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As filed with the Securities and Exchange Commission on December 11, 1997
Registration No. 333-26611
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SFX BROADCASTING, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3649750
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
150 EAST 58TH STREET, 19TH FLOOR, NEW YORK, NEW YORK 10155
(212) 407-9191
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
SFX BROADCASTING, INC. 1993 STOCK OPTION PLAN
SFX BROADCASTING, INC. 1994 STOCK OPTION PLAN
SFX BROADCASTING, INC. 1995 STOCK OPTION PLAN
SFX BROADCASTING, INC. 1996 STOCK OPTION PLAN
SFX BROADCASTING, INC. 1997 STOCK OPTION PLAN
(Full title of the Plans)
ROBERT F.X. SILLERMAN
EXECUTIVE CHAIRMAN
150 EAST 58TH STREET, 19TH FLOOR
NEW YORK, NEW YORK 10155
(212) 407-9191
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
With copies to:
HOWARD BERKOWER, ESQ.
BAKER & MCKENZIE
805 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 751-5700
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EXPLANATORY NOTE
The Prospectus filed as a part of this Registration Statement has been
prepared in accordance with the requirements of Form S-3 and may be used for
reofferings and resales of shares of Class A Common Stock of SFX Broadcasting,
Inc. acquired by the individual named therein pursuant to the Plans specified
therein.
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PROSPECTUS
UP TO 470,000 SHARES
OF
CLASS A COMMON STOCK,
PAR VALUE $.01 PER SHARE,
OF
SFX BROADCASTING, INC.
This Prospectus relates to an aggregate of up to 470,000 shares of
common stock, par value $.01 per share (the "Class A Common Stock"), of SFX
Broadcasting, Inc., a Delaware corporation (the "Company"), which shares of
Class A Common Stock are held by an individual who may be deemed to be an
"affiliate" of the Company as defined by Rule 405(a) of Regulation C of the
Securities and Exchange Commission (the "Commission"), and which shares of
Class A Common Stock may be offered from time to time by the selling
stockholder named herein (the "Selling Stockholder"), including his
transferees. See "Selling Stockholder." Shares of Class A Common Stock offered
hereby were acquired by the Selling Stockholder pursuant to the exercise of
stock options issued pursuant to the Company's 1993-1997 Stock Option Plans.
Sales to be made pursuant to this Prospectus are to be made on the Nasdaq
National Market or any national securities exchange on which the shares of
Class A Common Stock trade, at the price then available at the time of sale,
or (i) through privately negotiated transactions directly with purchasers or
(ii) through underwriters, dealers or agents who may receive compensation in
the form of underwriting discounts, commissions or commissions from the
Selling Stockholder and/or purchasers of the Class A Common Stock for whom
they act as agent. It is anticipated that the underlying shares will be sold
to a broker dealer at prices, and for compensation, to be negotiated between
the Selling Stockholder and such broker dealer. The broker dealer may retain
such shares or resell such shares (or any interest therein) in any legal
manner. The prices and compensation for such sale are being negotiated based
in part on trading in the stock and in connection with a contract proposed to
be entered into between the broker dealer and the Selling Stockholder. The
contract will relate to the value of shares of SFX Entertainment (as herein
defined) if and when issued as a dividend in the Spin-Off (as herein
defined). See "Recent Developments " and "Plan of Distribution." This
Prospectus also relates to such additional shares of Class A Common Stock as
may be issued to the Selling Stockholder as a result of future stock
adjustments in respect of the shares of Class A Common Stock covered hereby.
The Selling Stockholder and any broker or dealer that participates in
the distribution of the shares of Class A Common Stock offered hereby may be
deemed to be "underwriters", as that term is construed within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"), in which event
any profit on the sale of the shares of Class A Common Stock by them and any
discounts and commissions received by such broker or dealer may be deemed to
be underwriting discounts and commissions under the Securities Act.
The Company will not receive any part of the proceeds from sales made
hereunder. All expenses of registration incurred in connection with the
offering being made of this Prospectus are being borne by the Company, but any
brokerage commissions and other expenses incurred by the Selling Stockholder
will be borne by the Selling Stockholder.
The Class A Common Stock trades on the Nasdaq National Market, and on
December 9, 1997, the last practicable date preceding the date of this
Prospectus, the last reported sales price of a shares of Class A Common Stock
was $77.50.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 11, 1997
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Commission. Copies of such material may be obtained from the Public
Reference Section of the Commission at its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, such
reports, proxy statements and other information can be inspected and copied at
the Commission's facilities referred to above and at the public reference
facilities at the Regional Offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and the Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
Company is an electronic filer under the EDGAR (Electronic Data Gathering,
Analysis and Retrieval) system maintained by the Commission. The Commission
maintains a Web site (http://www.sec.gov) on the Internet that contains
reports, proxy and information statements and other information regarding
companies that file electronically with the Commission. In addition, documents
filed by the Company can be inspected at the offices of The Nasdaq Stock
Market, Inc., Reports Section, 1735 K Street, N.W. Washington, D.C. 20006.
The Company has filed a registration statement on Form S-8 (herein,
collectively, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby
made to the Registration Statement including the exhibits filed as a part
thereof and otherwise incorporated therein.
Statements contained in this Prospectus or in any document
incorporated by reference in this Prospectus as to the contents of any
contract or other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement or such
other document, each such statement being qualified in all respects by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS
The following documents filed with the Commission incorporated in
this Prospectus by reference:
(A) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(B) The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1997, June 30, 1997 and September
30, 1997;
(C) The Company's Current Reports on Form 8-K dated January 17,
1997, January 21, 1997, January 22, 1997, January 27, 1997,
April 15, 1997, June 16, 1997, July 11, 1997, August 25,
1997 and December 11, 1997 and the Company's Current Report
on Form 8-K/A dated June 16, 1997; and
(D) The description of the Class A Common Stock contained in the
Registration Statement on Form 8-A (File No. 0-22486) filed
with the Commission on September 29, 1993 and any subsequent
amendment thereto filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act after the date of this Prospectus and prior
to the termination of the offering of shares of Class A Common Stock hereunder
shall be deemed incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed incorporated herein by reference shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document which also is, or is deemed to be, incorporated by reference in this
Prospectus modifies or supersedes such statement.
The Company undertakes to provide without charge to each person to
whom a Prospectus is delivered, upon written or oral request of such person, a
copy of any and all of the information that has been incorporated by reference
in the Registration Statement filed with the Commission (of which this
Prospectus is a part) from a document or part thereof not delivered with the
Prospectus, but not including exhibits to the document unless such exhibits
are specifically incorporated by reference. Requests for such information
should be directed to SFX
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Broadcasting, Inc. at the Company's executive offices located at 150 East
58th Street, New York, New York 10155 (telephone number (212) 407-919),
Attention: Secretary.
NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. ANY INFORMATION OR
REPRESENTATION GIVEN WHICH IS NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN CONTAINED IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
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RECENT DEVELOPMENTS
On August 24, 1997, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with SBI Holdings Corporation ("Buyer") and
SBI Radio Acquisition corporation pursuant to which the Company will become a
wholly owned subsidiary of Buyer (the "Merger"). In the Merger, holders of the
Company's Class A Common Stock will receive $75.00 per share and the holders
of the Company's Class B Common Stock will receive $97.50 per share, subject
to adjustment under certain circumstances. Pursuant to the Merger Agreement,
the Company intends to spin-off (the "Spin-Off") its concert promotion and
venue operation business ("SFX Entertainment") pro-rata to its stockholders
and the holders of certain warrants prior to the effective time of the Merger.
In general, the receipt of cash by the Company's stockholders pursuant to the
Merger and the receipt of stock in the Spin-Off, will be taxable events for
stockholders.
The Company is presently in advanced negotiations for the
acquisitions of several substantial businesses in the live entertainment and
related businesses with an aggregate purchase price of approximately
$500,000,000 (the "Pending Acquisitions"). The Company intends to finance a
portion of the Pending Acquisitions by issuing rights to receive the common
stock of SFX Entertainment upon the consummation of the Spin-Off. The values
ascribed to the SFX Entertainment common stock in the agreements relating to
the Pending Acquisitions will be based upon certain financial projections
developed jointly by the Company and the respective sellers and it is expected
that such values will be greater than the book value of the SFX Entertainment
common stock at the time the Pending Acquisitions are consummated. There is
presently no trading market for the SFX Entertainment common stock and there
can be no assurance that the assumptions upon which such valuations are based
will, in fact, be correct and that such valuations will approximate the actual
trading price of the SFX Entertainment common stock.
SFX Entertainment intends to finance the cash portion of the Pending
Acquisitions through a combination of privately-placed debt and borrowings
under a bank credit facility. There can be no assurance that definitive
agreements for these acquisitions will be entered into, financing to
consummate the acquisitions will be available on terms satisfactory or at all
or that the acquisitions will be consummated. While there can be no assurance,
management believes that financing on satisfactory terms will be available.
The consummation of the Merger and/or the Spin-Off is subject to
certain conditions and the receipt of certain consents including, among other
things, the approval of the Company's common stock voting together as a single
class, the approval of each of the Class A Common Stock and Series D preferred
stock, voting separately as a class, and the consents of the holders of the
Series E preferred stock and certain of the Company's outstanding notes. In
addition, the Merger is subject to the receipt of certain regulatory
approvals.
The Company anticipates that the Merger will be consummated in the
second quarter of 1998 and that the Spin-Off will occur prior thereto. There
can be no assurance that the various approvals or consents will be given or
that the conditions to consummating the Merger will be met or that the
Spin-Off will occur as presently contemplated or at all.
RISK FACTORS
An investment in the shares of Class A Common Stock offered hereby
involves a high degree of risk. Prospective investors should consider
carefully, in addition to the other information contained in and incorporated
in this Prospectus (including the financial statements and notes thereto), the
following factors in connection with an investment in the shares of Class A
Common Stock offered hereby. This Prospectus contains forward-looking
statements that involve risks and uncertainties. These risks and uncertainties
include limitations on the consummation of the Merger and the Spin-Off,
leverage, limitations on the payment of dividends, regulation of radio
broadcasting and other factors, and the Company's actual results may differ
materially from the results discussed in the forward-looking statements.
Factors that could cause such a difference include, but are not limited to,
those discussed below, as well as those contained in the information
incorporated by reference herein.
PENDING MERGER AND SPIN-OFF
The Company has entered into the Merger Agreement pursuant to which,
among other things, each share of Class A Common Stock is to receive $75.00
cash (subject to adjustment under certain circumstances) and one share of
Class A common stock in SFX Entertainment, in the event that the Spin-Off is
consummated.
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Consummation of the Merger is subject to a number of conditions,
some of which are beyond the Company's control. No assurance can be given that
the Merger will be consummated. The trading price of the shares of Common
Stock may be significantly impacted in the event that the Merger is not
consummated and the Merger Agreement is terminated. See "Recent Developments."
See the Company's Current Report on Form 8-K dated August 25, 1997 for a
description of the Merger Agreement.
The consummation of the Spin Off is subject to a number of
conditions, including shareholder approval of certain amendments to the
Company's charter. No assurance can be given that the Spin Off will be
consummated. If the Spin Off is not consummated Buyer will have the right, but
not the obligation, to acquire SFX Entertainment at a price the management
believes to be below its fair value.
EXTENSIVE REGULATION OF RADIO BROADCASTING
Adoption of the Telecommunications Act of 1996 (the "Telecom Act")
eliminated the national limits and liberalized the local limits on radio
station ownership by a single company. However, the United States antitrust
authorities are increasingly scrutinizing acquisitions of radio stations and
the entering into of joint sales agreements ("JSAs") and local market
agreements ("LMAs"). There can be no assurance that policy and rule-making
activities of the United States antitrust authorities will not impact the
Company's operations (including existing stations or markets) or its ability
to realize the benefits that management had anticipated obtaining following
the adoption of the Telecom Act.
The radio broadcasting industry is subject to extensive regulation by
the Federal Communications Commission (the "FCC"). In particular, the
Company's business depends on its continuing to hold, and, in connection with
acquisitions of radio stations, on its obtaining prior FCC consent to
assignments or transfers of control of, broadcasting station operating
licenses issued by the FCC. There can be no assurance that the Company's
licenses will be renewed or that the FCC will approve future acquisitions or
dispositions. In addition, the number and locations of radio stations the
Company may acquire is limited by FCC rules and will vary depending upon
whether the interests in other radio stations or certain other media
properties of certain individuals affiliated with the Company are attributable
to those individuals. The issuance of shares of Class A Common Stock,
including those issuable pursuant to the conversion of other securities of the
Company and pursuant to all other rights, options or warrants to purchase
Class A Common Stock, that would cause Robert F.X. Sillerman, a Director of
the Company and the Executive Chairman of the Company, to hold directly voting
stock of the Company representing less than 50% of the total voting power of
the Company would require the Company to seek and obtain the consent of the
FCC.
The Congress and/or the FCC have under consideration, and in the
future may consider and adopt, new laws, regulations and policies regarding a
wide variety of matters that could affect, directly or indirectly, the
operation, ownership and profitability of the Company's radio broadcast
stations, result in the loss of audience share and advertising revenues for
the Company's radio broadcast stations, and affect the ability of the Company
to acquire additional radio broadcast stations or finance such acquisitions.
In particular, the FCC has outstanding a notice of proposed rulemaking that,
among other things, seeks comment on whether the FCC should modify its
attribution rules by (i) restricting the availability of the single majority
stockholder exemption, (ii) increasing the amount of stock an investment
company can own without attribution, (iii) attributing, under certain
circumstances, certain interests such as non-voting stock or debt and (iv)
attributing, under certain circumstances, JSAs.
SUBSTANTIAL LEVERAGE
In connection with its acquisitions of radio stations, the Company
has incurred significant amounts of indebtedness. The degree to which the
Company is and may become leveraged could have material consequences to the
Company and the holders of the Company's securities, including, but not
limited to, the following: (i) the Company's ability to obtain additional
financing in the future for acquisitions, working capital, capital
expenditures, general corporate or other purposes may be impaired, (ii) a
substantial portion of the Company's cash flow from operations will be
dedicated to the payment of the principal and interest on its debt and
dividends on capital stock and will not be available for other purposes, (iii)
the agreements governing the Company's debt contain or are expected to contain
restrictive financial and operating covenants, and the failure by the Company
to comply with such covenants could result in an event of default under the
applicable instruments, which could permit acceleration of the debt under such
instrument and in some cases acceleration of debt under other instruments that
contain
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cross-default or cross-acceleration provisions and (iv) the Company's level of
indebtedness could make it more vulnerable to economic downturns, limit its
ability to withstand competitive pressures and limit its flexibility in
reacting to changes in its industry and general economic conditions. Certain
of the Company's competitors operate on a less leveraged basis, and have
significantly greater operating and financial flexibility, than the Company.
The Company's ability to make scheduled payments of principal of, to
pay interest on or to refinance, its debt and to make dividend and redemption
payments on its capital stock depends on its future financial performance,
which, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors beyond its control, as
well as the success of the radio stations to be acquired and the integration
of these stations into the Company's operations. The Company's borrowings
under the senior credit facility may be at variable rates of interest, which
will result in higher interest expense in the event of increases in interest
rates. There can be no assurance that the Company's business will generate
sufficient cash flow from operations or that future working capital borrowings
will be available in an amount that enables the Company to service its debt,
to make dividend, conversion and redemption payments and to make necessary
capital or other expenditures. The Company may be required to refinance a
portion of the principal amount of its debt or the aggregate liquidation
preference of the outstanding preferred stock prior to their maturities. There
can be no assurance that the Company will be able to raise additional capital
through the sale of securities, the disposition of radio stations or otherwise
for any such refinancing.
HISTORICAL LOSSES
Although the Company had net income of $1.8 million for the year
ended December 31, 1994, the Company had net losses of $15.4 million
(unaudited), $50.9 million, $4.4 million and $17.8 million for the nine months
ended September 30, 1997, and the years ended December 31, 1996, 1995 and
1993, respectively. Depreciation and amortization relating to past
acquisitions and future acquisitions, interest expenses under the Company's
debt and dividend payments will continue to affect the Company's net income
(loss) in the future. There is no assurance that losses will not continue or
that the Company will become profitable in the future.
CHANGE OF CONTROL
Upon the occurrence of a change of control (as defined in the
applicable document) of the Company, the holders of certain preferred stock or
certain debt instruments will have the right, subject to certain conditions
and restrictions, to require the Company to repurchase their securities at a
price equal to 101% of the aggregate liquidation preference or the aggregate
principal amount thereof, as applicable, plus accrued and unpaid dividends or
interest, as applicable, to the date of repurchase. The repurchase price is
payable in cash. In addition, a change of control may constitute a default
under the Company's senior credit facility. If a change of control were to
occur, due to the highly leveraged nature of the Company, the Company might
not have the financial resources to repay all of its obligations under any
indebtedness that would become payable upon the occurrence of such change of
control. In addition, the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules require the prior consent of the FCC to
any change of control of the Company. See "--Extensive Regulation of Radio
Broadcasting" and "--Substantial Leverage; Inability to Service Obligations."
COMPETITION
The radio broadcasting industry is highly competitive, and the
Company's stations are located in highly competitive markets. Each of the
Company's stations competes for audience share and advertising revenue
directly with other FM and AM radio stations, as well as with other media,
within its respective market. The financial results of each of the Company's
stations are dependent to a significant degree upon its audience ratings and
its share of the overall advertising revenue within the station's geographic
market. The Company's audience ratings and market share are subject to change,
and any adverse change in audience rating or market share in any particular
market could have a material and adverse effect on the Company's net revenues.
Although the Company competes with other radio stations with comparable
programming formats in most of its markets, if another station in the market
were to convert its programming format to a format similar to one of the
Company's radio stations, if a new radio station were to adopt a competitive
format, or if an existing competitor were to strengthen its operations, the
Company's stations could suffer a reduction in ratings or advertising revenue
and could require the Company to incur increased promotional and other
expenses. In addition, certain of the Company's stations compete, and in the
future other stations may compete, with groups of stations in a market
operated by a single
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operator. As a result of the Telecom Act, the radio broadcasting industry has
become increasingly consolidated, resulting in the existence of radio
broadcasting companies which are significantly larger, with greater financial
resources, than the Company. Furthermore, the Telecom Act will permit other
radio broadcasting companies to enter the markets in which the Company
operates or may operate in the future. Although the Company believes that each
of its stations is able to compete effectively in its market, there can be no
assurance that any of the Company's stations will be able to maintain or
increase its current audience ratings and advertising revenue market share.
The Company's stations also compete with other advertising media such as
newspapers, television, magazines, billboard advertising, transit advertising
and direct mail advertising. Radio broadcasting 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 or the
introduction of digital audio broadcasting. The Company cannot predict the
effect, if any, that any of these new technologies may have on the radio
broadcasting industry.
DEPENDENCE ON ECONOMIC FACTORS
Because the Company derives substantially all of its revenue from the
sale of advertising time, economic conditions that affect advertisers may
adversely affect its revenues. In particular, because approximately 75% of the
Company's revenue has generally been derived from local advertisers, operating
results in individual geographic markets will be adversely affected by local
or regional economic downturns. These economic downturns might adversely
impact the Company's financial condition and results of operations. In
addition, other factors may affect radio stations' revenues, such as: (i) the
popularity of programming, including programming such as sports programming
where the Company makes long-term commitments; (ii) regulatory restrictions on
types of programming or advertising; (iii) competition within national,
regional or local markets from programming on other stations or from other
media; (iv) loss of market share to other technologies; and (v) challenges to
license renewals.
CONTROL BY MANAGEMENT
As of November 30, 1997, Robert F.X. Sillerman, a Director of the
Company and the Company's Executive Chairman, may be deemed to be the
beneficial owner of approximately 58.4% of the combined voting power of the
Company, and Mr. Sillerman and other members of the Company's management may
be deemed to be the beneficial owners of approximately 60.0% of the combined
voting power of the Company.
The Class A Common Stock has one vote per share on all matters,
whereas the Class B Common Stock, par value $.01 per share (the "Class B
Common Stock"), has ten votes per share except in certain matters.
Accordingly, management currently is able to control the vote on all matters
except (i) in the election of directors, with respect to which the holders of
the Class A Common Stock are entitled to elect, by a class vote, two sevenths
(2/7) of the Company's directors (or if such number of directors is not a
whole number, the next higher whole number), (ii) in connection with any
proposed "going private" transaction between the Company and Mr. Sillerman or
his affiliates, with respect to which the holders of the Class A Common Stock
and the Class B Common Stock vote as a single class, with each share of Class
A Common Stock and of Class B Common Stock entitled to one vote per share and
(iii) as otherwise provided by law. In addition, if dividends on the 6.5%
Series D Cumulative Convertible Exchangeable Preferred Stock due May 31, 2007
("Series D Preferred Stock") or the 12.625% Series E Cumulative Exchangeable
Preferred Stock (the "Series E Preferred Stock") are unpaid in an aggregate
amount equal to six full quarterly dividends and in certain other
circumstances, the holders of the series of preferred stock on which dividends
are unpaid will be entitled to elect two additional members of the Board of
Directors of the Company. The control of the Company by management may have
the effect of discouraging certain types of change-of-control transactions,
including transactions in which the holders of capital stock of the Company
might otherwise receive a premium for their shares over the then-current
market price. See "Description of Common Stock."
POTENTIAL CONFLICTS OF INTEREST; TRANSACTIONS WITH AFFILIATES
Mr. Sillerman and other members of the Company's management have
direct and indirect investments and interests in Triathlon Broadcasting
Company ("Triathlon"), a publicly-traded company, which owns and operates
radio stations, including stations that are in the same market as certain of
the Company's radio stations. These investments and interests (and any similar
investments and interests in the future) may give rise to certain conflicts of
interest as well as to potential attribution under FCC rules or invocation of
the FCC's cross-interest policy, which could restrict the Company's ability to
acquire radio stations in certain markets. See "--Extensive Regulation of
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Radio Broadcasting." Pursuant to a consulting and marketing agreement with
Triathlon, The Sillerman Companies, Inc. ("TSC"), an affiliate of Mr.
Sillerman and Howard J. Tytel, a Director of the Company and an Executive Vice
President of the Company, is obligated to offer to Triathlon any radio
broadcasting opportunities that come to its attention in medium and small
markets located west of the Mississippi River. The Company does not intend to
pursue acquisitions in the medium and small markets in the Midwest and Western
regions of the United States on which Triathlon primarily focuses, except for
radio stations owned by the Company in the Wichita, Kansas market, a market in
which Triathlon has radio station ownership interests. On April 15, 1996, the
Company was assigned the rights to receive fees for consulting and marketing
services payable by Triathlon, except for fees relating to certain
transactions pending at the date of such agreement, and the Company terminated
an arrangement pursuant to which TSC's contractual predecessor, Sillerman
Communications Management Corporation("SCMC"), performed financial consulting
services for the Company.
SCMC has acted from time to time as the Company's financial advisor
since the Company's inception. SCMC and TSC are controlled by Mr. Sillerman,
and Messrs. Sillerman and Tytel are officers and directors of SCMC and TSC.
SCMC acts in similar capacities for Triathlon, which may seek to participate
in business opportunities which may be suitable for the Company.
RELIANCE ON KEY PERSONNEL
The Company's business is dependent to a significant extent upon the
performance of certain key individuals, including Mr. Sillerman, Michael G.
Ferrel, a Director of the Company and the Company's Chief Executive Officer,
and D. Geoffrey Armstrong, a Director of the Company and an Executive Vice
President of the Company. The Company has entered into a five-year employment
agreement with Mr. Sillerman, effective as of January 1997, a five-year
employment agreement with Mr. Ferrel, effective as of November 1996, and a
five-year employment agreement with Mr. Armstrong, effective as of April 1995.
There can be no assurance that the services of Messrs. Sillerman, Ferrel or
Armstrong will continue to be provided for the term of such agreements.
Pursuant to Mr. Armstrong's employment agreement, he has the right to
terminate the agreement under certain circumstances, and, in connection with
such termination, to receive substantial payments. Messrs. Sillerman's and
Armstrong's employment agreements require that they devote substantially all
of their business time to the business and affairs of the Company, except that
Mr. Sillerman's agreement permits him to fulfill his obligations as a director
and officer of companies in which he served in such capacities as of the date
of his employment agreement and to devote a portion of his business time to
personal, non-broadcast investments or commitments or to certain broadcast
investments. The loss of the services of Messrs. Sillerman, Armstrong or
Ferrel could have a material adverse effect on the Company.
In addition, the Company has entered into employment agreements with
certain of the high-profile on-air personalities. However, there can be no
assurance that the Company will be able to retain any of these employees or
prevent them from competing with the Company in the event of their departure.
NO TRANSFER OF CAPITAL STOCK TO ALIENS
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), restricts the ownership, voting and transfer
of the Company's capital stock in accordance with the Communications Act and
the rules of the FCC to prohibit ownership of more than 25% of the Company's
outstanding capital stock, or more than 25% of the voting rights it represents
(this percentage, however, is 20% in the case of those subsidiaries of the
Company that are direct holders of FCC licenses), by or for the account of
non-U.S. citizens or their representatives or a foreign government or a
representative thereof or a corporation organized under the laws
of a foreign country ("Aliens") or corporations otherwise subject to
domination or control by Aliens. This restriction is in accordance with the
Communications Act and the rules of the FCC, which prohibit ownership of more
than 25% of the Company's outstanding capital stock, or more than 25% (20% in
the case of subsidiaries of the Company that directly hold FCC licenses) of
the voting rights it represents, by Aliens. As of June 18, 1997, based upon
reports filed with the Commission, the Company believes that there are
1,071,429 shares of Class A Common Stock held by Nomura Holdings America, Inc.
("Nomura"), representing 12.8% of the outstanding shares of Class A Common
Stock and 5.6% of the combined voting power of the Company. Because a
substantial portion of the common stock of Nomura is owned and voted by
Aliens, the Company, in order to comply with the requirements of the
Communications Act and the rules and regulations of the FCC promulgated
thereunder, may decide not to permit or recognize any issuance or transfer of
its common stock to an Alien. Failure to comply with these rules
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<PAGE>
and regulations could result in the imposition of penalties on the Company.
This restriction on transfers to Aliens may adversely affect the market for
the Company's securities. In addition, the Certificate of Incorporation
provides that shares of capital stock of the Company determined by the Board
of Directors to be owned beneficially by an Alien will always be subject to
redemption by the Company by action of the Board of Directors to the extent
necessary, in the judgment of the Board of Directors, to comply with the alien
ownership restrictions of the Communications Act and the FCC rules and
regulations.
DIVIDEND POLICY; RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company has not paid any dividends on its Common Stock since its
inception in 1992 and does not anticipate that it will pay any dividends on
its Common Stock in the foreseeable future. Earnings, if any, will be retained
by the Company to fund its growth. Certain of the Company's debt instruments
and certificates of designations with respect to its preferred stock include
covenants restricting the Company's ability to pay dividends or to make
certain other distributions to stockholders. The Company is a holding company,
substantially all of the operations of which are conducted through
subsidiaries. The ability of such subsidiaries to pay dividends is subject to
applicable state law and certain other restrictions.
MARKET RISK WITH RESPECT TO COMMON STOCK; CERTAIN INVESTMENT LIMITATIONS
The shares of Class A Common Stock are quoted on the Nasdaq National
Market. However, the prices at which the shares of Class A Common Stock trade
may depend upon many factors, including markets for similar securities,
industry conditions, and the performance of, and investor expectations for,
the Company. No assurance can be given that a holder of the shares of Class A
Common Stock of the Company will be able to sell such shares at any particular
price. Certain institutional investors may invest only in dividend-paying
equity securities or may operate under other restrictions that may prohibit or
limit their ability to invest in the shares of Class A Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE AND POSSIBLE ADVERSE EFFECT THEREOF
As of December 8, 1997 there were approximately 8,974,762 shares on
Class A Common Stock and approximately 1,047,037 shares of Class B Common
Stock of the Company issued and outstanding. Of these outstanding shares,
approximately 1.6 million shares of Class A Common Stock and approximately .8
million shares of Class B Common Stock are "Restricted Securities," as that
term is defined in Rule 144 promulgated under the Securities Act. Of such
shares, the Company believes that approximately 1.3 million shares of Class A
Common Stock and all of the shares of Class A Common Stock issuable upon
conversion of the Class B Common Stock are currently eligible for sale in the
open market under Rule 144 (subject to the limitations set forth therein). In
addition, the shares of Class A Common Stock held by Nomura have one demand
and certain piggy-back registration rights which expire on October 7, 2000.
Approximately 77,944 shares of Class A Common Stock (including shares of Class
A Common Stock issuable upon the exercise of options and warrants) and
approximately 208,810 shares of Class B Common Stock issued in an acquisition
by the Company which was consummated in November 1996 are subject to
restrictions on resale under Rule 145 ("Rule 145") promulgated under the
Securities Act. In addition, each of the 2,990,000 outstanding shares of
Series D Preferred Stock is convertible at the option of the holder thereof
into 1.0987 shares of Class A Common Stock (subject to adjustments in certain
events) at any time prior to the close of business on May 31, 2007, the
maturity date of the Series D Preferred Stock. The Company has filed a
registration statement with the Commission with respect to the resale by the
holders thereof of the shares of Series D Preferred Stock, the shares of Class
A Common Stock issuable upon conversion thereof and the Exchange Notes
issuable upon the exchange thereof. Such registration statement was declared
effective in July 1996. The sale, or availability for sale, of substantial
amounts of shares of stock of the Company in the public market pursuant to
Rule 144, Rule 145 or otherwise could adversely affect the prevailing market
price of the shares of Class A Common Stock and could impair the Company's
ability to raise additional capital through the sale of equity securities.
POSSIBLE ADVERSE IMPACT OF AUTHORIZED BUT UNISSUED SHARES OF CAPITAL STOCK
AND DELAWARE LAW
The Company has 100,000,000 shares of Class A Common Stock,
10,000,000 shares-of Class B Common Stock, 1,200,000 shares of Class C Common
Stock, par value $.01 per share (the "Class C Common Stock"), and 10,010,000
shares of preferred stock, par value $.01 per share, authorized, of which
approximately
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<PAGE>
8,974,762 shares of Class A Common Stock, 1,047,037 shares of Class B Common
Stock, no shares of Class C Common Stock and 5,243,000 shares of preferred
stock are outstanding as of December 8, 1997. Pursuant to the Certificate of
Incorporation, the unissued shares of preferred stock shall have such
designations, rights and preferences as may be determined from time to time by
the Board of Directors of the Company. Accordingly, the Board of Directors of
the Company is empowered, without stockholder approval, to issue stock
preferred stock with liquidation, conversion, voting or other rights which
could adversely affect the voting power or other rights of the holders of the
then outstanding shares of stock of the Company. In addition, the Board of
Directors of the Company may authorize the issuance of substantial amounts of
shares of common or preferred stock, as a financing technique or otherwise,
the effect of which would be to dilute the economic and voting rights of
existing stockholders and might adversely affect the prices at which the
shares of Class A Common Stock trade. The Board of Directors of the Company
could use the issuance of additional shares of capital stock of the Company as
a method of discouraging, delaying or preventing a change in control of the
Company.
The Company is subject to the "business combination" statute of
Section 203 of the General Corporation Law of the State of Delaware (the
"DGCL"). In general, 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", with certain specified
exceptions. A "business combination" includes mergers, stock or asset sales
and other transactions resulting in a financial benefit to the "interested
stockholder." An "interested stockholder" is a person who, together with
affiliates and associates, owns (or, within three years, owned) 15% or more of
the corporation's voting stock. The effect of Section 203 of the DGCL may be
to make it more difficult to effect a change in control of the Company.
USE OF PROCEEDS
All of the shares of Class A Common Stock offered hereby are being
offered by the Selling Stockholder and were acquired by the Selling
Stockholder in connection with the exercise of certain non-qualified stock
options. The Company will receive no part of the proceeds of any sales made
hereunder. Pursuant to the terms of the Merger Agreement, the options which
the Selling Stockholder exercised to acquire the shares being sold hereunder
would have been cashed out upon consummation of the Merger. For individual tax
planning purposes, the Selling Stockholder elected to exercise the options and
simultaneously sell the shares.
- 10 -
<PAGE>
SELLING STOCKHOLDER
The shares offered hereby are shares of Class A Common Stock which
have been acquired pursuant to the Plans. The following table sets forth
certain information with respect to the Selling Stockholder.
<TABLE>
<CAPTION>
SHARES OWNED
AFTER OFFERING
TOTAL SHARES OWNED --------------
RELATIONSHIP WITH AS OF TOTAL SHARES
NAME AND ADDRESS THE COMPANY DECEMBER 8 , 1997 OFFERED NUMBER PERCENT (2)
---------------- ----------- ----------------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert F.X. Sillerman Executive Chairman and 1,287,535 470,000 817,535(1) 9.1%
150 East 58th Street Director
19th Floor
New York, New York 10155
</TABLE>
- ----------------------
(1) Includes (i) 537,285 shares that may be acquired pursuant to the
exercise of options that have been vested or will vest in 60 days and
(ii) 600,000 shares issuable upon the exercise of warrants issued to
Sillerman Communications Management Corporation, a company controlled
by Mr. Sillerman. Does not include 1,024,168 shares of Class B Common
Stock, which generally has 10 votes per share, held by Mr. Sillerman.
(2) Based on 8,974,762 shares of Class A Common Stock issued and
outstanding as of December 8, 1997.
- 11 -
<PAGE>
PLAN OF DISTRIBUTION
The shares of Class A Common Stock offered hereby by the Selling
Stockholder or his transferees are to be sold from time to time, in one or
more transactions, in whole or in part, pursuant to any of the methods listed
herein. Sales may be made on the Nasdaq National Market or a national
securities exchange on which shares of Class A Common Stock may trade in the
future, at the price then prevailing at the time of sale, or (i) through
privately negotiated transactions directly with purchasers or (ii) through
underwriters, dealers or agents who may receive compensation in the form of
underwriting discounts, commissions or commissions from the Selling
Stockholder and/or purchasers of the Class A Common Stock form whom they act
as agent ((i) and (ii) above, collectively, the "Alternate Methods"). It is
anticipated that the underlying shares will be sold to a broker dealer at
prices, and for compensation, to be negotiated between the Selling Stockholder
and such broker dealer. The broker dealer may retain such shares or resell
such shares (or any interest therein) in any legal manner. The prices and
compensation for such sale are being negotiated based in part on trading in
the stock and in connection with a contract proposed to be entered into
between the broker dealer and the Selling Stockholder. The contact will relate
to the value of shares of SFX Entertainment if and when issued as a dividend
in the Spin-Off. Unless disclosed otherwise in a Prospectus Supplement or
Amendment (see below), any sale pursuant to the Alternate Method described in
clause (i) above will be negotiated directly between the Selling Stockholder
and the purchaser, and no finders or agents will be employed nor any
commissions or fees paid.
Any offer or sale made pursuant to an Alternate Method may be made
for a fixed price, which may be changed, or at varying prices determined at
the time of sale or at negotiated prices. Upon notice from the Selling
Stockholder that he has elected to use an Alternate Method for an offer or
sale, and to the extent required by the Securities Act, a Prospectus
Supplement or Amendment will be distributed which will set forth the aggregate
number of shares of Class A Common Stock being offered and the terms of the
offering, including the name or names of any underwriter, dealers or agents,
any discounts, commissions, concessions and other items constituting
compensation from the Selling Stockholder or the purchasers or the shares, any
discounts, commissions or concessions allowed or reallowed or paid to dealers
and any other material information required by the Securities Act.
The Selling Stockholder and any underwriter, broker, dealer or other
agent that participates in the distribution of the shares of Class A Common
Stock offered hereby may be deemed to be "underwriters", as that term is
construed within the meaning of the Securities Act, in which event any profit
on the sale of the shares of Class A Common Stock by then and any discounts
and commissions received by any such underwriter, broker, dealer or other
agent, may be deemed to be underwriting discounts and commissions under the
Securities Act.
The Company has informed the Selling Stockholder that the
anti-manipulative rules contained in Regulation M under the Exchange Act may
apply to his sales in the market and has informed them of the requirement for
delivery of this Prospectus in connection with any sale of Class A Common
Stock offered hereby. All expenses of registration incurred in connection with
the offering being made of this Prospectus are being borne by the Company, but
any brokerage commissions and other expenses incurred by a Selling Stockholder
will be borne by such Selling Stockholder.
Any shares of Class A Common Stock covered by this Prospectus which
qualify for sale pursuant to Rule 144 under the Securities Act may be sold
under that Rule rather than pursuant to this Prospectus.
LEGAL MATTERS
The validity of the issuance of the shares of Class A Common Stock
offered hereby has been passed upon for the Company by Baker & McKenzie, New
York, New York. Baker & McKenzie has also served as counsel to entities
controlled by the Selling Stockholder, Robert F.X. Sillerman, who is the
Executive Chairman and a Director of the Company, who directly and through his
affiliates, including Sillerman Communications Management Corporation ("SCMC")
and Sillerman Communications Partners, L.P. ("SCP") and The Sillerman
Companies ("TSC"), controls a majority of the voting power of the Company.
Howard J. Tytel is of Counsel of Baker & McKenzie, and also is Executive Vice
President, General Counsel, Secretary and a Director of the Company, SCMC, SCP
and TSC, and holds an equity interest in SCMC, SCP and TSC (which equity
interest does not include the right to vote or dispose of interests in SCMC,
SCP and TSC). A portion of the proceeds of the shares offered
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<PAGE>
hereby will be paid by the Selling Stockholder to Mr. Tytel as fees for
consulting and other services provided to Mr. Sillerman. In addition,
Mr. Tytel directly owns 18,108 shares of Class A Common Stock, 6,176 shares
of which are purchasable upon the exercise of options which have vested
or will vest within 60 days.
EXPERTS
The consolidated financial statements and schedule of the Company and
its subsidiaries appearing in SFX Broadcasting, Inc.'s Annual Report (Form
10-K) for the year ended December 31, 1996 have been audited by Ernst & Young,
LLP, independent auditors, as set forth in their report included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The combined balance sheet of The Secret Stations: Indianapolis and
Pittsburgh as of June 30, 1996, and the related combined statements of
operations and cash flows fro the year then ended, incorporated herein by
reference in this Registration Statement, 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.
- 13 -
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 8. EXHIBITS.
The following are filed as exhibits to this Registration Statement:
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
5 Opinion of Baker & McKenzie.*
24.1 Consent of Ernst & Young LLP.
24.2 Consent of Arthur Andersen LLP.
24.3 Consent of Baker & McKenzie.*
25 Power of Attorney*
- ----------------------------
* Previously filed.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Post-Effective Amendment No. 1 to this Registration Statement to be signed on
its behalf by the undersigned, thereunto authorized, in the City of New York,
State of New York, on December 11, 1997.
SFX BROADCASTING, INC.
By: /s/ Howard J. Tytel
------------------------
Howard J. Tytel
Executive Vice President
and Secretary
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Post
Effective Amendment No. 1 to this Registration Statement has been signed below
by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------- ----------------------------------------------------- --------------------
<S> <C> <C>
* Executive Chairman and Director December ___, 1997
- ---------------------------------------
Robert F.X. Sillerman
* Chief Executive Officer and Director December ___, 1997
- ---------------------------------------
Michael G. Ferrel
* Chief Operating Officer, Executive Vice December ___, 1997
- --------------------------------------- President and Director
D. Geoffrey Armstrong
* Chief Financial Officer, Treasurer and December ___, 1997
- --------------------------------------- Director
Thomas P. Benson (principal financial and accounting officer)
/s/ Howard J. Tytel Executive Vice President, December ___, 1997
- --------------------------------------- Secretary and Director
Howard J. Tytel
* Director December ___, 1997
- ---------------------------------------
James F. O'Grady, Jr.
* Director December ___, 1997
- ---------------------------------------
Paul Kramer
* Director December ___, 1997
- ---------------------------------------
Richard A. Liese
* Director December ___, 1997
- ---------------------------------------
Edward F. Dugan
* By: /s/ Howard J. Tytel
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-2
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-8 pertaining dated December 11, 1997
pertaining to the SFX Broadcasting, Inc. 1993 through 1997 Stock Option Plans
and to the incorporation by reference therein of our report dated February 20,
1997, except for Note 14 as to which the date is March 27, 1997, with respect
to the consolidated financial statements and schedule of SFX Broadcasting,
Inc. included in its Annual Report (Form 10-K) for the year ended December 31,
1996, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
New York, New York
December 10, 1997
II-3
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Post-Effective Amendment No. 1 on Form S-8 Registration
Statement (Registration Statement No. 333-26611) dated December 11, 1997 of
SFX Broadcasting, Inc. of our report dated January 17, 1997 (and to all
references to our Firm) relating to the combined financial statements of The
Secret Stations: Indianapolis and Pittsburgh included in SFX Broadcasting,
Inc.'s previously filed Form 8-K dated January 21, 1997.
/s/ Arthur Andersen LLP
Chicago, Illinois
December 11, 1997
II-4
