Bonneville Option
and the SFX Exchange, but without giving effect to the Capitol Broadcasting
Acquisition and the potential Capstar Transaction, the Company would have had
net revenue and broadcast cash flow of approximately $724.4 million and $303.5
million, respectively, for the nine months ended September 30, 1997, and its pro
forma broadcast cash flow margin for such period would have been 42%.
The Company's strategy is to secure leading clusters of radio stations in
the largest markets in the United States. The Company's current station
portfolio includes 97 stations (69 FM and 28 AM) comprising a total of 11
superduopolies, in seven of the 12 largest radio markets -- Los Angeles, New
York, Chicago, San Francisco, Philadelphia, Washington, D.C. and Detroit -- and
in four other large markets -- Denver, Minneapolis/St. Paul, Phoenix and
Orlando. Consummation of the Bonneville Option and the SFX Exchange will result
in a net increase of two FM stations to the Company's portfolio. Approximately
66% of pro forma net revenue for the nine months ended September 30, 1997 would
have been generated by the superduopoly markets.
In 1996 (the most recent period for which data is available to the
Company), the 12 largest radio markets in the United States generated
approximately $3.1 billion in radio advertising revenue, which represented
approximately 27% of all radio advertising dollars spent in the United States.
As a result of its large market focus, based on the most recent industry data
available to the Company, the Company's portfolio of stations upon completion of
the Bonneville Option and the SFX Exchange would reach an estimated 41.7 million
listeners on a weekly basis, or approximately 16% of the population of the
United States. Management believes that the size and reach of the portfolio will
allow the Company to compete more effectively for advertising dollars with other
mass advertising media, such as television and newspapers, and will also offer
national advertisers an opportunity to reach a large segment of the U.S.
population on an efficient, cost-effective basis.
The Company's portfolio is geographically diversified and employs a wide
variety of programming formats, including adult contemporary, contemporary hit
radio, urban, jazz, country, oldies, news/talk, rock and sports. Each of the
Company's 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, the Company is not unduly reliant on the performance of any one
station or market. No single market to be served by the Company represented more
than 12% of the Company's pro forma broadcast cash flow for the nine months
ended September 30, 1997 (giving effect to the Bonneville Option and the SFX
Exchange, but without giving effect to the Capitol Broadcasting Acquisition and
the potential Capstar Transaction).
As a complement to its radio broadcasting operations, the Company has
recently formed a national radio network, The AMFM Radio Networks, which began
broadcasting advertising over the Company's portfolio of stations in January
1998. In this regard, the Company has appointed David Kantor to the position of
Senior Vice President with responsibility for all of the Company's radio network
operations. Prior to joining the Company, Mr. Kantor served as President of ABC
Radio Networks, the largest commercial radio network in the United States.
Management believes that The AMFM Radio Networks will allow the Company to
further leverage its broad station base, personalities and advertising inventory
by delivering a national base of 41 million listeners to network advertisers.
However, there can be no assurance as to this result. See "Risk
Factors -- Integration of Operations; Operation of Katz and Radio Network."
The Company also owns Katz, a full-service media representation firm
serving multiple types of electronic media, with leading market shares in the
representation of radio and television stations and cable television systems.
Katz is exclusively retained by radio stations, television stations and cable
television systems in over 200 dominant market areas throughout the United
States, including at least one radio or television station in each of the 50
largest dominant market areas, to sell national spot advertising air time.
S-26
<PAGE> 27
BROADCAST PROPERTIES
The following table sets forth selected information with respect to the
portfolio of radio stations that are owned by the Company as of January 30, 1998
or would be owned upon completion of the Bonneville Option and the SFX Exchange,
but without giving effect to the Capitol Broadcasting Acquisition and the
potential Capstar Transaction.
<TABLE>
<CAPTION>
RANKING OF
STATION'S STATION RANKING
MARKET BY AUDIENCE TARGET IN TARGET
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
- -------------------- ---------- ----------- ----------- --------------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles, CA 1 KKBT-FM 4.5 Urban Contemporary Women 18-34 2
KYSR-FM 2.8 Hot Adult Contemporary Persons 25-54 12
KCMG-FM(5) 1.4 Adult Contemporary Women 25-54 22
KLAC-AM 2.3 Adult Standards/Sports Persons 35-64 21
KZLA-FM+ 2.7 Country Persons 25-54 14
KBIG-FM* 2.7 Adult Contemporary Persons 25-54 13
New York, NY 2 WKTU-FM 4.6 Rhythmic Contemporary Hits Persons 25-54 5
WLTW-FM 6.2 Soft Adult Contemporary Persons 25-54 1
WAXQ-FM 1.4 Classic Rock Persons 25-54 17
WHTZ-FM 3.9 Contemporary Hit Radio Persons 18-34 5
WBIX-FM*(6) 1.5 Hot Adult Contemporary Women 25-49 13
Chicago, IL 3 WMVP-AM 1.1 Personality/Sports Men 25-54 22
WRCX-FM 3.0 Mainstream Rock Men 18-34 2
WVAZ-FM 4.3 Black Adult Women 25-54 3
WNUA-FM 4.8 Contemporary Jazz Persons 25-54 4
WLIT-FM 4.5 Soft Adult Contemporary Persons 25-54 2
WGCI-FM 7.2 Urban Oldies Persons 25-54 1
WGCI-AM 1.7 Urban/R&B Persons 18-34 20
San Francisco, CA 4 KIOI-FM 2.9 Adult Contemporary Women 25-54 1
KMEL-FM 3.4 Contemporary Hits Persons 18-34 2
KKSF-FM 3.3 Contemporary Jazz Persons 25-54 2
KNEW-AM 1.4 Country/Sports Persons 25-54 37
KYLD-FM 4.2 Contemporary Hits Persons 18-34 1
KABL-AM 3.2 Adult Standards Persons 35-64 13
KISQ-FM 3.0 70's Oldies Persons 25-54 4
Dallas, TX 5 KSKY-AM N/M Inspirational N/M N/M
KDGE-FM 2.7 Alternative Rock Persons 18-34 6
KZPS-FM 3.9 Classic Rock Persons 25-54 4
KHKS-FM 7.5 Contemporary Hits Women 18-34 1
Philadelphia, PA 6 WYXR-FM 3.0 Adult Contemporary Women 18-49 3
WJJZ-FM 4.2 Contemporary Jazz Persons 35-54 7
WDAS-FM 5.5 Urban Contemporary Persons 25-54 2
WDAS-AM 1.2 Gospel N/M N/M
WUSL-FM 4.7 Urban Contemporary Women 18-34 4
WIOQ-FM 3.2 Contemporary Hit Women 18-34 6
Radio/Dance
Houston, TX 7 KTRH-AM 3.9 News/Sports Men 25-54 17
KLOL-FM 4.1 Album Rock Men 18-34 2
KKBQ-FM 4.5 Fresh Country Persons 25-54 6
KKBQ-AM(7) 0.2 Popular Standards Persons 35-64 34
KLDE-FM* 4.5 Oldies Persons 25-54 4
Washington, D.C. 8 WTOP-AM+ 2.9 News/Sports Men 25-54 13
WASH-FM 4.2 Adult Contemporary Women 25-54 2
WGAY-FM 3.7 Adult Contemporary Persons 35-64 8
WWRC-AM 0.9 News/Talk Persons 35-64 20
WMZQ-FM 5.1 Country Persons 25-54 3
WBIG-FM 4.1 Oldies Persons 25-54 6
WGMS-FM+ 4.0 Classical Persons 35-64 5
WTEM-AM 1.1 Sports/Talk Men 18-49 17
</TABLE>
S-27
<PAGE> 28
<TABLE>
<CAPTION>
RANKING OF
STATION'S STATION RANKING
MARKET BY AUDIENCE TARGET IN TARGET
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
- -------------------- ---------- ----------- ----------- --------------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Boston, MA 9 WJMN-FM 6.2 Contemporary Hits Women 18-24 1
WXKS-FM 5.9 Contemporary Hits Women 25-34 1
WXKS-AM 2.5 Nostalgia Women 45-54 14
Atlanta, GA 10 WFOX-FM 4.2 Oldies Persons 25-54 7
Detroit, MI 11 WKQI-FM 4.1 Adult Contemporary Women 25-54 5
WNIC-FM 7.4 Adult Contemporary Women 25-54 1
WYUR-AM N/M Brokered(8) N/M N/M
WWWW-FM 3.4 Country Women 25-54 9
WDFN-AM 1.8 Sports/Talk Men 25-49 7
WJLB-FM 7.9 Urban Contemporary Persons 18-34 1
WMXD-FM 3.9 Black Adult Persons 25-54 4
Miami/Ft.
Lauderdale, FL 12 WVCG-AM N/M Brokered(9) N/M N/M
WEDR-FM 4.9 Urban Contemporary Persons 25-54 4
Denver, CO 15 KRRF-AM 0.4 Talk Men 25-54 21
KXKL-FM 4.7 Oldies Persons 25-54 7
KVOD-FM 2.2 Classical Persons 25-54 19
KIMN-FM 3.4 70's Oldies Persons 25-54 11
KALC-FM 4.7 Hot Adult Contemporary Persons 18-34 3
KXPK-FM 3.0 Alternative Rock Persons 18-49 10
Minneapolis/St.
Paul, MN 16 KTCZ-FM 4.0 Progressive Album Rock Men 25-49 4
KXBR-AM 0.5 Classic Country Persons 35-64 16
KDWB-FM 7.8 Contemporary Hit Radio Persons 18-34 2
KFAN-AM 2.6 Sports Men 18-49 4
KEEY-FM 8.0 Country Persons 25-54 2
KQQL-FM 4.5 Oldies Persons 25-54 6
WRQC-FM 3.8 Album Rock Men 18-34 2
Phoenix, AZ 17 KMLE-FM 5.2 Country Persons 25-54 4
KISO-AM N/M Urban Adult Contemporary Persons 25-54 N/M
KOOL-FM 5.1 Oldies Persons 25-54 2
KOY-AM 5.3 Adult Standards Persons 35-64 10
KYOT-FM 3.6 Contemporary Jazz Persons 25-54 8
KZON-FM 3.0 Alternative Rock Persons 18-34 3
Cincinnati, OH 20 WUBE-FM(10) 9.4 Country Persons 25-54 1
WUBE-AM N/M Nostalgia Persons 35-64 N/M
WYGY-FM(10) 4.0 Young Country Men 18-34 8
WBOB-AM 0.9 Sports/Talk Men 18-49 15
Pittsburgh, PA 24 WWSW-AM(11) 0.4 Oldies Persons 25-54 26
WWSW-FM 5.1 Oldies Persons 25-54 3
Sacramento, CA 25 KGBY-FM 4.0 Adult Contemporary Women 25-54 2
KHYL-FM 4.2 Oldies Persons 25-54 5
KFBK-AM 9.6 News/Talk Persons 25-54 2
KSTE-AM 2.3 Talk Persons 25-54 15
Orlando, FL 26 WOCL-FM 6.4 Oldies Persons 25-54 7
WOMX-FM 5.0 Adult Contemporary Persons 25-54 8
WJHM-FM 6.6 Urban Contemporary Persons 18-34 3
WXXL-FM 6.1 Contemporary Hit Radio Persons 18-34 2
Nassau/Suffolk (Long
Island) NY(12) 44 WALK-FM 5.3 Adult Contemporary Persons 25-54 2
WALK-AM N/M Adult Contemporary Persons 35-64 N/M
WBAB-FM* 3.4 Album Rock Men 25-49 3
WBLI-FM* 5.0 Adult Contemporary Women 25-54 2
WHFM-FM* 0.1 Album Rock Men 25-49 43
WGBB-AM* N/M News/Talk Persons 25-54 N/M
</TABLE>
S-28
<PAGE> 29
<TABLE>
<CAPTION>
RANKING OF
STATION'S STATION RANKING
MARKET BY AUDIENCE TARGET IN TARGET
MARKET(1) REVENUE(2) STATION SHARE(%)(3) STATION FORMAT DEMOGRAPHICS DEMOGRAPHICS(4)
- -------------------- ---------- ----------- ----------- --------------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jacksonville, FL 47 WAPE-FM+ 7.7 Contemporary Hit Radio Women 18-34 1
WFYV-FM+ 9.4 Album Oriented Rock Men 25-54 1
Riverside/ San
Bernardino, CA 64 KGGI-FM 7.0 Contemporary Hit Radio Persons 18-34 1
KMRZ-AM 0.5 Oldies Men 25-54 44
</TABLE>
- ---------------
N/M: Not meaningful
+ Indicates station to be disposed in a pending transaction.
* Indicates station to be acquired in a pending transaction.
(1) Actual city of license may differ from metropolitan market served in
certain cases.
(2) Ranking of principal radio market served by the station among all U.S.
radio broadcast markets by aggregate 1996 gross radio broadcasting revenue
as reported by James H. Duncan, Duncan's Radio Market Guide (1997 ed.).
(3) Information derived from The Arbitron Company, Fall 1997, Local Market
Reports in the specified markets for listeners age 12+, Monday to Sunday,
6:00 a.m. to Midnight. Copyright, The Arbitron Company.
(4) Information derived from The Arbitron Company, Fall 1997, Local Market
Reports in the specified markets for the Target Demographics specified for
listening Monday to Sunday, 6:00 a.m. to Midnight. Copyright, The Arbitron
Company.
(5) The format of KCMG-FM was changed from Rhythmic Adult Contemporary with a
target demographic of Persons 25-54 to Adult Contemporary with a target
demographic of Women 25-54 effective November 19, 1997. The station
ranking in the target demographic for KCMG-FM for Fall 1997 is based on
the new target demographic of Women 25-54.
(6) The format of WBIX-FM was changed from Modern Adult Contemporary with a
target demographic of Women 25-44 to Hot Adult Contemporary with a target
demographic of Women 25-49 effective January 21, 1998. The station ranking
in the target demographic for WBIX-FM for Fall 1997 is based on the prior
target demographic of Women 25-44.
(7) The format of KKBQ-AM was changed from Country with a target demographic
of Persons 25-54 to Popular Standards with a target demographic of Persons
35-64 effective January 15, 1998. The station ranking in the target
demographic for KKBQ-AM for Fall 1997 is based on the prior target
demographic of Persons 25-54.
(8) The Company has historically brokered WYUR-AM to third parties.
(9) The Company sells airtime on WVCG-AM to third parties for broadcast of
specialty programming on a variety of topics.
(10) WUBE-FM and WYGY-FM are sold in combination.
(11) Programming provided to WWSW-AM via simulcast of programming broadcast on
WWSW-FM.
(12) Nassau/Suffolk (Long Island) may be considered part of the greater New
York market, although it is reported separately as a matter of convention.
The acquisition of WBAB-FM, WBLI-FM, WHFM-FM and WGBB-AM would not be
consummated if the transactions contemplated by the potential Capstar
Transaction are consummated. See "Prospectus Supplement Summary -- Recent
Developments -- Potential Capstar Transaction."
The following table sets forth, for the portfolio of stations that are
owned by the Company as of January 30, 1998 or will be owned by the Company upon
consummation of the Bonneville Option and the SFX Exchange, (i) the date of
acquisition by the Company, (ii) the frequency of each station and (iii) the
date of expiration of each 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>
KKBT-FM Los Angeles, CA 5/89 92.3 MHz 12/05
KYSR-FM Los Angeles, CA 9/97 98.7 MHz 12/97*
KCMG-FM Los Angeles, CA 9/97 100.3 MHz 12/05
KLAC-AM Los Angeles, CA 9/97 570 kHz 12/05
KZLA-FM+ Los Angeles, CA 9/97 93.9 MHz 12/97*
KBIG-FM++ Los Angeles, CA Pending 104.3 MHz 12/05
WKTU-FM New York, NY 5/95 103.5 MHz 6/98
WLTW-FM New York, NY 7/97 106.7 MHz 6/98
WAXQ-FM New York, NY 7/97 104.3 MHz 6/98
WHTZ-FM New York, NY 9/97 100.3 MHz 6/98
WBIX-FM++ New York, NY Pending 105.1 MHz 6/98
</TABLE>
S-29
<PAGE> 30
<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
------- --------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
WMVP-AM Chicago, IL 5/84 1000 kHz 12/03
WRCX-FM Chicago, IL 12/93 103.5 MHz 12/96*
WVAZ-FM Chicago, IL 5/95 102.7 MHz 12/03
WNUA-FM Chicago, IL 1/96 95.5 MHz 12/03
WLIT-FM Chicago, IL 9/97 93.9 MHz 12/03
WGCI-FM Chicago, IL 12/97 107.5 MHz 12/03
WGCI-AM Chicago, IL 12/97 1390 kHz 12/03
KIOI-FM San Francisco, CA 4/94 101.3 MHz 12/97*
KMEL-FM San Francisco, CA 11/92 106.1 MHz 12/97*
KKSF-FM San Francisco, CA 1/97 103.7 MHz 12/05
KNEW-AM San Francisco, CA 9/97 910 kHz 12/05
KYLD-FM San Francisco, CA 9/97 94.9 MHz 12/97*
KABL-AM San Francisco, CA 9/97 960 kHz 12/05
KISQ-FM San Francisco, CA 9/97 98.1 MHz 12/97*
KSKY-AM Dallas, TX 5/95 660 kHz 8/05
KDGE-FM Dallas, TX 10/97 94.5 MHz 8/05
KZPS-FM Dallas, TX 10/97 92.5 MHz 8/05
KHKS-FM Dallas, TX 12/97 106.1 MHz 8/05
WYXR-FM Philadelphia, PA 1/96 104.5 MHz 8/98
WJJZ-FM Philadelphia, PA 1/96 106.1 MHz 8/98
WDAS-AM Philadelphia, PA 5/97 1480 kHz 8/98
WDAS-FM Philadelphia, PA 5/97 105.3 MHz 8/98
WIOQ-FM Philadelphia, PA 5/97 102.1 MHz 8/98
WUSL-FM Philadelphia, PA 5/97 98.9 MHz 8/98
KTRH-AM Houston, TX 6/93 740 kHz 8/05
KLOL-FM Houston, TX 6/93 101.1 MHz 8/97*
KKBQ-FM Houston, TX 12/97 92.9 MHz 8/05
KKBQ-AM Houston, TX 12/97 790 kHz 8/05
KLDE-FM++ Houston, TX Pending 94.5 MHz 8/05
WTOP-AM+ Washington, D.C. 11/92 1500 kHz 10/02
WASH-FM Washington, D.C. 11/92 97.1 MHz 10/02
WGAY-FM Washington, D.C. 11/96 99.5 MHz 10/02
WWRC-AM Washington, D.C. 4/97 980 kHz 10/02
WMZQ-FM Washington, D.C. 7/97 98.7 MHz 10/02
WBIG-FM Washington, D.C. 9/97 100.3 MHz 10/03
WGMS-FM+ Washington, D.C. 9/97 103.5 MHz 10/03
WTEM-AM Washington, D.C. 9/97 570 kHz 10/03
WJMN-FM Boston, MA 1/96 94.5 MHz 4/98
WXKS-FM Boston, MA 1/96 107.9 MHz 4/98
WXKS-AM Boston, MA 1/96 1430 kHz 4/98
WFOX-FM Atlanta, GA 9/97 97.1 MHz 4/03
WKQI-FM Detroit, MI 5/95 95.5 MHz 10/03
WNIC-FM Detroit, MI 5/95 100.3 MHz 10/03
WYUR-AM Detroit, MI 5/95 1310 kHz 10/03
WWWW-FM Detroit, MI 1/97 106.7 MHz 10/03
WDFN-AM Detroit, MI 1/97 1130 kHz 10/03
WJLB-FM Detroit, MI 4/97 97.9 MHz 10/03
WMXD-FM Detroit, MI 4/97 92.3 MHz 10/03
WVCG-AM Miami/Ft. Lauderdale, FL 7/83 1080 kHz 2/03
WEDR-FM Miami/Ft. Lauderdale, FL 10/96 99.1 MHz 2/03
</TABLE>
S-30
<PAGE> 31
<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
------- --------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
KRRF-AM Denver, CO 9/97 1280 kHz 4/05
KXKL-FM Denver, CO 9/97 105.1 MHz 4/05
KVOD-FM Denver, CO 9/97 92.5 MHz 4/05
KIMN-FM Denver, CO 9/97 100.3 MHz 4/05
KALC-FM Denver, CO 9/97 105.9 MHz 4/05
KXPK-FM Denver, CO 1/98 96.5 MHz 4/05
KTCZ-FM Minneapolis/St. Paul, MN 9/97 97.1 MHz 4/05
KXBR-AM Minneapolis/St. Paul, MN 9/97 690 kHz 4/05
KDWB-FM Minneapolis/St. Paul, MN 9/97 101.3 MHz 4/05
KFAN-AM Minneapolis/St. Paul, MN 9/97 1130 kHz 4/05
KEEY-FM Minneapolis/St. Paul, MN 9/97 102.1 MHz 4/05
KQQL-FM Minneapolis/St. Paul, MN 9/97 107.9 MHz 4/05
WRQC-FM Minneapolis/St. Paul, MN 9/97 100.3 MHz 4/05
KMLE-FM Phoenix, AZ 9/97 107.9 MHz 10/05
KISO-AM Phoenix, AZ 9/97 1230 kHz 10/05
KOOL-FM Phoenix, AZ 9/97 94.5 MHz 10/05
KOY-AM Phoenix, AZ 9/97 550 kHz 10/05
KYOT-FM Phoenix, AZ 9/97 95.5 MHz 10/05
KZON-FM Phoenix, AZ 9/97 101.5 MHz 10/05
WUBE-FM Cincinnati, OH 9/97 105.1 MHz 10/03
WUBE-AM Cincinnati, OH 9/97 1230 kHz 10/03
WYGY-FM Cincinnati, OH 9/97 96.5 MHz 10/03
WBOB-AM Cincinnati, OH 9/97 1160 kHz 10/03
WWSW-AM Pittsburgh, PA 9/97 970 kHz 8/98
WWSW-FM Pittsburgh, PA 9/97 94.5 MHz 8/98
KGBY-FM Sacramento, CA 9/97 92.5 MHz 12/05
KHYL-FM Sacramento, CA 9/97 101.1 MHz 12/05
KFBK-AM Sacramento, CA 9/97 1530 kHz 12/05
KSTE-AM Sacramento, CA 9/97 650 kHz 12/05
WOCL-FM Orlando, FL 9/97 105.9 MHz 2/03
WOMX-FM Orlando, FL 9/97 105.1 MHz 2/03
WJHM-FM Orlando, FL 9/97 101.9 MHz 2/03
WXXL-FM Orlando, FL 9/97 106.7 MHz 2/03
WALK-FM Nassau/Suffolk
(Long Island), NY 9/97 97.5 MHz 6/98
WALK-AM Nassau/Suffolk
(Long Island), NY 9/97 1370 kHz 6/98
WBAB-FM++(2) Nassau/Suffolk
(Long Island), NY Pending 102.3 MHz 6/98
WBLI-FM++(2) Nassau/Suffolk
(Long Island), NY Pending 106.1 MHz 6/98
WHFM-FM++(2) Nassau/Suffolk
(Long Island), NY Pending 95.3 MHz 6/98
WGBB-AM++(2) Nassau/Suffolk
(Long Island), NY Pending 1240 kHz 6/98
WAPE-FM+ Jacksonville, FL 9/97 95.1 MHz 2/03
WFYV-FM+ Jacksonville, FL 9/97 104.5 MHz 2/03
</TABLE>
S-31
<PAGE> 32
<TABLE>
<CAPTION>
DATE OF EXPIRATION DATE
STATION MARKET(1) ACQUISITION FREQUENCY OF FCC LICENSE
------- --------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
KGGI-FM Riverside/San Bernardino, CA 9/97 99.1 MHz 12/97*
KMRZ-AM Riverside/San-Bernardino, CA 9/97 1290 kHz 12/05
</TABLE>
- ---------------
* Indicates pending renewal application.
+ Indicates station to be disposed in a pending transaction.
++ Indicates station to be acquired in a pending transaction.
(1) Actual city of license may differ from metropolitan market served in certain
cases.
(2) The acquisition of WBAB-FM, WBLI-FM, WHFM-FM and WGBB-AM would not be
consummated if the transactions contemplated by the potential Capstar
Transaction are consummated. See "Prospectus Supplement Summary -- Recent
Developments -- Potential Capstar Transaction."
ADVERTISING
The primary source of the Company's revenues is the sale of broadcasting
time for local, regional and national advertising. On a pro forma basis
approximately 71% of the Company's gross revenues would have been generated from
the sale of local advertising in 1996. The Company believes that radio is one of
the most efficient, cost-effective means for advertisers to reach specific
demographic groups. The advertising rates charged by the Company's radio
stations are based primarily on (i) a station's ability to attract audiences in
the demographic groups targeted by its advertisers (as measured principally by
quarterly Arbitron rating surveys that quantify the number of listeners tuned to
the station at various times) and (ii) the supply of and demand for radio
advertising time. Advertising rates generally are the highest during morning and
evening drive-time hours.
Depending on the format of a particular station, there are predetermined
numbers of advertisements that are broadcast each hour. The Company determines
the number of advertisements broadcast hourly that can maximize available
revenue dollars without jeopardizing listening levels. Although the number of
advertisements broadcast during a given time period may vary, the total number
of advertisements broadcast on a particular station generally does not vary
significantly from year to year.
A station's sales staff generates most of its local and regional
advertising sales. To generate national advertising sales, the Company engages
an advertising representative for each of its stations that specializes in
national sales and is compensated on a commission-only basis. Most advertising
contracts are short-term and generally run only for a few weeks.
The Company's Katz media representation operations generate revenues
primarily through contractual commissions realized through the sale of national
spot advertising air time. National spot advertising air time is commercial air
time sold to advertisers on behalf of radio and television stations and cable
systems located outside the local markets of those stations and systems. Katz
represents its media clients pursuant to media representation contracts. Media
representation contracts typically have terms of up to ten years in initial
length. In connection with the substantial consolidation that has occurred in
the broadcast industry in recent years and the concomitant development of large
client station groups, the frequency of representation contract "buyouts" has
increased. These buyouts occur because station groups have tended to negotiate
exclusive, long-term representation contracts with a single media representation
firm covering all of the station group's stations, including stations acquired
after the date of the initial representation contract. In the event that one of
the station group's stations is sold to an owner represented by a different
firm, representation contracts are frequently bought out by the successor
representation firm. Katz generally amortizes the cost of acquiring new
representation contracts associated with a buyout over the expected benefit
period, and also generally amortizes the income associated with a buyout of an
existing client's contract over the expected payment period.
S-32
<PAGE> 33
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement dated the
date hereof (the "Underwriting Agreement"), the Underwriters named below (the
"Underwriters") have severally agreed to purchase from the Company the following
respective number of shares of Common Stock at the public offering price less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus Supplement:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ----------
<S> <C>
BT Alex. Brown Incorporated.................................
Goldman, Sachs & Co.........................................
Credit Suisse First Boston Corporation......................
Morgan Stanley & Co. Incorporated...........................
Smith Barney Inc............................................
Furman Selz.................................................
NationsBanc Montgomery Securities LLC.......................
UBS Securities LLC..........................................
----------
Total............................................. 16,000,000
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of Common Stock offered hereby if any of
such shares are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus Supplement, to purchase up
to 2,400,000 additional shares of Common Stock at the public offering price less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus Supplement. To the extent that the Underwriters exercise such option,
each of the Underwriters will have a firm commitment to purchase approximately
the same percentage thereof that the number of shares of Common Stock to be
purchased by it shown in the above table bears to 16,000,000, and the Company
will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of Common Stock offered hereby.
If purchased, the Underwriters will offer such additional shares on the same
terms as those in which the 16,000,000 shares are being offered.
The Underwriting Agreement contains covenants of indemnity and contribution
among the Company and the Underwriters with respect to certain liabilities,
including liabilities under the Securities Act.
The Company has agreed not to offer, sell or otherwise dispose of any
shares of Common Stock for a period of 90 days after the date of this Prospectus
without the prior written consent of BT Alex. Brown Incorporated, provided that
the Company may, without such consent, (i) grant options pursuant to the
Company's existing employee stock option plans, (ii) issue stock upon the
exercise of outstanding options or warrants to purchase shares of Common Stock
or the conversion of outstanding securities of the Company convertible into
shares of Common Stock, (iii) agree to issue Common Stock as consideration for
the acquisition of radio stations or radio station groups, or (iv) honor
registration rights obligations in existence on the date of this Prospectus
Supplement.
Any Underwriter may engage in stabilizing transactions in accordance with
Rule 104 of Regulation M under the Exchange Act. Rule 104 permits stabilizing
bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specific maximum. The Underwriters may over-allot shares of Common
Stock
S-33
<PAGE> 34
in connection with an offering of Common Stock, thereby creating a short
position in the Underwriters' account. These transactions, if commenced, may be
discontinued at any time.
Certain of the Underwriters and their affiliates have from time to time
performed, and may from time to time perform in the future, certain investment
banking, advisory and commercial banking services for the Company and its
affiliates (and, prior to the Chancellor Merger, Chancellor and its affiliates).
For example, affiliates of certain of the Underwriters act as agents and lenders
under the Senior Credit Facility, and certain of the Underwriters acted as
initial purchasers in the Company's offerings of $3.00 Convertible Preferred
Stock in June 1997 and 8 1/8% Notes in December 1997, as well as in Chancellor's
offering of the 8 3/4% Notes in June 1997. In addition, affiliates of certain of
the Underwriters are limited partners in certain limited partnerships through
which Hicks Muse owns interests in the Company. The Underwriters and their
affiliates performing such services have received customary fees and expenses,
and may receive customary fees and expenses for performing such services in the
future.
Approximately $ million of the net proceeds of the Offering will be
used to repay lenders under the Senior Credit Facility which are affiliates of
certain of the Underwriters. Since the amount to be repaid to such lenders
exceeds 10% of the net proceeds from the sale of the Common Stock offered
hereby, the Offering is being made pursuant to the provisions of Rule 2710(c)(8)
of the Conduct Rules of the National Association of Securities Dealers, Inc.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock offered
hereby will be passed upon for the Company by Latham & Watkins, Washington, D.C.
and for the Underwriters by Davis Polk & Wardwell, New York, New York. Eric L.
Bernthal, a former director of the Company, is a partner of Latham & Watkins and
owns 5,000 shares of Common Stock and options to purchase 25,000 shares of
Common Stock.
S-34
<PAGE> 35
PROSPECTUS
$1,000,000,000
CHANCELLOR MEDIA CORPORATION
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK AND WARRANTS
------------------------------
Chancellor Media Corporation, a Delaware corporation formerly known as
Evergreen Media Corporation (the "Company"), directly or through agents, dealers
or underwriters designated from time to time, may offer from time to time in one
or more series or issuances (i) its secured or unsecured debt securities
consisting of debentures, notes or other evidences of indebtedness (the "'Debt
Securities"), which may be either senior debt securities ("Senior Debt
Securities") senior subordinated debt securities (the "Senior Subordinated Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"), (ii) shares of its preferred stock, par value $.01 per share (the
"Preferred Stock"), (iii) shares of its common stock, par value $.01 per share
(the "Common Stock") or (iv) warrants to purchase Common Stock, Preferred Stock
or Debt Securities (the "Warrants"), with an aggregate public offering price of
up to $1,000,000,000.00 (or the equivalent if the securities are denominated in
foreign currency or foreign currency units). The Debt Securities may be issued
as exchangeable and/or convertible Debt Securities, exchangeable for or
convertible into shares of Common Stock or Preferred Stock. The Company's
payment obligations under any series of Debt Securities may be guaranteed by
certain of the Company's various direct or indirect wholly-owned subsidiaries
(each, a "Guarantor" and collectively, the "Guarantors"). The Preferred Stock
may be issued as exchangeable and/or convertible Preferred Stock, exchangeable
for or convertible into Debt Securities or shares of Common Stock. The Debt
Securities (including any Guarantees thereof), Preferred Stock, Common Stock and
Warrants (collectively, the "Offered Securities") may be offered, separately or
together, in one or more separate classes or series and in amounts, at prices
and on terms to be determined at the time of offering and to be set forth in one
or more supplements to this Prospectus (each, a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable, (i) in the case of Debt
Securities and Guarantees thereof, if any, the specific designation, aggregate
principal amount, designated currency (or currency unit), purchase price,
maturity, interest rate (or manner of calculation thereof), time of payment of
interest (if any), terms (if any) for the subordination, redemption, exchange or
conversion thereof, and any other specific terms of the Debt Securities, (ii) in
the case of Preferred Stock, the specific designation, number of shares,
liquidation preference, purchase price, dividend, voting, redemption, exchange
and conversion provisions and any other specific terms of the Preferred Stock,
(iii) in the case of Common Stock, the number of shares, purchase price and
terms of the offering and sale thereof and (iv) in the case of Warrants, the
specific designation, number, duration, purchase price, exercise price,
detachability and any other terms in connection with the offering, sale and
exercise of the Warrants, as well as the terms on which and the securities for
which such warrants may be exercised.
The Company's Common Stock is traded on The Nasdaq Stock Market under the
symbol "AMFM." Any Common Stock sold pursuant to a Prospectus Supplement may be
listed on The Nasdaq Stock Market. On January 15, 1998, the last reported sale
price of the Common Stock on The Nasdaq Stock Market was $35.125 per share. The
Company has not yet determined whether any of the other Offered Securities will
be listed on any exchange or over-the-counter market. If the Company decides to
seek listing of any such Offered Securities, the Prospectus Supplement relating
thereto will disclose such exchange or market. The applicable Prospectus
Supplement will also contain information, where applicable, about certain
material United States federal income tax considerations relating to the Offered
Securities covered by such Prospectus Supplement.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------
The Offered Securities may be offered to or through underwriters, dealers
or agents designated from time to time, as set forth in the applicable
Prospectus Supplement, and may be offered to other purchasers directly by the
Company. Certain terms of the offering and sale of Offered Securities,
including, where applicable, the names of any underwriters, dealers or agents,
any applicable commissions, discounts and other items constituting compensation
to such underwriters, dealers or agents, and the proceeds to the Company from
such sale, will be set forth in the accompanying Prospectus Supplement. The
Company reserves the sole right to accept, and together with its agents, from
time to time, to reject in whole or in part any proposed purchase of the Offered
Securities to be made directly or through agents. See "Plan of Distribution" for
possible indemnification arrangements for underwriters, dealers and agents.
No Offered Securities may be sold without delivery of the applicable
Prospectus Supplement describing the method and terms of the offering of the
Offered Securities.
THE DATE OF THIS PROSPECTUS IS JANUARY 27, 1998.
<PAGE> 36
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND THEREIN, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THIS PROSPECTUS NOR ANY
PROSPECTUS SUPPLEMENT SHALL CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY OFFERED SECURITIES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR
SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN OR IN ANY PROSPECTUS SUPPLEMENT IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF OR OF SUCH PROSPECTUS SUPPLEMENT.
IN CONNECTION WITH THE OFFERING OF CERTAIN OFFERED SECURITIES, CERTAIN
PERSONS PARTICIPATING IN SUCH OFFERING MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE, MAINTAIN OR OTHERWISE EFFECT THE MARKET PRICES OF SUCH
SECURITIES OR OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE
NASDAQ NATIONAL MARKET, THE OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company and the Guarantors have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act with respect to the Offered
Securities. As permitted by the rules and regulations of the Commission, this
Prospectus and any Prospectus Supplement omit certain information, exhibits and
undertakings contained in the Registration Statement. For further information
with respect to the Company, the Guarantors and the Offered Securities,
reference is made to the Registration Statement, including the exhibits thereto
and the financial statements, notes and schedules filed as a part thereof. Any
statements contained herein concerning provisions of any document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission are
not necessarily complete, and in each instance reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by such
reference.
The Company and certain of the Guarantors are subject to the informational
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith, file reports, proxy materials and
other information with the Commission. The reports, proxy materials and other
information filed by the Company and such Guarantors with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Regional Offices of the Commission at Seven World Trade Center, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials also can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates.
The Commission maintains a site on the World Wide Web that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such site is
http://www.sec.gov. The Company's Common Stock is listed on The Nasdaq Stock
Market. Reports, proxy materials and other information concerning the Company
can also be inspected and copied at the office of The Nasdaq Stock Market, 1735
K Street, N.W., Washington, D.C. 20006-1500.
2
<PAGE> 37
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including documents incorporated by reference, contains
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Such forward-looking statements involve
known and unknown risks, uncertainties and other important factors that could
cause the actual results, performance or achievements of the Company, or
industry results, to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
risks, uncertainties and other important factors include, among others:
substantial leverage and the history of net losses; the necessity of
governmental approval for a number of transactions; certain risks associated
with the closing and integration of acquisitions; competition; government
regulation; general economic and business conditions; dependence on key
personnel; terms of the Company's indebtedness; and limitations on the ability
of the Company to pay dividends. These forward-looking statements speak only as
of the date of this Prospectus. The Company expressly disclaims any obligation
or undertaking to disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statement is based.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant to
the Exchange Act are hereby incorporated by reference in this Prospectus:
1. Evergreen Media Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996;
2. Current Reports on Form 8-K filed under the name of Evergreen Media
Corporation dated February 16, 1997 and filed March 9, 1997, dated
April 1, 1997 and filed May 9, 1997, dated May 27, 1997 and filed
May 28, 1997, dated May 27, 1997 and filed May 29, 1997, dated May
30, 1997 and filed June 4, 1997, dated June 11, 1997 and filed June
12, 1997, dated June 16, 1997 and filed July 2, 1997, and dated
July 7, 1997 and filed July 31, 1997; Current Reports on Form 8-K
filed under the name of Chancellor Media Corporation and Chancellor
Media Corporation of Los Angeles, dated September 5, 1997 and filed
September 17, 1997, as amended on Form 8-K/A, and dated September
23, 1997 and filed September 29, 1997, and dated January 13, 1998
and filed January 13, 1998; and the Current Report on Form 8-K
filed under the name of Chancellor Media Corporation of Los
Angeles, dated December 22, 1997 and filed December 30, 1997;
3. Evergreen Media Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997; Evergreen Media Corporation's and
Evergreen Media Corporation of Los Angeles' Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997 and Chancellor Media
Corporation's and Chancellor Media Corporation of Los Angeles'
Quarterly Report on Form 10-Q for the quarter ended September 30,
1997, as amended on Form 10-Q/A;
4. Chancellor Broadcasting Company's and Chancellor Radio Broadcasting
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended on Form 10-K/A;
5. Chancellor Broadcasting Company's and Chancellor Radio Broadcasting
Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997; and
6. Current Reports on Form 8-K filed by Chancellor Broadcasting
Company dated January 3, 1997 and filed January 7, 1997, dated
January 23, 1997 and filed February 6, 1997, as amended on Form
8-K/A dated April 29, 1997, dated February 13, 1997 and filed March
11, 1997, dated June 3, 1997 and filed June 4, 1997, dated June 18,
1997 and filed June 25, 1997, and dated July 2, 1997 and filed July
17, 1997; and Current Reports on Form 8-K filed by Chancellor Radio
Broadcasting Company dated January 3, 1997 and filed January 7,
1997, dated January 23, 1997
3
<PAGE> 38
and filed February 6, 1997, dated February 13, 1997 and filed March
11, 1997, dated May 2, 1997 and filed May 13, 1997, dated June 18,
1997 and filed June 25, 1997, and dated July 2, 1997 and filed July
17, 1997.
All documents filed by the Company or the Guarantors pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference in the Prospectus and made a part hereof
from the date of filing of such documents. Any statement contained in this
Prospectus or in any Prospectus Supplement or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus and any Prospectus Supplement to the
extent that a statement contained herein or in any other document subsequently
filed with the Commission which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any documents incorporated into
the Prospectus by reference (other than exhibits incorporated by reference into
such document). Requests for documents should be submitted to the Corporate
Secretary, Chancellor Media Corporation, 433 East Las Colinas Boulevard, Suite
1130, Irving, Texas 75039 (telephone (972) 869-9020).
4
<PAGE> 39
THE COMPANY
The Company is a leading owner of radio broadcasting stations in the United
States. The radio stations currently owned by the Company are located
principally in the top 40 radio markets of the United States. The Company's
portfolio of radio stations is diversified in terms of format, target
demographics, geographic location and phase of development. Because of the size
and diversity of its station portfolio, the Company believes that it is not
unduly reliant on the performance of any one station or market. The Company also
believes that the diversity of its portfolio helps to insulate the Company from
downturns in specific markets and changes in musical tastes. The Company also
owns and operates Katz Media Group, Inc., a full service media representation
firm serving multiple types of electronic media, with leading market shares in
the representation of radio and television stations and cable television
systems. The Company has also recently formed The AMFM Radio Networks, a new
national radio network.
The Company's principal executive officers are located at 433 East Las
Colinas Boulevard, Suite 1130, Irving, Texas 75039, and its telephone number at
that location is (972) 869-9020.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Offered Securities
for general corporate purposes, which may include the repayment, refinancing,
redemption or repurchase of existing indebtedness or capital stock, working
capital, capital expenditures, acquisitions and investments. Additional
information on the use of net proceeds from the sale of Offered Securities
offered hereby may be set forth in the Prospectus Supplement relating to such
Offered Securities.
HOLDING COMPANY STRUCTURE
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries. The Company's rights and the rights of its
creditors, including holders of Debt Securities, to participate in the
distribution of assets of any person in which the Company owns an equity
interest (including any subsidiary of the Company) upon such person's
liquidation or reorganization will be subject to prior claims of such person's
creditors, including trade creditors, except to the extent that the Company may
itself be a creditor with recognized claims against such person (in which case
the claims of the Company would still be subject to the prior claims of any
secured creditors or such person and of any holder of indebtedness of such
person that is senior to that held by the Company). Accordingly, the holder of
Debt Securities may be deemed to be effectively subordinated to such claims.
GENERAL DESCRIPTION OF OFFERED SECURITIES AND RISK FACTORS
The Company may offer shares of Common Stock, Preferred Stock, Debt
Securities or Warrants or any combination of the foregoing either individually
or as units consisting of one or more securities under this Prospectus.
CERTAIN OF THE SECURITIES TO BE OFFERED HEREBY THEMSELVES MAY INVOLVE A
HIGH DEGREE OF RISK. SUCH RISKS WILL BE SET FORTH IN THE PROSPECTUS SUPPLEMENT
RELATING TO SUCH OFFERED SECURITIES.
5
<PAGE> 40
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby are to be issued under an indenture (the
"Indenture") to be executed by the Company, the Guarantors, if any, and a
trustee to be identified in the applicable Prospectus Supplement, as Trustee
(the "Trustee"). The terms of the Debt Securities will include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "TIA") as in effect on the date of the Indenture. The
Debt Securities will be subject to all such terms, and potential purchasers of
the Debt Securities are referred to the Indenture and the TIA for a statement
thereof. A copy of the proposed form of Indenture has been filed as an exhibit
to the Registration Statement.
The Company may offer under this Prospectus up to $1,000,000,000 aggregate
principal amount of Debt Securities, or if Debt Securities are issued at a
discount, or in a foreign currency or composite currency, such principal amount
as may be sold for an initial public offering price of up to $1,000,000,000.
Unless otherwise specified in the applicable Prospectus Supplement, the Debt
Securities will represent direct, unsecured obligations of the Company and will
rank equally with all other unsecured indebtedness of the Company.
The following statements relating to the Debt Securities and the Indenture
are summaries and do not purport to be complete. Such summaries may make use of
certain terms defined in the Indenture and are qualified in their entirety by
express reference to the Indenture. Certain other specific terms of any series
of Debt Securities will be described in the applicable Prospectus Supplement. To
the extent that any particular terms of the Debt Securities described in a
Prospectus Supplement differ from any of the terms described herein, then such
terms described herein shall be deemed to have been superseded by such
Prospectus Supplement. As used in this "Description of Debt Securities," all
references to the "Company" shall mean Chancellor Media Corporation excluding,
unless the context otherwise required or as expressly stated, its subsidiaries.
GENERAL
The terms of each series of Debt Securities will be established by or
pursuant to a resolution of the Board of Directors of the Company and set forth
or determined in the manner provided in an Officers' Certificate or by a
supplemental indenture. The particular terms of each series of Debt Securities
will be described in a Prospectus Supplement relating to such series (including
any pricing supplement thereto).
The Debt Securities that may be offered under the Indenture are not limited
in aggregate principal amount. The Debt Securities may be issued in one or more
series with the same or various maturities, at par, at a premium, or at a
discount. The Prospectus Supplement (including any pricing supplement thereto),
will set forth the initial offering price, the aggregate principal amount and
the following terms of the Debt Securities in respect of which this Prospectus
is delivered:
(1) the title of such Debt Securities;
(2) whether such Debt Securities are Senior Debt Securities, Senior
Subordinated Debt Securities or Subordinated Debt Securities or any
combination thereof;
(3) the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which the Debt Securities will be issued;
(4) any limit on the aggregate principal amount of such Debt
Securities;
(5) the date or dates on which principal on such Debt Securities will
be payable;
(6) the rate or rates (which may be fixed or variable) per annum or,
if applicable, the method used to determine such rate or rates (including
any commodity, commodity index, stock exchange index or financial index) at
which such Debt Securities will bear interest, if any, the date or dates
from which such interest, if any, will commence and be payable and any
regular record date for the interest payable on the interest payment date;
(7) the place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable;
6
<PAGE> 41
(8) the period or periods within which, the price or prices at which
and the terms and conditions upon which the Debt Securities may be
redeemed, in whole or in part, at the option of the Company;
(9) the obligation, if any, of the Company to redeem or purchase the
Debt Securities in whole or in part pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof;
(10) the dates, if any, on which and the price or prices at which the
Debt Securities will be repurchased by the Company at the option of the
Holders thereof and other detailed terms and provisions of such repurchase
obligations;
(11) the denominations in which such Debt Securities may be issuable,
if other than denominations of $1,000 and any integral multiple thereof;
(12) whether the Debt Securities are to be issuable in the form of
Certificated Debt Securities (as defined below) or Global Debt Securities
(as defined below);
(13) the portion of principal amount of such Debt Securities that
shall be payable upon declaration of acceleration of the maturity date
thereof, if other than the principal amount thereof;
(14) the currency of denomination of such Debt Securities;
(15) the designation of the currency, currencies or currency units in
which payment of principal of, premium, if any, and interest, if any, on
such Debt Securities will be made;
(16) if payments of principal of, premium, if any, or interest, if
any, on the Debt Securities are to be made in one or more currencies or
currency units other than that or those in which such Debt Securities are
denominated, the manner in which the exchange rate with respect to such
payments will be determined;
(17) the manner in which the amounts of payment of principal of,
premium, if any, or interest, if any, on such Debt Securities will be
determined, if such amounts may be determined by reference to an index
based on a currency or currencies other than that in which the Debt
Securities are denominated or designated to be payable or by reference to a
commodity, commodity index, stock exchange index or financial index;
(18) the provisions, if any, relating to any security provided for
such Debt Securities;
(19) any addition to or change in the covenants described herein or in
the Indenture with respect to such Debt Securities and any change in the
acceleration provisions described herein or in the Indenture with respect
to such Debt Securities;
(20) any Events of Default with respect to the Debt Securities, if not
otherwise set forth under "-- Events of Default";
(21) the terms and conditions, if any, upon which the Debt Securities
shall be exchanged for or converted into Common Stock or Preferred Stock;
(22) the terms and conditions, if any, upon which the Debt Securities
and any Guarantees thereof shall be subordinated in right of payment to
other indebtedness of The Company or any Guarantor;
(23) the form and terms of any Guarantee of the Debt Securities;
(24) any other terms of such Debt Securities, which may modify or
delete any provision of the Indenture insofar as it applies to such series;
and
(25) any depositaries, interest rate calculation agents, exchange rate
calculation agents or other agents with respect to the Debt Securities.
Debt Securities may be issued that provide for an amount less than the
stated principal amount thereof to be due and payable upon declaration of
acceleration of the maturity thereof pursuant to the terms of the
7
<PAGE> 42
Indenture ("Discount Securities"). Federal income tax considerations and other
special considerations applicable to any such Discount Securities will be
described in the applicable Prospectus Supplement.
Debt Securities may be issued in bearer form, with or without coupons.
Federal income tax considerations and other special considerations applicable to
bearer securities will be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units, or if the
principal of and any premium and interest, if any, on any series or Debt
Securities is payable in a foreign currency or currencies or a foreign currency
unit or units, the restrictions, elections, general tax considerations, specific
terms and other information with respect to such issue of Debt Securities and
such foreign currency or currencies or foreign currency unit or units will be
set forth in the applicable Prospectus Supplement.
EXCHANGE AND/OR CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged
for or converted into shares of Common Stock or Preferred Stock will be set
forth in the Prospectus Supplement relating thereto.
TRANSFER AND EXCHANGE
Each Debt Security will be represented by either one or more global
securities (each, a "Global Debt Security") registered in the name of The
Depository Trust Company, as Depository (the "Depository") or a nominee of the
Depository (each such Debt Security represented by a Global Debt Security being
herein referred to as a "Book-Entry Debt Security"), or a certificate issued in
definitive registered form (a "Certificated Debt Security"), as set forth in the
applicable Prospectus Supplement. Except as set forth under "-- Global Debt
Securities and Book Entry System" below, Book-Entry Debt Securities will not be
issuable in certificated form.
Certificated Debt Securities. Certificated Debt Securities may be
transferred or exchanged at the Trustee's office or paying agencies in
accordance with the terms of the Indenture. No service change will be made for
any transfer or exchange of Certificated Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The transfer of Certificated Debt Securities and the right to receive the
principal of, premium, if any, and interest, if any, on such Certificated Debt
Securities may be effected only by surrender of the certificate representing
such Certificated Debt Securities and either reissuance by the Company or the
Trustee of such certificate to the new Holder or the issuance by the Company or
the Trustee of a new certificate to the new Holder.
Global Debt Securities and Book Entry System. The procedures that the
Depository has indicated it intends to follow with respect to Book-Entry Debt
Securities are set forth below.
Ownership of beneficial interests in Book-Entry Debt Securities will be
limited to persons that have accounts with the Depository for the related Global
Debt Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Global Debt Security, the Depository will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the Book-Entry Debt Securities
represented by such Global Debt Security beneficially owned by such
participants. The accounts to be credited shall be designated by any dealers,
underwriters or agents participating in the distribution of such Book-Entry Debt
Securities. Ownership of Book-Entry Debt Securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depository for the related Global Debt Security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to own, transfer
or pledge beneficial interests in Book-Entry Debt Securities.
8
<PAGE> 43
So long as the Depository for a Global Debt Security, or its nominee, is
the registered owner of such Global Debt Security, the Depository or such
nominee, as the case may be, will be considered the sole owner or Holder of the
Book-Entry Debt Securities represented by such Global Debt Security for all
purposes under the Indenture. Except as set forth below, beneficial owners of
Book-Entry Debt Securities will not be entitled to have such securities
registered in their names, will not receive or be entitled to receive physical
delivery of a certificate in definitive form representing such securities and
will not be considered the owners or Holders thereof under the Indenture.
Accordingly, each person beneficially owning Book-Entry Debt Securities must
rely on the procedures of the Depository for the related Global Debt Security
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a Holder
under the Indenture.
The Company understands, however, that under existing industry practice,
the Depository will authorize the persons on whose behalf it holds a Global Debt
Security to exercise certain rights of Holders of Debt Securities, and the
Indenture provides that the Company, the Guarantors, if any, the Trustee and
their respective agents will treat as the Holder of a Debt Security the persons
specified in a written statement of the Depository with respect to such Global
Debt Security for purposes of obtaining any consents or directions required to
be given by Holders of the Debt Securities pursuant to the Indenture.
Payments of principal of, premium, if any, and interest on Book-Entry Debt
Securities will be made to the Depository or its nominee, as the case may be, as
the registered Holder of the related Global Debt Security. None of the Company,
the Guarantors, if any, the Trustee or any other agent of the Company or agent
of the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in such Global Debt Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depository, upon receipt of any payment of
principal of, premium, if any, or interest, if any, on a Global Debt Security,
will immediately credit participants' accounts with payments in amounts
proportionate to the respective amounts of Book-Entry Debt Securities held by
each such participant as shown on the records of such Depository. The Company
also expects that payments by participants to owners of beneficial interests in
Book-Entry Debt Securities held through such participants will be governed by
standing customer instructions and customary practices, as is now the case with
the securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
If the Depository is at any time unwilling or unable to continue as
Depository or ceases to be a clearing agency registered under the Exchange Act,
and a successor Depository registered as a clearing agency under the Exchange
Act is not appointed by the Company within 90 days, the Company will issue
Certificated Debt Securities in exchange for each Global Debt Security. In
addition, the Company may at any time and in its sole discretion determine not
to have the Book-Entry Debt Securities of any series represented by one or more
Global Debt Securities and, in such event, will issue Certificated Debt
Securities in exchange for the Global Debt Securities of such series. Global
Debt Securities will also be exchangeable by the Holders for Certificated Debt
Securities if an Event of Default with respect to the Book-Entry Debt Securities
represented by such Global Debt Securities has occurred and is continuing. Any
Certificated Debt Securities issued in exchange for a Global Debt Security will
be registered in such name or names as the Depository shall instruct the
Trustee. It is expected that such instructions will be based upon directions
received by the Depository from participants with respect to ownership of
Book-Entry Debt Securities relating to such Global Debt Security.
The foregoing information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
NO PROTECTION IN THE EVENT OF CHANGE OF CONTROL
Other than as described in the applicable Prospectus Supplement, there are
no covenants or other provisions in the Indenture providing for a put or
increased interest or otherwise that would afford holders of Debt Securities
additional protection in the event of a recapitalization transaction, a change
of control of the Company or a highly leveraged transaction.
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COVENANTS
Unless otherwise indicated in this Prospectus or a Prospectus Supplement,
the Debt Securities will not have the benefit of any covenants that limit or
restrict the Company's business or operations, the pledging of the Company's
assets or the incurrence of indebtedness of the Company.
With respect to any series of Senior Subordinated Debt Securities, the
Company will agree not to issue Debt which is, expressly by its terms,
subordinated in right of payment to any other Debt of the Company and which is
not expressly made pari passu with, or subordinate and junior in right of
payment to, the Senior Subordinated Debt Securities.
The applicable Prospectus Supplement will describe any material covenants
in respect of a series of Debt Securities. Other than the covenants of the
Company included in the Indenture as described above or as described in the
applicable Prospectus Supplement, there are no covenants or other provisions in
the Indenture providing for a put or increased interest or otherwise that would
afford holders of Debt Securities additional protection in the event of a
recapitalization transaction, a change of control of the Company or a highly
leveraged transaction.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of its properties and assets to, any
Person (a "successor Person") unless (i) the Company is the surviving
corporation or the successor Person (if other than the Company) is a
corporation, partnership, trust or other entity organized and validly existing
under the laws of the United States, any state thereof or the District of
Columbia and expressly assumes the Company's obligations under the Debt
Securities and under the Indenture, (ii) immediately prior to and after giving
effect to the transaction, no Event of Default, and no event which, after notice
or lapse of time, or both, would become an Event of Default, shall have occurred
and be continuing under the Indenture and (iii) certain other conditions are
met.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following will be Events of Default under the Indenture with respect to Debt
Securities of any series: (a) default in the payment of any interest upon any
Debt Security of that series when it becomes due and payable, and continuance of
such default for a period of 30 days (unless the entire amount of such payment
is deposited by the Company with the Trustee or with a paying agent prior to the
expiration of such period of 30 days); (b) default in the payment of principal
of or premium, if any, on any Debt Security of that series when such payment
becomes due and payable, at maturity, upon redemption or otherwise; (c) default
in the deposit of any sinking fund payment, when and as due in respect of any
Debt Security of that series; (d) default in the performance or breach of any
other covenant or warranty of the Company in the Indenture (other than a
covenant or warranty that has been included in the Indenture solely for the
benefit of a series of Debt Securities other than that series), which default
continues uncured for a period of 30 days after written notice to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the outstanding Debt Securities of that series as
provided in the Indenture; (e) certain events of bankruptcy, insolvency or
reorganization with respect to the Company and the Guarantors, if any; and (f)
any other Event of Default provided with respect to Debt Securities of that
series that is described in the Prospectus Supplement accompanying this
Prospectus. No Event of Default with respect to a particular series of Debt
Securities (except as to certain events in bankruptcy, insolvency or
reorganization with respect to the Company) necessarily constitutes an Event of
Default with respect to any other series of Debt Securities. The occurrence of
an Event of Default may constitute an event of default under the Company's bank
credit agreements in existence from time to time. In addition, the occurrence of
certain Events of Default or an acceleration under the Indenture may constitute
an event of default under certain other indebtedness and/or preferred stock of
the Company outstanding from time to time.
If an Event of Default with respect to Debt Securities of any series at the
time outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of at least 25% in principal amount of the
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outstanding Debt Securities of that series may, by a notice in writing to the
Company (and to the Trustee if given by the Holders), declare to be due and
payable immediately the principal (or, if the Debt Securities of that series are
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of and accrued and unpaid interest, if any, on all
Debt Securities of that series. In the case of an Event of Default resulting
from certain events of bankruptcy, insolvency or reorganization, the principal
(or such specified amount) of and accrued and unpaid interest, if any, on all
outstanding Debt Securities shall 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 outstanding Debt Securities. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the Holders of a majority in principal amount of the outstanding
Debt Securities of that series may rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated principal and
interest, if any, with respect to Debt Securities of that series, have been
cured or waived as provided in the Indenture. For information as to waiver of
defaults, see the discussion set forth below under "-- Modification and Waiver."
Reference is made to the Prospectus Supplement relating to any series of Debt
Securities that are Discount Securities for the particular provisions relating
to acceleration of a portion of the principal amount of such Discount Securities
upon the occurrence of an Event of Default.
The Indenture provides that the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of outstanding Debt Securities, unless the Trustee receives indemnity
satisfactory to it against any loss, liability or expense. Subject to certain
rights of the Trustee, the Holders of a majority in principal amount of the
outstanding Debt Securities of any series shall 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 with
respect to the Debt Securities of that series.
No Holder of any Debt Security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to the Indenture
or for the appointment of a receiver or trustee, or for any remedy under the
Indenture, unless such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default with respect to Debt Securities of that
series and unless also the Holders of at least a majority in principal amount of
the outstanding Debt Securities of that series shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a majority
in principal amount of the outstanding Debt Securities of that series a
direction inconsistent with such request and shall have failed to institute such
proceeding within 60 days. Notwithstanding the foregoing, the Holder of any Debt
Security will have an absolute and unconditional right to receive payment of the
principal of, premium, if any, and any interest on such Debt Security on or
after the due dates expressed in such Debt Security and to institute suit for
the enforcement of any such payment.
The Indenture requires the Company to furnish to the Trustee a statement as
to compliance with the Indenture. The Indenture provides that the Trustee may
withhold notice to the Holders of Debt Securities of any series of any Default
or Event of Default (except in payment on any Debt Securities of such series)
with respect to Debt Securities of such series if it in good faith determines
that withholding such notice is in the interest of the Holders of such Debt
Securities.
MODIFICATION AND WAIVER
Modifications to, and amendments of, the Indenture may be made by the
Company and the Trustee with the consent of the Holders of at least a majority
in principal amount of the outstanding Debt Securities of each series affected
by such modifications or amendments; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
outstanding Debt Security affected thereby: (a) reduce the amount of Debt
Securities whose Holders must consent to an amendment or waiver; (b) reduce the
rate of or change the time for payment of interest (including default interest)
on any Debt Security; (c) reduce the principal of or premium, if any, on or
change the fixed maturity of any Debt Security or reduce the amount of, or
postpone the date fixed for, the payment of any sinking fund or analogous
obligation with respect to any series of Debt Securities; (d) reduce the
principal amount of Discount
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Securities payable upon acceleration of the maturity thereof; (e) waive a
default in the payment of the principal of, premium, if any, or interest, if
any, on any Debt Security (except a rescission of acceleration of the Debt
Securities of any series by the Holders of at least a majority in aggregate
principal amount of the then outstanding Debt Securities of such series and a
waiver of the payment default that resulted from such acceleration); (f) make
the principal of or premium, if any, or interest, if any, on any Debt Security
payable in currency other than that stated in the Debt Security; (g) make any
change to certain provisions of the Indenture protecting the right of each
Holder of Debt Securities to receive payment of the principal of, premium, if
any, and interest, if any, on such Debt Securities on or after the due date
thereof or to institute suit for the enforcement of any such payment and to
waivers or amendments; or (h) waive a redemption payment with respect to any
Debt Security. The Company and the Trustee may amend the Indenture or the Debt
Securities without notice to or consent of any holder of a Debt Security: (i) to
cure any ambiguity, defect or inconsistency; (ii) to comply with the Indenture's
provisions regarding successor corporations; (iii) to comply with any
requirements of the Commission in connection with the qualification of the
Indenture under the TIA; (iv) to provide for Global Debt Securities in addition
to or in place of Certificated Debt Securities; (v) to add to, change or
eliminate any of the provisions of the Indenture in respect of one or more
series of Debt Securities, provided, however, that any such addition, change or
elimination (A) shall neither (1) apply to any Debt Security of any series
created prior to the execution of such amendment and entitled to the benefit of
such provision, nor (2) modify the rights of a holder of any such Debt Security
with respect to such provision, or (B) shall become effective only when there is
no outstanding Debt Security of any series created prior to such amendment and
entitled to the benefit of such provision; (vi) to make any change that does not
adversely affect in any material respect the interest of any holder; or (vii) to
establish additional series of Debt Securities as permitted by the Indenture.
The Holders of at least a majority in principal amount of the outstanding
Debt Securities of any series may, on behalf of the Holders of all Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with provisions of the Indenture other than certain
specified provisions. The Holders of a majority in principal amount of the
outstanding Debt Securities of any series may on behalf of the Holders of all
the Debt Securities of such series waive any past default under the Indenture
with respect to such series and its consequences, except a default in the
payment of the principal of, premium, if any, or any interest, if any, on any
Debt Security of that series or in respect of a covenant or provision which
cannot be modified or amended without the consent of the Holder of each
outstanding Debt Security of such series affected; provided, however, that the
Holders of a majority in principal amount of the outstanding Debt Securities of
any series may rescind an acceleration and its consequences, including any
related payment default that resulted form such acceleration.
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
Legal Defeasance. The Indenture provides that, unless otherwise provided by
the terms of the applicable series of Debt Securities, the Company may be
discharged from any and all obligations in respect of the Debt Securities of any
series (except for certain obligations to register the transfer or exchange of
Debt Securities of such series, to replace stolen, lost or mutilated Debt
Securities of such series, and to maintain paying agencies and certain
provisions relating to the treatment of funds held by paying agents) upon the
deposit with the Trustee, in trust, of money and/or U.S. Government Obligations
or, in the case of Debt Securities denominated in a single currency other than
U.S. Dollars, Foreign Government Obligations (as defined below), that, through
the payment of interest and principal in respect thereof in accordance with
their terms, will provide money in an amount sufficient in the opinion of a
nationally recognized firm of independent public accountants to pay and
discharge each installment of principal (and premium, if any) and interest, if
any, on and any mandatory sinking fund payments in respect of the Debt
Securities of such series on the stated maturity of such payments in accordance
with the terms of the Indenture and such Debt Securities. Such discharge may
occur only if, among other things, the Company shall have delivered to the
Trustee an opinion of counsel stating that the Company has received from, or
there has been published by, the United States Internal Revenue Service a ruling
or, since the date of execution of the Indenture, there has been a change in the
applicable United States federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the Holders of the Debt
Securities of such series will not recognize income, gain or
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loss for United States federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to United States federal income tax
on the same amounts and in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not occurred.
Defeasance of Certain Covenants. The Indenture provides that, unless
otherwise provided by the terms of the applicable series of Debt Securities,
upon compliance with certain conditions, the Company may omit to comply with the
restrictive covenants, if any, set forth in the Indenture, as well as any
additional covenants or other provisions which may be set forth in the
applicable Prospectus Supplement, and any omission to comply with such covenants
will not constitute a Default or an Event of Default with respect to the Debt
Securities of such series ("covenant defeasance"). The conditions include: the
deposit with the trustee of money and/or U.S. Government Obligations or, in the
case of Debt Securities denominated in a single currency other than U.S.
Dollars, Foreign Government Obligations, that, through the payment of interest
and principal in respect thereof in accordance with their terms, will provide
money in an amount sufficient in the opinion of a nationally recognized firm of
independent public accountants to pay and discharge each installment of
principal of, premium, if any, and interest, if any, on and any mandatory
sinking fund payments in respect of the Debt Securities of such series on the
stated maturity of such payments in accordance with the terms of the Indenture
and such Debt Securities; and the delivery to the Trustee of an opinion of
counsel to the effect that the Holders of the Debt Securities of such series
will not recognize income, gain or loss for United States federal income tax
purposes as a result of such deposit and related covenant defeasance and will be
subject to United States federal income tax on the same amounts and in the same
manner and at the same times as would have been the case if such deposit and
related covenant defeasance had not occurred.
Covenant Defeasance and Events of Default. In the event the Company
exercises its option to effect covenant defeasance with respect to any series of
Debt Securities and the Debt Securities of such series are declared due and
payable because of the occurrence of any Event of Default, the amount of money
and/or U.S. Government Obligations or Foreign Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the Debt Securities of
such series at the time of their stated maturity but may not be sufficient to
pay amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, the Company shall
remain liable for such payments.
"Foreign Government Obligations" means, with respect to Debt Securities of
any series that are denominated in a currency other than U.S. Dollars, (i)
direct obligations of the government that issued or caused to be issued such
currency for the payment of which obligations its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by or acting as
an agency or instrumentality of such government the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by such
government, which, in either case under clauses (i) or (ii), are not callable or
redeemable at the option of the issuer thereof.
GUARANTEES
The Company's payment obligation under any series of Debt Securities may be
guaranteed by one or more Guarantors. The terms of any such guarantee will be
set forth in the applicable Prospectus Supplement.
REGARDING THE TRUSTEE
The Trustee with respect to any series of Debt Securities will be
identified in the Prospectus Supplement relating to such Debt Securities. The
Indenture and provisions of the TIA incorporated by reference therein contain
certain limitations on the rights of the Trustee, should it become a creditor of
the Company, to obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim, as security or
otherwise. The Trustee and its affiliates may engage in, and will be permitted
to continue to engage in, other transactions with the Company and its
affiliates, provided, however, that if it acquires any conflicting interest (as
defined in the TIA), it must eliminate such conflict or resign.
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The holders of a majority in principal amount of the then outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee. The TIA and the Indenture provide that in case an Event of Default
shall occur (and be continuing), the Trustee will be required, in the exercise
of its rights and powers, to use the degree of care and skill of a prudent man
in the conduct of his own affairs. Subject to such provision, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders of the Debt Securities issued
thereunder, unless they have offered to the Trustee indemnity satisfactory to
it.
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DESCRIPTION OF PREFERRED STOCK
Under the Amended and Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation"), shares of Preferred Stock may be issued
from time to time, in one or more classes or series, as authorized by the Board
of Directors, generally without the approval of the stockholders. Prior to
issuance of shares of each series, the Board of Directors is required by the
General Corporation Law of the State of Delaware (the "DGCL") and the
Certificate of Incorporation to adopt resolutions and file a Certificate of
Designation (the "Certificate of Designation") with the Secretary of State of
the State of Delaware, fixing for each such class or series the designations,
powers, preferences and rights of the shares of such class or series and the
qualifications, limitations or restrictions thereon, including, but not limited
to, dividend rights, dividend rate or rates, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences as are permitted by
the DGCL. The Board of Directors could authorize the issuance of shares of
Preferred Stock with terms and conditions which could have the effect of
discouraging a takeover or other transaction which holders of some, or a
majority, of such shares might believe to be in their best interests or in which
holders of some, or a majority, of such shares might receive a premium for their
shares over the then-market price of such shares.
Subject to limitations prescribed by the DGCL, the Certificate of
Incorporation and the Amended and Restated Bylaws of the Company (the "Bylaws"),
the Board of Directors is authorized to fix the number of shares constituting
each class or series of Preferred Stock and the designations and powers,
preferences and relative, participating, optional or other special rights,
including such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets, conversion or exchange,
and such other subjects or matters as may be fixed by resolution of the Board of
Directors or duly authorized committee thereof. The Preferred Stock offered
hereby will, when issued, be fully paid and nonassessable and will not have, or
be subject to, any preemptive or similar rights.
Reference is made to the Prospectus Supplement relating to the class or
series of Preferred Stock being offered for the specific terms thereof,
including:
(1) The title and stated value of such Preferred Stock;
(2) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the purchase price of such Preferred
Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock;
(4) Whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on such Preferred Stock shall
accumulate;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) The provisions for a sinking fund, if any, for such Preferred
Stock;
(7) The provisions for redemption, if applicable, of such Preferred
Stock;
(8) Any listing of such Preferred Stock on any securities exchange or
market;
(9) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock of the Company, including the
conversion price (or manner of calculation thereof) and conversion period;
(10) The terms and conditions, if applicable, upon which Preferred
Stock will be exchangeable into Debt Securities of the Company, including
the exchange price (or manner of calculation thereof) and exchange period;
(11) Voting rights, if any, of such Preferred Stock;
(12) Whether interests in such Preferred Stock will be represented by
depositary shares;
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(13) A discussion of any material and/or special United States federal
income tax considerations applicable to such Preferred Stock;
(14) The relative ranking and preferences of such Preferred Stock as
to dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company;
(15) Any limitations on issuance of any class or series of Preferred
Stock ranking senior to or on a parity with such series of Preferred Stock
as to dividend rights and rights upon liquidation, dissolution or winding
up of the affairs of the Company; and
(16) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company rank: (i) senior to all classes or
series of Common Stock of the Company, and to all equity securities issued by
the Company the terms of which specifically provide that such equity securities
rank junior to such Preferred Stock with respect to dividend rights or rights
upon liquidation, dissolution or winding up of the Company; (ii) on a parity
with all equity securities issued by the Company that do not rank senior or
junior to the Preferred Stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Company; and (iii) junior to all
equity securities issued by the Company the terms of which do not specifically
provide that such equity securities rank on a parity with or junior to the
Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company (including any entity with which the
Company may be merged or consolidated or to which all or substantially all the
assets of the Company may be transferred or which transfers all or substantially
all of the assets of the Company). As used for these purposes, the term "equity
securities" does not include convertible debt securities.
DESCRIPTION OF COMMON STOCK
General
The Company's authorized common stock consists of 200,000,000 shares of
Common Stock, par value $0.01 per share (the "Common Stock"), approximately
119,991,240 of which were issued and outstanding as of January 15, 1998 (after
giving effect to the Company's two-for-one common stock split effected in the
form of a stock dividend paid on January 12, 1998) and 75,000,000 shares of
Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"),
none of which were issued and outstanding as of January 15, 1998.
The shares of Common Stock currently outstanding are validly issued, fully
paid and nonassessable.
It is not contemplated that any shares of Class A Common Stock will be
issued at any time. The Certificate of Incorporation provides that the issuance
of any shares of Class A Common Stock will require the unanimous affirmative
vote of the Board of Directors of the Company. The Company presently expects
that the Board of Directors of the Company will submit a proposal at the 1998
annual meeting of stockholders in order to eliminate the authorized shares of
Class A Common Stock.
Dividends
Holders of shares of Common Stock and Class A Common Stock are entitled to
receive such dividends as may be declared by the Board of Directors of the
Company out of funds legally available for such purpose. The terms of the
currently outstanding indebtedness and preferred stock of the Company and
certain of its subsidiaries may restrict, directly or indirectly, the Company's
ability to pay cash dividends on the Common Stock and Class A Common Stock.
The Company has not declared or paid any dividends with respect to its
outstanding common stock in the past, and it is not anticipated that the Company
will pay any cash dividends on the Common Stock and Class A Common Stock in the
foreseeable future.
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Voting Rights
Holders of shares of Common Stock and Class A Common Stock, each voting as
a separate class, shall be entitled to vote on all matters submitted to a vote
of the stockholders, except as otherwise provided by law. Each share of Common
Stock and Class A Common Stock is entitled to one vote per share. Holders of
Common Stock and Class A Common Stock are not entitled to cumulative votes in
the election of directors.
Under Delaware law, the affirmative vote of the holders of a majority of
the outstanding shares of any class of capital stock of the Company is required
to approve any amendment to the Certificate of Incorporation that would increase
or decrease the aggregate number of authorized shares of any class, increase or
decrease the par value of the shares of any class, or modify or change the
powers, preferences or special rights of the shares of any class so as to affect
such class adversely.
Liquidation Rights
Upon liquidation, dissolution, or winding-up of the Company, the holders of
Common Stock and Class A Common Stock are entitled to share ratably in all
assets available for distribution after payment in full of creditors and the
holders of preferred stock of the Company.
Change of Control Provisions
Certain provisions of the Certificate of Incorporation and Bylaws may have
the effect of preventing, discouraging or delaying any change of control of the
Company and may maintain the incumbency of the Board of Directors and
management. The authorization of 50,000,000 shares of preferred stock makes it
possible for the Board of Directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
effect a change of control of the Company. In addition, the Certificate of
Incorporation provides for three classes of directors serving for staggered
three-year terms. Under the DGCL, subject to certain inapplicable exceptions,
directors on a classified board may only be removed by shareholders for cause.
This provision could also impede the success of any attempt to effect a change
of control of the Company.
The Company is subject to Section 203 ("Section 203") of the DGCL. Section
203 prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless: (i) prior to such date, the board of directors of the
corporation approves either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, or (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owns at least 85% of the
outstanding voting stock (excluding certain shares held by persons who are both
directors and officers of the corporation and certain employee stock plans) or
(iii) on or after the consummation date, the business combination is approved by
the board of directors and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested stockholder. For
purposes of Section 203, a "business combination" includes, among other things,
a merger, asset sale or other transaction resulting in a financial benefit to
the interested stockholder, and an "interested stockholder" is generally a
person who, together with affiliates and associates, owns (or within three
years, owned) 15% or more of the corporation's voting stock.
Alien Ownership
The Certificate of Incorporation restricts the ownership and voting of the
Company's capital stock, including its Common Stock, in accordance with the
Communications Act of 1934, as amended, and the rules of the Federal
Communications Commission (the "FCC"), to prohibit ownership of more than 25% of
the Company's outstanding capital stock (or control of more than 25% of the
voting power it represents) by or for the account of aliens, foreign
governments, or non-U.S. corporations or corporations otherwise subject to
control by such persons or entities. The Certificate of Incorporation also
prohibits any transfer of the Company's capital stock that would cause the
Company to violate this prohibition. In addition, the Certificate of
Incorporation of the Company authorizes the Board of Directors of the Company to
adopt such provisions as its deems necessary to enforce these prohibitions.
17
<PAGE> 52
Other Provisions
The holders of Common Stock and Class A Common Stock are not entitled to
preemptive or similar rights. The shares of Common Stock are not subject to
redemption or a sinking fund.
No single shareholder of the Company holds more than 50.0% of the combined
voting power of the Company. As a result, a holder of an "attributable" interest
in the Company may violate the FCC's multiple ownership rules or cross interest
rules if such holder also has an "attributable" interest (or, in some cases, a
"meaningful" nonattributable interest) in other television or radio stations, or
in daily newspapers, depending on the number and location of those radio or
television stations or daily newspapers. Such a stockholder may also be
restricted in the companies in which such stockholder may invest.
Transfer Agent
The Bank of New York serves as the Transfer Agent and Registrar for the
Common Stock.
DESCRIPTION OF WARRANTS
The Company may issue warrants to purchase Debt Securities (the "Debt
Warrants"), Preferred Stock (the "Preferred Stock Warrants") or Common Stock
(the "Common Stock Warrants" and, collectively with the Debt Warrants and the
Preferred Stock Warrants, the "Warrants"). Warrants may be issued independently
or together with any Offered Securities and may be attached to or separate from
such Offered Securities. The Warrants are to be issued under warrant agreements
(each a "Warrant Agreement") to be entered into between the Company and a bank
or trust company, as warrant agent (the "Warrant Agent"), all as shall be set
forth in the Prospectus Supplement relating to the Warrants being offered
pursuant thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the Debt Warrant certificates representing such Debt Warrants, including the
following:
(1) the title for such Debt Warrants;
(2) the aggregate number of such Debt Warrants;
(3) the price or prices at which such Debt Warrants will be issued;
(4) the designation, aggregate principal amount and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants, and the
procedures and conditions relating to the exercise of such Debt Warrants;
(5) the designation and terms of any related Debt Securities with
which such Debt Warrants are issued, and the number of such Debt Warrants
issued with each such security;
(6) the date, if any, on and after which such Debt Warrants and the
related Debt Securities will be separately transferable;
(7) the principal amount of Debt Securities purchasable upon exercise
of each Debt Warrant, and the price at which such principal amount of Debt
Securities may be purchased upon such exercise;
(8) the date on which such right shall expire;
(9) the maximum or minimum number of such Debt Warrants which may be
exercised at any time;
(10) a discussion of the material United States federal income tax
considerations applicable to the exercise of such Debt Warrants; and
(11) any other terms of such Debt Warrants and terms, procedures and
limitations relating to the exercise of such Debt Warrants.
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<PAGE> 53
Debt Warrant certificates will be exchangeable for new Debt Warrant
certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders of
the securities purchasable upon such exercise and will not be entitled to
payments of principal of (or premium, if any) or interest, if any, on the
securities purchasable upon such exercise.
OTHER WARRANTS
The applicable Prospectus Supplement will describe the following terms of
Preferred Stock Warrants or Common Stock Warrants in respect of which this
Prospectus is being delivered:
(1) the title of such Warrants;
(2) the securities for which such Warrants are exercisable;
(3) the price or prices at which such Warrants will be issued;
(4) the number of such Warrants issued with each share of Preferred
Stock or Common Stock;
(5) any provisions for adjustment of the number or amount of shares
of Preferred Stock or Common Stock receivable upon exercise of such
Warrants or the exercise price of such Warrants;
(6) if applicable, the date on and after which such Warrants and the
related Preferred Stock or Common Stock will be separately transferable;
(7) if applicable, a discussion of the material United States federal
income tax considerations applicable to the exercise of such Warrants;
(8) any other terms of such Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Warrants;
(9) the date on which the right to exercise such Warrants shall
commence, and the date on which such right shall expire; and
(10) the maximum or minimum number of such Warrants which may be
exercised at any time.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder of Warrants to purchase for cash such
principal amount of Debt Securities or shares of Preferred Stock or Common Stock
at such exercise price as shall in each case be set forth in, or be determinable
as set forth in, the Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised at any time up to the close of business on
the expiration date set forth in the Prospectus Supplement relating to the
Warrants offered thereby. After the close of business on the expiration date,
unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
Warrant certificate properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Debt
Securities or shares of Preferred Stock or Common Stock purchasable upon such
exercise. If less than all of the Warrants represented by such Warrant
certificate are exercised, a new Warrant certificate will be issued for the
remaining Warrants.
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<PAGE> 54
ERISA MATTERS
The Company and its subsidiaries may each be considered a "party in
interest" (within the meaning of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) or a "disqualified person" (within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")) with
respect to many employee benefit plans ("Plans") that are subject to ERISA. The
purchase of Offered Securities by a Plan that is subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions of
Section 4975 of the Code (including individual retirement arrangements and other
plans described in Section 4975(e)(1) of the Code) and with respect to which the
Company or any of its affiliates is a service provider (or otherwise is a party
in interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Offered
Securities are acquired pursuant to and in accordance with an applicable
exemption. Any pension or other employee benefit plan proposing to acquire any
Offered Securities should consult with its counsel.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's ratio of earnings to combined
fixed charges and preferred stock dividends on a historical basis for the
periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
--------------------------------------------- SEPTEMBER 30, SEPTEMBER 30,
1992 1993 1994 1995 1996 1996 1997
------ ------- ------ ------- ------- ------------- -------------
(IN THOUSANDS EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Deficiency of earnings to
combined fixed charges and
preferred stock
dividends(1).............. $6,129 $28,066 $7,392 $13,089 $24,967 $26,590 $7,236
</TABLE>
- ---------------
(1) For purposes of this calculation, "earnings" consist of income (loss) before
income taxes and fixed charges. "Fixed charges" consist of interest,
amortization of debt issuance costs, preferred stock dividends of
subsidiaries and the component of rental expense believed by management to
be representative of the interest factor thereon.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges on a historical basis for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
------------------------------------------ SEPTEMBER 30, SEPTEMBER 30,
1992 1993 1994 1995 1996 1996 1997
------ ------- ---- ------ ------- ------------- -------------
(IN THOUSANDS EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges(1)....... -- -- 1.0 -- -- -- 1.03
Deficiency of earnings to
fixed charges(1)....... $4,989 $20,749 $ -- $5,658 $19,090 $21,022 $ --
</TABLE>
- ---------------
(1) For purposes of this calculation, "earnings" consist of income (loss) before
income taxes and fixed charges. "Fixed charges" consist of interest,
amortization of debt issuance costs, preferred stock dividends of
subsidiaries and the component of rental expense believed by management to
be representative of the interest factor thereon.
20
<PAGE> 55
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities being offered hereby: (i)
directly to purchasers, (ii) through agents, (iii) through dealers, (iv) through
underwriters or (v) through a combination of any such methods of sale.
The distribution of the Offered Securities may be effected from time to
time in one or more transactions either: (i) at a fixed price or prices, which
may be changed, (ii) at market prices prevailing at the time of sale, (iii) at
prices related to such prevailing market prices or (iv) at negotiated prices.
Offers to purchase Offered Securities may be solicited directly by the
Company. Offers to purchase Offered Securities may also be solicited by agents
designated by the Company from time to time. Any such agent, who may be deemed
to be an "underwriter" as that term is defined in the Securities Act, may then
resell such Offered Securities to the public at varying prices to be determined
by such dealer at the time of resale.
If an underwriter is, or underwriters are, utilized in the sale, the
Company will execute an underwriting agreement with such underwriters at the
time of the sale to them, and the names of the underwriters will be set forth in
the Prospectus Supplement, which will be used by the underwriters to make
resales of the Offered Securities in respect of which this Prospectus is
delivered to the public. In connection with the sale of Offered Securities, such
underwriters may be deemed to have received compensation from the Company in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of Offered Securities for whom they may act as agents.
Underwriters may also sell Offered Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Any underwriting compensation paid by the Company
to underwriters in connection with the offering of Offered Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in the applicable Prospectus Supplement.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with the Company, to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which they may be
required to make in respect thereof. Underwriters and agents may engage in
transactions with, or perform services for, the Company in the ordinary course
of business.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters, dealers, or other persons to solicit offers by certain
institutions to purchase Offered Securities pursuant to contracts providing for
payment and delivery on a future date or dates. Institutions into which such
contracts may be made include commercial and savings banks, insurance companies,
pension funds, investment companies, educational and charitable institutions and
others. The obligations of any purchaser under any such contract will not be
subject to any conditions except that (a) the purchase of the Offered Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject and (b) if the Offered
Securities are also being sold to underwriters, the Company shall have sold to
such underwriters the Offered Securities not sold for delayed delivery. The
underwriters, dealers and such other persons will not have any responsibility in
respect to the validity or performance of such contracts. The Prospectus
Supplement relating to such contracts will set forth the price to be paid for
Offered Securities pursuant to such contracts, the commissions payable for
solicitation of such contracts and the date or dates in the future for delivery
of Offered Securities pursuant to such contracts.
Any underwriter may engage in stabilizing and syndicate covering
transactions in accordance with Rule 104 under Regulation M of the Exchange Act.
Rule 104 permits stabilizing bids to purchase the underlying security so long as
the stabilizing bids do not exceed a specified maximum. The underwriters may
over-allot shares of the Common Stock, Preferred Stock or, to the extent
applicable, Warrants, in connection with an offering of Common Stock, Preferred
Stock or, to the extent applicable, Warrants, respectively, thereby creating a
short position in the underwriters' account. Syndicate covering transactions
involve purchases of Offered Securities in the open market after the
distribution has been completed in order to cover
21
<PAGE> 56
syndicate short positions. Stabilizing and syndicate covering transactions may
cause the price of Offered Securities to be higher than it would otherwise be in
the absence of such transactions. These transactions, if commenced, may be
discontinued at any time.
The anticipated date of delivery of Offered Securities will be set forth in
the applicable Prospectus Supplement relating to each offer.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the Company
by Latham & Watkins, Washington, D.C. Eric L. Bernthal, a former director of the
Company, is a partner of Latham & Watkins and owns 5,000 shares of Common Stock
and options to purchase 25,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of Evergreen Media Corporation and
subsidiaries, the combined financial statements of WMZQ Inc. and Viacom
Broadcasting East Inc., the financial statements of WDRQ Inc., the combined
financial statements of Riverside Broadcasting Co., Inc. and WAXQ Inc., the
financial statements of WLIT Inc., the combined financial statements of KYSR
Inc. and KIBB Inc., the financial statements of WDAS-AM/FM (station owned and
operated by Beasley FM Acquisition Corp.), and the financial statements of
KKSF-FM/KDFC-FM and AM (A Division of The Brown Organization) incorporated by
reference herein have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, to the extent and for the periods indicated in
their reports thereon. Such financial statements are incorporated herein by
reference in reliance upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of Chancellor Broadcasting Company
and Subsidiaries and 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 incorporated by reference in this registration
statement, have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The consolidated statements of operations, changes in common stockholders'
equity and cash flows of Trefoil Communications, Inc. and Subsidiaries for the
period January 1, 1996 through February 13, 1996 incorporated by reference in
this registration statement, have been incorporated herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The financial statements of Century Chicago Broadcasting, L.P. as of and
for the year ended December 31, 1996 incorporated by reference in this
Prospectus have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The combined financial statements of WJLB/WMXD, Detroit, as of December 31,
1996 and for the year then ended, incorporated by reference in this Prospectus,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein by
reference in reliance upon the authority of said firm as experts in giving said
report.
The financial statements of Trefoil Communications, Inc., as of and for the
years ended December 31, 1995 and 1994 incorporated by reference in this
Prospectus have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
22
<PAGE> 57
============================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY
ANYONE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary............... S-3
Summary Historical and Pro Forma Financial
Data...................................... S-11
Risk Factors................................ S-13
Capitalization.............................. S-21
Use of Proceeds............................. S-22
Price Range of Common Stock................. S-23
Dividend Policy............................. S-23
Selected Consolidated Historical Financial
Data...................................... S-24
Business.................................... S-26
Underwriting................................ S-33
Legal Matters............................... S-34
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................... 2
Special Note Regarding Forward-Looking
Statements................................ 3
Incorporation of Certain Documents by
Reference................................. 3
The Company................................. 5
Use of Proceeds............................. 5
Holding Company Structure................... 5
General Description of Offered Securities
and Risk Factors.......................... 5
Description of Debt Securities.............. 6
Description of Preferred Stock.............. 15
Description of Common Stock................. 16
Description of Warrants..................... 18
ERISA Matters............................... 20
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............. 20
Ratio of Earnings to Fixed Charges.......... 20
Plan of Distribution........................ 21
Legal Matters............................... 22
Experts..................................... 22
</TABLE>
============================================================
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16,000,000 SHARES
[CHANCELLOR MEDIA CORPORATION LOGO]
Common Stock
------------------------
PROSPECTUS SUPPLEMENT
------------------------
Joint Book-Running Managers
BT ALEX. BROWN
GOLDMAN, SACHS & CO.
------------------
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
FURMAN SELZ
NATIONSBANC MONTGOMERY
SECURITIES LLC
UBS SECURITIES
March , 1998
============================================================
