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As filed with the Securities and Exchange Commission on June 23, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------------
SFX BROADCASTING, INC.
(Exact Name of Registrant as Specified in Its Charter)
--------------------------
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<S> <C> <C>
DELAWARE 13-3649750
(State or Other Jurisdiction of 150 East 58th Street, 19th Floor (I.R.S. Employer
Incorporation or Organization) New York, New York 10155 Identification No.)
(212) 407-9191
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
</TABLE>
--------------------------
ROBERT F.X. SILLERMAN
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)
--------------------------
Copies to:
HOWARD M. BERKOWER, ESQ.
BAKER & MCKENZIE
805 THIRD AVENUE
NEW YORK, NEW YORK 10122
(212) 751-5700
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box.[ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
--------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, par value $.01 per share.. 62,792 shares $35.125 $2,205,569.00 $668.35
=========================================================================================================================
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(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended,
on the basis of the average of the high ($35.375) and low ($34.875) prices
of the Class A Common Stock on June 18, 1997, as reported by The Nasdaq
Stock Market, Inc.'s National Market System.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PROSPECTUS
SFX LOGO
62,792 SHARES OF CLASS A COMMON STOCK
This Prospectus relates to 62,792 shares (the "Offered Stock") of the
Class A Common Stock, $.01 par value per share (the "Class A Common Stock"), of
SFX Broadcasting, Inc., a Delaware corporation (the "Company"), which may be
distributed, sold or otherwise transferred from time to time by and for the
account of the holders named herein (the "Selling Stockholders") and their
permitted transferees, pledgees, donees and other permitted successors in
interest. The Company will not receive any of the proceeds from any sale of the
Offered Stock, but has agreed to bear certain costs relating to the
registration, offer and sale of the Offered Stock (currently estimated to be
$15,000), not including certain expenses such as commissions and discounts of
dealers or agents. See "Selling Stockholders" and "Plan of Distribution."
Pursuant to that certain Asset and Sale Purchase Agreement (the
"Purchase Agreement") by and among Sunshine Promotions, Inc. ("Sunshine"),
Sunshine Concerts, L.L.C., an indirect wholly-owned subsidiary of the Company
(the "Buyer"), the Company and the stockholders of Sunshine, the Buyer
purchased substantially all of the assets of Sunshine on June ___, 1997 (the
"Acquisition"). In partial consideration for the assets acquired in the
Acquisition, Buyer delivered to Sunshine, and Sunshine subsequently transferred
to the Selling Stockholders, the Offered Stock. Pursuant to the Purchase
Agreement, the Company agreed to cause to be registered under the Securities
Act of 1933, as amended (the "Securities Act"), the resale of the shares of
Class A Common Stock delivered to Sunshine and presently held by the Selling
Stockholders. See "Selling Stockholders."
The economic rights of shares of Class A Common Stock and shares of
Class B Common Stock, par value $.01 per share (the "Class B Common Stock"), of
the Company are identical, but the voting rights differ in that each share of
Class A Common Stock is entitled to one vote and each share of Class B Common
Stock is generally entitled to ten votes. See "Description of Common Stock." As
of April 15, 1997, Robert F.X. Sillerman, a Director of the Company and the
Executive Chairman of the Company, may be deemed to be the beneficial owner of
approximately 56.0% of the combined voting power of the Company, and Mr.
Sillerman and other members of management of the Company may be deemed to be
the beneficial owners of approximately 57.7% of the combined voting power of
the Company. See "Risk Factors--Control by Management."
The Class A Common Stock is traded on The Nasdaq Stock Market, Inc.'s
National Market System (the "Nasdaq National Market") under the symbol "SFXBA."
On June 18, 1997, the last reported sales price of a share of Class A Common
Stock on the Nasdaq National Market was $34.875.
The shares of Offered Stock may be offered and sold from time to time
by the Selling Stockholders directly or through broker-dealers who may act
solely as agents, or who may acquire shares as principals. The distribution of
the shares of Offered Stock may be effected in one or more transactions that
may take place through the Nasdaq National Market or any national securities
exchange on which the Offered Stock is approved for listing in the future,
including block trades or ordinary broker's transactions, through privately
negotiated transactions, in accordance with Rule 144 under the Securities Act,
or through a combination of any such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Usual and customary or specially negotiated
brokerage fees or commissions may be paid by the Selling Stockholders in
connection with such sales. The Selling Stockholders and any dealers or agents
that participate in the distribution of the Offered Stock may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of the Offered Stock by them and any commissions received by any such
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act. See "Plan of Distribution."
To the extent required, the specific shares of Offered Stock to be
sold, the names of the Selling Stockholders, the purchase price, the public
offering price, the names of any such agent or dealer and any applicable
commission or discount with respect to a particular offering will be set forth
in an accompanying Prospectus Supplement. The aggregate proceeds to the Selling
Stockholders from the shares of Offered Stock will be the purchase price
thereof less commissions and discounts, if any, and other expenses of
distribution not borne by the Company.
----------------------------
SEE "RISK FACTORS," BEGINNING ON PAGE 4 OF THIS PROSPECTUS, FOR A
DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY 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.
----------------------------
The date of this Prospectus is , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has 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 Stock. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in exhibits and schedules to the Registration
Statement as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement, including the exhibits
thereto, and the financial statements and notes filed as a part thereof.
Statements made in this Prospectus concerning the contents of any contract,
agreement or other document filed with the Commission as an exhibit are not
necessarily complete. With respect to each such contract, agreement or other
document filed with the Commission as an exhibit, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.
The Company is subject to the informational 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. The reports, proxy statements and other information filed
by the Company with the Commission pursuant to the informational requirements
of the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at 7
World Trade Center, 13th Floor, New York, New York 10048 and the Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such documents can also be obtained at prescribed rates from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997;
(iii) 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 and June 16, 1997 and the Company's Current
Report on Form 8-K/A dated June 16, 1997; and
(iv) the description of the Class A Common Stock contained in the
Company's Registration Statement on Form 8-A (File No. 0-22486)
filed with the Commission on September 27, 1993, as amended.
All documents and reports filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of shares of Class A Common Stock
to which this Prospectus relates shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents or reports.
Any statement contained in a document which is, or is deemed to be,
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in any other subsequently filed document which also is, or is deemed to be,
incorporated by reference herein) modifies or supersedes the previous
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
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The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any document incorporated by reference in this Prospectus, other than exhibits
to any such document not specifically described above. Request for such
documents should be directed to SFX Broadcasting, Inc., 150 East 58th Street,
19th Floor, New York, New York 10155, Attention: Timothy Klahs, Director of
Investor Relations; telephone number (212) 407-9191.
TABLE OF CONTENTS
PAGE
Available Information ......................................................2
Incorporation of Certain Documents By Reference.............................2
Risk Factors................................................................4
Description of Common Stock................................................10
Use of Proceeds............................................................12
Selling Stockholders.......................................................12
Plan Of Distribution.......................................................13
Legal Matters..............................................................13
Experts....................................................................13
----------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE OFFERING MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY
OFFER TO OR SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE UNDER THIS PROSPECTUS SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS.
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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 acquisitions and dispositions,
integration of acquired stations, 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.
RISKS RELATED TO PENDING ACQUISITIONS AND DISPOSITIONS
Consummation of the Company's pending acquisitions and dispositions is
subject to a number of factors, certain of which are beyond the Company's
control. In particular, consummation of the acquisitions and the dispositions
is subject to the prior approval by the Federal Communications Commission (the
"FCC") of the assignments or transfers of control of operating licenses issued
by the FCC and the continued operating performance of the stations to be
acquired or disposed such that there is no material adverse change in such
stations that would prevent consummation of any such transactions and the prior
approval of the lenders under the Company's senior credit facility. As a result
of the elimination of the national ownership limits and the liberalization of
the local ownership limits effected by the Telecommunications Act of 1996 (the
"Telecom Act"), acquisitions and dispositions will be subject to antitrust
review by the Federal Trade Commission and the Department of Justice, Antitrust
Division (the "Antitrust Agencies"). The Antitrust Agencies have indicated
their intention to review matters related to the concentration of ownership
within markets even when the ownership in question is in compliance with the
provisions of the Telecom Act. While the Company believes that none of its
pending acquisitions or dispositions of radio stations substantially lessens
competition, there can be no assurance that the Antitrust Agencies will not
take a contrary position, which could delay or prevent the consummation of any
or all of the Company's pending acquisitions or dispositions of radio stations
or require the Company to restructure its ownership in the relevant market or
markets. See "--Extensive Regulation of Radio Broadcasting."
The Company will also require financing in order to consummate the
pending acquisitions, which the Company may obtain through the issuance of
securities, borrowings under the senior credit facility and proceeds from
dispositions. The ability of the Company to issue certain securities or borrow
under the senior credit facility will be subject to meeting certain financial
tests. In addition, consummation of certain acquisitions is subject to the
prior approval of the lenders under the Company's senior credit facility. There
can be no assurance that the Company's existing stations, and the stations
which the Company will acquire, will achieve the cash flow levels required to
issue certain securities or borrow under the senior credit facility. As a
result of the foregoing, there can be no assurance as to when the Company's
pending acquisitions or dispositions of radio stations will be consummated or
that they will be consummated at all.
RISKS ASSOCIATED WITH INTEGRATION OF THE STATIONS
As of January 1, 1996, the Company owned and operated, provided
programming to or sold advertising on behalf of 22 radio stations located in
eight markets. Since that time, the number of stations has more than tripled.
The Company's plans with respect to radio stations it has acquired and plans to
acquire involve, to a substantial degree, strategies to increase net revenue
while at the same time reducing operating expenses, as well as the
implementation of a new regional management structure and a modified senior
management team. Although the Company believes that its strategies are
reasonable, there can be no assurance that it will be able to implement its
plans without delay or that, when implemented, its efforts will result in the
increased net revenues or other benefits currently anticipated by the Company.
In addition, there can be no assurance that the Company will not encounter
unanticipated problems or liabilities in connection with the implementation of
the new management changes or the operation of the radio stations to be
acquired. The integration of the newly acquired stations into the Company will
require substantial attention from members of the Company's senior management,
which will limit the amount of time such members have available to devote to
the Company's existing operations. The Company currently anticipates realizing
certain cost savings and
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eliminating certain non-recurring expenses as a result of the acquisitions.
While management believes that such cost savings and non-recurring expense
elimination are reasonably achievable, the Company's ability to achieve such
cost savings and to eliminate such expenses is subject to numerous factors,
many of which are beyond the Company's control. There can be no assurance that
the Company will realize any such cost savings or will be able to eliminate
such non-recurring expenses.
EXTENSIVE REGULATION OF RADIO BROADCASTING
Adoption of the Telecom Act in February 1996 eliminated the national
limits and liberalized the local limits on radio station ownership by a single
company. However, the Antitrust Agencies 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 Antitrust Agencies will not impact the
Company's operations (including existing stations or markets), expansion
strategy 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 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 and will incur significant amounts of indebtedness. Subject to certain
restrictions contained in the Company's debt instruments and certificate of
designations with respect to its preferred stock, the Company may incur
additional indebtedness from time to time to finance acquisitions, for capital
expenditures or for other purposes. See "--Expansion Strategy; Need for
Additional Funds."
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
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instrument and in some cases acceleration of debt under other instruments that
contain 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 $6.5 (unaudited) million,
$50.9 million, $4.4 million and $17.8 million for the three months ended March
31, 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."
EXPANSION STRATEGY; NEED FOR ADDITIONAL FUNDS
The Company's principal growth strategy is to operate and acquire
highly-ranked radio stations with attractive audience demographics in major and
medium-sized markets located throughout the United States. The Company
regularly explores acquisition opportunities; however, there can be no
assurance that the Company will consummate any acquisitions or be able to
identify stations to acquire in the future. Each acquisition will be subject to
the prior approval of the FCC and certain acquisitions will be subject to the
prior approval of the lenders under the Company's senior credit facility.
Furthermore, as a result of the Telecom Act, future acquisitions may be subject
to antitrust review by the Antitrust Agencies, even if approved by the FCC. In
addition, the Company may require additional debt or equity financing to
finance properties it may seek to acquire in the future. The availability of
additional acquisition financing cannot be assured, and depending on the terms
of such acquisitions and financings, could be restricted by the terms of
certain debt instruments and preferred stock. There can be no assurance that
any future acquisitions will be successfully
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integrated into the Company's operations or that such acquisitions will not
have a material adverse effect on the Company's financial condition and results
of operations. See "--Extensive Regulation of Radio Broadcasting" and "--Risks
Associated with Integration of the Stations."
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 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 April 15, 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 56.0% 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 57.7% 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
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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 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.
TSC 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.
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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 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 April 15, 1997 there were approximately 8,773,934 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
1,559,053 shares of Class A Common Stock and approximately 856,126 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 1,281,897 shares of Class A Common Stock and the 856,126 shares
of Class A Common Stock issuable upon conversion of the Class B Common Stock
are currently eligible for sale in the open
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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
8,773,934 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 April 15, 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.
DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 100,000,000 shares of Class A
Stock, 10,000,000 shares of Class B Common Stock and 1,200,000 shares of Class
C Common Stock (collectively, the "SFX Common Stock"). In addition, the Company
is authorized to issue shares of preferred stock. See "Risk Factors--Possible
Adverse Impact of Authorized but Unissued Shares of Capital Stock and Delaware
Law."
DIVIDENDS. Holders of shares of SFX Common Stock are entitled to
receive such dividends as may be declared by the Board of Directors out of
funds legally available for such purpose. No dividend may be declared or paid
in cash or property on any share of any class of SFX Common Stock, however,
unless simultaneously the same dividend is declared or paid on each share of
the other classes of SFX Common Stock. In the case of any stock dividend,
holders
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of shares of Class A Common Stock of the Company are entitled to receive the
same percentage dividend (payable in shares of Class A Common Stock) as the
holders of shares of Class B Common Stock (payable in shares of Class B Common
Stock) and shares of Class C Common Stock (payable in shares of Class C Common
Stock). The payment of dividends is limited by certain agreements to which the
Company is a party and is expected to be limited by other indebtedness which
may be incurred in the future.
VOTING RIGHTS. Holders of shares of Class A Common Stock and shares of
Class B Common Stock of the Company vote as a single class on all matters
submitted to a vote of the stockholders, with each share of Class A Common
Stock entitled to one vote and each share of Class B Common Stock entitled to
ten votes, except (i) for the election of directors, (ii) with respect to any
"going private" transaction between the Company and Mr. Sillerman or any of his
affiliates and (iii) as otherwise provided by law. The holders of shares of
Class C Common Stock have no voting rights except as otherwise provided by law
In the election of directors, the holders of shares of Class A Common
Stock of the Company, voting as a separate class, are entitled to elect
two-sevenths (2/7ths) of the Company's directors (or, if such number of
directors is not a whole number, the next higher whole number). The holders of
Class A Common Stock of the Company are currently entitled to elect three of
the Company's nine directors. Any person nominated by the Board of Directors
for election by the holders of shares of Class A Common Stock as a director of
the Company must be qualified to be an "Independent Director," as such term is
used in the Certificate of Incorporation. In general, an Independent Director
is a director who is not (i) an officer, employee or affiliate of the Company
or any of its subsidiaries or any affiliate of Mr. Sillerman, (ii) an affiliate
of Mr. Sillerman or (iii) an individual having a relationship with the Company
which, in the opinion of the Board of Directors, would interfere with such
person's exercise of independent judgment in carrying out the responsibilities
of a director. In the event of the death, removal or resignation of a director
elected by the holders of shares of Class A Common Stock prior to the
expiration of his term, the vacancy on the Board of Directors created thereby
may be filled by a person appointed by a majority of the directors then in
office, although less than a quorum Any person appointed to fill any such
vacancy must, however, be qualified to be an Independent Director. The holders
of shares of Class A Common Stock and the holders of shares of Class B Common
Stock of the Company, voting as a single class, with each share of Class A
Common Stock entitled to one vote and each shares of Class B Common Stock
entitled to ten votes, are entitled to elect the remaining directors. The
holders of Class A Common Stock or Class B Common Stock of the Company are not
entitled to cumulative votes in the election of directors.
Each of Mr. Sillerman and SCMC has agreed to abstain, and has agreed
to cause each of his and its respective affiliated transferees to abstain, from
voting in any election of directors elected by the shares of Class A Common
Stock voting separately as a class.
The holders of shares of Class A Common Stock and Class B Common Stock
vote as a single class with respect to any proposed "going private" transaction
with Mr. Sillerman or any of is affiliates, with each share of Class A Common
Stock and each share of Class B Common Stock entitled to one vote.
Under Delaware law, the affirmative vote of the holders of a majority
outstanding shares of any class of SFX Common Stock is required to approve,
among other things, a change in the designations, preferences or limitations of
the shares of such class of SFX Common Stock.
LIQUIDATION RIGHTS. Upon the liquidation, dissolution, or winding-up
of the Company, the holders of shares of SFX Common Stock are entitled to share
ratably in all assets available for distribution after payment in full of
creditors.
OTHER PROVISIONS. Each share of Class B Common Stock of the Company is
convertible, subject to compliance with FCC rules and regulations, at the
option of its holder, into one share of Class A Common Stock of the Company at
any time. Each share of Class B Common Stock and each share of Class C Common
Stock converts automatically into one share of Class A Common Stock upon its
sale or other transfer to a party not affiliated with the Company, subject to
compliance with FCC rules and regulations. The holders of SFX Common Stock are
not entitled to preemptive or subscription rights. The shares of SFX Common
Stock presently outstanding are validly issued, fully-paid and nonassessable.
In any merger, consolidation or business combination, the consideration to be
received per share by
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holders of shares of Class A Common Stocks, Class B Common Stock and Class
Common Stock must be identical, except that in any such transaction in which
shares of common stock are distributed to the stockholders of the Company, such
shares may differ as to voting rights to the extent that voting rights now
differ among the classes of SFX Common Stock. No class of SFX Common Stock may
be subdivided, consolidated, reclassified or otherwise changed unless
concurrently the other classes of SFX Common Stock are subdivided,
consolidated, reclassified or otherwise changed in the same proportion and in
the same manner.
USE OF PROCEEDS
The Company will not receive any of the proceeds from sales of the
Offered Stock. See "Selling Stockholders" for a list of those persons who will
receive the proceeds from such sales.
SELLING STOCKHOLDERS
This Prospectus covers the offer and sale by each of the Selling
Stockholders of the shares of Common Stock set forth in the table below.
Sunshine received 62,792 shares of Class A Common Stock in the Acquisition, and
subsequently transferred those shares to the Selling Stockholders, who
constituted all of the stockholders of Sunshine. In the Purchase Agreement, the
Company agreed that it would cause to be registered under the Securities Act
the resale of the Common Stock received by Sunshine in the Acquisition.
The following table sets forth the name of each Selling Stockholder,
the number of shares of Common Stock which each Selling Stockholder owns, the
number of shares of Common Stock which may be offered for resale hereunder and
the percent of outstanding shares of Common Stock each Selling Stockholder
owned prior to the offering to which this Prospectus relates. Since the Selling
Stockholders may sell all, some or none of their shares, no estimate can be
made of the aggregate number of the Common Stock that are to be offered hereby
or that will be owned by each Selling Stockholder upon completion of the
offering to which this Prospectus relates.
PERCENT OF
OUTSTANDING
NUMBER OF NUMBER OF SHARES
SHARES SHARES PRIOR TO THIS
SELLING STOCKHOLDER OWNED OFFERED HEREBY OFFERING(1)
- ------------------- ----- -------------- -----------
P. David Lucas 31,396 31,396 *
Steven P. Sybesma 31,396 31,396 *
- -------------------
* Less than 1% of the outstanding Common Stock.
(1) Based on 8,773,934 shares of Common Stock outstanding on April 15, 1997.
The Selling Stockholders, or their permitted transferees, pledgees,
donees or other permitted successors in interest, may sell up to all of the
shares of the Common Stock shown above under the heading "Number of Shares
Offered Hereby" pursuant to this Prospectus in one of more transactions from
time to time as described below under "Plan of Distribution."
Except as set forth in this paragraph, none of the Selling
Stockholders has had a material relationship with the Company or any of its
affiliates or predecessors during the past three years. The Selling
Stockholders were stockholders, officers and directors of Sunshine prior to the
Acquisition, and the Selling Stockholders controlled one corporation and four
partnerships which, simultaneously with the consummation of the Acquisition,
sold assets to entities other than the Buyer which are wholly-owned by the
Company. In addition, each of the Selling Stockholders has entered into a
five-year employment agreement with a wholly-owned subsidiary of the Company,
SFX Broadcasting of the Midwest, Inc. ("Midwest"). Pursuant to such employment
agreements, Mr. Lucas will serve as the Chief Executive Officer of Midwest and
Mr. Sybesma will serve as the Chief Operating Officer of Midwest.
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PLAN OF DISTRIBUTION
Each of the Selling Stockholders may sell his shares of Offered Stock
directly or through broker-dealers who may act solely as agents, or who may
acquire shares as principals. The distribution of the shares of Offered Stock
may be effected in one or more transactions that may take place through the
Nasdaq National Market or any national securities exchange on which the Offered
Stock is approved for listing in the future, including block trades or ordinary
broker's transactions, or through privately negotiated transactions, or in
accordance with Rule 144 under the Securities Act (or any other applicable
exemption from registration under the Securities Act), through a combination of
any such methods of sale, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Usual
and customary or negotiated brokerage fees or commissions may be paid by the
Selling Stockholders in connection with such sales. Sales of the Offered Stock
may be effected to cover previous short sales of Common Stock.
The Selling Stockholders may effect transactions by selling the
Offered Stock directly or through broker-dealers acting either as principal or
as agent, and such broker-dealers may receive compensation in the form of usual
and customary or negotiated discounts, concessions or commissions from the
Selling Stockholders.
The aggregate proceeds to the Selling Stockholders from the sale of
the Offered Stock will be the purchase price of the Offered Stock sold less the
aggregate agents' commissions, if any, and other expenses of issuance and
distribution not borne by the Company. The Selling Stockholders and any dealers
or agents that participate in the distribution of the Offered Stock may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
profit on the sale of the Offered Stock by them and any commissions received by
any such dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act.
Each Selling Stockholder and any other person participating in a
distribution of Offered Stock will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which may restrict certain activities of, and limit
the timing of purchases and sales of Offered Stock by, Selling Stockholders and
other persons participating in a distribution of Offered Stock. Furthermore,
under Regulation M, persons engaged in a distribution of securities are
prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distribution, subject to specified exceptions or
exemptions. All of the foregoing may affect the marketability of the securities
offered hereby.
To the extent required, the specific shares of the Offered Stock to be
sold, the names of the Selling Stockholders, the purchase price, the names of
any agent or dealer and any applicable commission or discount with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Baker & McKenzie, New York, New York. Howard J. Tytel, who has
an equity interest in and is an executive officer and a Director of the
Company, is Of Counsel to Baker & McKenzie. Fisher Wayland Cooper Leader &
Zaragoza LLP, Washington D.C, has represented the Company with respect to legal
matters under the Communications Act and the rules and regulations promulgated
thereunder by the FCC.
EXPERTS
The consolidated financial statements and schedule of the Company and
its subsidiaries appearing in SFX Boardcasting, 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 thereon 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.
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The combined balance sheets of The Secret Stations: Indianapolis,
Indiana, and Pittsburgh, Pennsylvania as of June 30,1996, and the related
combined statements of operations and cash flows for the year then ended,
incorporated 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.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following sets forth the best estimate of the Company as to its
anticipated expenses and costs expected to be incurred in connection with the
issuance and distribution of the securities registered hereby (except for the
Commission registration fee and the Nasdaq listing fee, all amounts are
estimates):
Commission registration fee....................... $ 668
Nasdaq listing fee................................ 2,000
Printing expenses................................. 1,000
Legal fees and expenses........................... 10,000
Miscellaneous..................................... 1,332
-------
Total........................................ $15,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
empowers a Delaware corporation to indemnify any person who is, or is
threatened to be made, a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was an officer or director of such corporation, or
is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided that he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. A
Delaware corporation may indemnify officers and directors against expenses
(including attorneys' fees) in an action by or in the right of the corporation
under similar conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which he actually and reasonably incurred in
connection therewith.
The Certificate of Incorporation of the Company provides that no
director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the General Corporation Law of the State of Delaware or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Company's Bylaws provide that the Company shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is, was or has agreed to
become a director or officer of the Company, or is or was serving or has agreed
to serve at the request of the Company as a director or officer of another
company, partnership, joint venture, trust or other enterprise, against costs,
charges, expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith
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and in a manner which he reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
The Bylaws also provide that the Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Company to
procure a judgment in its favor by reason of the fact that he is, was or has
agreed to become a director or officer of the Company, or is or was serving at
the request of the Company as a director or officer of another company,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, against costs,
charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or on his behalf in connection with the defense or settlement
of such action or suit and any appeal therefrom, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and except that no such indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Company unless and only to the extent that
the Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such Court
of Chancery or such other court shall deem proper.
The Company's Bylaws state that, to the extent that a director or
officer of the Company shall be successful on the merits or otherwise,
including, without limitation, the dismissal of an action without prejudice, in
defense of any action, suit or proceeding referred to above, or in the defense
of any claim, issue or matter therein, he shall be indemnified against all
costs, charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or on his behalf in connection therewith.
The Bylaws further provide that any indemnification (unless ordered by
a court) shall be paid by the Company as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of conduct set forth
in the Bylaws unless a determination is made that indemnification of the
director or officer is not proper in the circumstances because he has not met
the applicable standard of conduct set forth in the Bylaws. Such determination
shall be made (i) by the Board of Directors of the Company by a majority vote
of a quorum consisting of directors who were not parties to such action, suit
or proceeding, or (ii) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders.
The Company's Bylaws further require that expenses incurred by an
officer or director in defending a civil or criminal action, suit or proceeding
shall be paid by the Company in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Company as
authorized in the Bylaws.
The Bylaws require the Board of Directors of the Company to purchase
and maintain insurance on behalf of any person who is or was or has agreed to
become a director or officer of the Company, or is or was serving at the
request of the Company as a director or officer of another company,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such capacity,
or arising out of his status as such, whether or not the Company would have the
power to indemnify him against such liability under the provisions of the
Bylaws, provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the Board of Directors.
The Bylaws also provide that the indemnification and advancement of
expenses provided by, or granted pursuant to, the Bylaws shall continue as to a
person who has ceased to be a director or officer and shall inure to the
benefit of the estate, heirs, executors and administrators of such person.
ITEM 16. EXHIBITS.
5.1 Opinion of Baker & McKenzie.*
23.1 Consent of Baker & McKenzie (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
II-2
<PAGE>
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of Fisher Wayland Cooper Leader & Zaragoza LLP.
23.5 Consent of BIA Research Incorporated.
24.1 Powers of Attorney (included on page II-5).
- --------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 15 above, or otherwise, the registrant has
been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceedings) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by
it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each
filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) to reflect in the Prospectus any facts of events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
II-3
<PAGE>
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
II-4
<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
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 20th day of
June, 1997.
SFX BROADCASTING, INC.
By: /s/ Robert F.X. Sillerman
-------------------------------
Name: Robert F.X. Sillerman
Title: Executive Chairman
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement on Form S-3 has been signed by the following
persons in the capacities and on the dates indicated. Each person whose
signature to this Registration Statement appears below hereby appoints Robert
F.X. Sillerman or Howard J. Tytel as his attorney-in-fact to sign on his
behalf, individually and in the capacities stated below, and to file (i) any
and all amendments and post-effective amendments to this Registration Statement
and (ii) any registration statement relating to the same offering pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, which amendment or
amendments or registration statement may make such changes and additions as
such attorney-in-fact may deem necessary or appropriate.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert F.X. Sillerman Executive Chairman and Director June 20, 1997
- ----------------------------- (principal executive officer)
Robert F.X. Sillerman
/s/ Michael G. Ferrel Chief Executive Officer and Director June 20, 1997
- -----------------------------
Michael G. Ferrel
/s/ D. Geoffrey Armstrong Chief Operating Officer, Executive June 20, 1997
- ----------------------------- Vice President and Director
D. Geoffrey Armstrong
/s/ Thomas P. Benson Chief Financial Officer, Treasurer June 20, 1997
- ----------------------------- and Director (principal financial
Thomas P. Benson and accounting officer)
Executive Vice President, Secretary June __, 1997
- ----------------------------- and Director
Howard J. Tytel
Director June __, 1997
- -----------------------------
James F. O'Grady, Jr.
/s/ Paul Kramer Director June 20, 1997
- -----------------------------
Paul Kramer
Director June __, 1997
- -----------------------------
Richard A. Liese
/s/ Edward F. Dugan Director June 18, 1997
- -----------------------------
Edward F. Dugan
</TABLE>
II-5
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of SFX Broadcasting,
Inc. for the registration of its Class A Common Stock and to the incorporation
by reference therein of our report dated February 20, 1997, except for Note 13,
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
June 19, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 Registration Statement of SFX Broadcasting, Inc.
dated June 23, 1997, of our report dated January 17, 1997, 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 and to all references to our Firm.
/s/ Arthur Andersen LLP
Chicago, Illinois
June 20, 1997
<PAGE>
EXHIBIT 23.4
CONSENT
We hereby consent to the use of our firm name in SFX Broadcasting, Inc.'s
Registration Statement on Form S-3 and in the Prospectus forming a part of such
Registration Statement to be filed with the Securities and Exchange Commission
on June 23, 1997. In giving this consent, we do not concede that we come within
the category of persons whose consent is required by Section 7 of the
Securities Act of 1933, as amended.
/s/ FISHER WAYLAND COOPER LEADER
& ZARAGOZA L.L.P.
Dated: June 23, 1997
<PAGE>
EXHIBIT 23.5
BIA Research Incorporated
14595 Avion Parkway, Suite 500
Chantilly, Virginia 22021
June 9, 1997
SFX Broadcasting, Inc.
150 East 58th Street, 19th Floor
New York, New York 10155
Ladies and Gentlemen:
BIA Research Incorporated hereby consents to the incorporation by
reference in the Registration Statement of SFX Broadcasting, Inc. on Form S-3
to be filed with the Securities and Exchange Commission on or about June 20,
1997 of the radio station and market data which was included in SFX
Broadcasting, Inc.'s Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
Very truly yours,
BIA RESEARCH INCORPORATED
By: /s/ Debra L. Metcalf
--------------------------
Authorized Officer
