PAXSON COMMUNICATIONS CORP, 424B1, 1996-04-01

PAXSON COMMUNICATIONS CORP
424B1, 1996-04-01
RADIO BROADCASTING STATIONS

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<PAGE> 1
Pursuant to Rule 424(b)(1)
Registration Statement #333-473

PROSPECTUS

PAXSON LOGO
13,500,000 SHARES

PAXSON COMMUNICATIONS CORPORATION
CLASS A COMMON STOCK

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

Of the 13,500,000 shares of Class A Common Stock, par value $.001 per share
(the "Class A Common Stock"), offered hereby, 10,300,000 shares are being issued
and sold by Paxson Communications Corporation (the "Company" or "Paxson
Communications") and 3,200,000 shares are being sold by certain stockholders of
the Company (the "Selling Stockholders"). See "Principal and Selling
Stockholders" and "Underwriting." The Company will not receive any part of the
proceeds from the sale of securities by the Selling Stockholders. Of the
13,500,000 shares of Class A Common Stock offered hereby, 2,700,000 shares are
being offered in an international offering outside the United States and Canada
by the Managers (as defined) (the "International Offering"), and 10,800,000
shares are being offered in the United States and Canada (the "U.S. Offering"
and, together with the International Offering, the "Offering") by the U.S.
Underwriters (as defined). The public offering price and aggregate underwriting
discount per share are identical for both offerings. See "Underwriting."

The Company's authorized capital stock includes Class A Common Stock, Class
B Common Stock and Class C Common Stock (collectively, the "Common Stock") and
preferred stock. The rights of holders of Common Stock are identical, except
that each share of Class B Common Stock generally entitles its holders to ten
votes, whereas each share of Class A Common Stock entitles its holders to one
vote and the holders of Class C Common Stock generally have no right to vote.
Shares of Class B Common Stock and Class C Common Stock are convertible into
shares of Class A Common Stock on a one-for-one basis at the option of the
holder. See "Description of Capital Stock."

The Company's Class A Common Stock is listed on the American Stock Exchange
under the symbol "PXN." The last reported sale price of the Company's Class A
Common Stock as reported on the American Stock Exchange on March 27, 1996 was
$18.875 per share.
------------------

SEE "RISK FACTORS" STARTING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE CLASS A COMMON
STOCK OFFERED HEREBY.

This document may not be passed on in the United Kingdom to any person
unless the person is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a
person to whom such document may otherwise lawfully be issued or passed on.
------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per share.................................. $16.00 $0.80 $15.20 $15.20
- ---------------------------------------------------------------------------------------------------------------
Total(3)................................... $216,000,000 $10,800,000 $156,560,000 $48,640,000
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Managers and the U.S. Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."

(2) Before deducting estimated expenses of $1,500,000 payable by the Company.

(3) The Company and the Selling Stockholders have granted the U.S.
Underwriters a 30-day option to purchase up to 2,025,000 additional
shares of Class A Common Stock solely to cover over-allotments, if any.
If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions, Proceeds to Company and Proceeds
to Selling Stockholders will be $248,400,000, $12,420,000, $168,233,600
and $67,746,400, respectively. See "Underwriting."
------------------

The shares of Class A Common Stock are being offered by the Managers named
herein, subject to prior sale, when, as and if accepted by them and subject to
certain conditions. It is expected that certificates for the shares of Class A
Common Stock offered hereby will be available for delivery on or about April 3,
1996, at the offices of Smith Barney Inc., 388 Greenwich Street, New York, New
York 10013.
------------------
SMITH BARNEY INC.
PAINEWEBBER INTERNATIONAL
CIBC WOOD GUNDY SECURITIES CORP.
BANKERS TRUST INTERNATIONAL PLC

MARCH 29, 1996
<PAGE> 2

PROSPECTUS INSIDE FRONT COVER

Depiction of various Company radio station, television station and network
logos or service marks shown.

TWO PAGE FOLD-OUT OF PROSPECTUS INSIDE COVER

Map of the United States and Puerto Rico, with separate enlarged map of
Florida, identifying locations of the Company's owned, operated or affiliated
television and radio stations, as well as the Company's radio networks and
areas of billboard concentration.

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

IN CONNECTION WITH THIS OFFERING, THE U.S. UNDERWRITERS AND THE MANAGERS
MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE CLASS A COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

-i-
<PAGE> 3

CERTAIN DEFINITIONS AND MARKET AND INDUSTRY DATA

The terms "EBITDA," "broadcast cash flow," "segment operating profit" and
"Adjusted EBITDA" are referred to in various places in this Prospectus. EBITDA
is defined as net income (loss) before (i) extraordinary item and cumulative
effect of a change in accounting principle, (ii) benefit (provision) for income
taxes, (iii) other income (expense), net, (iv) interest expense, (v)
depreciation and amortization, (vi) option plan compensation and (vii)
non-recurring items including terminated operations, less scheduled broadcast
rights payments. Broadcast cash flow is defined as income (loss) from broadcast
operations plus non-cash expenses, less scheduled broadcast rights payments and
non-cash revenue. Although EBITDA and broadcast cash flow are not measures of
performance under United States generally accepted accounting principles
("GAAP"), the terms are widely used in the broadcast industry as a measure of a
broadcasting company's financial performance. "Segment operating profit" is
defined as segment EBITDA before corporate overhead allocations. "Adjusted
EBITDA" is defined as EBITDA for the period, less (i) operating profit for the
Infomall TV Network segment for such period plus (ii) four times such segment's
operating profit for the most recently completed quarter prior to the measuring
date. Neither EBITDA, broadcast cash flow, segment operating profit, nor
Adjusted EBITDA, should be considered in isolation or as a substitute for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP, or as a measure of
profitability or liquidity.

The term "time brokerage agreement" (known in the broadcast industry as a
"local marketing agreement"), generally refers to an agreement under which a
radio or television programmer agrees to purchase from a broadcast station
licensee substantially all of the broadcast time on a station, provides
programming and sells advertising during the purchased time, receives all the
revenue derived from advertising sold during the purchased time, pays certain
expenses of the station and performs other functions, with the licensee
retaining responsibility for ultimate control of the station in accordance with
FCC policies. Time brokerage agreements are more fully described in
"Business -- Federal Regulation of Broadcasting." The term "joint sales
agreement" (a "JSA") refers to an agreement under which a broadcast station
agrees to provide sales and marketing services for another broadcast station
while the owner of such broadcast station provides the programming for such
other broadcast station.

Unless otherwise indicated herein, all market rankings, audience ratings
and audience rankings have been derived for the indicated radio station or group
of radio stations from surveys of the indicated demographic group listening
Monday-Sunday, 6:00 a.m. to 12:00 midnight, as reported by Arbitron, Radio
Market Report, The Arbitron Company ("Arbitron"). Unless otherwise indicated,
audience share data is expressed as the local average quarter-hour share for
each indicated radio station. A radio station's local audience share is derived
by comparing the radio station's average quarter-hour share to the total average
quarter-hour share for all radio stations listed as inside the Metro Survey Area
by Arbitron. Average quarter-hour share is a percentage of the estimated number
of persons who listen to a given radio station for a minimum of five minutes
within a quarter-hour compared to the total number of persons who listen to
radio in the market within such quarter-hour. The most recent Arbitron survey
utilized in this Prospectus is Fall 1995.

Market radio advertising revenue, revenue share data and revenue rankings
for radio stations have been obtained from Miller, Kaplan Market Revenue Report,
a monthly publication of Miller, Kaplan, Arase & Co., Certified Public
Accountants ("Miller Kaplan"); provided, however, that market radio advertising
revenue, revenue share data, and revenue rankings for the Company's radio
stations in the Cookeville, Tennessee area have been estimated by the Company
without the benefit of any independent investigation or confirmation, as no
published data on that survey area is available from Miller Kaplan. Arbitron and
Miller Kaplan both compile their audience share, revenue share, revenue ranking
and other statistical data under procedures and methodologies that are
described, and that have the limitations provided, in their respective reports.
All such information provided herein is subject to those limitations. This
Prospectus reflects data from the December 1995 Miller, Kaplan Market Review
Report unless otherwise indicated. The Company does not assume responsibility
for the accuracy or completeness of such published data.

All television station audience rating data in this Prospectus has been
obtained from the Nielsen Station Index Viewers and Profile for November 1995, a
publication of A. C. Nielsen Co. ("Nielsen"). All market rank and television
household data has been obtained from U.S. Television Household Estimates for
November 1995, as prepared by Nielsen for each designated market area ("DMA").
In addition, revenue data for the West Palm Beach television market has been
obtained from the local office of Ernst & Young LLP. The Company does not assume
responsibility for the accuracy or completeness of such published data.

-ii-
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise indicated
by the context, references in this Prospectus to the "Company" include Paxson
Communications Corporation and its direct and indirect wholly-owned
subsidiaries. Capitalized terms used without definition in the following summary
are defined elsewhere in this Prospectus. Unless otherwise indicated, all
information in this Prospectus assumes that the over-allotment option is not
exercised. See "Underwriting."

THE COMPANY

Paxson Communications Corporation (the "Company" or "Paxson
Communications") has created a nationwide network of television stations
dedicated to the airing of infomercial programming (the "Infomall TV Network" or
"inTV"*). In addition, the Company has a significant radio and
network-affiliated television broadcasting presence in the state of Florida. The
Company owns 16 radio stations in the four largest Florida cities, and will own
19 such stations upon completion of the Proposed Acquisitions (as defined), and
owns one network-affiliated television station and operates another pursuant to
a time brokerage agreement in the West Palm Beach market.

The Company introduced its Infomall TV Network in January 1995 with four
television stations. inTV has expanded rapidly and currently consists of 24
owned, operated pursuant to a time brokerage agreement or affiliated inTV
stations. Upon completion of the Proposed Acquisitions, the Company will have 28
owned or operated inTV stations and four affiliated inTV stations operating in
30 television markets, 20 of which are among the 30 largest in the United
States. The Company expects the Proposed Acquisitions to be consummated over the
next ten months, subject to receipt of regulatory approvals. See "The Proposed
Acquisitions."

The Company believes that (i) its inTV stations comprise the only national
network of television stations dedicated to the airing of infomercial
programming, (ii) its inTV stations represent a valuable national television
broadcasting distribution infrastructure that would be difficult and expensive
to replicate, and (iii) its radio and network-affiliated television stations in
Florida's five largest markets provide it with a significant statewide presence.

The Company was founded in 1991 by Lowell W. "Bud" Paxson. Mr. Paxson has
been at the forefront of several innovative broadcasting concepts over the last
decade, including his leadership role in the creation and early growth of
electronic retailing as the creator and co-founder of Home Shopping Network,
Inc. and Silver King Communications, Inc. Mr. Paxson has made equity investments
in the Company in excess of $33 million.

BUSINESS STRATEGY

The Company's business strategy is to increase revenue and cash flow by (i)
expanding its inTV network, (ii) applying its multiple station operating
strategy to its television and radio properties, (iii) exploring the additional
distribution potential of the television stations comprising its national inTV
network, and (iv) acquiring additional radio stations, primarily in Florida
markets.

INFOMALL TV NETWORK

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

* inTV is a service mark of Paxson Communications Corporation.

1
<PAGE> 5

network of inTV stations is the only group of broadcast television stations in
the United States that offers infomercial advertisers significant national,
regional and local distribution capability and airtime during each of the
popular morning, daytime and prime time viewing hours.

The television stations acquired by the Company and converted to inTV
stations are typically non-network-affiliated stations with marginal operating
results that can be acquired at a relatively low cost compared to
network-affiliated stations. Certain of these stations are licensed to
communities outside the center of major television markets, but within such
markets' designated market area ("DMA") and by virtue of the FCC's "must carry"
rules are thus generally entitled to carriage on cable systems within such DMA.
Through the exercise of "must carry" rights and the improvement of its stations'
over-the-air signals, the Company intends to continue its efforts to maximize
its cable household coverage within its markets beyond the 53.7% achieved
currently. The Company's goal is to reach approximately 85% of the cable homes
in its markets (although there can be no assurance that the Company will reach
such goal). The Company believes that it also reaches a significant number of
over-the-air television households that do not receive cable television. The
markets to be served by the Company upon completion of the Proposed Acquisitions
currently contain approximately 44.2 million television households, of which
28.6 million are served by cable television. The Company continues to evaluate
the acquisition of or affiliation with additional independent television
stations to further extend the national reach of its Infomall TV Network.

Shortly after the Company acquires a television station or commences
operating a television station pursuant to a time brokerage agreement, the
Company replaces the existing programming with infomercial programming. The
Company's infomercial programming format allows it to eliminate substantially
all programming expenses and achieve significant reductions in other operating
expenses. Unlike traditional television stations, inTV programming is paid for
by the advertiser as opposed to the broadcaster. The Company centralizes many
accounting, traffic and national sales functions at its headquarters, minimizing
the staff required at each station location. The Company's inTV stations are
connected through a wide area computer network enabling them to utilize common
computerized financial and sales systems. Engineering functions are standardized
through the purchase of similar equipment at each location for editing,
playback-to-air and signal transmission, thereby reducing maintenance expense.
As a result, the Company's inTV stations are operated by an average of 15
people, compared to network and independent television stations which average
over 100 and 60 people, respectively, in markets of similar size to the
Company's. To date, each of the inTV stations owned or operated by the Company
has contributed rapidly to broadcast cash flow, typically within two months
after the commencement of inTV operations.

PAXSON RADIO

The Company's radio operating strategy, which is implemented by the
Company's highly experienced management team, is to capitalize on the revenue
enhancing and cost saving opportunities of operating

2
<PAGE> 6

multiple FM and AM stations in geographically proximate markets. The principal
elements of the Company's operating strategy include: (i) extensive market
research, (ii) aggressive marketing and promotion and (iii) strict cost
controls.

PAXSON NETWORK-AFFILIATED TELEVISION

Paxson Communications owns and operates an ABC-TV affiliate, WPBF-TV, in
the West Palm Beach market. Pursuant to a time brokerage agreement, the Company
provides programming and markets commercial time for a second television
station, WTVX-TV (a combined United Paramount Network and Warner Brothers
Network affiliate), which is also in the West Palm Beach market. The West Palm
Beach television market is one of the fastest growing markets in the country as
evidenced by its increased market ranking from 65th in 1985 to 45th in 1995.

The Company acquired WPBF-TV in July 1994 for approximately $32.5 million
and began operating WTVX-TV under a time brokerage agreement in August 1995. The
Company has a long-term option to acquire WTVX-TV for approximately $19 million.
The Company's television operating strategy is similar to its radio operating
strategy as the Company seeks to capitalize on the revenue enhancing and cost
saving opportunities from operating two television stations in one market from a
single studio facility. After the acquisition of WPBF-TV, the Company installed
its management team and implemented a program of cost rationalization measures
consisting of, among other things, a reduction in program rights payments, an
increase in salesperson commissions related to additional staffing and higher
revenues, and increased local news expenses to generate higher audience ratings.

3
<PAGE> 7

MARKET OVERVIEW

INFOMALL TV NETWORK

The following table lists those inTV properties that the Company owns,
operates or is affiliated with, and those properties which the Company has
agreements to acquire or operate, as identified under "Proposed inTV Stations"
below. (Television and cable households in thousands.)

<TABLE>
<CAPTION>
INTV
ACTUAL OR CABLE
NATIONAL ANTICIPATED CARRIAGE CURRENT
TV COMMENCE- AT INTV TOTAL CURRENT INTV TOTAL
MARKET MENT OF COMMENCE- CABLE MARKET CABLE CABLE MARKET TV
MARKET(1) RANK(2) STATION OPERATIONS MENT(3) CARRIAGE(4) HOUSEHOLDS(5) CARRIAGE(6) HOUSEHOLDS(7)
- -------------------- -------- ------------------ --------- --------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Owned or Operated
New York, NY........ 1 WHAI-TV 3/96 626 626 4,529 13.8% 6,695
Los Angeles, CA..... 2 KZKI-TV 5/95 1,453 2,002 2,997 66.8 4,918
Philadelphia, PA.... 4 WTGI-TV 2/95 1,225 1,436 1,961 73.2 2,646
San Francisco, CA... 5 KLXV-TV 6/95 650 796 1,578 50.4 2,257
Boston, MA.......... 6 WGOT-TV 5/95 604 841 1,625 51.8 2,122
Washington, DC...... 7 WYVN-TV(8) 4/96 0 0 1,238 0.0 1,884
Atlanta, GA......... 10 WTLK-TV 4/94 300 919 1,015 90.5 1,584
Houston, TX......... 11 KTFH-TV 3/95 647 777 867 89.6 1,574
Cleveland, OH*...... 13 WOAC-TV 10/95 332 336 966 34.8 1,452
Cleveland, OH....... 13 WAKC-TV 3/96 560 560 966 58.0 1,452
Tampa, FL........... 15 WFCT-TV(9) 8/94 0 831 976 85.1 1,395
Miami, FL........... 16 WCTD-TV(9) 4/94 396 868 922 94.1 1,341
Denver, CO.......... 18 KUBD-TV(9) 8/95 430 433 699 61.9 1,160
Phoenix, AZ......... 19 KWBF-TV(9) 1/96 23 23 661 3.5 1,170
St. Louis, MO....... 20 WCEE-TV(9) 1/96 227 227 569 39.9 1,108
Orlando, FL*........ 22 WIRB-TV 12/94 468 482 741 65.0 998
Hartford, CT*....... 26 WTWS-TV(10) 3/95 661 719 770 93.4 911
Raleigh, NC*........ 32 WRMY-TV(11) 6/96 0 0 481 0.0 792
Dayton, OH.......... 53 WTJC-TV(9) 10/95 298 312 341 91.5 501
San Juan, PR........ NR WSJN-TV(9)(12)(15) 2/96 285 285 298 95.6 1,064
--------- ----------- ------ ------
Total Owned or
Operated(7)... 9,185 12,473 23,234 53.7% 35,572
--------- ----------- ------ ------
Affiliates
Sacramento, CA...... 21 KCMY-TV 7/95 624 640 688 93.1% 1,101
Indianapolis, IN.... 24 WIIB-TV 1/96 401 418 580 72.1 925
Norfolk, VA......... 40 WJCB-TV 8/95 343 354 446 79.4 619
Fresno, CA.......... 57 KGMC-TV 1/96 179 179 256 69.8 482
--------- ----------- ------ ------
Total
Affiliates.... 1,547 1,591 1,970 80.8% 3,127
--------- ----------- ------ ------
Total Owned,
Operated and
Affiliates(7). 10,732 14,064 25,204 55.8% 38,699
--------- ----------- ------ ------
Proposed inTV Stations
Dallas, TX.......... 8 Channel 68(15) 12/96 924 0.0% 1,822
Atlanta, GA*........ 10 WNGM-TV(15) 4/96 1,015 17.8 1,584
Milwaukee, WI*...... 29 WHKE-TV(15) 1/97 438 58.8 783
Salt Lake City,
UT................ 37 KZAR-TV(12)(15) 12/96 359 0.0 656
Grand Rapids, MI.... 38 WJUE-TV(13)(15) 6/96 390 0.0 637
West Palm Beach,
FL................ 45 WHBI-TV(14)(15) 7/96 468 0.0 576
Providence, RI...... 46 WOST-TV(12)(15) 12/96 412 0.0 557
Albany, NY.......... 52 WOCD-TV(15) 5/96 357 68.8 507
------ ------
Total Proposed
inTV
Stations(7)... 4,363 15.7% 7,122
--------- ----------- ------ ------
TOTAL INTV
NETWORK(7).... 10,732 14,064 28,552 44,237
========= ========= =========== ===========
</TABLE>

(see footnotes on the following page)

4
<PAGE> 8

<TABLE>
<S> <C>
* Operated or to be operated pursuant to a time brokerage agreement.
(1) Each station is licensed by the FCC to serve a specific community, which is included in the listed market.
(2) See "Certain Definitions and Market and Industry Data" for information concerning market rank.
(3) Cable households reached at commencement of station's operations.
(4) Estimated cable households reached at 1/96 based on cable operators' information.
(5) Source: AC Nielsen. San Juan cable households provided by J. Walter Thompson Latin America, June 1995.
(6) Cable households reached at 1/96 as a percent of the market's total cable households.
(7) Figures represent total television households in each market only and are not necessarily indicative of the
number of television households reached by each station in its market; totals do not double count markets
where the Company has more than one station. Source: AC Nielsen. San Juan cable households provided by J.
Walter Thompson Latin America, June 1995.
(8) Station is not currently on the air.
(9) Currently operated pursuant to a time brokerage agreement pending completion of the Proposed Acquisitions
and exercise of the Station Options.
(10) To be operated pursuant to a time brokerage agreement upon completion of an FCC-required restructuring of
the Company's investment in such station in connection with the Company's acquisition of WHAI-TV.
(11) Option to acquire 40% ownership interest.
(12) 50% ownership interest to be acquired.
(13) 70% ownership interest to be acquired.
(14) inTV affiliate upon acquisition by Cocola Media Corporation of Florida. See "Business -- Time Brokerage
Agreements, Joint Sales Agreements and Other Interests in Broadcast Stations."
(15) Purchase considered an asset acquisition for accounting purposes and therefore historical financial
information not required to be included in the pro forma financial information included herein.
</TABLE>

5
<PAGE> 9

PAXSON RADIO

<TABLE>
<CAPTION>
COMMENCEMENT
NATIONAL RADIO OF
RADIO MARKET(1) MARKET RANK(2) STATION FORMAT OPERATIONS
- ------------------------------- -------------- ------- -------------------------- ------------
<S> <C> <C> <C> <C>
Miami/Ft. Lauderdale, FL....... 11 WLVE-FM Smooth Jazz 4/93
WZTA-FM Mainstream AOR 4/92
WXDJ-FM Spanish Salsa, Meringue (3)(4)
WRMA-FM Spanish Adult Contemporary (3)(4)
WINZ-AM News/Sports 4/92
WFTL-AM Talk/Sports 6/95
WACC-AM Spanish Sports (5)
Tampa/St. Petersburg, FL....... 21 WHPT-FM Rock Adult Contemporary 11/91
WSJT-FM Smooth Jazz 7/95
WHNZ-AM News/Sports 11/91
WNZE-AM Sports 8/94
Orlando, FL.................... 35 WMGF-FM Soft Adult Contemporary 6/92
WJRR-FM Modern Rock 7/92
WWNZ-AM News 4/92
WWZN-AM Sports 12/94
Jacksonville, FL............... 50 WROO-FM Young Country 9/91
WPLA-FM Alternative Rock 6/92
WFSJ-FM Smooth Jazz (3)(6)(7)
WNZS-AM Sports 5/93
WZNZ-AM News 6/92
Cookeville, TN................. n/c WGSQ-FM Country 4/94
WHUB-FM Adult Contemporary (3)(7)
WPTN-AM Talk 4/94
WHUB-AM Country (3)(7)
</TABLE>

<TABLE>
<CAPTION>
COMMENCEMENT
AFFILIATE OF
RADIO NETWORKS(6) STATIONS FORMAT OPERATIONS
- ----------------------------------------------------------------- --------- ------ -----------
<S> <C> <C> <C>
Alabama Radio Network............................................ 74 News 1/95
Florida Radio Network............................................ 56 News 3/93
Tennessee Radio Network.......................................... 79 News 4/94
University of Florida Sports Network............................. 53 Sports 4/94
University of Miami Sports Network............................... 25 Sports 4/95
Penn State Sports Network........................................ 51 Sports 4/94
</TABLE>

PAXSON NETWORK-AFFILIATED TELEVISION

<TABLE>
<CAPTION>
COMMENCEMENT
NATIONAL TV OF
TV MARKET(1) MARKET RANK(2) STATION NETWORK AFFILIATION OPERATIONS
- -------------------------------- -------------- ------- ------------------- ------------
<S> <C> <C> <C> <C>
West Palm Beach, FL............. 45 WPBF-TV ABC 7/94
WTVX-TV(8) Warner/UPN 8/95
</TABLE>

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

(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) See "Certain Definitions and Market and Industry Data" for information
concerning market rank.
(3) Included in the Proposed Acquisitions.
(4) Purchase considered a significant business acquisition for accounting
purposes and therefore certain historical financial information is included
in pro forma financial information included herein.
(5) Company provides services to the station under a JSA; Company owns a 49%
interest.
(6) Company provides services to the station under a JSA.
(7) Purchase considered an insignificant business acquisition for accounting
purposes and therefore historical financial information is not required to
be included in the pro forma financial information included herein.
(8) Operated under a time brokerage agreement.
n/c Market not covered by Arbitron; revenue not independently reported.

6
<PAGE> 10

THE OFFERING

<TABLE>
<S> <C>
Class A Common Stock Offered:
Company.................................... 10,300,000 shares
Selling Stockholders(1).................... 3,200,000 shares
Total.............................. 13,500,000 shares
U.S. Offering.............................. 10,800,000 shares
International Offering..................... 2,700,000 shares
Total.............................. 13,500,000 shares
Common Stock to be Outstanding after this
Offering:
Class A Common Stock(2).................... 38,521,854 shares
Class B Common Stock(3).................... 8,311,639 shares
Total(2)(3)(4)..................... 46,833,493 shares
Use of proceeds.............................. The Company intends to use the net proceeds to
the Company of the Offering to fund the
Proposed Acquisitions and related capital
expenditures, the exercise of the Station
Options (as defined), and capital expenditures
associated with certain previous acquisitions.
Pending such uses, the Company may repay
amounts outstanding under the Company's New
Credit Facility (as defined), which amounts
may subsequently be reborrowed. See "Use of
Proceeds."
Voting rights................................ The holders of the Class A Common Stock and
the Class B Common Stock vote together as a
single class on all matters submitted to a
vote of stockholders of the Company, 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 as otherwise
provided by law. Holders of Class C Common
Stock have no right to vote on any matter
voted on by the Stockholders of the Company,
except as may be provided by law or as
provided in certain circumstances in the
Company's Certificate of Incorporation (as
defined). See "Description of Capital Stock."
Upon consummation of the Offering and as a
result of his ownership of Class B Common
Stock, Mr. Paxson will continue to control the
outcome of any matter submitted to a vote of
stockholders, including the election of a
majority of the directors.
American Stock Exchange symbol............... PXN
Dividend policy.............................. The Company has not paid cash dividends on its
Common Stock and does not intend for the
foreseeable future to declare or pay any cash
dividends and intends to retain earnings, if
any, for the future operation and expansion of
the Company's business. The Company's ability
to pay dividends in the future is subject to
limitations and prohibitions of certain of the
Company's debt instruments and of its
Preferred Stock (as defined). See "Dividend
Policy."
</TABLE>

7
<PAGE> 11

(1) Includes 1,854,000 shares of Class A Common Stock issuable upon exercise of
the warrants to be purchased by the Underwriters from certain Selling
Stockholders. See "Principal and Selling Stockholders" and "Underwriting."
(2) Excludes (i) up to 768,000 shares of Class A Common Stock that may be sold
by the Company upon exercise of the overallotment option, (ii) the
1,630,305 shares of Class A Common Stock issuable upon exercise of options
outstanding as of March 27, 1996 under the Company's Stock Incentive Plan
that are not being exercised as a part of the Offering and (iii) the
2,039,379 shares of Class A Common Stock that are issuable by the Company
upon the exercise of certain warrants outstanding as of March 27, 1996 that
are not being exercised as a part of the Offering. See "Underwriting" and
"Description of Capital Stock."
(3) Excludes the 679,793 shares of Class B Common Stock that are issuable by
the Company upon exercise of certain warrants outstanding as of March 27,
1996 that are not being exercised as a part of the Offering, which Class B
Common Stock is generally convertible into Class A Common Stock at the
holder's option. See "Description of Capital Stock."
(4) Excludes the 3,892,628 shares of Class C Common Stock that are issuable by
the Company upon exercise of certain Warrants outstanding as of March 27,
1996 that are not being exercised as a part of the Offering, which Class C
Common Stock is generally convertible into Class A Common Stock at the
holder's option. See "Description of Capital Stock."

RISK FACTORS

Investors should carefully consider the information set forth under the
heading "Risk Factors," in addition to the other information contained in this
Prospectus, before purchasing the securities offered hereby.

8
<PAGE> 12

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The following summary historical and pro forma financial data, insofar as
it relates to each of the five years ended December 31, 1995, has been derived
from Company prepared financial information and should be read in conjunction
with the audited financial statements, including the consolidated balance sheets
at December 31, 1994 and 1995 and the related consolidated statements of
operations for each of the years in the three year period ended December 31,
1995 and the notes thereto, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Pro Forma Financial Information" and
"Selected Historical and Pro Forma Financial Data" included elsewhere herein.

The following unaudited summary pro forma statement of operations data and
other data for the year ended December 31, 1995 give effect to (i) the
consummation of the Offering; (ii) significant business acquisitions of KZKI-TV,
WGOT-TV, and WTVX-TV; (iii) the issuance of $230,000,000 aggregate principal
amount of Senior Subordinated Notes, issued on September 28, 1995 (the "Notes");
(iv) proposed significant business acquisitions for WRMA-FM and WXDJ-FM; and (v)
the exercise of the Station Options (see "The Proposed Acquisitions" for certain
information concerning the Station Options), as if such events had occurred on
January 1, 1995. WRMA-FM and WXDJ-FM are the only Proposed Acquisitions which
are considered to be significant business acquisitions and all other Proposed
Acquisitions are asset acquisitions or immaterial both individually and in the
aggregate and therefore are not required to be included in the pro forma
financial information. Prior operators' fiscal years have been conformed to the
Company's December 31, 1995 year end. In addition, depreciation and amortization
expense has been increased for the period to reflect preliminary purchase
accounting allocations for all stations included in the Proposed Acquisitions
and Station Options. The following unaudited summary pro forma balance sheet
data at December 31, 1995 gives effect to (i) the consummation of the Offering;
(ii) the Proposed Acquisitions and related capital expenditures; (iii) capital
expenditures on existing properties; (iv) the exercise of the Station Options;
(v) the termination of the holders' put on the Class A and Class B common stock
warrants; (vi) acquisitions and dispositions which have closed subsequent to
December 31, 1995; and (vii) the acquisition of a note receivable from Mr.
Paxson, as if such events included in (i) through (vii) had occurred on December
31, 1995. The Offering and the Proposed Acquisitions and certain management
assumptions and adjustments are described in the accompanying notes hereto. The
pro forma information should be read in conjunction with the Company's
consolidated financial statements and the notes thereto, as of December 31, 1995
and for the three years then ended, included elsewhere in this Prospectus. See
"Pro Forma Financial Information" appearing elsewhere in this Prospectus. This
pro forma information is not necessarily indicative of the Company's actual or
future operating results or financial position.

9
<PAGE> 13

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------- PRO FORMA
1991 1992 1993 1994 1995 1995(A)
------- ------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue......................... $ 830 $17,062 $ 32,062 $62,067 $103,074 $ 122,858
Operating expenses, excluding
depreciation, amortization and
option plan compensation............ 1,719 17,922 28,872 51,225 82,103 91,785
Option plan compensation(b)........... -- -- -- -- 10,803 10,803
Depreciation and amortization......... 497 5,977 9,351 12,404 18,719 38,546
------- ------- -------- ------- -------- ---------
Loss from operations.................. (1,386) (6,837) (6,161) (1,562) (8,551) (18,276)
Interest expense...................... (52) (1,262) (2,052) (5,210) (16,303) (31,288)
Interest income....................... -- -- 113 335 1,709 1,768
Other income (expense), net........... 10 134 108 (5) (982) (1,093)
Benefit (provision) for income
taxes............................... -- -- (2,960) 1,680 1,280 1,280
Extraordinary item and cumulative
effect of a change in accounting
principle(c)........................ -- 110 (457) -- (10,626) (10,626)
------- ------- -------- ------- -------- ---------
Net loss.............................. $(1,428) $(7,855) (11,409) (4,762) (33,473) (58,235)
======= =======
Dividends and accretion on preferred
stock and common stock
warrants(d)......................... (151) (3,386) (13,297) (13,297)
-------- ------- -------- ---------
Net loss attributable to common
stock............................... $(11,560) $(8,148) $(46,770) $ (71,532)
======== ======= ======== ========
Net loss per share(e)................. $ (0.36) $ (0.14) $ (0.97) $ (1.25)
Net loss per share attributable to
common stock(e)..................... (0.37) (0.24) (1.36) (1.53)
Weighted average shares outstanding --
primary and fully diluted(f)........ 31,582 33,430 34,430 46,689
======== ======= ======== ========
Cash dividends declared............... -- -- -- -- -- --
OTHER DATA:
EBITDA(g)............................. $ (796) $ (162) $ 4,522 $11,790 $ 24,582 $ 34,189
Capital expenditures(h)............... $ 60 $ 1,273 $ 1,963 $ 5,917 $ 25,017 $ 25,017
Adjusted EBITDA(i).................... $ 39,802
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
---------------------------
ACTUAL PRO FORMA(A)
-------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................................... $ 68,071 $ 28,403
Working capital................................................... 74,338 34,670
Total assets...................................................... 293,832 468,652
Total debt........................................................ 240,289 257,989
Redeemable preferred stock and Class A and B common stock
warrants(j)..................................................... 57,176 50,711
</TABLE>

(see footnotes on the following page)

10
<PAGE> 14

NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS)

(a) Pro forma statement of operations data and other data for the year ended
December 31, 1995 gives effect to (i) the consummation of the Offering; (ii)
significant business acquisitions of KZKI-TV, WGOT-TV, and WTVX-TV; (iii)
issuance of the Notes on September 28, 1995; (iv) proposed significant business
acquisitions of WRMA-FM and WXDJ-FM; and (v) the exercise of the Station Options
as if such events had occurred on January 1, 1995. WRMA-FM and WXDJ-FM are the
only Proposed Acquisitions which are considered to be significant business
acquisitions and all other Proposed Acquisitions are asset acquisitions or are
immaterial both individually and in the aggregate and therefore are not required
to be included in the pro forma financial information. Prior operators' fiscal
years have been conformed to the Company's December 31, 1995 year end. In
addition, depreciation and amortization expense has been increased for the
period to reflect preliminary purchase accounting allocations for all stations
included in the Proposed Acquisitions and Station Options. The pro forma balance
sheet data as of December 31, 1995 gives effect to: (i) the consummation of the
Offering; (ii) the Proposed Acquisitions and related capital expenditures; (iii)
capital expenditures on existing properties; (iv) the exercise of the Station
Options; (v) the termination of the holders' put on the Class A and Class B
common stock warrants; (vi) acquisitions and dispositions which have closed
subsequent to December 31, 1995; and (vii) the acquisition of a note receivable
from Mr. Paxson, as if such events included in (i) through (vii) had occurred on
December 31, 1995.

(b) Option plan compensation represents a non-cash charge associated with
the granting of common stock options to employees under the Company's Stock
Incentive Plan. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Results of Operations" and "Management -- Stock
Incentive Plan."

(c) Extraordinary item and cumulative effect of a change in accounting
principle reflects a gain of $110 in 1992 as a result of a change in the method
of calculating depreciation and an extraordinary loss of $457 and $10,626 in
1993 and 1995, respectively, associated with the write-off of capitalized
financing costs on debt retired.

(d) Dividends and accretion on preferred stock and common stock warrants
represent the Senior Preferred Stock (as defined herein) (15% dividend rate),
redeemable Class A and Class B common stock warrants and Junior Preferred Stock
(as defined herein) (12% dividend rate). Such capital stock is mandatorily
redeemable and certain issues accrete. See "Description of Capital Stock."

(e) Loss per share data for the years ended December 31, 1993 and 1994 give
a pro forma effect to (i) the Company's amended capital structure related to the
merger with ANG; and (ii) a stock dividend on common shares outstanding on
January 1, 1995. For periods prior to January 1, 1993, loss per share data was
not computed as such amounts were not relevant.

(f) Weighted average shares outstanding for the years ended December 31,
1993 and 1994 give pro forma effect to an increase in the weighted average
number of shares outstanding relating to (i) the merger with ANG of 21,055 and
22,287 shares, respectively; and (ii) a stock dividend on common shares
outstanding on January 1, 1995 of 10,527 and 11,143 shares, respectively. For
periods prior to January 1, 1993, weighted average shares outstanding was not
computed as such amounts were not relevant.

(g) EBITDA is defined as net income (loss) before (i) extraordinary item and
cumulative effect of a change in accounting principle; (ii) benefit (provision)
for income taxes; (iii) other income (expense), net; (iv) interest expense; (v)
depreciation and amortization; (vi) option plan compensation; and (vii)
non-recurring items including terminated operations; less scheduled broadcast
rights payments.

(h) Includes all capital expenditures including expenditures associated with
the upgrade and conversion of acquired and operated television stations to the
inTV format. Pro forma capital expenditures exclude $38,550 of capital
expenditures associated with the Proposed Acquisitions and additional capital
expenditures on existing properties which will be funded from proceeds of the
Offering.

(i) Adjusted EBITDA is defined as EBITDA for the latest twelve months ended
December 31, 1995, less (i) segment operating profit for the Infomall TV Network
for such period plus (ii) four times segment operating profit for the Infomall
TV Network for the quarter ended December 31, 1995. Adjusted EBITDA is
calculated on a basis consistent with calculations under the Indenture (as
defined).

(j) The put rights of the holders of the Class A and Class B common stock
warrants will be terminated upon the closing of the Offering and such warrants
are not included in the pro forma amount at December 31, 1995.

11
<PAGE> 15

RISK FACTORS

Prospective investors should consider carefully the following risk factors
in addition to the other information set forth in this Prospectus before
purchasing the Class A Common Stock.

HIGH LEVEL OF INDEBTEDNESS; ABILITY TO SERVICE INDEBTEDNESS

The Company is highly leveraged. At December 31, 1995, on a pro forma
basis, after giving effect to this Offering and the Proposed Acquisitions, the
Company would have had $258.0 million of total debt, including $227.4 million of
Notes, and $50.7 million of redeemable preferred stock. In addition, subject to
restrictions in the indenture governing the Notes (the "Indenture") and the
Company's $100 million senior secured revolving credit facility (the "New Credit
Facility"), the Company may incur additional indebtedness from time to time to
finance acquisitions or capital expenditures or for other corporate purposes.
Interest expense for the years ended December 31, 1993, 1994 and 1995 was $2.1
million, $5.2 million and $16.3 million, respectively.

The level of the Company's indebtedness could have important consequences
to stockholders, including: (i) a substantial part of the Company's cash flow
from operations must be dedicated to debt service and will not be available for
other purposes; (ii) the Company's ability to obtain additional financing in the
future, if needed, may be limited; (iii) the Company's leveraged position and
covenants contained in the Indenture and the New Credit Facility (or any
replacement thereof) could limit its ability to expand and make capital
improvements and acquisitions; (iv) the Indenture and the New Credit Facility
contain certain restrictive covenants, including covenants that restrict or
prohibit the payment of dividends or other distributions by the Company to its
stockholders; and (v) 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
economic conditions generally. Certain of the Company's competitors currently
operate on a less leveraged basis and may have significantly greater operating
and financing flexibility than the Company.

The Company's ability to satisfy its debt obligations and to pay dividends
on its Preferred Stock (as defined herein) and Common Stock will depend upon its
future operating performance, which will be affected by prevailing economic
conditions and financial, business and other factors, many of which are beyond
its control. The Company expects that its operating cash flow will be sufficient
to meet its operating expenses and to service its debt and preferred stock
requirements as they become due. If the Company is unable to service its
indebtedness or make payments with respect to its preferred stock, however, it
will be forced to adopt an alternative strategy that may include actions such as
reducing or delaying capital expenditures, selling assets, restructuring or
refinancing its indebtedness or seeking additional equity capital. There can be
no assurance that any of these strategies could be effected on satisfactory
terms, if at all, and the implementation of any of these alternative strategies
could have a negative impact on the value of the Class A Common Stock. In the
event of a liquidation of the Company, the Class A Common Stock would be
subordinate to the Company's debt instruments and its Preferred Stock, as well
as other indebtedness incurred and outstanding preferred stock which may be
issued in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

NET LOSSES

The Company has incurred net losses in each of its fiscal years since
inception. Net losses for the fiscal years ended December 31, 1993, 1994 and
1995 were $11.4 million, $4.8 million and $33.5 million, respectively.
Furthermore, the Company's Preferred Stock and certain warrants to purchase
shares of Class A Common Stock and Class B Common Stock have certain dividend,
redemption and accretion provisions. Net losses attributable to Common Stock for
the fiscal years ended December 31, 1993, 1994 and 1995 were $11.6 million, $8.1
million and $46.8 million, respectively. There can be no assurance that the
Company will not continue to generate net losses in the future.

12
<PAGE> 16

DEPENDENCE ON KEY PERSONNEL

The Company's business depends upon the efforts, abilities and expertise of
its executive officers and other key employees, including Lowell W. Paxson. If
certain of these executive officers were to leave the Company, the Company's
operating results could be adversely affected. In addition, in the event of Mr.
Paxson's death, the Company may be required, in certain circumstances, to make
an offer to repurchase the Notes and to redeem its Preferred Stock. See "Certain
Transactions -- Stockholders Agreement." However, there can be no assurance that
if such an event were to occur, the Company will have, or will have access to,
sufficient funds to satisfy such repurchase or redemption obligations. The
Company maintains insurance on Mr. Paxson's life, in the amount of five million
dollars. Mr. Paxson has an employment agreement that expires on December 31,
1999, unless terminated sooner as permitted therein. See "Management --
Employment Agreements."

"MUST CARRY" REGULATIONS

The Company believes that its growth and success depend in part upon access
to households served by cable television systems. Pursuant to the Cable
Television Consumer Protection and Competition Act of 1992 (the "1992 Cable
Act"), each broadcaster was required to elect to exercise either certain "must
carry" or retransmission consent rights in connection with carriage of their
signals by cable systems in their local market. By electing the "must carry"
rights, a broadcaster can demand carriage on a specified channel on cable
systems within its DMA. These "must carry" rights are not absolute, and their
exercise depends on variables such as (i) the number of activated channels on a
cable system, (ii) the location and size of a cable system, and (iii) the amount
of duplicative programming on a broadcast station. Therefore, under certain
circumstances, a cable system can decline to carry a given station.
Alternatively, if a broadcaster chooses to exercise retransmission consent
rights, it can prohibit cable systems from carrying its signal or grant the
appropriate cable system the authority to retransmit the broadcast signal for a
fee or other consideration. The Company's television stations have elected the
"must carry" alternative. The Company's elections of retransmission or "must
carry" status will continue until the next required election date of October 1,
1996.

The "must carry" rules have been subject to judicial scrutiny. In April
1993, the United States District Court for the District of Columbia upheld the
constitutionality of the "must carry" provisions. In June 1994, the Supreme
Court ruled that the "must carry" provisions were content-neutral and, thus, not
subject to strict scrutiny; however, the Supreme Court remanded the case to the
lower federal court with instructions to hold further proceedings with respect
to evidence that lack of the "must carry" requirements would harm local
broadcasting. On December 12, 1995, the District Court again upheld the
constitutionality of the "must carry" provisions. The District Court's most
recent decision has been appealed to the Supreme Court and management cannot
predict the final outcome of the Supreme Court case or the extent to which, in
the absence of any "must carry" obligation, its television stations might lose
viewers because of the deletion or repositioning of its signal on cable
television systems. See "Business -- Federal Regulation of Broadcasting."

GOVERNMENT REGULATION

Each of the Company's radio and television stations operates pursuant to
one or more licenses issued by the Federal Communications Commission (the "FCC")
that expire at different times, commencing in February 1996. The Company may
apply to renew those licenses, and third parties may challenge those
applications. Although the Company has no reason to believe that its licenses
will not be renewed in the ordinary course, there can be no assurance that the
licenses will be renewed.

The radio and television broadcasting industries are subject to extensive
and changing regulation. Among other things, the Communications Act of 1934, as
amended (the "Communications Act"), and FCC rules and policies require FCC
consent to assignments of FCC licenses and transfers of control of FCC
licensees. Congress and the FCC currently have under consideration and may in
the future adopt new laws and regulations and policies regarding a wide variety
of matters which could, directly or indirectly, adversely affect the ownership
and operation of the Company's broadcast properties, as well as the Company's
business

13
<PAGE> 17

strategies. In addition, relaxation of the existing multiple ownership and
cross-ownership rules and policies by the FCC, as provided in the newly-enacted
Telecommunications Act of 1996 (the "1996 Act"), removes restrictions on larger
media, entertainment and telecommunications companies, with greater access to
capital and resources than the Company, from competing with the Company for the
acquisition of media properties and the negotiation of programming arrangements.
Changes in the FCC's rules following passage of the 1996 Act, such as
elimination of restrictions on the offering of multiple network services by the
existing major television networks, the relaxation of restrictions on the
participation by the regional Bell holding companies in cable television and
other direct-to-home video technologies, the removal of nationwide restrictions
on radio broadcast ownership and the relaxation of restrictions on nationwide
broadcast television ownership could accelerate the existing trend toward
vertical integration in the telecommunications, media and home entertainment
industries and cause the Company to face more formidable competition in the
future. See "Business -- Federal Regulation of Broadcasting."

MULTIPLE OWNERSHIP RULES; TIME BROKERAGE AGREEMENTS

Current FCC duopoly rules prohibit ownership interests in two or more
television stations with overlapping service areas. The FCC generally applies
its ownership limits to attributable interests held by an individual,
corporation, partnership or other entity. In the case of corporations holding
broadcast licenses, the interests of officers, directors and those who directly
or indirectly have the right to vote 5% or more of the corporation's voting
stock (or 10% or more of such stock in the case of insurance companies, certain
regulated investment companies and bank trust departments) are generally deemed
to be attributable, as are positions as an officer or director of a corporate
parent of a broadcast licensee. Changes in the rule for attributing the
ownership of media interests for purposes of the FCC's multiple ownership and
cross-ownership rules could require that the Company restructure or divest
itself of some existing broadcast interests.

The 1996 Act eliminated the existing restrictions on the number of
television stations that a single entity may own nationwide and increased the
nationwide ceiling for national television audience reach to 35 percent of the
television households, with UHF stations counting only 50% of their respective
market households. Congress also has directed the FCC to institute a proceeding
to review its present rules to determine whether to retain, modify or eliminate
its present restrictions on the number of television stations in which a single
entity may hold an attributable interest within a single market.

The FCC previously initiated rule making proceedings to consider proposals
to modify its television ownership restrictions, including ones that may permit
ownership, in some circumstances, of two television stations with overlapping
service areas, and these rule making procedures may be incorporated in the
proceedings required by the 1996 Act. The FCC also is considering in these
proceedings whether to adopt restrictions on television time brokerage
agreements. The duopoly rules for television currently prevent the Company from
acquiring the FCC licenses of television stations with which it has time
brokerage agreements in those markets where the Company owns a television or
radio station. In addition, if the FCC were to decide that the provider of
programming services under time brokerage agreements should be treated as having
an attributable ownership in the television station it programs, and if it did
not relax the duopoly rules, or if the FCC were to adopt restrictions on time
brokerage agreements without grandfathering existing time brokerage agreements,
the Company could be required to renegotiate or terminate certain of its time
brokerage agreements. The 1996 Act specifies, however, that none of the
provisions relating to broadcast ownership shall be construed to prohibit the
origination, continuation or renewal of any television time brokerage agreement
that is in compliance with the regulations of the FCC. The Committee Report
accompanying the 1996 Act notes that the Act grandfathers time brokerage
agreements in existence upon enactment of the act and allows time brokerage
agreements in the future, consistent with the FCC's rules. Nevertheless, if the
FCC were to find that the licensees of the stations with which the Company has
time brokerage agreements failed to maintain control over their operations as
required by FCC rules and policies, the licensee of the time brokerage
agreements and/or the Company could be fined or could be set for hearing, the
outcome of which could be a fine or, under certain circumstances, loss of the
applicable FCC license. The Company is unable to

14
<PAGE> 18

predict the ultimate outcome of possible changes to these FCC rules and the
impact such FCC rules may have on its broadcasting operations. See
"Business -- Federal Regulation of Broadcasting."

VOTING CONTROL BY FOUNDING STOCKHOLDER

After the Offering, Lowell W. Paxson will beneficially own approximately
60.4% of the outstanding Class A Common Stock (approximately 57.0% if the
Underwriters' over-allotment option is exercised in full) and 100% of the
outstanding Class B Common Stock and will have 87.4% of the voting power of the
outstanding Common Stock (86.8% if the Underwriters' overallotment option is
exercised in full). As a result, Mr. Paxson will effectively be able to control
the outcome of matters requiring a stockholder vote, including the election of
directors, adopting or amending provisions of the Company's certificate of
incorporation and bylaws, and approving certain mergers or other similar
transactions, such as a sale of substantially all the Company's assets. See
"Principal and Selling Stockholders."

Purchasers of Class A Common Stock offered hereby will become minority
stockholders of the Company and will be unable to control the management or
business policies of the Company. Moreover, subject to contractual restrictions
and general fiduciary obligations, the Company is not prohibited from engaging
in transactions with its management and principal stockholders, or with entities
in which such persons are interested. The Company's certificate of incorporation
does not provide for cumulative voting in the election of directors.

ANTI-TAKEOVER EFFECT OF CHARTER PROVISIONS, BYLAWS, AND STATE LAW

The Company's certificate of incorporation and bylaws and Delaware law
contain provisions that may have the effect of inhibiting a non-negotiated
merger or other business combination. These provisions are intended to encourage
a person interested in acquiring the Company to negotiate with, and to obtain
the approval of, the Board of Directors in connection with the transaction.
However, certain of these provisions may discourage a future acquisition of the
Company, including an acquisition in which stockholders might otherwise receive
a premium for their shares. As a result, stockholders who might desire to
participate in such a transaction may not have the opportunity to do so. See
"Description of Capital Stock -- Certain Provisions of the Company's Certificate
of Incorporation" and "-- Bylaws."

In addition to its authorized shares of Common Stock, the Company's
certificate of incorporation authorizes the issuance of up to 1,000,000 shares
of preferred stock. The Board of Directors has authority to determine the price,
rights, preferences, privileges and restrictions, including the voting rights of
those shares, without any further vote or action by the stockholders. Of the
1,000,000 shares of preferred stock that the Company is authorized to issue, as
of December 31, 1995: (a) 2,000 shares have been designated as 15% Cumulative
Compounding Redeemable Preferred Stock, (b) 714.286 shares have been designated
as Series B 15% Cumulative Compounding Redeemable Preferred Stock, and (c)
33,000 shares have been designated as Junior Cumulative Compounding Redeemable
Preferred Stock. The holders of the Company's outstanding Preferred Stock have
rights which are generally senior to those of the holders of the Common Stock,
including certain voting, redemption and other rights which could have the
effect of inhibiting a change in control of the Company without the consent of
such holders and thereby delay, discourage or prevent a future acquisition of
control of the Company. The rights of holders of Common Stock will be subject
to, and may be adversely affected by, the rights of holders of any Preferred
Stock that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no current plans to issue additional shares of
preferred stock. See "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Upon consummation of the Offering, the Company will have outstanding a
total of 38,521,854 shares of Class A Common Stock (40,105,854 shares if the
Underwriters' over-allotment option is exercised in full), which gives effect to
the issuance of 1,959,000 shares upon the exercise of options and warrants
(2,775,000 if

15
<PAGE> 19

the Underwriters' over-allotment option is exercised in full), 8,311,639 shares
of Class B Common Stock and no shares of Class C Common Stock. Generally, shares
of Class B Common Stock and Class C Common Stock are convertible to shares of
Class A Common Stock at the option of the holder thereof. In addition, there
will be outstanding options to purchase an aggregate of 1,630,305 shares of
Class A Common Stock and warrants to purchase an aggregate of 2,039,379 shares
of Class A Common Stock, 679,793 shares of Class B Common Stock and 3,892,628
shares of Class C Common Stock, all of which are currently exercisable. Of the
outstanding shares, the shares of Class A Common Stock sold in the Offering will
be freely transferable without restriction under the Securities Act of 1933, as
amended (the "Securities Act"), except for any such shares purchased by
"affiliates" of the Company as that term is defined in Rule 144 of the
Securities Act ("Rule 144"), which will be subject to the limitations of Rule
144 under the Securities Act. 23,788,686 shares of Class A Common Stock, all
8,311,639 shares of Class B Common Stock and all shares of Class C Common Stock,
including any such shares acquired upon the exercise of outstanding options or
warrants, will be "restricted securities" for purposes of Rule 144 and, subject
to the agreement discussed below, may not be resold unless registered under the
Securities Act or sold pursuant to an applicable exemption from registration
thereunder, including the exemptions contained in Rule 144. All of such
restricted shares are eligible for sale on the open market under Rule 144
(subject to the volume and manner of sale limitations of that rule) except for
(i) shares issued upon the exercise of warrants to purchase Class C Common Stock
which will be so eligible for sale, commencing in December 1996 (unless a
proposed amendment to Rule 144 is adopted by the Commission, in which case all
such shares would immediately be eligible for sale on the open market under Rule
144 (subject to the volume and manner of sale limitations of that rule)); (ii)
94,767 shares of Class A Common Stock which shall be so eligible in April 1997
(or in April 1996 if such proposed amendment is adopted); and (iii) 441,376
shares of Class A Common Stock which shall be so eligible in July 1997 (or in
July 1996 if such proposed amendment is adopted).

The Company is a party to a stockholders' agreement (the "Stockholders
Agreement") with certain of its stockholders, which grants them the right to
require the Company, subject to certain limitations, to effect up to five
"demand" registrations under the Securities Act for the sale of such
stockholders' shares of Common Stock. The Stockholders Agreement also provides
that in the event that the Company proposes to register any of its Common Stock
under the Securities Act, whether or not for its own account, at any time or
times, the stockholders that are parties to the Stockholders Agreement shall be
entitled, with certain exceptions, to include their shares of Common Stock in
such registration unless the managing underwriters of such offering exclude some
or all of such shares from such registration under the circumstances specified
in the Stockholders Agreement.

The Company, its executive officers and directors and certain of the
Company's existing stockholders have generally agreed that, for a period of 180
days from the date of this Prospectus, they will not, without the prior consent
of Smith Barney Inc., offer, sell, contract to sell or otherwise dispose of, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for, capital stock of the Company. Such restrictions
have certain exceptions, including permitting the Company to issue capital stock
in connection with acquisitions, including the Proposed Acquisitions. See
"Underwriting."

Because there has been only a limited public market for shares of the Class
A Common Stock, the Company is unable to predict the effect, if any, that future
sales of shares, or the availability of shares for future sale, will have on the
market price for the Class A Common Stock prevailing from time to time. Sales of
substantial amounts of Class A Common Stock, or the perception that such sales
could occur, could adversely affect market prices for the Class A Common Stock
and could impair the Company's future ability to obtain capital through an
offering of equity securities.

CHANGE OF CONTROL

A "change of control" (as defined in the New Credit Facility) constitutes
an event of default under the New Credit Facility. In the event of a "change of
control" (as defined in the Indenture), the Company is required to offer to
repurchase all of the outstanding Notes at 101% of the principal amount thereof
plus any accrued and unpaid interest thereon to the date of the purchase. A
"change of control" (as defined with respect to the Preferred Stock) will
require the Company to redeem the Senior Preferred Stock and pay a

16
<PAGE> 20

significantly higher dividend on the Junior Preferred Stock, unless it is
redeemed. The exercise by the holders of the Notes of their right to require the
Company to repurchase the Notes upon a change of control could also cause a
default under the New Credit Facility and other indebtedness of the Company. The
Company's ability to repurchase the Notes or to repay such indebtedness may be
limited by the Company's then existing financial resources. There can be no
assurance that in the event of any such change of control, the Company will
have, or will have access to, sufficient funds or will be contractually
permitted under the terms of outstanding indebtedness to pay the required
purchase price for all Notes tendered by holders upon a change of control, repay
outstanding indebtedness or redeem Senior Preferred Stock or Junior Preferred
Stock. See "Description of Capital Stock -- Senior Preferred Stock" and
"-- Junior Preferred Stock."

NEW INDUSTRY

inTV operates in a relatively new industry with a limited operating
history. Potential investors should be aware of the difficulties and uncertainty
that are normally associated with new industries, including a lack of consumer
and advertiser acceptance, difficulty in obtaining financing, increasing
competition, advances in technology, and changes in law and regulations. There
can be no assurance that this new industry will develop and continue as a viable
industry. Such development could require the Company to sell its owned inTV
dedicated television stations or convert them to other uses that are less
profitable than expected. Growth in revenue from the Company's inTV business
depends on increasing consumer awareness and acceptance of infomercial
programming and growing demand by infomercial advertisers. See "Business --
Infomall TV Network."

ABILITY TO MANAGE GROWTH

Since inception, the Company has experienced rapid growth, primarily
through acquisitions. Rapidly growing businesses frequently encounter unforeseen
expenses and delays in completing acquisitions, as well as difficulties and
complications in integrating acquired operations without disruption to overall
operations. In addition, such rapid growth may adversely affect the Company's
operating results because of many factors, including capital requirements,
transitional management and operating adjustments, and interest costs associated
with acquisition debt. There can be no assurance that the Company will
successfully integrate recently acquired and future acquired operations or
successfully manage the costs often associated with rapid growth. While the
Company has no probable or pending significant acquisitions other than the
Proposed Acquisitions and the exercise of the Station Options, the Company
continuously evaluates the acquisition or operation of additional television and
radio stations.

TIME BROKERAGE AGREEMENTS -- RIGHTS OF PREEMPTION AND TERMINATION

Upon completion of the Proposed Acquisitions, the exercise of the Station
Options and the restructuring of the Company's investment in WTWS-TV, the
Company will operate six television stations pursuant to time brokerage
agreements, which stations will not be owned by the Company. The Company will
have options to purchase three of such stations. All of the Company's time
brokerage agreements allow, in accordance with FCC rules, regulations and
policies, preemption of the Company's programming by the FCC licensee of each
station with which the Company has a time brokerage agreement. In addition, each
time brokerage agreement provides that under certain limited circumstances it
may be terminated by the FCC licensee. Accordingly, there can be no assurance
that the Company will be able to air all the programming expected to be aired on
those stations with which it has a time brokerage agreement or that the Company
will receive the expected advertising revenue from the sale of advertising in
such programming. Although the Company believes that the terms and conditions of
each of its time brokerage agreements should enable the Company to air and
utilize the programming and other non-broadcast license assets of the respective
stations, there can be no assurance that early terminations of the time
brokerage agreements or unexpected preemptions of all or a significant part of
the programming by the FCC licensee of such stations will not occur. An early
termination of one of the Company's time brokerage agreements or repeated and
material preemptions of programming could adversely affect the Company's
operations. In addition, the Company's time brokerage agreements generally have
expiration dates ranging from seven to ten years. The Company expects its future
time brokerage agreements to have terms of not more than ten years. There can be
no assurance that the Company will be able to negotiate extensions of its time
brokerage agreements on terms satisfactory to the Company.

17
<PAGE> 21

INDUSTRY AND ECONOMIC CONDITIONS; SEASONALITY

The profitability of the Company's radio and television stations is subject
to various factors that influence the radio and television broadcasting
industries as a whole. The Company's radio and television stations may be
affected by numerous factors, including changes in audience tastes, priorities
of advertisers, new laws and governmental regulations and policies, changes in
broadcast technical requirements, technological changes, proposals to eliminate
the tax deductibility of expenses incurred by advertisers and changes in the
willingness of financial institutions and other lenders to finance radio and
television station acquisitions and operations. The Company cannot predict
which, if any, of these or other factors might have a significant impact on the
radio and television broadcasting industry in the future, nor can it predict
what impact, if any, the occurrence of these or other events might have on the
Company's operations. Generally, advertising tends to decline during economic
recession or downturn. Consequently, the Company's broadcasting revenue is
likely to be adversely affected by a recession or downturn in the United States
economy or other events or circumstances that adversely affect advertising
activity. In addition, the Company's operating results in individual geographic
markets could be adversely affected by local regional economic downturns,
particularly in Florida. Seasonal revenue fluctuations are common in the radio
and television broadcasting industry and result primarily from fluctuations in
advertising expenditures by local retailers. Paxson Radio and Paxson
Network-Affiliated Television generally experience their lowest revenue for the
year in the first quarter, whereas their highest revenue generally occurs in the
fourth fiscal quarter. Because of the short operating history of inTV, the
Company's ability to assess the effects of seasonality on inTV is limited. It
appears, however, that inTV may experience its highest revenues in the first and
fourth quarters.

COMPETITION; NEW TECHNOLOGY

The Company's television and radio stations are located in highly
competitive markets. The financial success of each of the Company's radio and
television stations depends, to a significant degree, upon its audience ratings,
its share of the overall radio or television (as applicable) sales within its
geographic market, the economic health of the market and the popularity of its
programming. The audience ratings and advertising of such individual stations
are subject to change and any adverse change in a particular market could have a
material adverse effect on the revenue and cash flow of the Company. Paxson
Radio stations compete for audience share and advertising revenue directly with
other FM and AM radio stations and with other media within their respective
markets. Although Paxson Radio 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 increased promotional and other expenses. Paxson
Network-Affiliated Television stations face similar competitive forces. In
addition, to the extent that certain of the Company's competitors have or may,
in the future, obtain greater resources than the Company, its ability to compete
successfully in its broadcasting markets may be impeded. There can be no
assurance that the Company will be able to maintain or increase its current
audience ratings and advertising revenue. See "Business -- Competition."

The Company's owned and operated inTV stations face significant competition
from various broadcasting stations and broadcasting and cable networks that air
both traditional and long-form paid programming in varied amounts, as well as
local cable operators that sell blocks of time to long-form advertisers and
could encounter competition from developments in technology that may be
subsequently commercialized. To the extent that the Infomall TV Network is
successful, it is likely that the Company will face additional competition from
new market entrants. See "Business -- Competition."

TECHNOLOGY CHANGES

Radio and television broadcasting are also subject to competition with new
media technologies that are being developed or have been introduced, such as,
for radio, the delivery of audio programming through cable television, telephone
or electrical wires or the introduction of digital audio broadcasting ("DAB")
and, for television, direct satellite-to-home video programming and so-called
video dialtone in which telephone or

18
<PAGE> 22

other companies provide broad-band wire links for delivery of video programming
to homes by independent program suppliers. DAB may provide a medium for the
delivery by satellite or terrestrial means of multiple audio programming formats
to local and national audiences. Further, the Company may be subject to other
changes in technology and the manner in which businesses and individual
households adopt such technologies and embrace new communication and
distribution channels available via the Internet, World Wide Web, and other such
broadband networks. Prospective technology enhancements may allow for increased
economic, distribution and communication efficiencies which may impact the
Company. The Company cannot predict the effect, if any, that these or other new
technologies may have on the industries in which the Company operates, or on the
Company. See "Business -- Federal Regulation of Broadcasting."

RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS

The New Credit Facility and the Indenture each contain certain covenants
that restrict, among other things, the Company's ability to incur additional
indebtedness, incur liens, make investments, pay dividends or make certain other
restricted payments, consummate certain asset sales, consolidate with any other
person or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company. In addition, the New Credit
Facility also requires the Company to comply with certain financial ratios and
tests, under which the Company is required to achieve certain financial and
operating results. The Company's ability to meet these financial ratios and
tests may be affected by events beyond its control, and there can be no
assurance that they will be met. In the event of such a default under the New
Credit Facility, the lenders thereunder may terminate their lending commitments
and declare the indebtedness under the New Credit Facility immediately due and
payable, which would result in a default under the Notes. There can be no
assurance that the Company would have sufficient assets to pay indebtedness then
outstanding under the New Credit Facility and the Notes. Any refinancing of the
New Credit Facility is likely to contain similar restrictive covenants.

LIMITED PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been only a limited public market for the
Common Stock and there can be no assurance that an active trading market for the
Class A Common Stock will develop and continue after the Offering. The public
offering price of the Class A Common Stock will be determined through
negotiations among the Company and representatives of the Underwriters based
upon a variety of factors. Additionally, the market price of the Class A Common
Stock could be subject to significant fluctuations in response to quarterly and
annual operating results of the Company, announcements of technological
improvements or new products by the Company or its competitors, changes in
financial estimates by securities analysts, changes in general conditions in the
economy, the financial markets, or the broadcasting, advertising or television
retail shopping industries, or other developments affecting the Company, its
customers or its competitors, some of which may be unrelated to the Company's
performance and beyond the Company's control.

NO DIVIDENDS

DILUTION

Persons purchasing shares of Class A Common Stock in the Offering will
incur immediate and substantial dilution in the net tangible book value per
share of Class A Common Stock. Dilution for this purpose represents the
difference between the $16.00 per share public offering price of the Class A
Common Stock and the pro forma net tangible book value per share of the Class A
Common Stock as of December 31, 1995 adjusted for the consummation of the
Offering and the Proposed Acquisitions. See "Dilution."

19
<PAGE> 23

THE PROPOSED ACQUISITIONS

The Company currently has agreements, subject to various conditions
including the receipt of regulatory approvals, to purchase the assets of or, as
indicated below, to finance the acquisition of assets of, and enter into time
brokerage agreements with respect to, the following television and radio
stations (the "Proposed Acquisitions") (dollars in thousands):

<TABLE>
<CAPTION>
ANTICIPATED
COMMENCEMENT EXPECTED TOTAL
OF PURCHASE CAPITAL EXPECTED
MARKET(1) STATION OPERATIONS PRICE EXPENDITURES COST
- ---------------------------- --------------------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C> <C>
TELEVISION
Dallas, TX................ Channel 68(2) 12/96 $ 3,000 $ 3,000 $ 6,000
Atlanta, GA*.............. WNGM-TV(2)(3) 4/96 n/a 2,400 2,400
Milwaukee, WI*............ WHKE-TV(2)(4) 1/97 4,000 1,900 5,900
Grand Rapids, MI.......... WJUE-TV(2)(5) 6/96 1,000 4,300 5,300
West Palm Beach, FL**..... WHBI-TV(2) 7/96 3,000 3,300 6,300
Albany, NY................ WOCD-TV(2) 5/96 2,500 1,000 3,500
Salt Lake City, UT........ KZAR-TV(2)(6) 12/96 850 3,200 4,050
Providence, RI............ WOST-TV(2)(6) 12/96 1,000 2,500 3,500
San Juan, PR.............. WSJN-TV(2)(6)(7) 2/96 4,000 500 4,500
RADIO
Jacksonville, FL.......... WFSJ-FM(8)(9) 6/96 1,550 0 1,550
Cookeville, TN............ WHUB-FM(9) 9/96 3,800 0 3,800
WHUB-AM(9) 9/96
Miami/Ft. Lauderdale, WXDJ-FM(10) 6/96 107,500 0 107,500
FL.....................
WRMA-FM(10) 6/96
Less Deposits (7,000) (7,000)
Paid............
-------- ------------ --------
Total............. $125,200 $ 22,100 $147,300
======== ========= ========
</TABLE>

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

* To be operated pursuant to a time brokerage agreement.
** inTV affiliate upon acquisition by Cocola Media Corporation of Florida. See
"Business -- Time Brokerage Agreements, Joint Sales Agreements and Other
Interests in Broadcast Stations."
(1) Each station is licensed by the FCC to serve a specific community which is
included in the listed market.
(2) Purchase considered an asset acquisition for accounting purposes and
therefore historical financial information is not required to be included
in the pro forma financial information included herein.
(3) The station license will be purchased and held by an affiliate of Whitehead
Media. The Company has entered into a time brokerage agreement with
Whitehead Media to operate the station. The purchase price of $10 million
will be financed by a third party and the Company will provide for certain
of this station's capital expenditures.
(4) The Company will finance acquisition of the station by The Christian
Network, Inc. and will have an option to acquire the station.
(5) 70% ownership interest to be acquired.
(6) 50% ownership interest to be acquired. See "Business -- Time Brokerage
Agreements, Joint Sales Agreements and Other Interests in Broadcast
Stations."
(7) Operated pursuant to a time brokerage agreement pending acquisition of 50%
interest.
(8) To be acquired through acquisition of Todd Communications, Inc.; Company
currently provides services under a JSA. See "Certain Transactions."
(9) Purchase considered an insignificant business acquisition for accounting
purposes and therefore historical financial information is not required to
be included in the pro forma financial information included herein.
(10) Purchase considered a significant business acquisition for accounting
purposes and therefore certain historical financial information is included
in the pro forma financial information included herein.

The Company has agreed to acquire WXDJ-FM and WRMA-FM in the Miami market
for a price of either (i) $107.5 million in cash or (ii) $92 million in cash
plus 1,277,778 shares of Class A Common Stock (subject to increase if the market
value of the Class A Common Stock declines below $18 per share), as determined
at the seller's option prior to the execution of definitive purchase
documentation. For purposes of the information set forth in this prospectus, the
Company has assumed that the sellers will elect to receive the purchase price
for the stations entirely in cash. Were the sellers to elect to receive cash and
shares of Class A Common Stock, the anticipated aggregate cost of all of the
Proposed Acquisitions and related capital

20
<PAGE> 24

expenditures listed above would increase from approximately $147.3 million to
approximately $154.8 million ($23 million of which would be payable in shares of
Class A Common Stock).

In addition to the Proposed Acquisitions set forth above, the Company
intends to exercise options to acquire the following television stations
currently being operated by the Company pursuant to time brokerage agreements:
WFCT-TV (Tampa, FL), WCTD-TV (Miami, FL), KUBD-TV (Denver, CO), KWBF-TV
(Phoenix, AZ), WCEE-TV (St. Louis, MO) and WTJC-TV (Dayton, OH). Exercise of
certain of such options by the Company became permissible with the recent
enactment of the 1996 Act. The aggregate exercise price for the foregoing
options (collectively, the "Station Options") is $1.4 million.

The Company has a history of regularly considering the acquisition of
broadcast and other properties, and at any given time is in various stages of
considering such opportunities. In addition to the Proposed Acquisitions, the
Company is currently conducting due diligence with respect to certain broadcast
and other properties, primarily in Florida markets, following the execution of
six separate non-binding letters of intent. If all of these potential
acquisitions were consummated, the aggregate purchase price could be as much as
$110 million, substantially all of which would likely to be paid in cash and the
remainder through the issuance of Common Stock. The consummation of such
acquisitions would require various regulatory approvals and could require, among
other things, the waiver or consent of the Company's existing lenders and
holders of Preferred Stock as well as additional financing relating to one or
more of the potential acquisitions. If definitive acquisition agreements are
executed, the Company anticipates that closing on the purchases of such
acquisitions would require an additional three to twelve months. Given the
nature of these arrangements and the numerous conditions precedent to any
acquisition, there can be no assurance that any of these acquisitions will
occur.

Company investments in broadcast properties (including certain of the
Proposed Acquisitions as noted above) involve arrangements with third parties,
including time brokerage agreements and joint sales agreements, as well as the
co-ownership of certain television stations and radio stations. These
investments in broadcast properties permit the Company to have a presence in
additional markets and to enjoy many, but not all, of the benefits of ownership
while at the same time remaining in compliance with FCC regulations. For a
description of the Company's relationships with these companies, see
"Business -- Time Brokerage Agreements, Joint Sales Agreements and Other
Interests in Broadcast Stations." The Company has structured its relationships
with these companies in a manner designed to ensure strict compliance with the
FCC's rules and regulations governing television station ownership.

USE OF PROCEEDS

The net proceeds to the Company from the Offering (after deduction of the
underwriting discounts and commissions and estimated offering expenses) are
estimated to be approximately $155.4 million ($167.8 million if the
Underwriters' over-allotment option is exercised in full). The Company will not
receive any of the proceeds from the sale of the Class A Common Stock being sold
by the Selling Stockholders. Of the aggregate of the net proceeds to the Company
from the Offering of $155.4 million and existing working capital of $9.8
million, (i) $147.3 million will be used to fund the Proposed Acquisitions and
related capital expenditures; (ii) $1.4 million will be used to fund the
exercise of the Station Options; and (iii) $16.5 million will be used to fund
capital expenditures associated with certain previous acquisitions. Pending the
use of proceeds described above, the net proceeds will be invested in
short-term, investment grade securities, certificates of deposit, or direct or
guaranteed obligations of the United States Government, and may be used to repay
amounts outstanding under the New Credit Facility, the Company's senior secured
revolving credit facility which currently bears an interest rate of LIBOR plus
3.25% (8.93% as of December 31, 1995).

21
<PAGE> 25

PRICE RANGE OF CLASS A COMMON STOCK

In November 1994, the Company's Class A Common Stock became publicly-held
through its merger with The American Network Group, Inc. ("ANG") and beginning
November 7, 1994, the Class A Common Stock was listed on the Nasdaq Small-Cap
Market. Since July 10, 1995, the Class A Common Stock has been listed on the
American Stock Exchange under the symbol PXN. The following table sets forth for
the periods indicated, the high and low last sales price per share for the Class
A Common Stock, as reported on the Nasdaq Small-Cap Market (until July 7, 1995)
and the closing sale price per share for the Class A Common Stock on the
American Stock Exchange thereafter.

<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
1994
Fourth quarter (beginning November 7, 1994)..................................... 16 10 5/8
1995
First Quarter................................................................... 12 5/8 9
Second Quarter.................................................................. 14 8
Third Quarter................................................................... 15 3/4 12
Fourth Quarter.................................................................. 16 3/8 11 1/2
1996
First Quarter (through March 27).............................................. 21 1/4 13 7/8
</TABLE>

On March 27, 1996, the closing price of the Class A Common Stock on the
American Stock Exchange was $18.875 per share. As of that date, there were
approximately 330 holders of record of the Class A Common Stock. Because of the
limited trading activity in the Class A Common Stock, the preceding prices may
not be indicative of the actual value of the Class A Common Stock or of the
trading prices that would result from a more seasoned market.

DIVIDEND POLICY

The Company has not paid cash dividends and does not intend for the
foreseeable future to declare or pay any cash dividends on its Common Stock and
intends to retain earnings, if any, for the future operation and expansion of
the Company's business. Any determination to declare or pay dividends will be at
the discretion of the Company's board of directors and will depend upon the
Company's future earnings, results of operations, financial condition, capital
requirements, contractual restrictions under the Indenture and the New Credit
Facility, considerations imposed by applicable law and other factors deemed
relevant by the board of directors. In addition, the terms of the outstanding
shares of Preferred Stock contain restrictions on the declaration of dividends
with respect to the Common Stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation -- Liquidity and Capital Resources"
and "Description of Capital Stock."

DILUTION

The net tangible book value (deficit) of the Company as of December 31,
1995 was approximately ($101.8 million) or ($2.95) per share of Common Stock.
Net tangible book value (deficit) per share is equal to the Company's total
tangible assets less total liabilities (including mandatorily redeemable
securities) divided by the total number of shares of Common Stock outstanding.
After giving effect to the sale of the shares of Class A Common Stock offered
hereby at the public offering price of $16.00 per share (after deducting the
estimated underwriting discounts and commissions and estimated offering expenses
payable by the Company) and the receipt of the net proceeds of $155.4 million
therefrom, the pro forma net tangible book value of the Company as of December
31, 1995 would have been $53.6 million or $1.15 per share of Common Stock.
Assuming consummation of the Proposed Acquisitions, exercise of the Station
Options and application of the net proceeds of the Offering as described under
"Use of Proceeds," pro forma net tangible book value (deficit) would have been
($2.23) per share of Common Stock. This represents an immediate increase in pro
forma net tangible book value of $0.72 per share to existing shareholders and an
immediate

22
<PAGE> 26

dilution of $18.23 per share to purchasers of Class A Common Stock in this
Offering. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed public offering price....................................... $16.00
Net tangible book value (deficit) as of December 31, 1995........... (2.95)
Increase attributable to net proceeds of the Offering............... 4.10
(Decrease) attributable to the Proposed Acquisitions, the exercise
of the Station Options and other pro forma balance sheet
adjustments....................................................... (3.38)
Pro forma net tangible book value (deficit) after the Offering and
application of Use of Proceeds.................................... (2.23)
------
Dilution to new investors........................................... $18.23
======
</TABLE>

The above computation assumes no exercise of outstanding options or the
Underwriters' over-allotment option. As of March 27, 1996, there were options
outstanding to purchase a total of 1,735,305 shares of Class A Common Stock at
an exercise price of $3.42 per share. See "Capitalization" and "Management --
Stock Incentive Plan." The above computation further assumes no exercise of
outstanding warrants to purchase an aggregate of 7,727,800 shares of Common
Stock at nominal exercise prices. The exercise of any of these options or
warrants would not materially affect the dilution to new investors in this
Offering.

23
<PAGE> 27

CAPITALIZATION

The following table sets forth the actual and pro forma capitalization of
the Company as of December 31, 1995. Pro forma capitalization gives effect to
(i) the consummation of the Offering at the public offering price of $16.00 per
share (providing $155.4 million of cash); (ii) the Proposed Acquisitions and
related capital expenditures (utilizing $147.3 million of cash); (iii) capital
expenditures on existing properties (utilizing $16.5 million of cash); (iv) the
exercise of the Station Options (utilizing $1.4 million of cash); (v) the
termination of the holders' put on the Class A and Class B common stock
warrants; (vi) acquisitions and dispositions which have closed subsequent to
December 31, 1995 (utilizing $28.9 million of cash and $17.7 million of other
debt) and (vii) the acquisition of a note receivable from Mr. Paxson (utilizing
$1 million of cash), as if such events included in (i) through (vii) had
occurred on December 31, 1995. This table should be read in conjunction with the
information contained in "Pro Forma Financial Information" and the Company's
consolidated financial statements and notes thereto appearing elsewhere herein.

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1995
--------------------------
ACTUAL PRO FORMA
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents(1)....................................... $ 68,071 $ 28,403
======== ========
Long-term debt (including current maturities)
New Credit Facility................................................ $ 10,000 $ 27,700
11 5/8% Senior Subordinated Notes due 2002(2)...................... 227,375 227,375
Other debt......................................................... 2,914 2,914
-------- ---------
240,289 257,989
-------- ---------
Redeemable senior preferred stock(3)............................... 16,824 16,824
Redeemable Class A and B Common Stock warrants(3)(4)............... 6,465 --
Redeemable Series B preferred stock(3)............................. 2,353 2,353
Redeemable Junior preferred stock(3)............................... 31,534 31,534
Class A Common Stock(1)(3)......................................... 26 38
Class B Common Stock(3)............................................ 8 8
Class C Common Stock(3)............................................ -- --
Class A and B Common Stock Warrants(4)............................. -- 4,867
Class C common stock warrants(3)................................... 5,339 4,283
Stock subscription notes receivable................................ (116) (116)
Additional paid-in capital(1)...................................... 34,342 194,104
Deferred option plan compensation(5)............................... (1,384) (1,384)
Accumulated deficit................................................ (55,694) (55,694)
-------- ---------
Total capitalization..................................... $279,986 $ 454,806
======== ========
</TABLE>

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

(1) Assumes WRMA-FM and WXDJ-FM are purchased solely for cash, as described in
"The Proposed Acquisitions."
(2) Net of issue discount.
(3) See "Description of Capital Stock."
(4) Reflects termination of the holders' put on the Class A Common Stock and
Class B Common Stock warrants concurrent with the completion of this
Offering. See "Description of Capital Stock."
(5) See "Management -- Stock Incentive Plan."

24
<PAGE> 28

THE COMPANY

The Company was organized in December 1993, as the successor to businesses
formed in 1991 primarily for the purpose of owning and operating radio and
television broadcasting stations and networks. The Company's principal executive
offices are located at 601 Clearwater Park Road, West Palm Beach, Florida 33401
and its telephone number is (407) 659-4122.

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

The following selected historical and pro forma financial data, insofar as
it relates to each of the five years ended December 31, 1995, has been derived
from Company prepared financial information and should be read in conjunction
with the audited financial statements, including the consolidated balance sheets
at December 31, 1994 and 1995 and the related consolidated statements of
operations for each of the years in the three year period ended December 31,
1995 and the notes thereto, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Pro Forma Financial Information"
included elsewhere herein.

The following unaudited summary pro forma statement of operations data and
other data give effect to (i) the consummation of the Offering; (ii) significant
business acquisitions of KZKI-TV, WGOT-TV and WTVX-TV; (iii) the issuance of the
Notes on September 28, 1995; (iv) proposed significant business acquisitions of
WRMA-FM and WXDJ-FM; and (v) the exercise of the Station Options, as if such
events had occurred on January 1, 1995. WRMA-FM and WXDJ-FM are the only
Proposed Acquisitions which are considered to be significant business
acquisitions and all other Proposed Acquisitions are asset acquisitions or are
immaterial both individually and in the aggregate and therefore are not required
to be included in the pro forma financial information. Prior operators' fiscal
years have been conformed to the Company's December 31, 1995 year end. In
addition, depreciation and amortization expense has been increased for the
period to reflect preliminary purchase price allocations for all stations
included in the Proposed Acquisitions and Station Options. The following
unaudited summary pro forma balance sheet data gives effect to (i) the
consummation of the Offering; (ii) the Proposed Acquisitions and related capital
expenditures; (iii) capital expenditures on existing properties; (iv) the
exercise of the Station Options; (v) the termination of the holders' put on the
Class A and Class B common stock warrants; (vi) acquisitions and dispositions
which have closed subsequent to December 31, 1995; and (vii) the acquisition of
a note receivable from Mr. Paxson, as if such events included in (i) through
(vii) had occurred on December 31, 1995. The Offering and the Proposed
Acquisitions and certain management assumptions and adjustments are described in
the accompanying notes hereto. The pro forma information should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto, as of December 31, 1995 and for the three years then ended, included
elsewhere in this Prospectus. See "Pro Forma Financial Information" appearing
elsewhere in this Prospectus. This pro forma information is not necessarily
indicative of the Company's actual or future operating results or financial
position.

25
<PAGE> 29

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

(see footnotes on the following page)

26
<PAGE> 30

NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS)

(a) Pro forma statement of operations data and other data for the year ended
December 31, 1995 give effect to (i) the consummation of the Offering; (ii)
significant business acquisitions of KZKI-TV, WGOT-TV and WTVX-TV; (iii) the
issuance of the Notes on September 28, 1995; (iv) proposed significant business
acquisitions of WRMA-FM and WXDJ-FM; and (v) the exercise of the Station Options
as if such events had occurred on January 1, 1995. WRMA-FM and WXDJ-FM are the
only Proposed Acquisitions which are considered to be significant business
acquisitions and all other Proposed Acquisitions are asset acquisitions or are
immaterial both individually and in the aggregate and therefore are not required
to be included in the pro forma financial information. Prior operators' fiscal
years have been conformed to the Company's December 31, 1995 year end. In
addition, depreciation and amortization expense has been increased for the
period to reflect preliminary purchase price allocations for all stations
included in the Proposed Acquisitions and Station Options. The pro forma balance
sheet data as of December 31, 1995 gives effect to: (i) the consummation of the
Offering; (ii) the Proposed Acquisitions and related capital expenditures; (iii)
capital expenditures on existing properties; (iv) the exercise of the Station
Options; (v) the termination of the holders' put on the Class A and Class B
common stock warrants; (vi) acquisitions and dispositions which have closed
subsequent to December 31, 1995; and (vii) the acquisition of a note receivable
from Mr. Paxson, as if such events included in (i) through (vii) had occurred on
December 31, 1995.

(d) Dividends and accretion on preferred stock and common stock warrants
represent the Senior Preferred Stock (15% dividend rate), redeemable Class A and
Class B common stock warrants and Junior Preferred Stock (12% dividend rate).
Such capital stock is mandatorily redeemable and certain issues accrete. See
"Description of Capital Stock."

(e) Loss per share data for the historical years ended December 31, 1993 and
1994 give a pro forma effect to (i) the Company's amended capital structure
related to the merger with ANG; and (ii) a stock dividend on common shares
outstanding on January 1, 1995. For periods prior to January 1, 1993, loss per
share data was not computed as such amounts were not relevant.

(f) Weighted average shares outstanding for the years ended December 31,
1993 and 1994 give a pro forma effect to an increase in the number of shares
outstanding relating to (i) the merger with ANG of 21,055 and 22,287 shares,
respectively; and (ii) a stock dividend on common shares outstanding on January
1, 1995 of 10,527 and 11,143 shares, respectively. For periods prior to January
1, 1993, weighted average shares outstanding was not computed as such amounts
were not relevant.

(g) EBITDA is defined as net income (loss) before (i) extraordinary item and
cumulative effect of a change in accounting principle; (ii) benefit (provision)
for income taxes; (iii) other income (expense), net; (iv) interest expense; (v)
depreciation and amortization; (iv) option plan compensation and (vii)
non-recurring items including terminated operations; less scheduled broadcast
rights payments.

(h) Includes all capital expenditures including expenditures associated with
the upgrade and conversion of acquired television stations to the inTV format.
Pro forma capital expenditures exclude $38,550 of capital expenditures
associated with the Proposed Acquisitions and additional capital expenditures on
existing properties which will be funded from proceeds of the Offering.

(j) The put rights of holders of the Class A and Class B common stock
warrants will be terminated upon the closing of the Offering and such warrants
are not included in the pro forma amount at December 31, 1995.

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<PAGE> 31

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

GENERAL

The Company commenced Paxson Radio operations in September 1991 following
the acquisition of three radio stations in Florida. The Company has since
expanded Paxson Radio primarily through the acquisition of 15 additional
stations, the execution of joint sales agreements for two additional stations in
Florida (in one of which the Company owns a 49% interest and the other of which
the Company has agreed to acquire), and significant internal growth of acquired
stations, and has agreed to acquire two additional radio stations in Miami, one
station in Jacksonville and two stations in Tennessee. Paxson Radio includes the
operation of six radio networks and outdoor billboards which have operating and
financial characteristics different from those of radio stations. These
operations, however, are not material to the radio group or to the Company
overall. The billboards serve to increase awareness of the Company's radio
operations and the radio networks are utilized in part to provide sports and
other programming to certain of the Company's radio stations and to 338
affiliates in the eastern and southeastern United States.

The Company commenced Paxson Network-Affiliated Television operations in
July 1994, following the acquisition of WPBF-TV, an ABC affiliate, in West Palm
Beach, Florida. The Company expanded its network affiliated television
operations in August 1995 with the execution of a time brokerage agreement for
WTVX-TV, a combined Warner/UPN affiliate, also in West Palm Beach.

The Company commenced its Infomall TV Network operations with four inTV
stations in January 1995. The Company has since expanded the Infomall TV Network
to a total of 24 owned, operated or affiliated inTV stations. The Company has
agreements to acquire or operate an additional eight stations, seven of which
are anticipated to close in 1996, following completion of this Offering and the
receipt of the net proceeds therefrom. Upon completion of the Proposed
Acquisitions, the Company will have 32 owned, operated or affiliated inTV
stations which provide a national distribution network currently dedicated to
airing of infomercial programming.

The Company's operating data throughout the periods discussed have been
impacted significantly by the timing and mix of radio, television and inTV
acquisitions throughout such periods. Operating revenues are derived from the
sale of advertising to local and national advertisers. The Company's primary
operating expenses involved in owning and operating Paxson Radio and Paxson
Network-Affiliated Television are syndicated program rights fees, commissions on
revenues, employee salaries, news gathering, promotion and administrative
expenses. Comparatively, operation of an inTV station involves low operating
expenses relative to traditional network or independent television station
operation. As a result, the Company's inTV stations usually contribute to
operating profit within a short time frame. The costs of operating an inTV
station do not vary significantly with revenue, with the exception of costs
associated with sales commissions and agency fees. As such, upon obtaining a
certain level of revenue sufficient to cover fixed costs, additional revenue
levels have a significant impact on the operating results of an individual inTV
station.

The Company's past results are not necessarily indicative of future
performance due to various risks and uncertainties which may significantly
reduce revenues and increase operating expenses. For example, a reduction in
expenditures by radio and television advertisers in the Company's markets may
result in lower revenues. The Company may be unable to reduce expenses,
including certain variable expenses, in an amount sufficient in the short term
to offset lost revenues caused by poor market conditions. The Company's
television stations are dependent upon "must carry" regulations for carriage on
cable systems in each market. The constitutionality of "must carry" regulations
is currently being litigated in the U.S. Supreme Court and if such regulations
were invalidated, the Company could suffer decreased revenues or increased
carriage expenses if the Company's stations lose cable carriage or are forced to
pay cable systems for carriage. The broadcasting industry continues to undergo
rapid technological change which may increase competition within the Company's
markets as new delivery systems, such as direct broadcast satellite and computer
networks, attract customers. The changing nature of audience tastes and viewing
and listening habits may affect the continued

28
<PAGE> 32

attractiveness of the Company's broadcasting stations to advertisers, upon whom
the Company is dependent for its revenue.

Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount (contingent or otherwise) of assets and liabilities
at the date of the financial statements and the reported amount of revenues and
expenses during the reporting period. The fair value of the Company's
investments in broadcast properties and programming rights payable were based
upon the net present value of applicable estimated future cash flows using a
discounted rate approximating market rates. The fair values of the Company's
long-term debt and the Notes were estimated based on market rates and
instruments with similar risks and maturities. The fair value estimates
presented are based on pertinent information available to management as of
December 31, 1995. As a result of the foregoing, the estimates presented in the
Company's financial statements are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. Although management
is not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of the Company's financial statements.

The Company's operations as a public company commenced in November 1994 as
a result of the Company's merger with ANG, a company primarily involved in the
operation of radio networks. The former operations of ANG are no longer material
to the Company.

The Company currently expects to continue acquiring additional stations
which may have similar effects on the comparability of revenues, operating
expenses, interest expense and broadcast cash flow as those described below.

RESULTS OF OPERATIONS

Years Ended December 31, 1995 and 1994

Consolidated revenues for 1995 increased 66% (or $41.0 million) to $103.1
million from $62.1 million for 1994. This increase was primarily due to the new
television station acquisitions and time brokerage operations ($19.2 million),
acquisition of WPBF-TV on July 1, 1994 ($7.1 million) and increased revenues
from existing television stations ($9.1 million).

Operating expenses for 1995 increased 75% (or $48.0 million) to $111.6
million from $63.6 million in 1994. The increase was primarily due to higher
direct expenses such as commissions which rise in proportion to revenues ($8.1
million), other non-direct costs of operating newly acquired and operated
television stations ($5.5 million), higher corporate overhead ($6.3 million),
option plan compensation ($10.8 million), higher depreciation and amortization
related to assets acquired ($6.3 million), and increased expenses from a full
year of operating existing television stations ($1.6 million).

Net interest expense for 1995 increased to $16.3 million from $5.2 million
for 1994, an increase of 213%, primarily due to a greater level of long-term
debt throughout the period and higher borrowing rates. As a result of
acquisitions, at December 31, 1995, total long-term debt, including the Notes,
was $240 million, or 191% higher than the $82.4 million outstanding a year
prior.

The Company has accumulated $35.7 million of taxable losses. The Company
recognized $1.3 million of income tax benefit which resulted primarily from the
1995 net loss and reversal of deferred taxes associated with the 1993 tax
provision resulting from the change in tax status.

Broadcast cash flow for 1995 increased 108% (or $15.6 million) to $30.0
million, from $14.4 million for 1994. The increase in broadcast cash flow was a
direct result of new television station acquisitions and time brokerage
operations ($9.1 million), acquisition of WPBF-TV on July 1, 1994 ($1.7
million), and improved performance of existing television properties ($5.5
million).

Years Ended December 31, 1994 and 1993

Consolidated revenues for 1994 increased 93% (or $30.0 million) to $62.1
million from $32.1 million in 1993. This increase was primarily due to the
acquisition of WPBF-TV on July 1, 1994 ($7.5 million), revenue

29
<PAGE> 33

received under the time brokerage agreement for WTLK-TV beginning April 4, 1994
($2.2 million) and the subsequent purchase thereof on July 13, 1994, the
consolidation of the ANG operations beginning April 14, 1994 ($8.4 million), and
improved market conditions and better sales management within the Company's
existing properties ($10.8 million). In addition, revenue increased because of
the time brokerages of WCTD-TV beginning April 1, 1994 and WFCT-TV beginning
August 1, 1994 (totalling $1.1 million).

Operating expenses for 1994 increased 66% (or $25.4 million) to $63.6
million from $38.2 million in 1993. The increase was primarily due to direct
expenses such as commissions which rise in proportion to revenue ($7.3 million),
other non-direct costs of operating WPBF-TV and WTLK-TV ($4.1 million), the
consolidation of ANG ($6.3 million), higher costs for the Company's existing
properties ($3.4 million), and higher depreciation and amortization related to
assets acquired ($3.0 million). In addition, operating expenses increased
because of the time brokerages of WCTD-TV and WFCT-TV and related fees ($1.3
million).

Interest expense increased to $5.2 million from $2.1 million, an increase
of 148%, primarily due to a greater level of long-term debt throughout the year
and higher borrowing rates. As a result of acquisitions, at December 31, 1994,
long-term debt was $82.4 million, or 153% higher than the $32.6 million
outstanding a year prior.

The Company recognized $1.7 million of income tax benefit which resulted
primarily from the 1994 net loss and related reversal of deferred taxes
associated with the 1993 tax provision.

Broadcast cash flow for 1994 increased 112% (or $7.6 million) to $14.4
million, from $6.8 million in 1993. The increase in broadcast cash flow was a
direct result of acquisitions, revenue growth and continued expense controls.

LIQUIDITY AND CAPITAL RESOURCES

On September 28, 1995, the Company sold $230 million aggregate principal
amount of 11 5/8% Senior Subordinated Notes (the "Notes") at a discount,
receiving $227.3 million in proceeds before approximately $8.6 million of
transaction costs. These transaction costs have been classified as "other
assets" and are being amortized as interest expense over the term of the Notes.
The Notes mature in 2002 with interest payable semiannually on April 1 and
October 1. In connection with the issuance of the Notes, the Company repaid
approximately $170 million in outstanding balances under its then-existing
senior credit facilities. In conjunction with the repayment of these debt
facilities approximately $10.6 million of loan origination costs were written
off as an extraordinary expense.

The Company's working capital at December 31, 1995 and December 31, 1994
was $74.3 million and $26.4 million, respectively, and the ratio of current
assets to current liabilities was 6.37:1 and 3.11:1 on such dates, respectively.
Working capital increased primarily due to proceeds from the Notes net of debt
repaid and acquisitions previously discussed.

Cash provided by operations of $10.9, $5.1 and $2.8 million for 1995, 1994
and 1993, respectively, primarily reflects the improvement in operating results
of existing properties, acquisitions and time brokerage properties net of
increased interest expense. Cash used for investing activities of $105.6, $66.8
and $30.8 million for 1995, 1994 and 1993, respectively, primarily reflects
acquisitions of and investments in broadcast properties, and purchases of
equipment for these and existing properties net of the proceeds from station or
asset sales. Cash provided by financing activities of $141.1, $76.3 and $34.4
million in 1995, 1994 and 1993, respectively, primarily reflects the proceeds
from the issuance of the Notes and the incurrence of long-term debt net of debt
repaid and loan origination costs incurred. Non-cash activity relates to
depreciation and amortization, option plan compensation and reciprocal trade and
barter advertising revenue and expense, as well as dividends and accretion on
the Preferred Stock and common stock warrants.

The Company has issued options to purchase shares of Class A Common Stock
to certain members of management during 1995 under its stock compensation plan.
See "Management -- Stock Incentive Plan." There are currently 1,744,205 options
outstanding under this plan. Further, the Company recognized option plan
compensation expense of approximately $10.8 million in 1995, and expects that
approximately $1.4 million of compensation expense will be recognized over the
remaining vesting period of the outstanding options. The Company intends to
retain the intrinsic value method of accounting for stock-based compensa-

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<PAGE> 34

tion, which will result in the Company disclosing related required pro forma
information in the notes to certain future financial statements.

The Company was initially funded primarily by Mr. Paxson, who has made
equity investments in the Company since its inception totaling in excess of $33
million. Beginning in 1992, the Company has also utilized senior long-term debt
provided to its principal operating subsidiaries by consortiums of financial
institutions. Proceeds from the issuance of the Notes were used to retire the
Company's then existing senior indebtedness. On December 19, 1995, the Company
entered into the New Credit Facility, providing for a senior secured revolving
line of credit in an aggregate principal amount of $100 million. The New Credit
Facility will mature on June 30, 2002.

The Company's primary capital requirements are interest and principal
payments on indebtedness. The Notes require semiannual interest payments at a
fixed rate. Borrowings under the New Credit Facility bear interest at floating
rates and require interest payments on varying dates depending on the interest
rate option selected by the Company. In addition to debt service, the Company's
principal cash requirements will be for capital expenditures and, if appropriate
opportunities arise, the acquisition of additional broadcasting stations or
assets. The Company estimates that, in addition to the $22.1 million of capital
expenditures associated with the Proposed Acquisitions, it will spend
approximately $20 million for property and equipment for its existing
operations.

The Company believes that the proceeds of the Offering, cash flow from
operations, existing cash balances and available borrowings under the New Credit
Facility will be sufficient to consummate the Proposed Acquisitions (including
the expected capital expenditures associated therewith), to exercise the Station
Options and to meet its anticipated short term and long term working capital
requirements for its existing properties and those to be acquired upon
completion of the Proposed Acquisitions and the exercise of the Station Options.
Pro forma for the Proposed Acquisitions and the exercise of the Station Options,
the Company would have approximately $57 million in borrowing capacity available
under the New Credit Facility, including $27.7 million of which is currently
outstanding. To the extent that the Company pursues future acquisitions or
requires additional working capital, the Company may be required to obtain
additional financing. There can be no assurance that the Company will be able to
obtain such financing on terms acceptable to it. The failure to raise funds
necessary to finance the Company's future cash requirements could adversely
affect the Company's ability to pursue its business strategy. In addition,
should the Company suffer a significant impairment to its cash flow from
operations due to the occurrence of one or more adverse events, including those
set forth under "Risk Factors," its liquidity could become insufficient on a
short term basis due to diminished borrowing capacity under the New Credit
Facility and on a long term basis, the Company could have insufficient resources
to repay indebtedness under the New Credit Facility or the Notes when due.

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<PAGE> 35

BUSINESS

GENERAL

Paxson Communications Corporation has created a nationwide network of
television stations dedicated to the airing of infomercial programming (the
"Infomall TV Network" or "inTV"). In addition, the Company has a significant
radio and network-affiliated television broadcasting presence in the state of
Florida. The Company owns 16 radio stations in the four largest Florida cities
and will own 19 such stations upon completion of the Proposed Acquisitions, and
owns one network-affiliated television station and operates another in the West
Palm Beach market.

The Company introduced its Infomall TV Network in January 1995 with four
television stations. inTV has expanded rapidly and currently consists of 24
owned, operated or affiliated inTV stations. Upon completion of the Proposed
Acquisitions, the Company will have 28 owned or operated inTV stations and four
affiliated inTV stations operating in 30 television markets, 20 of which are
among the 30 largest in the United States.

SEGMENT DATA (1)

The following table sets forth certain data for each of the Company's
segments:

<TABLE>
<CAPTION>
PRO FORMA
FOR THE THREE MONTHS ENDED FOR THE FOR THE YEAR
--------------------------------------------------- YEAR ENDED ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1995 1995 1995 1995 1995(3)
--------- -------- ------------- ------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SEGMENT REVENUE
Infomall TV Network.......... $ 3,903 $ 6,823 $ 8,330 $ 10,598 $ 29,654 $ 31,562
Paxson Radio................. 12,306 12,816 14,405 15,226 54,753 69,505
Paxson Network-Affiliated
Television................. 3,585 3,722 3,929 5,301 16,537 19,661
Corporate and Other(2)....... 826 376 503 425 2,130 2,130
--------- -------- ------------- ------------ ------------ ------------
Total Segment Revenue.... $20,620 $ 23,737 $27,167 $ 31,550 $103,074 $122,858
========= ======== ============ ============ ============ ============
SEGMENT INCOME (LOSS) FROM
OPERATIONS
Infomall TV Network........ $ 615 $ 1,820 $ 2,762 $ 3,607 $ 8,804 $ (8,456)
Paxson Radio............... (911) (1,089) 327 89 (1,584) 5,535
Paxson Network-Affiliated
Television............... 247 230 (204) 1,368 1,641 2,057
Corporate and Other(2)..... (1,797) (9,861) (2,480) (3,274) (17,412) (17,412)
--------- -------- ------------- ------------ ------------ ------------
Total Segment Income
(Loss) from
Operations............. $(1,846) $ (8,900) $ 405 $ 1,790 $ (8,551) $(18,276)
========= ======== ============ ============ ============ ============
</TABLE>

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<PAGE> 36

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

(1) Segment financial data present business operations for Paxson Radio, Paxson
Network-Affiliated Television and the Infomall TV Network.
(2) Corporate and other represents corporate overhead expenses, including
management expenses which are not allocated to the individual segments and
expenses associated with non-broadcast activities.
(3) Pro forma segment data give effect to (i) the consummation of the Offering;
(ii) significant business acquisition of KZKI-TV, WGOT-TV, WRMA-FM, WXDJ-FM
and WTVX-TV; (iii) the issuance of the Notes; (iv) proposed significant
business acquisitions of WRMA-FM and WXDJ-FM; and (v) and the exercise of
the Station Options as if such events had occurred on January 1, 1995. Prior
operators' fiscal years have been conformed to the Company's December 31,
1995 year end.
(4) EBITDA is defined as net income (loss) before (i) extraordinary item and
cumulative effect of a change in accounting principle; (ii) benefit
(provision) for income taxes; (iii) other income (expense), net; (iv)
interest expense; (v) depreciation and amortization; (iv) option plan
compensation; and (vii) non-recurring items including terminated operations,
less scheduled broadcast rights payments.
(5) Adjusted EBITDA is defined as EBITDA for the period, less (i) segment
operating profit for the Infomall TV Network for such period plus (ii) four
times such segment's operating profit for the most recently completed
quarter prior to the measuring date.

INFOMALL TV NETWORK

In January 1995, Paxson Communications introduced the Infomall TV Network
in order to capitalize on what the Company believes to be a rapidly growing
industry. The Company has assembled 20 owned or operated stations dedicated to
inTV programming and has entered into agreements to own or operate eight
additional inTV stations in seven additional markets. In addition, the Company
has affiliation agreements with four independently owned and operated television
stations. Upon completion of the Proposed Acquisitions, the Company will have 32
owned, operated or affiliated inTV stations operating in 30 television markets,
20 of which are among the 30 largest in the United States. The Company believes
that its network of inTV stations is the only group of broadcast television
stations in the United States that offers infomercial advertisers significant
national, regional and local distribution capability and airtime during each of
the popular morning, daytime and prime time viewing hours.

The television stations acquired by the Company and converted to inTV
stations are typically non-network-affiliated stations with marginal operating
results that can be acquired at a relatively low cost compared to
network-affiliated stations. Certain of these stations are licensed to
communities outside the center of major television markets, but within such
markets' DMA, and thus, by virtue of the FCC's "must carry" rules, are generally
entitled to carriage on cable systems within such DMA. Through the exercise of
federal "must carry" rights and the improvement of its stations' over-the-air
signals, the Company intends to continue its efforts to maximize its cable
household coverage within its markets beyond the 53.7% achieved currently. The
Company's goal is to reach approximately 85% of the cable homes in its markets
(although there can be no assurance that the Company will reach such goal). See
"Business -- Federal Regulation of Broadcasting -- "Must Carry"/Retransmission
Consent." The Company believes that it also reaches a significant number of
over-the-air television households that do not receive cable television. The
Company continues to evaluate the acquisition of or affiliation with additional
independent television stations to further extend the national distribution
reach of its Infomall TV Network.

In 1995, its initial year of operations, inTV achieved segment revenue of
$29.7 million, segment income from operations of $8.8 million and segment
operating profit of $14.3 million. Segment revenue increased from $3.9 million
during the first quarter of 1995 to $10.6 million during the fourth quarter of
1995. Segment income from operations increased from $.6 million during the first
quarter of 1995 to $3.6 million during the fourth quarter of 1995. Segment
operating profit increased from $1.7 million during the first quarter of 1995 to
$5.2 million during the fourth quarter of 1995.

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<PAGE> 37

Industry Background

During recent years, advertisers have evaluated the benefits of television
and cable advertising, with many sophisticated consumer product and service
advertisers now recognizing the effectiveness and reasonable cost of long-form
programming, or infomercials. An infomercial is an advertisement, usually
approximately one half-hour in length and often produced in an entertainment
format, that is paid for by the advertiser on the basis of air-time, market size
and past results from airing on a particular television station. Regardless of
the presentation format, the viewers are provided information that can be used
to make informed purchasing decisions from the comfort of their home without the
pressure of a salesperson or the crowds of a shopping mall.

Increasingly, advertisers are recognizing the benefits of infomercials as a
powerful marketing tool. Infomercials provide advertisers with a cost-effective
medium through which to deliver sales messages, product introductions or
demonstrations to an interested target audience. Advertisers are recognizing
that infomercials can increase a company's or product's brand awareness and
loyalty while educating uninformed potential new customers. The viewer or
potential consumer is provided information that can be used to make informed
purchasing decisions. Due to the direct response nature of many infomercials,
advertisers are afforded the ability to evaluate their efficiency on an
immediate basis.

The Company believes that the infomercial industry has grown rapidly during
the past several years. Historically, and to a large extent currently, long-form
informational programming occupied time slots that were otherwise unprofitable
for broadcasters. Increasingly, infomercials are being placed in more expensive
and attractive time periods such as daytime, early fringe and prime time. In
addition, the quality of the infomercial advertiser has improved. Today,
infomercials are being used to promote major consumer brandnames:

<TABLE>
<S> <C> <C> <C>
Apple Computers Compaq Mastercard Procter & Gamble
Avon Products Estee Lauder Mattel Saturn
Bank of America Fidelity Investments Mercedes Benz Sears Roebuck
Bell Atlanta Ford Microsoft Sega of America
Black & Decker General Motors Motorola Toyota
Braun GTE NBC Visa
Cadillac Lexus Nissan Volvo
Coca-Cola Magnavox Philips Consumer Warner Music
Electronics
</TABLE>

The production quality of infomercial programming by these major
advertisers has also brought increased credibility to the infomercial industry.
In addition, infomercials have recently been successfully utilized to promote
newly introduced network television series and full length feature movies. The
Company believes that as the benefits of infomercial programming become more
widely understood, the number of advertisers and the volume of infomercial
programming will continue to grow. In terms of demand for airtime, major
corporate advertisers who use long-form "advertorials", or image building
programs rather than direct selling messages, may ultimately surpass infomercial
programmers who rely on immediate sales to viewers via telephone response.
Currently, the funds spent on advertorials by major corporations are a
relatively small part of their overall advertising budget. The Company believes
that such advertorial expenditures will continue to increase.

Infomercials are one type of long-form paid programming. Other types
include religious, ethnic and political paid programming. In certain of the
Company's markets, such as Los Angeles and Miami, the demand for airtime by
foreign language ethnic programmers has steadily increased. With regard to
political long-form paid programming, Ross Perot and others have utilized this
method of reaching voters. In general, religious, ethnic and political paid
programs have produced revenues for particular time periods (e.g., Sundays for
religious programming and weekday mornings for certain ethnic programming) which
are higher than otherwise available from infomercial advertisers during such
time periods.

Operating Strategy

By purchasing independent television stations, entering into time brokerage
agreements, signing affiliate stations, and extending its stations' broadcast
reach on cable via "must carry" requirements, the Company has

34
<PAGE> 38

created a television network dedicated to providing long-form, paid
entertainment and information programming. Expansion of the Infomall TV Network
continues through the purchase, operation or affiliation with independent
television stations in major United States television markets. The markets to be
served by the Company's inTV stations upon completion of the Proposed
Acquisitions currently contain approximately 44.2 million television households
of which 28.6 million are served by cable television.

Shortly after the Company acquires a station or commences operating a
station pursuant to a time brokerage agreement, the Company replaces the
existing programming with infomercial programming. The Company's infomercial
programming format allows it to eliminate substantially all programming expenses
and achieve significant reductions in other operating expenses. Unlike
traditional television stations, inTV programming is paid for by the advertiser
as opposed to the broadcaster. The Company centralizes many accounting, traffic
and national sales functions at its headquarters, minimizing the staff required
at each station location. The Company's inTV stations are connected through a
wide area computer network enabling them to utilize common computerized
financial and sales systems. Engineering functions are standardized through the
purchase of similar equipment at each location for editing, playback-to-air and
signal transmission, thereby reducing maintenance expense. As a result, the
Company's inTV stations are operated by an average of 15 people, compared to
network and independent television stations, which average over 100 and 60
people, respectively, in markets of similar size to the Company's. To date, each
of the inTV stations owned or operated by the Company has contributed rapidly to
broadcast cash flow, typically within two months after the commencement of inTV
operations.

inTV programming time is sold on a local, national and network basis. Local
programming time is sold by each station's local sales force and is offered to
merchants and businesses operating within a station's local market, including
medical clinics, automobile dealers and general merchandisers. National and
network programming time is sold by national advertising placement agencies and
the Company's own in-house national and network sales force. National and
network programming times appeal to advertisers who desire to reach viewers in
targeted inTV markets and all inTV markets. Currently, the Company maintains
national sales offices in New York, Los Angeles, Chicago, and at the Company's
headquarters in West Palm Beach. Support and administration of the Infomall TV
Network is also centralized at the Company's West Palm Beach headquarters,
including most accounting and personnel functions as well as administration of
the inTV programming traffic scheduling systems.

The benefits of the Infomall TV Network are being realized as inTV makes
accessible relatively more desirable broadcast time periods (e.g. "prime-time")
generally unavailable to infomercial and other paid programmers at reasonable
rates on traditional television stations. The Company believes that attractive
rates and further growth of inTV's audience reach should continue to attract a
greater breadth of advertising clients. Moreover, as infomercial scheduling
information and promotional support (through radio, television and print
advertising as well as other media) become more available, the Company believes
that the viewing population will further increase.

The Company seeks to increase the percentage of time sold to local
infomercial and other long-form paid programmers. Such local advertisers and
paid programmers have the potential to be consistent, long-term clients in each
of the Company's inTV markets. Because such advertising can be complementary to
local retailing outlets and professional businesses, and may result in increased
store traffic as well as immediate sales via telephone, the Company believes
that the rates paid by such advertisers have the potential to exceed those paid
by national direct marketers who lack a local store presence.

When the Company commences operation of an inTV station, revenues are
derived primarily from national infomercial advertisers. Such revenues enable
new inTV stations to quickly cover operating costs. As the Company's inTV
stations mature, however, a local sales staff is developed, generally consisting
of two sales persons and a manager. The Company's experience with its more
mature inTV stations is that local sales can increase to become significant,
increasing the overall demand for airtime and, therefore, resulting in higher
average advertising rates.

Expansion Strategy

The Company assembled its Infomall TV Network through the conversion of
independent television stations to inTV stations. In most cases, those stations
were non-network-affiliated stations with marginal operating results. Certain
stations are licensed to communities outside the center of major television
markets, but within such markets' DMA, and by virtue of the FCC's "must carry"
rules, are therefore entitled to

35
<PAGE> 39

carriage on cable systems within such DMA. The Company's inTV stations
subsequently extend their reach to a substantial percentage of such DMA's cable
households through the exercise of federal "must carry" rights. See
"Business -- Federal Regulation of Broadcasting -- "Must Carry"/Retransmission
Consent."

The Company has paid an aggregate of $145.2 million (including capital
expenditures through the date hereof) to assemble its inTV network, with an
additional $59.4 million committed for inTV stations included in the Proposed
Acquisitions or to be acquired pursuant to the exercise of the Station Options
and for capital expenditures on existing inTV stations and inTV stations
included in the Proposed Acquisitions. The Company intends to continue to
evaluate the acquisition of or affiliation with independent television stations
to further extend the national distribution system for its Infomall TV Network.

In order to increase cable household penetration by its existing and
proposed stations, the Company is studying the employment of various
distribution-enhancing technologies. Such technologies include signal
transmission through fiber optic lines either alone or along with microwave
transmission, as well as low power television ("LPTV") broadcast signal
transmission and television signal compression and satellite technology. The
Company envisions that implementation of one or more of these technologies could
significantly increase the households reached in several of its largest existing
and proposed inTV markets, including New York, Los Angeles, San Francisco,
Boston, Washington, D.C., Phoenix and St. Louis.

The Company may also selectively consider joint venture or other
relationships with established members of the infomercial and electronic
retailing industries with whom the Company can further exploit both its
infomercial distribution system and its knowledge of the infomercial and
telemarketing industries generally. For example, the Company recently announced
a joint venture to be established with the L.L. Knickerbocker Company, Inc., a
Nasdaq traded company engaged in the development and distribution of products to
the electronic retailing industry. This joint venture, which will be known as
"Paxson/Knickerbocker Media Marketing" ("P/KMM"), will permit the Company,
together with its co-venturer, to identify products and services which are
suited to exploiting advantages of long-form advertising, develop marketing
strategies and infomercials for such products and services, including the airing
of infomercials for such products and services on the Infomall TV Network, and
participate in the revenues and profits from sales of such products and
services. For example, Olympic gold medalist Florence Griffith Joyner has agreed
with P/KMM to promote a new exercise product using infomercials to be aired on
the Infomall TV Network. The P/KMM joint venture illustrates the Company's
continuing efforts to fully utilize and exploit its Infomall TV Network and its
knowledge of the infomercial and electronic retailing industry. In addition to
the P/KMM venture, the Company is exploring the launch of the Home Business
Network ("HBN"), which will market home based, independent distributor
businesses. The Company currently expects that the distribution businesses
marketed by HBN will initially include health, beauty and fitness products.

The Company has entered into an agreement to acquire from the City of West
Palm Beach a 19 acre tract of land on which it plans to construct an office,
studio and warehouse facility currently targeted for completion during the first
quarter of 1997. This newly constructed facility is expected to contain
production studios and inbound and outbound telemarketing capabilities, all of
which the Company expects will be utilized to fully exploit the P/KMM venture,
HBN and other future complimentary telemarketing and infomercial businesses.

The Company is presently finalizing plans for the launch of its Infomall
Netsite. The Company's presence on the World Wide Web through the Infomall
Netsite will provide both the Company and Infomall TV Network advertisers with a
complimentary outlet to provide additional product or service information to a
growing audience to augment their inTV infomercial sales. It is envisioned that
infomercials aired on the Company's Infomall TV Network stations will promote
and guide viewers and customers to the Infomall Netsite. Information with regard
to the Infomall Netsite will be provided on inTV infomercials.

Infomall Properties

The stations included in the Company's Infomall TV Network are either (i)
owned by the Company, (ii) operated by the Company pursuant to time brokerage
agreements entered into with the FCC licensee, or (iii) owned by independent
television station operators that enter into affiliation agreements with the
Company. After giving effect to the Proposed Acquisitions, the Company will own
or operate 28 inTV stations, and have affiliation agreements with four
independently owned and operated stations that are currently dedicated to inTV.

36
<PAGE> 40

INFOMALL TV NETWORK

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Affiliates
Sacramento,
CA............ 21 KCMY-TV 7/95 624 640 689 93.1% 1,101
Indianapolis,
IN............ 24 WIIB-TV 1/96 401 418 580 72.1 925
Norfolk, VA..... 40 WJCB-TV 8/95 343 354 446 79.4 619
Fresno, CA...... 57 KGMC-TV 1/96 179 179 256 69.8 482
--------- ----------- ------ ------
Total
Affiliates... 1,547 1,591 1,970 80.8% 3,127
--------- ----------- ------ ------
Total Owned,
Operated
and
Affiliates(7)... 10,732 14,063 25,204 53.3% 38,699
--------- ----------- ------ ------
Proposed inTV
Stations
Dallas, TX...... 8 Channel 68 12/96 924 0.0% 1,822
Atlanta, GA*.... 10 WNGM-TV 4/96 1,015 17.8 1,584
Milwaukee,
WI*........... 29 WHKE-TV 1/97 438 58.8 783
Salt Lake City,
UT............ 37 KZAR-TV (12) 12/96 359 0.0 656
Grand Rapids,
MI............ 38 WJUE-TV (13) 6/96 390 0.0 637
West Palm Beach,
FL............ 45 WHBI-TV (14) 7/96 468 0.0 576
Providence,
RI............ 46 WOST-TV (12) 12/96 412 0.0 577
Albany, NY...... 52 WOCD-TV 5/96 357 68.8 507
------ ------
Total
Proposed
inTV
Stations(7)... 4,363 15.7% 7,122
------ ------
TOTAL INTV
NETWORK... 10,732 14,063 28,552 44,237
========= ========= ============ ============
</TABLE>

- ---------------
* Operated or to be operated pursuant to a time brokerage agreement.
(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) See "Certain Definitions and Market and Industry Data" for information
concerning market rank.
(3) Cable households reached at commencement of station's operations.
(4) Estimated cable households reached at 1/96 based on cable operators'
information.
(5) Source: AC Nielsen. San Juan cable households provided by J. Walter
Thompson Latin America, June 1995.
(6) Cable households reached at 1/96 as a percent of the market's total cable
households. Source: AC Nielsen.
(7) Figures represent total television households in each market only and are
not necessarily indicative of the number of television households reached
by each station in its market; totals do not double count markets where
Company has more than one station. San Juan cable households provided by J.
Walter Thompson Latin America, June 1995.
(8) Station is not currently on the air.

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<PAGE> 41

(9) Operated pursuant to a time brokerage agreement pending completion of the
Proposed Acquisitions and exercise of the Station Options.
(10) To be operated pursuant to a time brokerage agreement upon completion of an
FCC-required restructuring of the Company's investment in such station in
connection with the Company's acquisition of WHAI-TV.
(11) Option to acquire 40% ownership interest.
(12) 50% ownership interest to be acquired.
(13) 70% ownership interest to be acquired.
(14) inTV affiliate upon acquisition by Cocola Media Corporation of Florida. See
"Business -- Time Brokerage Agreements, Joint Sales Agreements and Other
Interests in Broadcast Stations."

PAXSON RADIO

Upon completion of the Proposed Acquisitions, Paxson Communications will
own and operate 24 radio stations (13 FM and 11 AM stations), with more radio
stations in Florida than any other broadcaster. The Company operates two FM and
two AM stations, commonly referred to as a "duopoly" serving Florida's four most
populous cities (Miami, Tampa, Orlando and Jacksonville), and has agreed to
acquire two additional FM stations in the Miami market and an additional FM
station in the Jacksonville market. In addition, the Company owns and operates
an AM/FM combination in Cookeville, Tennessee, and has agreed to acquire an
additional AM/FM combination in that market, and has a JSA with an AM station in
Miami in which the Company owns a 49% interest. The Company's radio stations
employ broadly diversified programming formats, including News, Talk, Sports,
Country, Soft Adult Contemporary, Smooth Jazz, Album Oriented Rock, Mainstream
AOR, Alternative Rock, Spanish Sports, Spanish Adult Contemporary and Spanish
Salsa/Meringue. The Company operates six radio networks, primarily in the
southeastern United States, that provide daily statewide news segments, sports
programming and satellite distribution of play-by-play broadcasts of
professional and collegiate sports teams for 338 affiliated stations throughout
the eastern and southeastern United States and controls 67 billboard locations
(161 faces) in the Tampa and Orlando markets that support the Company's radio
station operations and provide advertising revenue.

The Company believes that its established position among the leading radio
broadcast groups in each of its Florida markets differentiates it from its
competitors and makes the Company attractive to regional and national
advertisers. In addition to having leading positions in its markets, the Company
believes that its Florida markets are highly attractive. According to Miller
Kaplan, the Miami, Tampa, Orlando and Jacksonville markets are among the fastest
growing radio markets within the top 100 DMAs, with average compound annual
growth for the three years ended December 31, 1995 of 10.3%.

The Company acquired its existing radio properties between 1991 and 1995.
In 1995, Paxson Radio operations generated segment pro forma revenue, segment
pro forma loss from operations, and segment pro forma operating profit of $69.5
million, $5.5 million and $19.4 million, respectively.

Radio Broadcasting

The Company was one of the first radio broadcasters to capitalize on
changes in federal regulations permitting radio market duopolies, and
subsequently assembled eight duopolies, two in each of Florida's four most
populous cities in addition to an AM/FM combination in Cookeville, Tennessee.
The Company initially pursued a strategy of entering into time brokerage
agreements with, and concurrently obtaining an option to purchase, stations in
markets in which the Company already owns a station in the same radio service
(AM or FM), and following changes in the FCC's rules regarding multiple
ownership of radio stations in September 1992, the Company was able to exercise
such purchase options. Upon completion of the Proposed Acquisitions, the Company
will have the leading audience share in the Miami market, Florida's largest
radio market, and an additional AM/FM duopoly in Cookeville. The Company will
continue to consider additional radio acquisition opportunities.

During 1995, several changes were instituted by management of Paxson Radio
to strengthen performance. These changes included a new sales approach whereby
each sales person sells time primarily for one particular station to more
effectively capture advertising revenue. In addition, the Company also
instituted changes in individual markets including (i) a management change at
the station general manager and sales manager positions in the Miami and Orlando
markets, (ii) a change in the morning drive personalities in the Miami and
Jacksonville markets, and (iii) an FM format change in Jacksonville.

38
<PAGE> 42

The 1996 Act significantly liberalized radio station ownership rules, which
now permit the Company to increase the number of radio stations its owns in each
of the Miami, Orlando, Tampa and Jacksonville markets. The liberalized ownership
rules are not exclusively applicable to the Company, and will permit other radio
station owners to increase station ownership as well. See "Federal Regulation of
Broadcasting." Subsequent to enactment of the 1996 Act, the Company agreed to
acquire two additional FM stations in the Miami market. The Company has also
agreed to acquire an additional FM station serving the Jacksonville market and
an AM/FM combination serving the Cookeville, Tennessee market. See "The Proposed
Acquisitions". The Company plans to opportunistically pursue additional
in-market acquisitions to capitalize on the inherent leverage in operating
multiple stations in a single market.

Operating Strategy

The Company believes that its radio properties are well positioned in
attractive and growing markets, and the Company hopes to continue to improve
cash flow growth through the integration of recent duopoly acquisitions and
enhanced station performance. The Company believes that the geographic proximity
of its FM and AM duopolies throughout Florida give it the ability to realize
synergistic revenue and promotional opportunities as well as significant cost
efficiencies. The Company's group of Florida stations enables an advertiser to
cover an entire geographic region, while effectively reaching targeted
demographic groups. Various cross-market promotional opportunities exist, such
as the ability to provide listeners with tickets to another market's sporting
events or local entertainment attractions. Personnel and technical costs can be
minimized by virtue of the ability to service markets in close proximity to one
another. The stations' geographic concentration allows management to more easily
and rapidly respond to market developments.

The Company believes that its experienced management team is one of its
strongest assets. Local managers are responsible for the day-to-day operations
of their respective stations. The Company believes that the autonomy of its
station management and its incentive-based compensation enable it to attract and
retain skilled and experienced managers capable of implementing the Company's
aggressive marketing and promotion strategy. Local managers have incentive
compensation linked to the station's broadcast cash flow performance.

Corporate management is responsible for long-range planning, establishment
of primary policies and procedures, resource allocation, accounting and
auditing, regulatory and legal compliance, license renewals and the evaluation
of potential acquisitions. Corporate management reviews sales pacing reports
from each station on a daily basis. In addition, members of senior management
visit the Company's stations on a regular basis to review performance and to
assist local management with its programming, sales and recruiting efforts, as
well as to develop overall station operating and marketing strategies.

The principal elements of the Company's operating strategy include:

Targeted Programming and Extensive Market Research. The Company provides
programming designed to appeal to targeted demographic groups, and seeks to
convert its rating shares into disproportionately large shares of each market's
advertising dollars. The Company believes that effective programming is a key
element in sustaining and improving audience shares within its targeted
demographic groups, and uses extensive ongoing research to refine each station's
programming. For example, the Company decided to operate News and Sports formats
in all four of its Florida markets following extensive research demonstrating
the popularity of each format with an upscale male audience. Similarly, in July
1995, after conducting programming research, Tampa's WSJT-FM began broadcasting
a Smooth Jazz format, designed to appeal to adults aged 25-54 (a demographic
group attractive to advertisers). The Company will continue to identify and
refine programming to enhance its stations' audience and advertiser appeal.

Aggressive Marketing and Promotion. The Company believes that effective
marketing and promotion play a significant role in maximizing each station's
performance. The Company utilizes local television, print media, outbound
telemarketing and billboards to promote its stations. In the Orlando and Tampa
markets, the Company's unsold billboard locations are used to promote its
stations. The Company also believes that community involvement is particularly
important in creating public awareness and its stations participate in numerous
community programs and activities.

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<PAGE> 43

Strict Cost Controls. Management believes that it is critical to maintain
the lowest possible cost structure compatible with its operating strategy.
Strict financial reporting standards and cost control measures are implemented
to ensure a focus on improvements in operating results throughout Paxson Radio.
Management regularly receives operating reports that track station performance,
thereby enabling better monitoring by management and establishing greater
accountability throughout the station group. In addition, since local management
incentive programs are tied to increasing broadcast cash flow, local managers
are focused on minimizing costs and exceeding budgeted cash flow results.

Radio Properties

The following table sets forth certain information about the Company's
current radio stations:

<TABLE>
<CAPTION>
NATIONAL % OF
RADIO MARKET STATION POWER AUDIENCE
MARKETS(1) RANK(2) STATION FORMAT FREQUENCY (WATTS) SHARE(3)
- ---------------------- ------------ ------- --------------------------- --------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Miami/Ft.
Lauderdale.......... 11 WLVE-FM Smooth Jazz 93.9 100,000 4.2
WZTA-FM Mainstream AOR 94.9 100,000 3.6
WRMA-FM(4) Spanish Adult Contemporary 106.7 100,000 6.8
WXDJ-FM(4) Spanish Salsa/Meringue 95.7 46,000 4.7
WINZ-AM News and Sports 940 50,000(day) 1.4
10,000(night)
WFTL-AM Talk and Sports 1400 1,000 0.3
WACC-AM(5) Spanish Sports 830 1,000 n/a
Tampa/St.
Petersburg.......... 21 WHPT-FM Rock Adult Contemporary 102.5 100,000 5.9
WSJT-FM Smooth Jazz 94.1 100,000 5.4
WHNZ-AM News and Sports 570 5,000(day) 0.6
10,000(night)
WNZE-AM Sports 820 50,000(day) 0.4
1,000(night)
Orlando............... 35 WMGF-FM Soft Adult Contemporary 107.9 100,000 7.1
WJRR-FM Modern Rock 101.1 100,000 4.5
WWNZ-AM News 740 50,000 1.3
WWZN-AM Sports 540 50,000 0.7
Jacksonville.......... 50 WROO-FM Young Country 107.3 100,000 5.4
WPLA-FM Alternative Rock 93.3 50,000 3.8
WFSJ-FM(4)(6) Smooth Jazz 97.9 50,000 3.9
WNZS-AM Sports 930 5,000 2.8
WZNZ-AM News 1460 5,000 0.3
Cookeville............ n/c WGSQ-FM Country 94.7 100,000 n/c
WHUB-FM(4) Adult Contemporary 98.5 50,000 n/c
WPTN-AM Talk 780 1,000 n/c
WHUB-AM(4) Country 1400 1,000 n/c
</TABLE>

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

(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) Source: Miller Kaplan.
(3) Adults 25-54 Monday-Sunday 6 AM-Midnight in radio market per Fall 1995
Arbitron Radio Market Reports.
(4) Included in the Proposed Acquisitions.
(5) Company provides services to the station under a JSA; Company owns a 49%
interest.
(6) Company provides services to the station under a JSA.
n/a Insignificant share.
n/c Market not covered by Arbitron; revenue not independently reported.

40
<PAGE> 44

Market Overviews

Miami/Ft. Lauderdale, FL. The Company owns and operates radio stations
WLVE-FM, WZTA-FM, WINZ-AM and WFTL-AM in the Miami/Ft. Lauderdale radio market,
the 11th largest radio market in the United States. The Company also owns a 49%
interest in WACC-AM and provides certain sales and marketing services to this
station through a joint sales agreement, and has agreed to acquire WRMA-FM and
WXDJ-FM in this market. The Miami/Ft. Lauderdale radio market had advertising
revenue of $136.3 million in 1995, a 9.9% increase over 1994. Including the
Proposed Acquisitions, the Company's Miami/ Ft. Lauderdale radio stations had a
21.0% combined audience share in the Miami/Ft. Lauderdale 25-54 year old
demographic category, according to the Fall 1995 Arbitron ratings survey.

WLVE-FM is programmed in a Smooth Jazz format, playing a blend of
contemporary jazz and vocals, targeting the upscale 25-54 year old audience.
WLVE-FM does not have a direct competitor within the format category. WZTA-FM
became the only Mainstream AOR station in the Miami market when its former
competitor changed formats to Alternative Rock in May 1995. The Company's
acquisition of stations WRMA-FM and WXDJ-FM in the Miami market will enable the
Company to expand its reach to Spanish speaking demographic groups. WRMA-FM is
programmed in a Spanish Adult Contemporary format, while WXDJ-FM carries Spanish
Salsa/Meringue programming and WACC carries Spanish language sports. WINZ-AM is
the only station in the Miami market with an All News format throughout the
daytime hours. After 7:00 p.m. WINZ-AM carries sports programming with broadcast
rights to the Miami Heat NBA basketball team and the University of Miami
football games. WFTL-AM located in Broward County has a talk radio format and
through a simulcast with WINZ-AM increases the Company's broadcast reach of the
Miami Heat.

Tampa/St. Petersburg, FL. The Company owns and operates radio stations
WHPT-FM, WSJT-FM, WHNZ-AM and WNZE-AM in the Tampa/St. Petersburg radio market,
the 21st largest radio market in the United States. The Tampa/St. Petersburg
radio market had advertising revenue of $77.4 million in 1995, a 9.8% increase
over 1994. The Company's Tampa/St. Petersburg stations had a 12.3% combined
audience share in the Fall 1995 Arbitron ratings survey, including WSJT-FM which
commenced broadcasting in July 1995.

WHPT-FM is formatted with a distinctive blend of music categorized as Rock
Adult Contemporary targeted toward white-collar, adult listeners. The Company
purchased WEZY-FM in Lakeland, Florida in March 1995 and subsequently moved the
station to the Tampa market. The Company reformatted the station as WSJT-FM, a
Smooth Jazz station targeted to adults in the 25-54 year old demographic
category. WHPT-FM and WSJT-FM have two of the strongest signals in the State of
Florida. WHNZ-AM is the only radio station in the Tampa market with an All News
format throughout the daytime hours. After 7:00 p.m. the station carries sports
talk and play-by-play sports programming, including University of Florida
football and basketball games. WNZE-AM is one of two AM radio stations in the
Tampa market that provides an All Sports format, including play-by-play coverage
of the Florida State football and basketball games. In addition, WNZE-AM
achieves economies by utilizing satellite programming.

Orlando, FL. The Company owns and operates radio stations WMGF-FM,
WJRR-FM, WWNZ-AM and WWZN-AM in Orlando, the 35th largest radio market in the
United States. The Orlando radio market had advertising revenue of $63.5 million
in 1995, a 10.7% increase over 1994. The Company's Orlando radio stations had a
13.6% combined audience share in the Orlando 25-54 year old demographic
category, according to the Fall 1995 Arbitron ratings survey.

WMGF-FM is a Soft Adult Contemporary format appealing to the 35-54
audience. WJRR-FM, a Modern Rock station, complements WMGF-FM by appealing
primarily to the 18-49 year old male audience. WWNZ-AM is the only station in
the market with an All News format. WWZN-AM is the only All Sports radio station
in the Orlando market, and includes play-by-play programming and sports talk
shows. Cost savings are obtained through the utilization of satellite
programming, which is used to augment the station's sports-talk programming.

Jacksonville, FL. The Company owns and operates radio stations WROO-FM,
WPLA-FM, WNZS-AM and WZNZ-AM in Jacksonville, the 50th largest radio market in
the United States. The Company also provides certain sales and marketing
services to WFSJ-FM under a joint sales agreement, and

41
<PAGE> 45

has recently agreed to purchase this station for $5.0 million. See "Certain
Transactions." The Jacksonville radio market had advertising revenue of $34.7
million in 1995, an 8.4% increase over 1994. The Company's radio stations had a
16.2% combined audience share in the 25-54 year old demographic category,
according to the Fall 1995 Arbitron ratings survey.

WROO-FM broadcasts a Young Country format that appeals to the 18-49 year
old demographic category. WPLA-FM was recently reformatted as an Alternative
Rock radio station, designed to appeal to a younger 18-34 target audience.
WFSJ-FM is a Smooth Jazz formatted station targeted to adults in the 24-54 year
old demographic. WNZS-AM broadcasts an All Sports format, including the leading
sports talk show in the market, and carries live play-by-play sports broadcasts,
including Florida State University mens' football and basketball games. WZNZ-AM
has an all News format consisting of satellite-delivered CNN Headline News
programming.

Cookeville, TN. The Company owns and operates WGSQ-FM and WPTN-AM in the
Cookeville, Tennessee radio market, serving the Upper Cumberland region between
Nashville and Knoxville (ranked the 45th and 70th largest markets, respectively)
and has agreed to acquire WHUB-FM and WHUB-AM in this market. WGSQ-FM and
WHUB-FM are the two highest rated stations in this market, and all four of such
stations are first on a combined basis within this market in all categories of
listenership. WGSQ-FM and WHUB-AM each feature a country format. WHUB-FM
programs an Adult Contemporary format and WPTN-AM programs an All Talk format
featuring various local and nationally-syndicated personalities, including Rush
Limbaugh. The four stations have a combined 56.6% share of the 12+ demographic
group in Arbitron's most recent county-by-county survey.

Radio Networks

The Company operates six radio networks that serve approximately 338
affiliates. The programs produced and distributed by the Company's radio
networks include news broadcasts, sports play-by-play and sports talk shows, and
business and agricultural news and information. In addition to providing radio
programming, the Company also offers its affiliates printed script for news,
sports and weather information, that the Company either generates internally or
consolidates from wire services and other sources. The Company believes radio
networks are attractive to advertisers because they provide an opportunity to
advertise simultaneously on multiple stations. In addition, the Company's
networks provide certain programming to the Company's radio broadcast stations.

In December 1992, the Company purchased the Florida Radio Network in order
to build statewide advertising sales. The network produces daily news segments
for 56 affiliated stations in Florida, thereby giving the Company a presence in
almost every market in Florida. On November 4, 1994, the Company merged with ANG
significantly expanding the Company's radio network holdings. As a result of the
merger, the Company owns and operates a radio network in Tennessee, as well as
several collegiate sports radio networks. Such radio networks currently produce
and distribute news, sports play-by-play and other programs, giving the Company
79 affiliated radio stations in Tennessee. In January 1995, the Company acquired
the Alabama Radio Network, which produces and distributes news, sports and other
programs to 74 affiliates in Alabama. The Company has the exclusive rights to
produce and broadcast the men's football and basketball games and weekly
coaches' radio shows of the University of Florida Gators through 53 affiliates,
the University of Miami Hurricanes through 25 affiliates, and Pennsylvania State
University Nittany Lions through 51 affiliates. The broadcasts are distributed
to radio stations that have subscribed for them pursuant to affiliate
agreements. Certain affiliates of the Company's sports networks are also
affiliates of its state radio networks.

During 1995, the Company upgraded the technical facilities at each of its
radio news networks with digital sound programming. The Company believes that
such quality improvements will enable it to maintain its network presence in
each of the states in which it has networks.

Billboard Properties

The Company currently owns 67 billboard locations, including 55 billboards
with 113 faces in the Tampa market, and 12 billboard locations at which the
Company will have 48 faces in the Orlando market. While the

42
<PAGE> 46

Company will sell the use of the billboards to a broad group of potential
advertisers, the Company takes advantage of the relationships it has with its
radio advertisers to broaden its billboard client base, as well as expand the
Company's share of the advertiser's media purchases within a market. In
addition, as broadcasters are major users of billboard advertising campaigns,
the Company can control its own billboard promotional expenditures through the
use of its unsold billboards, as well as assure full use of all its owned
billboards. As opportunities are presented to the Company, it will consider the
acquisition of additional billboards in markets in which it owns broadcasting
properties.

PAXSON NETWORK-AFFILIATED TELEVISION

Paxson Communications owns and operates an ABC-TV affiliate, WPBF-TV, in
the West Palm Beach market. Pursuant to a time brokerage agreement, the Company
provides programming and markets commercial time for a second television
station, WTVX-TV (a combined United Paramount Network and Warner Brothers
Network affiliate), which is also in the West Palm Beach market. The West Palm
Beach television market is one of the fastest growing markets in the country, as
evidenced by its increased market ranking from 65th in 1985 to 45th in 1995.
Television advertising expenditures in the West Palm Beach market totalled $88.2
million in 1995, an increase of 2.6%.

The Company acquired WPBF-TV in July 1994 for approximately $32.5 million
and began operating WTVX-TV under a time brokerage agreement in August 1995. The
Company has a long-term option to acquire WTVX-TV for approximately $19 million.
After the acquisition of WPBF-TV, the Company installed its management team and
implemented a program of cost rationalization measures consisting of, among
other things, a reduction in program rights payments, an increase in salesperson
commissions related to additional staffing and higher revenues, and increased
local news expenses to generate higher audience ratings. Pro forma for the
inclusion of WTVX-TV, these television stations generated segment pro forma
revenue, segment pro forma income from operations and segment pro forma
operating profit of $19.7 million, $2.1 million and $6.1 million, respectively,
in 1995.

Operating Strategy

The Company's television operating strategy is similar to its radio
operating strategy as the Company seeks to capitalize on the revenue enhancing
and cost saving opportunities from operating two television stations in one
market from a single studio facility.

WPBF-TV (channel 25) is the ABC-TV affiliate in the West Palm Beach,
Florida market. The station achieved a 10 share of household audience in the
November 1995 Nielsen ratings survey, tied for third place in the market.
WPBF-TV airs ninety minutes of local news each weekday and an hour each Saturday
and Sunday. In addition, the station's current schedule includes the following
syndicated programs: Hard Copy, A Current Affair, Coach, Geraldo!, Jerry
Springer and Sally Jessy Raphael. The highly rated Montel Williams Show will
join WPBF's lineup in the fall of 1996. Monday through Friday, WTVX-TV airs a
second run of Sally Jessy Raphael as part of a three hour daytime talk show
block, and a second run of Jerry Springer at 10:00 p.m. The second runs of Sally
Jessy Raphael and Jerry Springer air at no net cost to WTVX-TV, as they were
included in WPBF's negotiations for these programs. WTVX-TV is a leading
provider of children's programming in the West Palm Beach market with the
following syndicated programs: Flintstones, Mighty Max, Goof Troop, Bonkers and
Animaniacs. The station also airs off network and original syndicated family-
oriented programming such as Family Matters, Step by Step, Baywatch, Highlander,
Kung Fu, Land's End, High Tide and Renegade. This fall, WTVX-TV will add the NBC
network sitcom Mad About You to its program lineup. WTVX-TV achieved a four
share of household audience in the November 1995 Nielsen ratings, ranking fifth
in the market. WPBF-TV and WTVX-TV will continue to carry Southeastern
Conference and Atlantic Coast Conference college football games, featuring among
other teams the University of Florida Gators and the Florida State University
Seminoles.

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<PAGE> 47

ADVERTISING

Virtually all the Company's broadcasting revenue is derived from local,
regional and national advertising. Advertising rates charged by radio and
network television stations are based on a station's ability to attract
audiences in the demographic groups that advertisers wish to reach, and the
number of stations competing in the market area. A station's audience is
reflected in rating surveys of the number of listeners tuned to the station and
the time spent listening. The Company believes that its regional presence in
Florida's most populous markets and its targeted demographic groups in those
markets make it attractive to national, regional and local radio and television
advertisers. The Company strives to maximize radio revenue by constantly
managing the number of commercials available and all broadcast revenue by
adjusting prices based upon demand by advertisers to reach the Company's
stations' target demographic groups. In addition to the sales of advertising
time for cash, stations typically exchange advertising time for goods or
services that can be used by the station in its business operations, including
radio, television and billboard advertising and such items as travel and
entertainment services. The Company generally limits the use of such trade
transactions to promotional items or services for which the Company would
otherwise have paid cash. In addition, it is the Company's general policy not to
preempt advertising spots paid for in cash with advertising spots paid for in
trade.

inTV advertising rates are primarily based on the number of cable
households reached, the effectiveness of infomercials, the nature of the
advertiser, the nature of the advertisement (local, national or network), and
ultimately the demand for available infomercial time. The Company attempts to
maximize revenue by increasing the number of cable homes reached providing
advertisers with increased viewership. The Company increases the number of cable
households reached both by increasing the reach of each of its stations through
the exercise of "must carry" rights and by acquiring broadcast stations in
additional markets. In addition, certain advertisers can measure the success of
an infomercial program almost immediately after a show is broadcast. The Company
believes the success of infomercials with viewers continues to drive advertisers
to use infomercials. As such, the demand for infomercials continues to increase.

COMPETITION

The Company's radio and television stations compete with the other radio
and television broadcasting stations in their respective market areas, as well
as with other advertising media, including newspapers, television, magazines,
outdoor advertising, transit advertising and direct mail marketing. Competition
within the radio and television broadcasting industries occurs primarily in
individual market areas, so a station in one market does not generally compete
with stations in other market areas. In each of its markets, the Company's radio
and television stations face competition from other stations with substantial
financial resources, including, in certain instances, stations whose programming
is directed to the same demographic groups. In addition to management
experience, factors that are material to competitive positions include a
station's rank in its market, authorized power, assigned frequency or station
(as applicable), audience characteristics, local program acceptance and the
programming characteristics of other stations in the market area. The Company
attempts to improve its radio station's competitive position with extensive
research and promotional campaigns aimed at the demographic groups targeted by
its stations, and through sales efforts designed to attract advertisers,
including those who have done little or no radio advertising, by emphasizing the
effectiveness of radio advertising in increasing the advertisers' revenue.
Recent changes in the FCC's policies and rules permit increased joint ownership
and joint operation of local radio stations. Stations, such as those owned by
the Company, taking advantage of these joint arrangements may in certain
instances have lower operating costs and may be able to offer advertisers more
attractive rates and services. The Company attempts to improve its television
stations' competitive positions with local tie-in promotions and strong local
news segments. Although the Company believes that each of the Company's radio
and television stations can compete effectively in its market, there can be no
assurance that any of the Company's radio or television stations will be able to
maintain or increase its current audience rating or advertising revenue market
share.

Although the radio and television broadcasting industries are highly
competitive, some barriers to entry exist. The operation of a radio or
television broadcasting station requires a license from the FCC, and the number
of radio and television stations that can operate in a given market is limited
by the availability of the

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<PAGE> 48

FM and AM radio frequencies or stations (as applicable) that the FCC will
license in that market. The radio and television broadcasting industries
historically have grown in terms of total revenue, despite the introduction of
new technologies for the delivery of entertainment and information, such as
cable, audio tapes and compact discs. The Company believes that radio's
portability makes it less vulnerable than other media to competition from new
methods of distribution or other technological advances. There can be no
assurance, however, that the involvement or introduction in the future of any
new media technology will not have an adverse effect on the radio or television
broadcasting industries.

The Company's development of inTV and creation of a national long-form paid
programming distribution system is a relatively new concept, and there can be no
assurance of its success. The concept is subject to competition from several
sources. The Company's inTV stations face significant competition from
established broadcasting stations and cable television. Various television
networks carry blocks of infomercials and local cable operators also sell blocks
of time to long-form advertisers. To the extent that the Infomall TV Network is
successful, it is likely that the Company will face competition from new market
entrants, some of which could have significantly greater financial resources
than the Company. In addition, the Company could encounter competition as a
result of technological developments. The Company believes, however, that it can
compete on a favorable basis because it contains the only group of television
stations in the United States that currently offers infomercial advertisers both
significant national and regional distribution capabilities and inventory
availability during popular morning, daytime and prime time hours.

TIME BROKERAGE AGREEMENTS, JOINT SALES AGREEMENTS AND OTHER INTERESTS IN
BROADCAST STATIONS

The Company has made certain investments in broadcast properties with third
parties consisting of time brokerage agreements and joint sales agreements, as
well as the co-ownership of certain television stations and radio stations.
These investments in broadcast properties permit the Company to have a presence
in additional markets and to enjoy many, but not all, of the benefits of
ownership while at the same time remaining in compliance with FCC regulations.

Time Brokerage Agreements. The Company has entered into time brokerage
agreements with third parties pursuant to which the Company enjoys many, but not
all, of the benefits of operating a television station while not owning such
station. The Company may in the future enter into other time brokerage
agreements to operate stations prior to their acquisition or to enable the
Company to operate additional television stations that it might not be able to
own itself under current FCC multiple station ownership restrictions.

As a result of changes embodied in the 1996 Act, certain of the FCC's
ownership limitations have been relaxed and, to take advantage of such changes,
the Company intends to exercise the Station Options and acquire WCTD-TV,
WFCT-TV, KUBD-TV, WTJC-TV, WCEE-TV and KWBF-TV, which stations have been
operated pursuant to time brokerage agreements with The Christian Network, Inc.
("CNI"). In addition, the Company is currently operating stations WSJN-TV and
WRMY-TV pursuant to time brokerage agreements pending the consummation of the
Company's investment in such stations.

Upon consummation of the Proposed Acquisitions and the Station Options, the
Company will operate each of WTVX-TV, WOAC-TV, WNGM-TV, WHKE-TV and WIRB-TV
under time brokerage agreements. Three of such stations (WTVX-TV, WOAC-TV and
WNGM-TV) will be operated pursuant to time brokerage agreements with Whitehead
Media, Inc. and two (WHKE-TV and WIRB-TV) will be operated pursuant to time
brokerage agreements with subsidiaries of CNI. In addition, in connection with
the Company's acquisition of WHAI-TV, the Company was required by the FCC to
restructure its investment in WTWS-TV within six months of its acquisition of
WHAI-TV, in order to divest itself of an attributable interest, for FCC multiple
station ownership purposes, in WTWS-TV. The Company intends that, upon the
consummation of such restructured investment, WTWS-TV will be owned by an entity
owned by Steven Roberts and Michael Roberts (each of the entities owned or
controlled by Steven Roberts and Michael Roberts jointly and with which the
Company has an agreement is referred to herein as "Roberts Broadcasting"), and
the Company will operate WTWS-TV pursuant to a time brokerage agreement. With
certain limited exceptions, the time brokerage agreements of the Company entered
into other than in anticipation of the consummation of an acquisition

45
<PAGE> 49

involve a basic transaction structure. The Company (i) finances the acquisition
by the third party of some or all of the assets of the brokered stations and
secures such financing by encumbering such assets including, to the extent
permitted under FCC rules and regulations, the FCC license and all of the
capital stock of the acquiring company; and (ii) enters into a time brokerage
agreement with such third party which allows the Company to operate the brokered
station, in accordance with FCC guidelines. In the case of Whitehead Media, the
Company initially financed the acquisition by Whitehead Media of each of WTVX-TV
and WOAC-TV. Whitehead Media subsequently obtained third party financing, a
portion of the proceeds of which was used to repay the debt owed by Whitehead
Media to the Company. In general, payments made to the FCC licensee under the
time brokerage agreement are established, and renegotiated from time to time,
based upon increases in expenses for which the FCC licensee must, in accordance
with FCC regulations, remain primarily liable, including servicing the
indebtedness owed by such FCC licensee to the Company or, in the case of
Whitehead Media, to third parties. In certain circumstances, the Company may
acquire certain tangible assets useful in the construction or operation of the
brokered station and lease such assets to the brokered station. In addition,
unless prohibited by FCC rules and regulations, the FCC licensee also grants to
the Company an option to purchase the station for an amount payable in cash
together with the forgiveness of all outstanding indebtedness. Upon consummation
of the Proposed Acquisitions and the exercise of the Station Options, the
Company will have options to purchase four (WTVX-TV, WOAC-TV, WNGM-TV and
WHKE-TV) of the six stations which the Company will operate pursuant to time
brokerage agreements. The Company has no ownership interest in Whitehead Media,
CNI or Roberts Broadcasting.

Other Investments in Television Properties. The Company is currently
operating WSJN-TV pursuant to a time brokerage agreement pending its acquisition
of a 50% interest in S&E Network, Inc. for approximately $4,000,000. S&E
Network, Inc., a Puerto Rican corporation, is the licensee of the station and is
currently 100% owned by Housing Development Associates, S.A. ("HDA"). The
Company's investment in WSJN-TV will be consummated upon the receipt of
regulatory approvals and thereafter, the Company will control substantially all
of the programming time and other operations of the station pursuant to a
management agreement with HDA.

The Company is currently operating station WRMY-TV pursuant to a time
brokerage agreement pending the consummation of the Offering, and has also
agreed to lend to Roberts Broadcasting Company of Raleigh-Durham, L.P., a
limited partnership which is the licensee of the station and of which Roberts
Broadcasting is the sole general partner, up to $4,000,000 to relocate and
upgrade the station's transmitter facilities. The Company has an option to
convert a portion of its investment in WRMY-TV into a 40% limited partnership
interest, with Roberts Broadcasting holding the remaining 60% partnership
interest. The limited partnership agreement that governs the Company's
partnership interest in WRMY-TV provides the Company the right to approve
substantially all of the programming to be aired on the station and to
participate in certain fundamental decisions concerning the operation and
management of the station, including, for example, the approval of station
budgets.

The Company has agreed to acquire for $850,000 a 50% interest in Roberts
Broadcasting of Salt Lake City, L.L.C. a Delaware limited liability company
which will be the licensee of KZAR-TV and of which Roberts Broadcasting will be
the sole other member, and to loan the station up to $3,180,000 to relocate and
upgrade its transmitter facilities. Similarly, the Company has agreed to acquire
for $1,000,000 a 50% interest in Offshore Television Company, L.L.C., a Delaware
limited liability company which will be the licensee of WOST-TV and of which
Offshore Broadcasting Corporation will be the sole other member, and to loan the
station up to $2,500,000 to relocate and upgrade its transmitter facilities. The
business of each of the limited liability companies which will own and operate
KZAR-TV and WOST-TV will be managed under the terms of an "operating agreement"
between the Company and, respectively, Roberts Broadcasting and Offshore
Broadcasting Corporation. The Company expects that each of such operating
agreements will provide it and the other member of such limited liability
company the right to approve programming and other decisions concerning the
operation of the station.

The loan and security documents governing the terms and conditions of the
loans extended by the Company to each of WRMY-TV, KZAR-TV and WOST-TV contain
customary negative and affirmative covenants made for the benefit of the Company
as a lender to such stations, including limitations on the

46
<PAGE> 50

incurrence of indebtedness, restrictions on liens, prohibitions on sales of
assets and the Company's prior approval of significant contracts and agreements.

The Company has also extended financing to Cocola Media Corporation of
Florida ("Cocola"), which has in turn financed the construction by WPB
Communications, Inc. of television station WHBI-TV, which is licensed to
Hispanic Broadcasting, Inc. WPB Communications, Inc. is the holder of an option
to acquire WHBI-TV from Hispanic Broadcasting, Inc. after the station commences
broadcast operations. After the consummation of the acquisition by WPB
Communications, Inc., Cocola has an option to acquire the station and, pending
the consummation of such option acquisition, the right to operate WHBI-TV
pursuant to a time brokerage agreement. The Company expects to enter an
affiliation agreement with Cocola after Cocola acquires WHBI-TV, pursuant to
which WHBI-TV would air inTV programming. The Company does not have any
ownership interest in Cocola, WPB Communications, Inc. or Hispanic Broadcasting,
Inc.

Joint Sales Agreements and other Radio Investments. The Company currently
provides sales and marketing services under a joint sales agreement for each of
radio stations WACC-AM, serving the Miami radio market, and WFSJ-FM, serving the
Jacksonville radio market, while the owner of each such station provides the
programming for such radio station. The Company owns a 49% interest in WACC-AM
and has agreed to acquire WFSJ-FM for a total consideration of $5 million,
consisting of $1.7 million in Company common stock, cancellation of $1.75
million in indebtedness to the Company, and assumption and repayment by the
Company of a $1.55 million note to Mr. Paxson. See "Certain Transactions."

FEDERAL REGULATION OF BROADCASTING

The FCC regulates radio and television broadcast stations pursuant to the
Communications Act. The Communications Act permits the operation of radio and
television broadcast stations only in accordance with a license issued by the
FCC upon a finding that the grant of such license would serve the public
interest, convenience and necessity. The Communications Act provides for the FCC
to exercise its licensing authority to provide a fair, efficient and equitable
distribution of broadcast service throughout the United States.

The Communications Act empowers the FCC, among other things, to determine
the frequencies, location and power of broadcast stations; to issue, modify,
renew and revoke station licenses; to approve the assignment or transfer of
control of broadcast licenses; to regulate the equipment used by stations; to
impose fees for processing applications; to adopt regulations to implement the
provisions of the Communications Act; and to impose penalties for violations of
the Communications Act or FCC regulations. The FCC may revoke licenses for,
among other things, false statements made to the FCC or willful or repeated
violations of the Communications Act or of FCC rules. Legislation has been
introduced from time to time to amend the Communications Act in various respects
and the FCC from time to time considers new regulations or amendments to its
existing regulations. On February 8, 1996, the President signed into law the
1996 Act. The 1996 Act changes many provisions of the Communications Act and
requires the FCC to change its existing rules and adopt new rules in several
areas affecting broadcasting. The Company cannot predict whether Congress will
enact any further such legislation, whether the FCC will adopt new or amend
existing regulations (although the 1996 Act requires the FCC to institute a rule
making proceeding to amend broadcast rules), or what the effect of such actions
would be on the Company.

The following is a brief summary of certain provisions of the
Communications Act and the rules of the FCC. Reference should be made to the
Communications Act and the rules, orders, decisions and published policies of
the FCC for further information on FCC regulation of television and radio
broadcast stations.

License Renewal. The Communications Act provides that a broadcast station
license may be granted to an applicant if the public interest, convenience and
necessity will be served thereby, subject to certain limitations. In making
licensing determinations, the FCC considers an applicant's legal, technical,
financial and other qualifications. Broadcast station licenses are granted for
specific, limited periods, and, upon application, are renewable for additional
terms. Prior to recent amendments to the Communications Act in the 1996 Act, the
Communications Act provided for radio broadcast station licenses to be granted
for a maximum term of seven years, and television station licenses to be granted
for a maximum term of five years. The 1996 Act extends the license term for both
television and radio broadcast stations to eight years. The FCC has not

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<PAGE> 51

yet proposed regulations to implement the new license terms. In addition, the
1996 Act provides that, if a broadcast station fails to transmit broadcast
signals for any consecutive 12-month period, the station license expires at the
end of that 12-month period without regard to the stated term of the license.
The Company's current licenses, and the licenses of stations with which the
Company has time brokerage agreements expire on the following dates:

<TABLE>
<CAPTION>
RADIO STATIONS MARKET(A) LICENSE EXPIRATION
-------------------------------------- ----------------------- -------------------
<S> <C> <C>
WLVE-FM............................... Miami/Ft. Lauderdale February 1, 2003
WZTA-FM............................... Miami/Ft. Lauderdale February 1, 1996
WINZ-AM............................... Miami/Ft. Lauderdale February 1, 1996
WFTL-AM............................... Miami/Ft. Lauderdale February 1, 1996
WHPT-FM............................... Tampa/St. Petersburg February 1, 1996
WSJT-FM............................... Tampa/St. Petersburg February 1, 1996
WHNZ-AM............................... Tampa/St. Petersburg February 1, 1996
WNZE-AM............................... Tampa/St. Petersburg February 1, 1996
WJRR-FM............................... Orlando February 1, 2003
WMGF-FM............................... Orlando February 1, 1996
WWNZ-AM............................... Orlando February 1, 1996
WWZN-AM............................... Orlando February 1, 1996
WPLA-FM............................... Jacksonville February 1, 1996
WROO-FM............................... Jacksonville February 1, 1996
WNZS-AM............................... Jacksonville February 1, 1996
WZNZ-AM............................... Jacksonville February 1, 1996
WPTN-AM............................... Cookeville August 1, 1996
WGSQ-FM............................... Cookeville August 1, 1996
</TABLE>

<TABLE>
<CAPTION>
OWNED TELEVISION STATIONS MARKET(A) LICENSE EXPIRATION
-------------------------------------- ----------------------- -------------------
<S> <C> <C>
WHAI.................................. New York June 1, 1999
KZKI.................................. Los Angeles December 1, 1998
WTGI.................................. Philadelphia August 1, 1999
KLXV.................................. San Francisco December 1, 1998
WGOT.................................. Boston April 1, 1999
WYVN.................................. Washington, D.C. October 1, 1996
WTLK.................................. Atlanta April 1, 1997
KTFH.................................. Houston August 1, 1998
WAKC.................................. Cleveland October 1, 1997
WTWS.................................. Hartford/New Haven April 1, 1999
WPBF.................................. West Palm Beach February 1, 1997
</TABLE>

(see footnotes on following page)

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<PAGE> 52

<TABLE>
<CAPTION>
TIME BROKERAGE
TELEVISION STATIONS MARKET(A) LICENSE EXPIRATION
-------------------------------------- ----------------------- -------------------
<S> <C> <C>
WOAC.................................. Cleveland October 1, 1997
WFCT(b)............................... Tampa/St. Petersburg February 1, 1997
WCTD(b)............................... Miami/Ft. Lauderdale February 1, 1997
KUBD(b)............................... Denver April 1, 1998
KWBF(b)............................... Phoenix October 1, 1998
WCEE(b)............................... St. Louis December 1, 1997
WIRB.................................. Orlando February 1, 1997
WRMY.................................. Raleigh December 1, 1996
WTVX.................................. West Palm Beach February 1, 1997
WTJC(b)............................... Dayton October 1, 1997
WSJN.................................. San Juan February 1, 1997
</TABLE>

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

(a) Each station is licensed by the FCC to serve a specific community which is
included in the listed market.
(b) Operated pursuant to a time brokerage agreement pending exercise of the
Station Options.

The Company timely filed license renewal applications for all of its
Florida radio stations with the FCC which renewal applications were required to
be filed on or before October 1, 1995. These applications are subject to public
comment and interested third parties could have filed formal petitions to deny
each license renewal application with the FCC on or before January 2, 1996. No
such petitions were filed. Two of such station licenses (WLVE-FM) and (WJRR-FM)
were renewed through February 1, 2003. While the license for each of the Florida
radio stations other than WLVE-FM and WJRR-FM expired on February 1, 1996, the
Communications Act provides that, because the FCC has not acted on such
applications, such station licenses shall automatically continue in force until
the pending renewal applications have been acted upon. Based upon its review of
FCC records, the Company is not aware of any petitions or other informal
objections filed against any one of its pending radio station license renewal
applications. The Company expects its pending renewal applications for its
Florida radio station licenses to be acted upon favorably by the FCC and for
such licenses to be renewed through February 1, 2003.

Generally, the FCC renews licenses without a hearing. The Communications
Act authorizes the filing of petitions to deny and of competing applications
against license renewal applications during specified periods after the renewal
applications have been filed. Interested parties, including members of the
public, may file petitions to deny as a means to raise issues concerning the
renewal applicant's qualifications. The Telecommunications Act of 1996 removed
the opportunity for the filing of competing applications against an incumbent
licensee at renewal time. Instead, the FCC will renew broadcast licenses if the
incumbent meets three requirements: (1) the station has served the public
interest, convenience and necessity; (2) the licensee has not seriously violated
the Communications Act or the FCC's rules; and (3) there have been no other
violations, which, taken together, would constitute a pattern of abuse. If an
applicant for renewal fails to satisfy this tripartite standard, the FCC
nevertheless may renew the license on appropriate terms and conditions,
including renewal for less than a full license term. The FCC may not consider
applications for the channel by other parties until it first has decided to deny
renewal to the incumbent. Before denying renewal to an incumbent, the FCC must
first allow the licensee a hearing on the licensee's alleged failure to satisfy
the statutory standard. The Communications Act, as amended, now prohibits the
FCC from considering whether another licensee would be preferable until it first
has determined that the incumbent does not qualify for renewal.

In recent years, there have been a number of petitions to deny filed with
respect to broadcast license renewal applications, but in the vast majority of
cases the FCC has renewed incumbent operators' station licenses.

Ownership Matters. The Communications Act requires the prior approval of
the FCC for the assignment of a broadcast license or the transfer of control of
a corporation or other entity holding a license. In determining whether to
approve an assignment of a broadcast license or a transfer of control of a
broadcast licensee, the FCC considers, among other things, the financial and
legal qualifications of the prospective

49
<PAGE> 53

assignee or transferee, including compliance with FCC restrictions on alien
ownership and control, compliance with rules limiting the common ownership of
certain attributable interests in broadcast, cable and newspaper properties, and
the character qualifications of the transferee or assignee and the individuals
or entities holding attributable interests in them.

The FCC generally applies its ownership limits to attributable interests
held by an individual, corporation, partnership, or other association or entity.
In the case of corporations holding broadcast licenses, the interests of
officers, directors, and those who, directly or indirectly, have the right to
vote five percent or more of the corporation's stock are generally attributable,
as are positions of an officer or director of a corporate parent of a broadcast
licensee. The FCC treats all partnership interests as attributable, except for
those limited partnership interests that are insulated under FCC policies. For
insurance companies, certain regulated investment companies and bank trust
departments, that hold stock for investment purposes only, such interests become
attributable with the ownership of ten percent or more of the stock of the
corporation holding broadcast licenses. The FCC's rules specify exceptions to
the general principles for attribution. For example, in a corporation with a
single majority shareholder, such as the Company, no other shareholder is deemed
to hold an attributable interest.

The 1996 Act substantially relaxed and restructured ownership rules
applicable to broadcast entities by removing restrictions on the number of
television stations a single entity may own or control nationwide and increasing
the nationwide audience reach ceiling for television ownership. Under the new
rules, an entity will be able to hold an attributable interest in television
stations reaching up to 35% of the United States television households. The 1996
Act also removes entirely the nationwide limits on the number of radio broadcast
stations in which a single entity may hold an attributable interest. In
addition, the new act changed the local radio ownership rules to increase the
number of radio stations a single entity may own in a single market:

If there are fourteen or fewer stations in a market, a single entity
may own as many as five stations and three same-service stations (that is,
AM or FM), except that a single entity may not own, operate or control more
than 50% of the stations in a market with fourteen or fewer commercial
radio broadcast stations;

In a market with between fifteen and twenty-nine stations, a single
entity may own or control six stations and four stations in the same
service;

In a market with thirty to forty-four stations, a single entity may
own or control a total of seven stations and four same-service stations;
and

In a market of forty-five or more stations, a single entity may own or
control a total of eight stations with up to five same-service stations.

The FCC also has rules that limit the number of co-located radio or
television broadcast stations in which a single entity may own an attributable
interest. Certain of these rules also will change because of the 1996 Act. For
television, no single entity may hold an attributable interest in television
stations with overlapping Grade B service contours. The 1996 Act directs the FCC
to conduct a rule making proceeding to determine whether these rules should be
retained. The Grade B contour is a predicted signal strength contour that
generally approximates the area within which a viewer can receive off-the-air a
signal adequate for normal viewing. The local ownership restrictions for radio
broadcast stations vary based on market size.

Under local radio ownership rules, an entity with an attributable interest
in one radio station is considered also to have an attributable interest in any
other radio station in the same market for which the first radio station
provides the programming for more than 15% of the broadcast time, on a weekly
basis. As a result, such programming arrangements may not be entered into by
radio station combinations that could not be commonly owned under FCC rules.

The FCC's cross-ownership rules prohibit the common ownership of
attributable interests in certain combinations of media outlets serving the same
geographic area. Under these rules, a single entity may not have an attributable
interest in: (i) both a radio station and a television station that serve
specified overlapping areas; (ii) a daily newspaper and either a radio station
or a television station that serve specified overlapping

50
<PAGE> 54

areas; or (iii) a television station and a cable television system that serve
specified overlapping areas. (The 1996 Act deleted the statutory prohibition on
a single entity owning both a television station and a cable television system
in the same market, but did not require the FCC to change its rule that imposes
this restriction.) The FCC has established a liberal waiver policy to permit
common ownership of a radio station and a television station in any of the
nation's 25 largest markets, and in some circumstances involving failed stations
and in other situations where more stringent waiver standards can be met. The
1996 Act extends this waiver policy to the top 50 markets. In addition,
legislative proposals have been made from time to time to liberalize or
strengthen these prohibitions. See "Proposed Changes."

In cases involving competing media in the same market, FCC policy in
certain instances prohibits common ownership interests under its cross-interest
policy even if the interests involved are non-voting or other non-attributable
interests not specifically forbidden under the FCC's cross-ownership rules. The
FCC has initiated proceedings to inquire whether it should change or eliminate
this policy, covering joint ventures and common key employees. The policy does
not necessarily prohibit these interests, but may require that the FCC consider
whether they could have a significant adverse affect on programming diversity
and competition in the market. See "Proposed Changes."

In cases where one person or entity (such as Mr. Paxson in the case of the
Company) holds more than 50% of the combined voting power of the common stock of
a broadcasting corporation, a minority shareholder of the corporation generally
would not acquire an attributable interest in the corporation. Any attributable
interest by any shareholder in another broadcast station or daily newspaper in a
market where such a corporation owns or seeks to acquire a station may still be
subject to review by the FCC under its cross-interest policy, and could result
in the Company's being unable to obtain from the FCC one or more authorizations
needed to acquire other broadcast stations. Furthermore, if a majority
shareholder of a company (such as Mr. Paxson in the case of the Company) were no
longer to hold more than 50% of the combined voting power of the common stock of
the Company, the interests of minority shareholders that had theretofore been
considered non-attributable could become attributable, with the result that any
other media interests held by such shareholders would be combined with the media
interests of such company for purposes of determining the shareholders'
compliance with FCC ownership rules. In the event of any noncompliance, steps
required to achieve compliance could include divestitures by either the
shareholder or the affected company. Furthermore, other media interests of
shareholders having or acquiring an attributable interest in such a company
could result in the company's being unable to obtain FCC consents for future
acquisitions. Conversely, the Company's media interests could operate to
restrict other media investments by shareholders having or acquiring an interest
in the Company.

Under the Communications Act, no FCC broadcast license may be held by a
corporation of which more than one-fifth of its capital stock is owned of record
or voted by aliens or their representatives or by a foreign government or
representative thereof, or by any corporation organized under the laws of a
foreign country (collectively "Aliens"). Furthermore, the Communications Act
provides that no FCC broadcast license may be granted to any corporation
directly or indirectly controlled by any other corporation of which more than
one-fourth of its capital stock is owned of record or voted by Aliens if the FCC
should find that the public interest would be served by the refusal of such
license. Restrictions on alien ownership also apply, in modified form, to other
types of business organizations, including partnerships.

Programming and Operation. The Communications Act requires broadcasters to
serve the public interest. Since the late 1970's, the FCC gradually has relaxed
or eliminated many of the more formalized procedures it developed to promote the
broadcast of certain types of programming responsive to the needs of a station's
market. Nevertheless, broadcast licensees continue to be required to present
programming that responds to community problems, needs and interests and to
maintain certain records demonstrating such responsiveness. Complaints from
listeners or viewers about a broadcast station's programming often will be
considered by the FCC when it evaluates renewal applications of a licensee,
although such complaints may be filed at any time.

Broadcast of obscene or indecent material is regulated by the FCC as well
as by state and federal law. Stations also must follow various rules promulgated
under the Communications Act that regulate, among

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<PAGE> 55

other things, political advertising, sponsorship identifications, the
advertising of contests and lotteries, and technical operations, including
limits on radio frequency radiation. In addition, licensees must develop and
implement affirmative action programs designed to promote equal employment
opportunities, and must submit reports to the FCC with respect to these matters
on an annual basis and in connection with a renewal application. Pursuant to the
Children's Television Act of 1990, the FCC has adopted rules limiting
advertising in children's television programming and required that television
broadcast stations serve the educational and informational needs of children.
The Children's Television Act specifically requires that the FCC consider
compliance with these obligations in deciding whether to renew a television
broadcast license.

Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
short term renewals or, for particularly egregious violations, the denial of a
license renewal application or the revocation of a license.

Time Brokerage Agreements. Over the past several years a significant
number of radio broadcast licensees, including certain of the Company's
subsidiaries, have entered into time brokerage agreements. While these
agreements may take varying forms, under a typical time brokerage agreement
separately-owned and licensed radio stations agree to enter into arrangements of
varying sorts, subject to compliance with the requirements of antitrust laws and
with the FCC's rules and policies. These arrangements are subject under FCC
rules and regulations to maintenance by the licensee of each station of
independent control over the programming and station operations of its own
station.

Typically, a time brokerage agreement is a programming agreement between
two separately owned radio stations serving a common service area, whereby the
licensee of one station programs substantial parts of the broadcast day on the
other licensee's station, subject to ultimate editorial and other controls being
exercised by the licensee of the brokered station. The broker then sells
advertising time during such program segments for its own account. Such
arrangements are an extension of the concept of time brokerage, under which a
licensee of a station sells the right to broadcast blocks of time on its station
to an entity or entities which program the blocks of time and sell their own
commercial advertising for their own account during the time periods in
question.

The FCC has determined that issues of joint advertising sales should be
left to antitrust enforcement. In addition, it has specifically exempted time
brokerage agreements from its cross-interest policy. Furthermore, the FCC and
the staff of the FCC's Mass Media Bureau have held that time brokerage
agreements do not per se constitute a transfer of control and are not contrary
to the Communications Act provided that the licensee of the station maintains
ultimate responsibility for and control over operations of its broadcast station
(including, specifically, control over station finances, licensee personnel and
programming) and complies with applicable FCC rules and with antitrust laws.
Thus far, the FCC has not considered what relevance, if any, a time brokerage
agreement may have upon its evaluation of a licensee's performance at renewal
time.

Under certain circumstances, the FCC will consider a station brokering time
on another radio station serving the same market to have an attributable
ownership interest in the brokered station for purposes of the FCC's radio local
ownership rules. In particular, a radio broadcast station is not permitted to
enter into a time brokerage agreement giving it the right to program more than
15% of the broadcast time, on a weekly basis, of another local station that it
could not own under the FCC's revised local radio duopoly multiple ownership
rules. Nevertheless, radio time brokerage agreements entered into before
September 16, 1992 are generally grandfathered. The FCC has no present rules on
the attribution of television time brokerage agreements as it does with radio
time brokerage agreements. The FCC has adopted an interim policy on the grant of
transfer and assignment applications that include television time brokerage
agreements and the FCC is now considering whether to adopt rules governing
television time brokerage agreements. The 1996 Act grandfathered time brokerage
agreements existing at the time of its passage and included a provision that the
broadcast ownership section of the act is not to be construed to prohibit the
origination, continuation or renewal of any television time brokerage agreement
that complies with FCC regulations. See "Proposed Changes."

The FCC rules also prohibit a radio broadcast licensee from simulcasting
more than 25% of its programming on another station in the same radio broadcast
service (that is, AM-AM or FM-FM) whether it

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<PAGE> 56

owns both stations or operates both through a time brokerage agreement if the
brokered and brokering stations serve substantially the same geographic area.

"Must Carry"/Retransmission Consent. Some provisions of the 1992 Cable Act
and the implementing rules adopted by the FCC, such as signal and carriage and
equal employment opportunity requirements, directly affect television
broadcasting. Other provisions, although focused exclusively on the regulation
of cable television, may indirectly affect the Company because of the
competition between over-the-air television stations and cable systems.

The 1992 Cable Act contains broadcast signal carriage requirements that
allow local commercial television broadcast stations to elect once every three
years to require a cable system to carry the station on certain designated cable
channels subject to certain exceptions, or to negotiate for retransmission
consent to carry the station. A cable system generally is required to devote up
to one-third of its activated channel capacity for the mandatory carriage of
local commercial television stations. Local non-commercial television stations
are also given mandatory carriage rights; however, such stations are not given
the option to negotiate retransmission consent for the carriage of their signals
by cable systems. Additionally, cable systems are required to obtain
retransmission consent for all distant commercial television stations (except
for commercial satellite-delivered independent superstations such as WTBS),
commercial radio stations and certain low power television stations carried by
such systems after October 6, 1993.

On April 8, 1993, a special three-judge federal district court issued a
decision upholding the constitutional validity of the mandatory signal carriage
requirements. In June 1994, the United States Supreme Court vacated this
decision and remanded it to the district court to determine, among other
matters, whether the statutory carriage requirements are necessary to preserve
the economic viability of the broadcast industry. On December 12, 1995, a
three-judge federal district court panel again upheld the constitutional
validity of the mandatory signal carriage requirements, ruling that reasonable
evidence supported Congress' conclusion that "must carry" rules are necessary to
preserve the economic validity of the broadcast industry. The district court's
decision has been appealed to the Supreme Court, but the mandatory broadcast
signal carriage requirements will remain in effect pending the outcome of the
further proceedings. The Company cannot predict whether the Supreme Court will
ultimately uphold or strike down the mandatory signal carriage requirements. If
a station is not carried by a cable system in its area or is shifted to an
undesirable channel on such cable system, the station could experience a decline
in viewership that could adversely affect its revenue, particularly revenue from
stations carried on a cable system solely to comply with the "must carry" law
(for example, if the Infomall programming competes with the cable system's own,
similar non-broadcast offering).

The 1996 Act allows for telephone companies to provide video programming as
an "Open Video System." The FCC is required to adopt regulations mandating must
carry for commercial and noncommercial stations and retransmission consent for
these operators.

The 1996 Act modified the way in which markets for carriage will be
determined for purposes of the must-carry rules. The new act provides that,
instead of using markets previously defined by the Arbitron ratings service, the
FCC will determine a broadcast station's market by using commercial publications
that delineate television markets based on viewing patterns. This modification
will allow the FCC to use Nielsen's DMAs to delineate markets. The FCC is
authorized to entertain requests for expansion or other modification of
television station markets, and is now required to resolve any market
modification request within 120 days after the request is filed or within 120
days of enactment of the 1996 Act, whichever is later. The grant of such
requests by a licensee to extend its "must carry" rights into another ADI may
fractionalize the viewing audience of other television stations already
classified as entitled to "must carry" rights within the DMA.

The 1996 Act also directs the FCC to adopt regulations to allow local
exchange telephone companies to provide video programming either as cable
operators or under the newly-established category of "Open Video Systems." If a
local exchange telephone company decides to provide video programming as a cable
operator, it will be subject to the same must-carry/retransmission consent
requirements as a cable operator. The FCC also is directed to adopt rules
requiring operators of Open Video Systems to be subject to regulations regarding
"must carry" for commercial and noncommercial broadcast stations, network
nonduplication, syndicated exclusivity protection and retransmission consent
options. Operators of Open Video Systems will be required

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<PAGE> 57

to carry identification of broadcast stations on any navigational device, guide,
or menu that they have on their System.

Equal Employment Opportunity Requirements. The 1992 Cable Act also
codified the FCC's existing equal employment opportunity ("EEO") regulations and
reporting forms used by television broadcast stations. In addition, as required
by the 1992 Cable Act, the FCC has adopted rules providing for a review of the
EEO performance of each television station at the mid-point in its license term
(in addition to an examination at renewal time) and for the FCC to inform the
licensee of any improvements in recruiting practices that may be needed as a
result of the review. The FCC recently proposed rules that would reduce the EEO
recordkeeping and filing requirements of certain categories of stations. The FCC
has also proposed to give broadcasters credit for using the recruiting resources
of a central source, such as a state broadcast association, and has proposed to
adopt guidelines for imposing forfeitures for EEO violations.

Syndicated Exclusivity/Territorial Exclusivity. The FCC has imposed on
cable operators syndicated exclusivity rules and expanded existing network
non-duplication rules. These syndicated exclusivity rules allow local broadcast
stations to require that cable operators black out certain syndicated
non-network programming carried on distant signals (that is, signals of
broadcast stations, including so-called super stations, which serve areas
substantially removed from the cable system's local community). The network
non-duplication rules allow local broadcast network affiliates to require that
cable operators black out duplicating network broadcast programming carried on
more distant signals that are not significantly viewed over the air.

Prime Time Access Rules. The FCC's prime time access rule places
programming restrictions on affiliates of major national television networks. In
the past, this rule restricted affiliates of networks in the 50 largest
television markets (as defined by the rule) generally to no more than three
hours of network programming during the four hours of prime time. Recently, the
FCC changed its definition of network to include those entities that deliver
more than 15 hours of prime time programming (a term defined in those rules) to
affiliates reaching 75% of the nation's television homes. Under this definition,
certain national television networks are not subject to the prime time access
rule. In July 1995, the FCC issued an order repealing the prime time access
rules, subject to a one-year transition period during which the rules will
continue in effect. If the order is not modified or overturned, the prime time
access rules will terminate on August 30, 1996. The Company cannot predict what
effect the repeal of the rules may have on the operation of its
network-affiliated television stations or the market for syndicated television
programming.

V-Chip. The 1996 Act encourages the industry to establish a ratings system
for video programming. If the industry fails to establish such a ratings system
within one year, the FCC is directed to appoint a Committee to recommend a
ratings system. The 1996 Act also requires the inclusion of an electronic device
(the "V-Chip") in new television sets, which will enable parents to block
programming that contains a certain rating.

Television and radio broadcast stations also may be subject to a number of
other federal, state and local regulation, including regulations of the Federal
Aviation Administration affecting tower height and marking, and federal, state
and local environmental and land use restrictions and general business
regulation, and a variety of local regulatory concerns.

Proposed Changes. The Congress and the FCC have under consideration, and
in the future may consider and adopt, new laws, regulations and policies
involving a wide variety of matters that could affect, directly or indirectly,
the operation, ownership and profitability of the Company's broadcast stations,
result in the loss of audience and advertising revenue for the Company's
broadcast stations and affect the ability of the Company to acquire additional
broadcast stations or finance such acquisitions.

Implementation of Amendments to the Communications Act. The 1996 Act is
one of the most significant changes to the Communications Act since its adoption
in 1934. The 1996 Act expressly requires the FCC to change its rules in many
significant respects, and additional rule making proceedings may be required to
adapt present FCC requirements to the new law. As the 1996 Act only recently has
been passed and become law and the FCC has not yet begun the proceedings that
the 1996 Act requires, it remains to be seen

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how the FCC will interpret certain provisions of the 1996 Act. Although the
focus of the 1996 Act is on telephony, the Act will result in changes to several
provisions of the law relating to broadcasters.

--FCC Proceedings to Revise Broadcast Ownership Rules. The FCC has several
pending rule making proceedings to consider aspects of its ownership rules
affecting broadcasting that predate the enactment of the 1996 Act. The passage
of the 1996 Act will affect the outcome of these proceedings, and the FCC may
initiate new or further proceedings to consider some of these matters in view of
the new amendments to the Communications Act. In January 1995, the FCC issued a
further notice of proposed rule making which proposed the following changes in
regulations governing television broadcasting: (i) modifying the reach discount
as it applies to UHF stations; (ii) narrowing the geographic area where common
ownership restrictions would be triggered by limiting it to overlapping Grade A
contours rather than Grade B contours and by permitting (or granting waivers in
particular cases or markets) certain UHF/UHF or UHF/VHF overlaps; (iii) relaxing
the rules prohibiting cross-ownership of radio and television stations in the
same market to allow certain combinations where there remain alternative outlets
and suppliers to ensure diversity; and (iv) treating television time brokerage
agreements the same as radio time brokerage agreements which would presently
preclude certain television time brokerage agreements where the programmer owns
or has an attributable interest in another television station in the same
market. In June 1995, the FCC announced an interim policy for processing
television transfer and assignment application that include time brokerage
agreements. Pending the adoption of new rules, the FCC has stated that it will
not grant applications that propose a time brokerage arrangement if the
arrangement also includes both debt financing by the time broker and an option
for the time broker to purchase the brokered station. The FCC has stated that it
will continue to grant applications with time-brokerage arrangement if they
include only one of those elements (that is, either debt financing by the broker
or an option of the time broker to purchase). Adoption of the most restrictive
proposals in this proceeding could limit the Company's alternatives for entering
into new time brokerage agreements and making new broadcast acquisitions and, if
existing arrangements are not grandfathered, could require the Company to modify
or terminate certain of its time brokerage agreements.

In January 1995, the FCC issued a further notice of proposed rule making
that combined several long-pending proceedings to consider changes in its
ownership rules and policies. In the new proceeding, the FCC is considering,
among other things, (i) whether to make non-voting stock interests attributable;
(ii) whether to change attribution thresholds; (iii) how to treat limited
liability companies for purposes of attribution; (iv) whether to extend the
cross-interest policy to require review of multi-layered business relationships,
including debt relationships, that now are not subject to scrutiny; and (v)
whether to change the insulation standards for non-attribution of limited
partnership interests. Adoption of the most restrictive alternatives available
to the FCC could require that the Company, in assessing acquisition and
compliance strategies, take into account additional interests in itself and its
principals that are now exempt from FCC ownership regulation, and potentially
divest or restructure some interests.

In a second notice of proposed rule making the FCC is seeking comment on
whether the FCC should relax attribution and other rules to facilitate greater
minority and female ownership.

The 1996 Act directs the FCC to conduct biannual review of its broadcast
ownership rules, to determine whether the rules continue to be in the public
interest, and to repeal or modify regulations found to no longer serve the
public interest.

FCC Inquiry on Broadcast of Commercial Matter. The FCC also has initiated
a notice of inquiry proceeding seeking comment on whether the public interest
would be served by establishing limits on the amount of commercial matter
broadcast by television stations. No prediction can be made at this time as to
whether the FCC will propose any limits on commercial advertising at the
conclusion of its deliberation or the effect the imposition of limits on the
commercial matter broadcast by television stations would have upon the Company's
operations.

Digital Audio Broadcasting. The FCC recently has allocated spectrum to a
new technology, digital audio broadcasting ("DAB"), to deliver satellite-based
audio programming to a national or regional audience and is considering rules
for a DAB service. DAB may provide a medium for the delivery by satellite or
terrestrial means of multiple new audio programming formats with compact disc
quality sound to local and

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national audiences. It is not known at this time whether this technology also
may be used in the future by existing radio broadcast stations either on
existing or alternate broadcasting frequencies. In addition, applications by
several entities currently are pending at the FCC for authority to offer
multiple channels of digital, satellite-delivered S-Band aural services that
could compete with conventional terrestrial radio broadcasting. These satellite
radio services use technology that may permit higher sound quality than is
possible with conventional AM and FM terrestrial radio broadcasting. Thus far,
the FCC has not granted the pending requests for authorizations to offer
satellite radio, nor has it adopted rules for the proposed satellite radio
service. Implementation of DAB would provide an additional audio programming
service that could compete with the Company's radio stations for listeners, but
the effect upon the Company cannot be predicted.

Advanced High Definition Television System. The FCC has also begun to
adopt rules for implementing advanced (high definition) television ("ATV") in
the United States. Implementation of ATV service should improve the technical
quality of television broadcasts. In anticipation of the implementation of ATV
operations, the 1996 Act directs the FCC to adopt ATV technical standards and
other rules necessary to protect the public interest. The FCC is authorized (but
not required) to establish minimum hours of ATV operation. The act also provides
for the FCC to limit the eligibility for ATV licenses to existing television
licensees and permittees. The FCC is directed to condition ATV licenses on
recapture of either the new ATV spectrum or television licensees' initial
spectrum, but neither the timetable nor the subsequent use of recaptured
spectrum is specified. Ten years after it first issues ATV licenses, however,
the FCC must evaluate its regulation and public acceptance of ATV, including
possible alternative uses of and reduction in ATV spectrum.

The FCC is required to adopt rules permitting ATV licensees to offer
"ancillary or supplementary services" on newly-available ATV spectrum, so long
as such services are consistent with the FCC's ATV standards; do not derogate
required ATV services, including high definition television; and are regulated
in the same manner as similar non-ATV services. Ancillary or supplementary
services will not have must-carry rights on cable television systems. All
services using ATV spectrum must be consistent with the public interest and
renewal applicants will be required to establish that all conventional and ATV
program services are in the public interest. Failure to comply with FCC
requirements governing ancillary or supplementary ATV services will reflect
adversely on renewal qualifications.

Licensees which use ATV frequencies to provide ancillary or supplementary
services on a subscription or similar paid basis (commercially-supported
non-subscription broadcasting is excluded) will be required to pay annual fees,
based on the amount of spectrum being used and the time it is used for ancillary
and supplementary services. The fee is not to exceed the amount which would have
been received had the spectrum been auctioned for similar uses.

The FCC has decided that it will set aside specific new channel allotments
for ATV service. Initial eligibility for these channels will be limited to
existing television licensees. The FCC has not yet adopted a new technical
standard for ATV, nor has it adopted a new Table of Allotments for ATV channels.

Under the FCC's current plan for phasing in ATV service, each television
station would be able to continue to provide conventional television service on
its regular channel until advanced television service has become the prevalent
medium. In August 1995, the FCC issued its Fourth Further Notice of Proposed
Rule Making and Third Notice of Inquiry in its ATV proceeding. The notice and
inquiry requested public comment on a number of issues in connection with the
establishment of ATV television broadcasting, including: (i) procedures and
timetables for existing broadcasters to move to ATV channels and relinquish
their present spectrum; (ii) restrictions on the use of ATV channels during the
transition period; (iii) the effect of conversion to digital transmission on a
broadcaster's public interest obligations; (iv) incentives for the rapid
adoption of ATV transmission technologies by broadcasters and by the public, and
(v) the impact of ATV on cable television carriage or retransmission consent.
Fifteen years after the start date, television broadcasters would be required to
surrender their conventional television licenses. Implementation of ATV service
is likely to impose additional costs on television stations providing new
service due to increased equipment costs. While

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the Company believes the FCC will authorize ATV, the Company cannot predict when
such authorization might be given or the effect such authorization might have on
the Company's business.

Other changes that may result from matters under consideration by the FCC
or the Congress include: (i) spectrum use or other fees on FCC licensees; (ii)
the FCC's EEO rules and other matters relating to female or minority involvement
in the broadcasting industry; (iii) rules relating to political broadcasting;
(iv) technical and frequency allocation matters; (v) changes in the FCC's
cross-interest, multiple ownership and cross-ownership rules and policies; (vi)
changes in the tax deductibility of advertising expenses; (vii) changes in
standards governing the evaluation and regulation of television programming
directed toward children, and violent or indecent programming; and (viii)
changes in regulation of the relationship between major television networks and
their affiliates.

The foregoing is only a brief summary of certain provisions of the
Communications Act and of specific FCC and other regulations. Reference is made
to the Communications Act, FCC regulations, and the public notices and rulings
of the FCC for further information concerning the nature and extent of federal
regulation of broadcast stations.

EMPLOYEES

As of December 31, 1995, the Company had approximately 714 full-time
employees and approximately 202 part-time employees, for a total of 916
employees. None of its employees is represented by a labor union. The Company
considers its relations with its employees to be good.

SEASONALITY

Seasonal revenue fluctuations are common within the radio and television
broadcasting industry and result primarily from fluctuations in advertising
expenditures by local retailers. Paxson Radio and Paxson Network-Affiliated
Television generally experience their lowest revenue for the year in the first
quarter, whereas the highest revenue for the year generally occurs in the fourth
fiscal quarter. Because of the short operating history, the Company's ability to
assess the effects of seasonality on inTV is limited. It appears, however, that
inTV may experience its highest revenues during the first and fourth quarters.

PATENTS AND TRADEMARKS

The Company has 21 registered trademarks and 11 trademark registrations
pending relating to its business. It does not own any patents or patent
applications. The Company does not believe that any of its trademarks are
material to its business or operations.

PROPERTIES AND FACILITIES

The following table sets forth information with respect to the Company's
offices and its studios and broadcast tower locations. Management believes that
the Company's properties are in good condition and are suitable for its
operations.

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<TABLE>
<CAPTION>
LEASE
MARKET(A) PROPERTY OWNED/LEASED EXPIRATION
- -------------------------------------------- -------------- ------------ --------------
<S> <C> <C> <C>
Orlando, FL................................. Studio/Offices Leased March 2002
WJRR-FM Tower Leased April 2000
WMGF-FM Tower Leased February 2001
WWNZ-AM Tower Owned
WWZN-AM Tower Owned
Jacksonville, FL............................ Studio/Offices Leased February 1999
WROO-FM Tower Leased March 1999
WPLA-FM Tower Owned
WNZS-AM Tower Leased Perpetual
WZNZ-AM Tower Owned
Cookeville, TN.............................. Studio/Offices Leased December 1998
WGSQ-FM Tower Leased July 2007
WPTN-AM Tower Owned
Los Angeles, CA............................. Studio/Offices Leased October 1998
Tower Leased June 2005
Sales Office Leased July 1998
Philadelphia, PA............................ Studio Leased September 2000
Tower Owned
San Francisco, CA........................... Studio/Offices Leased June 2005
Tower Leased June 2020
Boston, MA.................................. Studio/Offices Leased February 2006
Tower Leased June 2026
Atlanta, GA................................. Studio/Offices Leased June 2001
Tower Leased October 2015
Houston, TX................................. Studio/Offices Leased October 1998
KTFH-TV Tower Owned
K33DB Tower Leased January 1997
Hartford, CT................................ Studio Leased October 1999
Tower Leased October 2035
West Palm Beach, FL......................... Studio/Offices Leased October 1998
Tower Owned
Headquarters Owned
Cleveland, OH............................... Studio Owned
Tower Owned
Washington, D.C............................. Studio Owned
Tower Owned
New York, NY................................ Studio Leased March 2001
Tower Leased March 2006
</TABLE>

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

(a) Market listed may differ from actual location

LEGAL PROCEEDINGS

The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, no material legal
proceedings are pending to which the Company, or any of its property, is
subject.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information concerning the Company's directors
and executive officers.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- ----------------------------------------------------
<S> <C> <C>
Lowell W. Paxson................... 60 Chairman of the Board, Chief Executive Officer and
Director
James B. Bocock.................... 51 President, Chief Operating Officer and Director
Dean M. Goodman.................... 48 President, inTV and Paxson Network-Affiliated
Television
Jon Jay Hoker...................... 57 President, Paxson Radio
Arthur D. Tek...................... 46 Vice President, Treasurer, Chief Financial Officer
and Director
Anthony L. Morrison................ 34 Vice President, Secretary and General Counsel
Michael J. Marocco................. 37 Director
John A. Kornreich.................. 50 Director
J. Patrick Michaels, Jr. .......... 51 Director
S. William Scott................... 62 Director
Bruce L. Burnham................... 62 Director
</TABLE>

Lowell W. Paxson has been Chairman of the Board, Chief Executive Officer
and a Director of the Company since its inception. Mr. Paxson was the creator,
co-founder and president of Home Shopping Network, Inc. ("HSN"), a position he
held from HSN's inception in May 1985 to December 1990. He remained a consultant
to HSN through 1994. Mr. Paxson was a pioneer in the home shopping concept on
radio beginning in 1977, which he later transferred to television through HSN.
Mr. Paxson has been involved in radio for over 40 years, during which time he
owned a majority interest in a number of radio stations. At HSN, in which he was
a major initial stockholder, he was actively involved in the acquisition and
operation of ten television stations which were later spun-off by HSN as Silver
King Communications, Inc. Mr. Paxson earned his Bachelor's degree from Syracuse
University in 1956. He served as a U.S. Army captain from 1956 to 1957. Mr.
Paxson served on the boards of a variety of charitable, civic and educational
institutions. He holds memberships in the National Cable Television Association
and the National Association of Broadcasters.

James B. Bocock has been President and Chief Operating Officer of the
Company since July 1991 and has been a Director since January 1994. Mr. Bocock
was Vice President -- Broadcast Affiliations for HSN from September 1986 to June
1991. While at HSN, Mr. Bocock negotiated HSN's acquisition of several full and
low power television stations. Mr. Bocock, a former radio station owner, has
been involved in broadcasting since 1962, including service as the general
manager of a number of radio stations throughout the United States.

Dean M. Goodman has been President of inTV and Paxson Network-Affiliated
Television since January 1995. Mr. Goodman joined the Company in 1993 and prior
to becoming President of Paxson Communications Television, Inc., was the General
Manager of the Company's Miami radio group. Prior to joining the Company in
1993, Mr. Goodman was Executive Vice President of the television and radio
broadcast group of Gilmore Broadcasting Corp. Prior to joining Gilmore
Broadcasting Corp., Mr. Goodman was Vice President and General Manager of
Southwest Radio, Inc. and Community Service Broadcasters, Inc. Since 1993, Mr.
Goodman has served as chairman of the Florida Association of Broadcasters, and
has been a director of the National Association of Broadcasting since January
1995.

Jon Jay Hoker has been the President of Paxson Radio since January 1995.
From April 1994 to January 1995 he was President of Paxson Networks, Inc. Mr.
Hoker is a former radio group owner, having formed Hoker Broadcasting in 1985.
Prior to forming his own group, Mr. Hoker was a vice president with Belo
Broadcasting from 1982 to 1985. Mr. Hoker was responsible for overall operations
of radio stations in Dallas

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<PAGE> 63

and Denver as well as overseeing all radio acquisitions. Mr. Hoker began his
broadcast career with ABC, where he worked from 1971 to 1981.

Arthur D. Tek has been Vice President and Chief Financial Officer of the
Company since December 1992. He has been Treasurer and a Director of the Company
since January 1994. Prior to joining the Company, Mr. Tek was Chief Financial
Officer and Controller of Chase Communications, Inc., a television and radio
broadcasting firm, from February 1990 to December 1992. Mr. Tek was Vice
President -- Finance for SunGroup, Inc., a radio station group, from November
1986 to February 1990. Mr. Tek has been a director of the Broadcast Cable
Financial Management Association since June 1995.

Anthony L. Morrison has been Vice President, Secretary and General Counsel
since February 1995. He was an attorney in the New York office of the law firm
of O'Melveny & Myers from June 1990 to February 1995, with a practice consisting
of banking, finance, and general corporate matters. Mr. Morrison was an attorney
with the New York office of White & Case from November 1987 to June 1990.

Michael J. Marocco has served as a Director since December 1993. He joined
Sandler Capital Management in 1989 and is a general partner of Sandler
Associates and, through affiliates, a general partner of the Sandler Media
Partnerships, Sandler Mezzanine Partnerships, and the 21st Century
Communications Partnerships. The Sandler Mezzanine Partnerships hold an equity
interest in the Company. See "Principal and Selling Stockholders." He was a Vice
President at Morgan Stanley & Co. Inc., serving in its communications group,
from 1984 to 1989. Mr. Marocco is a director of YES Entertainment, Inc.

John A. Kornreich has served as a Director since December 1993. He joined
Sandler Capital Management in 1988 and is a general partner of Sandler
Associates and, through affiliates, a general partner of the Sandler Media
Partnerships, Sandler Mezzanine Partnerships, and the 21st Century
Communications Partnerships. The Sandler Mezzanine Partnerships hold an equity
interest in the Company. See "Principal and Selling Stockholders." In 1986, Mr.
Kornreich formed J.K. Media, L.P., a private investment partnership funded
primarily by communications industry executives, for which Mr. Kornreich serves
as the sole general partner.

J. Patrick Michaels, Jr. has been serving as a Director since February
1995. Mr. Michaels founded and since 1973 has been the Chairman of the Board of
Directors and Chief Executive Officer of Communications Equity Associates, Inc.
("CEA"), a firm that specializes in providing financial services to a variety of
organizations in the media, communications and entertainment industries. During
1973, Mr. Michaels was Vice President of Cable Funding Corporation, a
specialized finance company lending to the cable television industry. From
October 1968 through December 1972, Mr. Michaels served as one of the original
employees and Vice President of TM Communications, the cable subsidiary of The
Times Mirror Company. Mr. Michaels holds equity interests in a number of media
companies, some of which may be deemed competitive with the Company. Mr.
Michaels is the Vice Chairman of the Board of Directors, Acting President and
Acting Chief Operating Officer of Video Jukebox Network, Inc.

S. William Scott has been serving as a Director since February 1995. From
1983 to 1987, Mr. Scott was Executive Vice President, Westinghouse Broadcasting
Television Group. From 1981 through the end of 1983, Mr. Scott served as
President and Chief Operating Officer of a Westinghouse Broadcasting/American
Broadcasting Company joint venture for cable television known as the Satellite
News Channels. Currently, Mr. Scott provides consulting services to various
media companies, including the Company.

Bruce L. Burnham has been serving as a director since February 1996. Mr.
Burnham has been President of The Burnham Group, a retail consulting and
marketing firm, since 1993. From 1981 to 1984, Mr. Burnham was Chairman and
Chief Executive Officer of Dayton's Department Stores, headquartered in
Minneapolis, and from 1979 to 1980 was President and Chief Executive Officer of
Bonwit Teller in New York City. Mr. Burnham is currently a director of Financial
Benefit Group, Inc. and J.B. Rudolph, Inc.

All officers are elected until the next annual meeting of the Board of
Directors or until their respective successors are chosen and qualified.
Directors serve for a one-year term or until their successors are elected.

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<PAGE> 64

BOARD COMMITTEES

The Company's Board of Directors appointed a Compensation Committee and an
Audit Committee in February 1995. Neither committee existed in 1994. The
Compensation Committee consists of Lowell W. Paxson, Michael J. Marocco, and
John A. Kornreich. The Compensation Committee recommends to the Board both base
salary levels and bonuses for the Chief Executive Officer and the other officers
of the Company. The Compensation Committee also reviews and makes
recommendations with respect to the Company's existing and proposed compensation
plans, and serves as the committee responsible for administering the Company's
Stock Incentive Plan. Until February 1995, the Compensation Committee's
functions were exercised by the Board of Directors.

The Audit Committee consists of Bruce L. Burnham, Michael J. Marocco, and
John A. Kornreich. The duties of the Audit Committee are to recommend to the
Board of Directors the selection of independent certified public accountants, to
meet with the Company's independent certified public accountants to review the
scope and results of the audit, and to consider various accounting and auditing
matters related to the Company, including its system of internal controls and
financial management practices. Until February 1995, the Audit Committee's
functions were exercised by the Board of Directors.

The Company does not have a nominating committee. This function is
performed by the Board of Directors.

All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. No director
receives separate compensation for services rendered as a director.

EXECUTIVE COMPENSATION

The following table presents certain information concerning the
compensation received or accrued for services rendered during the fiscal years
ended December 31, 1995, 1994 and 1993 for the Company's Chief Executive Officer
and four highest paid executive officers (collectively, the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION NUMBER OF
-------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) OPTIONS COMPENSATION
- ------------------------------- ---- --------- -------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lowell W. Paxson............... 1995 $ 350,000 $ -0- $ -0- -0- $ -0-
Chairman and Chief Executive 1994 -0- -0- -0- -0- -0-
Officer(3) 1993 -0- -0- -0- -0- -0-
James B. Bocock................ 1995 225,000 -0- 164,325 850,000 -0-
President and Chief Operating 1994 160,000 -0- -0- -0- -0-
Officer 1993 125,000 -0- -0- -0- -0-
Dean M. Goodman................ 1995 200,000 75,000 229,625 223,361 -0-
President -- Paxson 1994 183,750 207,057 -0- -0- -0-
Television 1993 126,562 53,665 -0- -0- -0-
Jon Jay Hoker.................. 1995 200,000 50,000 182,688 150,000 -0-
President -- Paxson Radio(4) 1994 140,000 51,043 -0- -0- -0-
1993 -0- -0- -0- -0- -0-
Arthur D. Tek.................. 1995 150,000 -0- -0- 150,000 3,000(5)
Vice President, Treasurer, 1994 112,500 -0- -0- -0- -0-
and Chief Financial Officer 1993 100,000 -0- -0- -0- -0-
</TABLE>

- ---------------
(1) Includes amount Named Executive Officer elected to defer pursuant to the
Company's Profit Sharing Plan.
(2) Represents the difference between the price paid by the Named Executive
Officer upon the exercise of certain of his options granted under the Stock
Incentive Plan and the fair market value of such securities at the time of
exercise.

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<PAGE> 65

(3) Mr. Paxson has entered into a five and one-half year employment agreement
that commenced on June 30, 1994. See "Employment Agreements."
(4) Mr. Hoker was employed by the Company commencing in January 1994.
(5) Represents relocation allowance in excess of general allowance under
Company's relocation plan.

OPTION GRANTS IN 1995

The following table sets forth certain information relating to option
grants pursuant to the Stock Incentive Plan in the year ended December 31, 1995
to the individuals named in the Summary Compensation Table above.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUES AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF SHARES OF PRICE APPRECIATION FOR
COMMON STOCK % OF TOTAL OPTIONS EXERCISE OPTION TERM(2)
UNDERLYING OPTIONS GRANTED TO EMPLOYEES IN PRICE PER EXPIRATION --------------------------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 0%(3) 5% 10%
- ------------------ ------------------- ----------------------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Lowell W. Paxson.. -0- -0-% N/A N/A $ -0- $ -0- $ -0-
James B. Bocock... 850,000 46.1% $3.42 2/12/2005 5,593,000 11,628,000 21,343,500
Dean M. Goodman... 223,361 12.1% 3.42 2/12/2005 1,469,715 3,055,579 5,608,595
Jon Jay Hoker..... 150,000 8.1% 3.42 2/12/2005 987,000 2,052,000 3,766,500
Arthur D. Tek..... 150,000 8.1% 3.42 2/12/2005 987,000 2,052,000 3,766,500
</TABLE>

- ---------------
(1) All options granted to the named executive officers were granted pursuant to
the Stock Incentive Plan. The options were granted pursuant to a five year
vesting schedule retroactive to the executive's date of employment. All
options are for Class A Common Stock.
(2) Potential realizable value is based on the assumed growth rates for the
option term. The actual value, if any, an executive may realize will depend
on the excess of the stock price over the exercise price on the date the
option is exercised, therefore, there is no assurance the value realized by
an executive will be at or near the amounts reflected in this table.
(3) Denotes realizable value at the date of grant which reflected a market value
of $10.00 per share.

AGGREGATE OPTION EXERCISES IN 1995

The following table sets forth certain information with responsible to the
unexercised options to purchase. Class A Common Stock granted under the Stock
Incentive Plan to the individuals named in the Summary Compensation Table above.

AGGREGATE OPTIONS EXERCISED IN 1995 AND DECEMBER 31, 1995 OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1995 AT DECEMBER 31, 1995(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- --------------------------------------- ----------- -------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Lowell W. Paxson....................... -0- $ -0- -0- -0- $ -0- $ -0-
James B. Bocock........................ 15,000 164,325 665,000 170,000 7,866,950 2,011,100
Dean M. Goodman........................ 20,000 229,625 113,361 90,000 1,341,061 1,064,700
Jon Jay Hoker.......................... 15,000 182,688 15,000 120,000 177,450 1,419,600
Arthur D. Tek.......................... -0- -0- 90,000 60,000 1,064,700 709,800
</TABLE>

- ---------------
(1) Based on the public trading price of the Class A Common Stock of $15.25 on
December 29, 1995.

STOCK INCENTIVE PLAN

The Company established the Company's Stock Incentive Plan (the "Stock
Incentive Plan") in November 1994 to provide incentives to officers and other
employees who contribute significantly to the strategic and long-term
performance objectives and growth of the Company. The Stock Incentive Plan is
administered by the Compensation Committee of the Company's Board of Directors.

The Stock Incentive Plan provides for the issuance of options, in the form
of incentive stock options or non-qualified stock options, to officers and
employees selected by the Compensation Committee. Under the Stock Incentive
Plan, options exercisable for an aggregate amount of 2,143,575 shares of Class A
Common Stock are available for issuance. The Company intends to either amend the
Stock Incentive Plan or create an additional stock incentive plan to increase
the number of shares available for options to 4,143,575, subject to approval by
the Company's stockholders at the 1996 Annual Meeting. The exercise price per
share of Class A Common Stock deliverable upon the exercise of each stock option
is determined by the Compensation

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<PAGE> 66

Committee at the date the stock option is granted and as provided in the terms
of the Stock Incentive Plan. Stock options are exercisable in whole or in part
on such date or dates as are determined by the Compensation Committee at the
date of the grant. The Compensation Committee may, in its sole discretion,
accelerate the time at which any stock option may be exercised. Stock options
expire on the date or dates determined by the Compensation Committee at the time
the stock options are granted. Holders of more than 10% of the combined voting
power of the capital stock of the Company may be granted stock options, provided
that the exercise price be 110% of the fair market value of Class A Common Stock
as of the date of the grant, and provided that the term of the stock option
shall not exceed five years after the date of the grant.

Stock options granted under the Stock Incentive Plan may be exercised by
the participant to whom granted or by his or her legal representative. If a
Stock Incentive Plan participant's employment is terminated for cause, each
stock option which has not been exercised shall terminate.

The Compensation Committee also has the discretion to award restricted
stock. Participants who receive restricted stock do not become 100% vested in
their restricted stock until five years after the effective date of the award.
During the restricted period prior to vesting, the participant may transfer the
restricted stock to a trust for the benefit of the participant or an immediate
family member, but may not otherwise sell, assign, transfer, give or otherwise
dispose of, mortgage, pledge or encumber such restricted stock. The Compensation
Committee may, in its discretion, provide that a participant shall be vested in
whole or with respect to any portion of the participant's award not previously
vested if the participant's employment with the Company is terminated because of
death, disability or retirement.

PROFIT SHARING PLAN

The Company has a profit sharing plan under Section 401(k) of the Internal
Revenue Code (the "Profit Sharing Plan"). The Profit Sharing Plan provides that
employees of the Company must complete one year of service in order to be
eligible to defer salary and, if available, receive matching contributions under
the Section 401(k) portion of the Profit Sharing Plan. Participants may elect to
defer a specified percentage of their compensation into the Profit Sharing Plan
on a pre-tax basis. The Company may, at its sole discretion, make matching
contributions based on a percentage of deferred salary contributions at a
percentage rate to be determined by the Board of Directors of the Company, which
matching contributions may be in Company stock. In addition, the Company may
make supplemental profit sharing contributions in such amounts as the Board of
Directors of the Company may determine. Participants earn a vested right to
their profit sharing contribution in increasing amounts over a period of five
years. After five years of service, the participant's right to his or her profit
sharing contribution vests 100%. Thereafter the participant may receive a
distribution of the entire value of his or her account at age 55, 62 or 65 or
upon termination of employment, death or disability.

EMPLOYMENT AGREEMENTS

Mr. Paxson is employed as Chairman and Chief Executive Officer of the
Company under an employment agreement. The agreement provides that Mr. Paxson
will be employed for a five and one-half year period commencing on June 30,
1994, unless sooner terminated. Mr. Paxson began receiving an annual base salary
of $350,000 commencing on January 1, 1995. Mr. Paxson's salary will be $385,000
in 1996, $423,500 in 1997, $465,850 in 1998 and $500,000 in 1999. In addition to
the base salary, Mr. Paxson may receive an annual bonus at the discretion and in
an amount set by members of the Compensation Committee that are not employees of
the Company. Mr. Paxson's employment agreement is renewable for successive
one-year terms, subject to good faith negotiation of its terms. Under the terms
of the agreement, Mr. Paxson is eligible to participate in all employee benefit
plans and arrangements that are generally available to other senior executives,
and is entitled to vacation days in an amount determined annually by the Board
of Directors after good faith negotiation. Mr. Paxson is reimbursed for all
reasonable expenses incurred by him in the discharge of his duties, including
entertainment and travel. Mr. Paxson's employment agreement is terminable by the
Board of Directors before expiration for good cause, as defined in the
agreement, or by Mr. Paxson for good reason, as defined in the agreement. In the
event of Mr. Paxson's permanent disability or death, the Company will pay Mr.
Paxson, or his estate, as the case may be, his then existing salary for the
remaining term of the agreement, in the case of disability, or one year, in the
case of death.

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<PAGE> 67

In addition, Mr. Paxson is a party to a noncompete agreement with the
Company for a period ending on December 31, 1999 or the date of a change of
control (as defined with respect thereto) of the Company. See "Certain
Transactions -- Home Shopping Network, Inc."

CERTAIN TRANSACTIONS

Mr. Paxson is the Chairman and Chief Executive Officer of the Company.
Messrs. Marocco and Kornreich are directors of the Company and principals of the
Sandler Partnerships, which are significant stockholders of the Company. See
"Principal and Selling Stockholders." Mr. Michaels is a director of the Company
and the owner of CEA. Mr. Scott is a director of the Company and provides it
certain consulting services. Set forth below is a description of certain
transactions and relationships between Mr. Paxson, his affiliates and others and
the Company, between the Sandler Partnerships and the Company, CEA and the
Company and Mr. Scott and the Company.

WFCT-TV Transactions. On December 17, 1993, BBTC entered into an agreement
whereby CNI, a Section 501(c)(3) Florida non-profit corporation to which Mr.
Paxson was a substantial contributor and of which he was a director, would make
available to BBTC up to $3,120,000 for certain expenses in connection with the
redemption of a limited partnership interest in BBTC and the construction of
television station WFCT-TV, Bradenton, Florida (the "BBTC Loan Agreement"). In
connection with the loan, BBTC granted to CNI an irrevocable, exclusive option
to purchase the assets owned by BBTC that are used or useful in the construction
or operation of WFCT-TV, including the licenses issued by the FCC for WFCT-TV,
subject to the satisfaction of certain conditions and the receipt of necessary
regulatory approvals. CNI's option may be exercised, subject to the prior
approval of the FCC, at any time during the 10-year period beginning August 2,
1995. The price payable to BBTC upon exercise of the option is $91,000 in cash
and the forgiveness of all outstanding indebtedness under the BBTC Loan
Agreement, in the amount of $1,120,000 as of December 31, 1995. WFCT-TV
commenced broadcasting operations on August 1, 1994.

BBTC also entered into an agreement with a wholly-owned subsidiary of the
Company as of December 17, 1993, under which the Company provides certain
specified services relating to the construction and installation of WFCT-TV
facilities. Pursuant to a time brokerage agreement, BBTC makes air-time
available to CNI on WFCT-TV. In exchange for certain specified payments, BBTC
has broadcast programming and commercial announcements produced by CNI.

In connection with the foregoing transactions, Mr. Paxson agreed to lend
CNI up to $3,120,000 to fund the loan to BBTC. On June 15, 1994, CNI and BBTC
revised the BBTC Loan Agreement to reduce the maximum amount of the loan from
$3,120,000 to $1,400,000, and to provide that BBTC lease rather than purchase
the equipment and related tangible personal property required to construct
WFCT-TV from the Company.

Mr. Paxson assigned his rights and interests in the CNI loan to the Company
in the amount of $1,120,000 (representing the then outstanding principal balance
owed by CNI), and CNI agreed that the maximum principal amount of the loan would
be reduced from $3,120,000 to $1,400,000. On June 15, 1994, CNI granted the
Company the option to acquire the WFCT-TV assets from CNI for $191,000 after CNI
exercises its option to purchase such assets from BBTC. On June 15, 1994, CNI
assigned to the Company its rights and interests under the time brokerage
agreement to provide up to 12 hours per day of programming on WFCT-TV. In
connection with the exercise of the Station Options, the Company exercised the
option to acquire the WFCT-TV assets.

Worship Channel Studio. On January 1, 1993, Mr. Paxson agreed to lend CNI
up to $2,500,000 to fund CNI's acquisition of certain equipment and related
tangible property used in the production of television programming. Mr. Paxson
assigned his rights and interests under the loan to the Company in consideration
for the Company's promissory note in the principal amount of $2,500,000, which
the Company subsequently repaid. In accordance with the terms of an agreement
dated as of June 15, 1994, CNI sold to the Company CNI's production assets in
consideration for the cancellation of CNI's $2,500,000 promissory note held by
the Company. CNI and the Company have also contracted, effective as of August 1,
1994, for the Company to

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<PAGE> 68

lease CNI's television production and distribution facility for the purpose of
producing television programming for the Infomall TV Network.

Christian Network, Inc. The Company and CNI entered into an agreement in
May 1994 (the "CNI Agreement") under which the Company agreed that, if the tax
exempt status of CNI were jeopardized by virtue of its relationships with the
Company and its subsidiaries, the Company would take certain actions to try and
ensure that CNI's tax exempt status would no longer be so jeopardized. Such
steps could include, but not be limited to, rescission of one or more
transactions or payment of additional funds by the Company. The Company believes
that all of its agreements with CNI have been on terms at least as favorable to
CNI as it would obtain in arm's length transactions. The Company intends any
future agreements with CNI to be at least as favorable to CNI as CNI would
obtain in arm's length transactions. Accordingly, if the Company's activities
with CNI are consistent with the terms governing their relationship, the Company
believes that it will not be required to take any action under the CNI
Agreement. However, there can be no assurance that the Company will not be
required to take any actions under the CNI Agreement at a material cost to the
Company. At December 31, 1995, the Company had made loans to CNI and its
subsidiaries in an aggregate amount of $16.5 million to finance station
acquisitions and related capital expenditures.

Stockholders Agreement. On December 15, 1993, in connection with the
issuance of the Company's Initial Senior Preferred Stock (as defined herein) and
warrants to purchase shares of Class A Common Stock and Class B Common Stock,
the Company entered into a stockholders agreement with two entities controlled
by Lowell W. Paxson (collectively, "Management Investors"), and the four
purchasers of the Initial Senior Preferred Stock (the "Sandler Group"), three of
which are affiliates of Michael J. Marocco and John A. Kornreich, two directors
of the Company. On December 22, 1994, in connection with the issuance of the
Junior Preferred Stock and Series B Preferred Stock (as defined herein), the
purchasers of the Junior Preferred Stock and warrants to purchase Class C Common
Stock became parties to the stockholders agreement, which was amended and
restated (as amended, the "Stockholders Agreement"). At the same time, the
Sandler Group entered into an exchange agreement and consent with the Company
under which certain call rights with respect to warrants held by the Sandler
Group were terminated effective upon consummation of this Offering, the parties
to the Stockholders Agreement further modified such agreement and the Sandler
Group exercised certain of their warrants and exchanged them for the Series B
Preferred Stock. The parties to the Stockholders Agreement further amended
certain provisions thereof on March 26, 1996 in anticipation of, and primarily
conditioned upon the consummation of, the Offering. Such agreement, among other
things, terminated the right of the holders of the Class A and Class B warrants
("Warrant Shares") to put such Warrant Shares to the Company, eliminated certain
rights of the Sandler Group to approve certain investments by the Company,
permitted the Company to redeem the Senior Preferred Stock on or after December
15, 1996 (a year earlier than previously) at a price of 105% of the liquidation
price thereof, permitted the Company to issue 2,000,000 additional shares of
stock (or options to purchase the same), permitted the Company to issue 125,000
shares of Common Stock (or options to purchase the same) at an exercise price of
$3.42 per share, deleted certain restrictions on the Company's ability to
acquire businesses in consideration for stock of the Company and modified
certain rights of the parties to register Common Stock of the Company. The
ownership interests of the Sandler Group in the Initial Senior Preferred Stock
and Series B Preferred Stock are identical. The rights of the holders of Senior
Preferred Stock and the Junior Preferred Stock differ in certain respects under
the Stockholders Agreement.

Under the terms of the Stockholders Agreement, each holder of Senior
Preferred Stock has redemption rights that can be triggered by a change of
control (as defined with respect thereto) of the Company, by certain
bankruptcy-related events or any failure to select a successor to Mr. Paxson as
Chairman and Chief Executive Officer in accordance with the succession
provisions contained in the Stockholders Agreement. In addition, subject to
certain limitations and only after December 15, 1999, each holder of Senior
Preferred Stock has the right to require that any shares of Senior Preferred
Stock held by such holder be purchased for cash by the Company.

If a holder of Senior Preferred Stock chooses to exercise its put or
similar rights with respect to Senior Preferred Stock or Warrant Shares and the
Company is unable to purchase all of the shares on the applicable purchase date
because of a material contractual obligation that prohibits such a repurchase,
the Company is

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<PAGE> 69

required to take reasonable actions to enable the Company to purchase the
securities subject to the put notice, and is required to engage a nationally
recognized investment banking firm in order to advise and assist the Company in
connection with such actions.

The Stockholders Agreement also grants to each holder of Senior Preferred
Stock and each holder of Junior Preferred Stock the right of first refusal to
purchase, subject to certain conditions, its pro rata share of any new
securities the Company may issue. The Company must give each holder of Senior
Preferred Stock and each holder of Junior Preferred Stock written notice of the
Company's intention to issue certain new securities. Such holders have waived
any right of first refusal to purchase any of the shares of Class A Common Stock
offered hereby. The parties to the Stockholders Agreement have certain
registration rights granted therein. See "Shares Eligible For Future
Sale -- Registration Rights."

Airplane. During 1994, the Company purchased an aircraft for $250,000 from
a company controlled by Mr. Paxson. The Company believes that the terms of such
transaction were at least as favorable as it would have obtained in an arm's
length transaction with an unaffiliated third party.

Home Shopping Network, Inc. In connection with the departure in 1990 of
Mr. Paxson from HSN, he executed a consulting agreement containing various
restrictions upon activities by him that might be considered competitive with
HSN, including activities as an investor in competitive and other enterprises.
Although Mr. Paxson's consulting services to HSN terminated in 1994, certain of
the restrictions survived. As the Company's business evolved, the possible
effect of the consulting agreement upon Mr. Paxson's role as the Company's chief
executive officer and controlling stockholder became unclear. The Company
considered it advisable to eliminate doubts concerning, among other matters, Mr.
Paxson's role as a chief executive officer and controlling stockholder as the
Company's business developed, and the scope of HSN's rights under the consulting
agreement. Accordingly, on August 25, 1995, the Company and Mr. Paxson agreed
with HSN to, among other things, terminate HSN's rights under the consulting
agreement in consideration of a payment to HSN by the Company of $1,200,000. In
conjunction with this transaction Mr. Paxson advanced $1,200,000 to the Company
in the form of a note bearing interest at 6%. The Company repaid the note in
October 1995.

Shortly before the transaction with HSN, Mr. Paxson agreed with the Company
that upon termination of HSN's rights under the consulting agreement, he will
not compete with the Company for a period ending on December 31, 1999 (the date
that the HSN consulting agreement would have otherwise terminated) or the date
of a change of control (as defined with respect thereto) of the Company. An
intangible asset has been recorded for $1,200,000 which will be amortized
through maturity of the agreement.

Todd Communications, Inc. In 1993, Mr. Paxson contributed a demand note
receivable in the amount of $1,750,000 from Todd Communications, Inc., a company
which owns WFSJ-FM (St. Augustine, Florida) and is beneficially owned by a
member of Mr. Paxson's family. The note receivable accrues interest at the
short-term annual applicable federal rate prescribed by the Internal Revenue
Service with the balance of principal and interest due upon demand. The Company
also performs limited sales support and administrative functions for Todd
Communications, Inc., under a joint sales agreement. Todd Communications, Inc.
is billed for efforts expended on terms comparable to those generally available
from unaffiliated third parties. Todd Communications also has a note outstanding
to Mr. Paxson in the principal amount of $1,550,000. The Company has agreed to
acquire Todd Communications for aggregate consideration of $5 million,
consisting of the cancellation of Todd's note held by the Company in the
principal amount of $1,750,000, assumption and immediate repayment by the
Company of the note to Mr. Paxson and the issuance of shares of Class A Common
Stock valued at $1.7 million.

Whitehead Media. The Company initially financed the acquisition by
Whitehead Media of each of WTVX-TV and WOAC-TV. Whitehead Media subsequently
obtained refinancing from Banque Paribas, an affiliate of a holder of the
Company's Junior Preferred Stock and warrants to acquire Class C Common Stock,
and Canadian Imperial Bank of Commerce, an affiliate of one of the U.S.
Underwriters and one of the Lead Managers, the proceeds of which were used to
repay the debt owed by Whitehead Media to the Company and will be used to fund
Whitehead Media's acquisition of WNGM-TV. The third party financing provided to
Whitehead Media is unconditionally guaranteed by Mr. Paxson and Second Crystal
Diamond, Limited Partnership ("Second Crystal"), an affiliate controlled by Mr.
Paxson and through which he beneficially owns

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and controls a substantial portion of the Company's Class A Common Stock and
Class B Common Stock. Such guarantees are secured by a pledge of a significant
portion of Second Crystal's Class A Common Stock. The Company is permitted to
operate stations WTVX-TV and WOAC-TV pursuant to time brokerage agreements and
as a result of the third party financing to Whitehead Media has an option to
purchase each of such stations, which options to purchase would otherwise be
prohibited under FCC rules and regulations because each of such stations serves
a market in which the Company has or will own another television station which
also serves the same market.

KLDT-TV. In connection with CNI securing the rights to acquire television
station KLDT-TV in Dallas, Texas and, prior to such acquisition, operate the
station pursuant to a time brokerage agreement, Mr. Paxson initially loaned CNI
$1,000,000 to make a deposit with respect to such acquisition and guaranteed the
obligations of CNI under the purchase agreement and the time brokerage
agreement. On January 9, 1996, the Company purchased such note from Mr. Paxson
at its face value.

World Travelers Network. Effective January 1, 1996, Mr. Paxson purchased
certain assets of World Travelers Network, Inc. ("WTN"), a wholly-owned
subsidiary of the Company. WTN's business was unprofitable and the Company had
determined to discontinue its operations. Mr. Paxson purchased all of the assets
of WTN except for its accounts receivable for $70,322 in cash, which price was
equal to the book value of such assets. WTN retained its accounts receivable and
accounts payable. The parties agreed that if Mr. Paxson resells such assets at a
profit prior to April 1, 1996, the amount of any profit will be paid to the
Company.

South Carolina Radio Network. Effective January 1, 1996, Mr. Paxson
purchased from the Company certain assets of the Company's South Carolina Radio
Network, an unprofitable business segment which the Company had determined to
discontinue. Mr. Paxson purchased all of the assets of the South Carolina Radio
Network other than cash and accounts receivable for $45,413 in cash paid to the
Company, which price was equal to the book value of such assets. The Company
retained the cash, accounts receivable and accounts payable of the South
Carolina Radio Network operation. The parties agreed that if Mr. Paxson resold
such assets at a profit prior to April 1, 1996, the amount of any profit would
be paid to the Company. Mr. Paxson subsequently sold such assets to a third
party for $150,000, with the excess over $45,413 being paid to the Company.

Transfer of Partnership Interest. On January 26, 1996, the Company
acquired certain interests in a partnership with a view to securing programming
for its broadcast stations, and substantially concurrently with its acquisition,
transferred a portion of its interest to Mr. Paxson for approximately $900,000,
which amount equalled the consideration paid by the Company for its interests in
the partnership.

Communications Equity Associates, Inc. J. Patrick Michaels, Jr. is
Chairman of the Board and Chief Executive Officer of CEA. Prior to his becoming
a Director in February 1995, the Company engaged CEA as a financial advisor in
connection with the private placements of the Senior Preferred Stock and Junior
Preferred Stock and the Private Offering, as well as with the Company's various
lending relationships. In connection with such matters, management of the
Company believes that its arrangements with CEA have been, and will continue to
be, on terms comparable to those generally available from unaffiliated third
parties.

S. William Scott, Consulting. S. William Scott has an arrangement with the
Company pursuant to which he provides consulting services to the Company with
respect to the development of its news programming for its radio and television
broadcast business and its radio network business. During 1993, 1994 and 1995,
Mr. Scott was paid $84,000, $84,000 and $80,000 respectively, for such services.
Mr. Scott has been providing such services since before he became a Director.

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<PAGE> 71

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information as to the Company's
voting securities beneficially owned as of February 15, 1996, and as adjusted to
reflect the sale of the 13,500,000 shares of Class A Common Stock offered hereby
by (i) each director of the Company, (ii) each Named Executive Officer, (iii)
all directors and executive officers of the Company as a group, (iv) any person
who is known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, and (v) each Selling Stockholder.

<TABLE>
<CAPTION>
CLASS A CLASS B PERCENTAGE PERCENTAGE
COMMON STOCK COMMON STOCK OF VOTING OF VOTING
----------------------- ---------------------- POWER OF ALL POWER OF ALL
NAMES OF SELLING STOCKHOLDERS, PERCENT OF PERCENT OF COMMON NUMBER OF COMMON
DIRECTORS AND EXECUTIVE NUMBER OF CLASS A NUMBER OF CLASS B STOCK PRIOR SHARES STOCK AFTER
OFFICERS(1) SHARES(2) SHARES SHARES(2) SHARES TO OFFERING OFFERED(3) OFFERING
- ------------------------------------ ---------- ---------- --------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Lowell W. Paxson(4)................. 24,442,543 93.2% 8,311,639 100% 98.4% 1,190,000 87.4%
James B. Bocock(5).................. 665,000 2.5 -- -- * 33,000 *
Dean M. Goodman(5).................. 143,361 * -- -- * 23,000 *
Jon Jay Hoker(6).................... 45,850 * -- -- * 16,000 *
Arthur D. Tek(5).................... 90,000 * -- -- * 23,000 *
Anthony L. Morrison(5).............. 5,000 * -- -- * 5,000 *
Michael J. Marocco(7)(8)(9)......... 2,419,252 8.4 806,417 8.8 8.9 797,322 6.5
John A. Kornreich(7)(8)(9).......... 2,419,252 8.4 806,417 8.8 8.9 797,322 6.5
Sandler Partnerships(8)(9).......... 2,419,252 8.4 806,417 8.8 8.9 797,322 6.5
J. Patrick Michaels, Jr.(10)........ 200,000 * -- -- * 26,650 *
S. William Scott(5)(11)............. 8,000 * -- -- -- 5,000 *
Bruce L. Burnham.................... 0 -- -- -- -- 0 --
All directors and executive officers
as a group(12).................... 28,019,006 94.0 9,118,056 100 98.7 2,118,972 90.3
OTHER SELLING STOCKHOLDERS
BT Investment Partners, Inc.(13).... -- -- -- -- -- 446,500 --
First Union Corporation of
Virginia(14)...................... -- -- -- -- -- 446,500 --
National Union Fire Insurance
Company(15)....................... 289,877 1.1 96,626 1.1 1.1 95,679 *
Union Ventures Corporation(16)...... -- -- -- -- -- 68,000 --
PXN Investment Partnership(17)...... 125,600 * -- -- * 16,630 *
Smith PXN Company(18)............... 66,776 * -- -- * 7,720 *
Other Selling Stockholders as a
group............................. 582,853 2.2 96,626 1.1 1.4 1,081,029 *
</TABLE>

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

* Less than one percent.
(1) The address of all persons in this table, unless otherwise specified, is
c/o Paxson Communications Corporation, 601 Clearwater Park Road, West Palm
Beach, Florida 33401.
(2) As used in this table, beneficial ownership means sole or shared power to
vote or direct the voting of a security, or the sole or shared investment
power with respect to a security (i.e., the power to dispose, or direct the
disposition, of a security). A person is deemed as of any date to have
beneficial ownership of any security that such person has a right to
acquire within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person named above, any
security that such person has the right to acquire within 60 days of the
date of calculation is deemed to be outstanding, but is not deemed to be
outstanding for purposes of computing the percentage ownership of any other
person. This table does not include 4,853,628 shares of non-voting Class C
Common Stock issuable upon the exercise of warrants. In addition, for
purposes of this table, beneficial ownership does not include the number of
shares of Class A Common Stock issuable upon conversion of Class C Common
Stock even though such shares are generally convertible into or are
exchangeable for shares of Class A Common Stock on a share-for-share basis.
(3) Includes shares issuable upon the exercise of warrants to be purchased by
the Underwriters.
(4) Mr. Paxson is the beneficial owner of all of his Class A Common Stock and
all of his Class B Common Stock through his control of Second Crystal
Diamond, L.P. and Paxson Enterprises, Inc.
(5) Reflects vested options under the Company's Stock Incentive Plan. Shares
offered will be obtained by exercising options.
(6) 45,000 of Mr. Hoker's shares reflect vested options under the Company's
Stock Incentive Plan. Shares offered will be obtained by exercising
options.
(7) Messrs. Marocco and Kornreich do not own any shares of the Company's Common
Stock. Because of their interests in the general partner of Sandler
Mezzanine Partners, L.P., Sandler Mezzanine Foreign Partners, L.P. and
Sandler Mezzanine T-E Partners, L.P. (the "Sandler Partnerships"), Messrs.
Marocco and Kornreich may be deemed to possess or share beneficial
ownership of the shares of Senior Preferred Stock and Common Stock subject
to warrants held by the Sandler Partnerships. Messrs. Marocco and Kornreich
are also stockholders, directors and officers of certain corporations that
serve as general partners of Sandler Mezzanine General Partnership, which
is the general partner of each of the Sandler Partnerships. The Sandler
Partnerships' ownership includes 2,419,252 shares of Class A Common Stock
subject to warrants and 806,417 shares of Class B Common Stock subject to
warrants. See "Certain Transactions."
(8) Address is c/o Sandler Media Group, Inc., 767 Fifth Avenue, New York, NY
10153.
(9) Represents shares of Class A Common Stock and Class B Common Stock subject
to warrants held by the Sandler Partnerships. Shares offered will be
obtained by the Underwriters purchasing and immediately exercising Class A
Common Stock warrants and Class B Common Stock warrants and converting
resulting Class B Common Stock to Class A Common Stock.

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<PAGE> 72

(10) Address is 101 East Kennedy Boulevard, Suite 3300, Tampa, FL 33602. Mr.
Michaels does not own any shares of Common Stock directly. Because of Mr.
Michaels' interest in certain trusts and a partnership, he may be deemed
the beneficial owner of such Class A Common Stock. Mr. Michaels disclaims
beneficial ownership in such Class A Common Stock, except to the extent of
his pecuniary interests in such trusts and partnerships. Mr. Michaels is
the Chairman of the Board and Chief Executive Officer of CEA, a company
which has provided financial advisory services to the Company. See "Certain
Transactions."
(11) Mr. Scott provides consulting services to the Company. See "Certain
Transactions."
(12) Includes 956,361 shares subject to vested options under the Company's Stock
Incentive Plan and shares described in footnote (7).
(13) Shares offered will be obtained by the Underwriters purchasing and
immediately exercising Class C Common Stock warrants and converting
resulting Class C Common Stock to Class A Common Stock; address is One
Bankers Trust Plaza, New York, NY 10006.
(14) Shares offered will be obtained by the Underwriters purchasing and
immediately exercising Class C Common Stock warrants and converting
resulting Class C Common Stock to Class A Common Stock; address is 301
South College Street, 18th Floor, Charlotte, NC 28288-0732.
(15) Shares offered will be obtained by the Underwriters purchasing and
immediately exercising Class A Common Stock warrants and Class B Common
Stock warrants and converting resulting Class B Common Stock to Class A
Common Stock.
(16) Shares offered will be obtained by the Underwriters purchasing and
immediately exercising Class C Common Stock warrants and converting
resulting Class C Common Stock to Class A Common Stock; address is c/o
Union Bank, 445 South Figueroa Street, 13th Floor, Los Angeles, CA 90071.
(17) Address is c/o Communications Equity Associates, 101 East Kennedy
Boulevard, Tampa, FL 33602, Attn: George Pollock, Jr.
(18) Address is 500 Plum Street, Suite 600, Syracuse, NY 13204, Attn: Lynn H.
Smith.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's capital stock consists of 197,500,000 shares of common stock
with a par value of $.001 per share, and 1,000,000 shares of preferred stock
with a par value of $.001 per share. Of the 197,500,000 shares of common stock
that the Company is authorized to issue: (a) 150,000,000 shares are designated
as Class A Common Stock, (b) 35,000,000 shares are designated as Class B common
stock (the "Class B Common Stock"), and (c) 12,500,000 shares are designated as
Class C non-voting common stock (the "Class C Common Stock" and with the Class A
Common Stock and Class B Common Stock, collectively, the "Common Stock"). Of the
1,000,000 shares of preferred stock that the Company is authorized to issue: (a)
2,000 shares have been designated as 15% Cumulative Compounding Redeemable
Preferred Stock (the "Initial Senior Preferred Stock"), (b) 714.286 shares have
been designated as Series B 15% Cumulative Compounding Redeemable Preferred
Stock (the "Series B Preferred Stock," and with the Initial Senior Preferred
Stock, collectively, the "Senior Preferred Stock"), and (c) 33,000 shares have
been designated as Junior Cumulative Compounding Redeemable Preferred Stock (the
"Junior Preferred Stock," and, with the Senior Preferred Stock, collectively,
the "Preferred Stock"). As of March 27, 1996, 26,262,854 shares of Class A
Common Stock, 8,311,639 shares of Class B Common Stock, no shares of Class C
Common Stock, 2,000 shares of Initial Senior Preferred Stock, 714.286 shares of
Series B Preferred Stock, and 33,000 shares of Junior Preferred Stock are
outstanding. In addition, 18,795,186 shares of Class A Common Stock are reserved
for issuance with respect to: (a) the conversion of shares of Class B Common
Stock to Class A Common Stock, (b) the conversion of shares of Class C Common
Stock to Class A Common Stock, (c) the exercise of warrants issued in connection
with the issuance of the Initial Senior Preferred Stock and the Junior Preferred
Stock, and (d) the exercise of certain rights under the Company's Stock
Incentive Plan.

COMMON STOCK

Dividends. Subject to the Preferred Stock's prior right to dividends,
holders of record of shares of Class A Common Stock, Class B Common Stock and
Class C Common Stock on the record date are entitled to receive such dividends
as may be declared by the Company's board of directors out of funds legally
available for such purpose. No dividends may be declared or paid in cash or
property on any share of any class of the Common Stock, however, unless
simultaneously the same dividend is declared or paid on each share of the other
classes of Common Stock. In the case of any stock dividend, holders of Class A
Common Stock are entitled to receive the same percentage dividend (payable in
shares of Class A Common Stock) as holders of Class B Common Stock receive
(payable in shares of Class B Common Stock) and holders of Class C Common Stock
receive (payable in shares of Class C Common Stock).

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<PAGE> 73

Until December 15, 1998, the consent of the holders of a majority of the
outstanding shares of the Initial Senior Preferred Stock and of the Series B
Preferred Stock is required for the Company to declare any dividends on its
Common Stock; and thereafter, such consent will continue to be required as long
as any Senior Preferred Stock remains outstanding, except under certain limited
circumstances. In addition, as long as any Junior Preferred Stock is
outstanding, the Company cannot declare dividends on its Common Stock, except
under certain limited circumstances.

Voting Rights. Holders of shares of Class A Common Stock and Class B
Common Stock will vote as a single class on all matters submitted to a vote of
the stockholders of the Company, 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 as otherwise provided by law. Holders of Class C Common Stock have
no right to vote on any matter voted on by the stockholders of the Company,
except as may be provided by law or as provided in limited circumstances in the
Company's certificate of incorporation.

Liquidation Rights. Upon liquidation, dissolution, or winding-up of the
Company, the holders of Class A Common Stock are entitled to share pro rata with
holders of Class B Common Stock and Class C Common Stock in all assets available
for distribution after payment in full to creditors and payment in full to any
holders of Preferred Stock then outstanding of any amount required to be paid
under the terms of such Preferred Stock.

Other Provisions. Each share of Class B Common Stock and Class C Common
Stock is generally convertible or exchangeable at the option of its holder into
one share of Class A Common Stock at any time, subject to certain restrictions
in the case of the conversion or exchange of Class C Common Stock. Holders of
Common Stock do not have preemptive rights, although holders of Senior Preferred
Stock and holders of Junior Preferred Stock have limited preemptive rights under
the Stockholders Agreement.

SENIOR PREFERRED STOCK

Dividends. The holders of the Senior Preferred Stock are entitled under
the Company's certificate of incorporation to cumulative dividends on a basis
preferential to the holders of Common Stock and the holders of Junior Preferred
Stock. From their respective dates of issue through December 15, 2000, the
holders of Senior Preferred Stock would be entitled to receive cumulative
dividends from the Company on each share of Senior Preferred Stock at the per
annum rate of 15% of the Liquidation Price of such share. The Liquidation Price
for each share of Senior Preferred Stock is defined as the sum of $7,000 plus
all accrued and unpaid dividends with respect to such share. Accrued dividends
on the Senior Preferred Stock are payable semiannually to the holders of record
of the Senior Preferred Stock as of the close of business on the applicable
record date. The Company has the option to defer the payment of accrued
dividends until the Senior Preferred Stock is redeemed. On January 1 and July 1
of each year, all dividends that have accrued on each share of Senior Preferred
Stock and that have not theretofore been accumulated shall, to the extent not
paid for any reason, be accumulated, and dividends will accrue on such
accumulation until such accumulated dividends are paid. As of December 31, 1995,
the Company has not paid any cash dividends on the Senior Preferred Stock, and
there are $5,415,621 in accrued and unpaid dividends on the Senior Preferred
Stock.

Voting Rights. The affirmative vote or written consent of the holders of a
majority of the outstanding shares of each class of Senior Preferred Stock is
required in order for the Company to take the following actions: amend, alter or
repeal any of the provisions of the certificate of incorporation or any
resolution of the Company's board of directors or any other instrument
establishing and designating the Senior Preferred Stock or any other capital
stock of the Company so as to adversely affect the rights, privileges,
preferences or powers of the Senior Preferred Stock; create or designate any
stock on a parity with or senior to the Senior Preferred Stock; enter into an
agreement that would prevent the Company from performing its obligations with
respect to the Senior Preferred Stock; or pay dividends to the holders of, or
redeem, securities of the Company or its subsidiaries junior to the Senior
Preferred Stock, except as specifically provided therein.

Liquidation Rights. Upon liquidation, dissolution, or winding-up of the
Company, the holders of Senior Preferred Stock are entitled to a preference of
$7,000 per share, plus accrued and unpaid dividends, over all classes and series
of junior stock, including the Junior Preferred Stock, Class A Common Stock,
Class B

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<PAGE> 74

Common Stock, and Class C Common Stock, with respect to the assets available for
distribution after payment in full of creditors.

Redemption Rights. All the shares of Senior Preferred Stock are redeemable
on or after December 15, 1996, at the option of the Company, in whole at any
time, at a redemption price equal to the Liquidation Price for such shares, plus
the amount of all accrued and unpaid dividends thereon, as of the redemption
date, (plus a premium if such redemption occurs prior to December 15, 1997)
payable in cash. The Company is obligated to redeem on December 15, 2000, out of
unrestricted funds legally available therefor, all the shares of the Senior
Preferred Stock then outstanding, at a redemption price equal to the Liquidation
Price for such shares, plus the amount of all unpaid dividends thereon, as of
the redemption date, payable in cash. Holders of shares of the Senior Preferred
Stock are entitled to require the Company to redeem their shares of Senior
Preferred Stock upon the occurrence of the bankruptcy or similar event by the
Company.

JUNIOR PREFERRED STOCK

Dividends. The holders of the Junior Preferred Stock are entitled under
the Company's certificate of incorporation to cumulative dividends on a basis
preferential to the holders of Common Stock, but subordinate to the holders of
Senior Preferred Stock. Until December 22, 2001, the holders of Junior Preferred
Stock are entitled to receive cumulative dividends from the Company on each
share of Junior Preferred Stock at the per annum rate of 12% of the Liquidation
Price of such share ($1,000) plus all accrued and unpaid dividends with respect
to such share. For each year thereafter, the per annum rate shall increase by
1%. In addition, the dividend rate may be substantially increased under certain
circumstances, such as a change in control of the Company, the incurrence of
certain indebtedness, the failure to pay dividends on the Junior Preferred Stock
under certain circumstances and the failure to redeem the Junior Preferred Stock
prior to December 23, 2003. Accrued dividends on the Junior Preferred Stock are
payable semi-annually to the holders of record of the Junior Preferred Stock as
of the close of business on the applicable record date. Until December 22, 1999,
the Company has the option to defer the payment of accrued dividends until the
Junior Preferred Stock is redeemed. On January 1 and July 1 of each year, all
dividends that have accrued on each share of Junior Preferred Stock and that
have not theretofore been accumulated shall, to the extent not paid for any
reason, be accumulated, and dividends will accrue on such accumulation until
such accumulated dividends are paid. As of December 31, 1995, the Company has
not paid any cash dividends on the Junior Preferred Stock, and there were
$4,188,512 in accrued and unpaid dividends on the Junior Preferred Stock.
Holders of Junior Preferred Stock shall not be entitled to any dividends until
the full amount of accrued and unpaid dividends to which holders of Senior
Preferred Stock are entitled are paid.

Voting Rights. The affirmative vote or written consent of the holders of a
majority of the outstanding shares of Junior Preferred Stock is required in
order for the Company to take the following actions: amend, alter or repeal any
of the provisions of the certificate of incorporation or any resolution of the
Company's board of directors or any other instrument establishing and
designating the Junior Preferred Stock or any other capital stock of the Company
so as to adversely affect the rights, privileges, preferences or powers of the
Junior Preferred Stock; create or designate any stock on a parity with or senior
to the Junior Preferred Stock; enter into an agreement that would prevent the
Company from performing its obligations with respect to the Junior Preferred
Stock; or pay dividends to the holders of, or redeem, securities of the Company
or its subsidiaries junior to the Junior Preferred Stock, except as specifically
provided therein.

Liquidation Rights. Upon liquidation, dissolution or winding-up of the
Company, the holders of Junior Preferred Stock are entitled to a preference of
$1,000 per share, plus accrued and unpaid dividends, over all classes and series
of junior stock, including the Class A Common Stock, Class B Common Stock, and
Class C Common Stock, with respect to the assets available for distribution
after payment in full of creditors, but the rights of holders of Junior
Preferred Stock are subordinate in all such respects to those of holders of
Senior Preferred Stock.

Redemption Rights. Subject to the rights of the Senior Preferred Stock,
all the shares of Junior Preferred Stock are redeemable, at the option of the
Company, in whole at any time, at a redemption price equal to the Liquidation
Price for such shares, plus the amount of all accrued and unpaid dividends
thereon, as

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<PAGE> 75

of the redemption date, payable in cash. Subject to the rights of the Senior
Preferred Stock, the Company is obligated to redeem on December 22, 2003, out of
unrestricted funds legally available therefor, all the shares of the Junior
Preferred Stock then outstanding, at a redemption price equal to the Liquidation
Price for such shares, as of the redemption date (plus a declining premium if
redeemed prior to December 22, 1998), plus the amount of all accrued and unpaid
dividends thereon, payable in cash. Holders of shares of the Junior Preferred
Stock are entitled to require the Company to redeem their shares of Junior
Preferred Stock upon the occurrence of a bankruptcy or similar event relating to
the Company or the default by the Company under the terms of the Stockholders
Agreement.

WARRANTS

In connection with the issuance of the Initial Senior Preferred Stock, the
Company entered into a warrant agreement pursuant to which the Company issued to
the holders of the Initial Preferred Stock warrants entitling the holders
thereof to purchase shares of common stock of the Company. The warrant agreement
was subsequently amended and certain warrants were cancelled in exchange for the
issuance of the Series B Preferred Stock to the holders thereof. As of March 27,
1996, holders of such warrants are entitled to purchase for a nominal exercise
price 2,709,129 (2,039,379 after the Offering) shares of Class A Common Stock
and 903,043 (679,793 after the Offering) shares of Class B Common Stock. The
holders of such warrants are entitled to notice of the consolidation, merger, or
sale of substantially all of the assets of the Company, a reclassification of,
tender offer or exchange offer for, Class A Common Stock and Class B Common
Stock, a granting by the Company of subscription rights to the holders of Common
Stock, or the voluntary or involuntary dissolution, liquidation or winding up of
the Company. In addition, the holders of such warrants have certain
anti-dilution protections that provide for, among other things, an increase in
the number of shares of Class A Common Stock and Class B Common Stock for which
each such warrant is exercisable in the event of certain issuances of shares of
Common Stock by the Company at less than fair market value.

In connection with the issuance of the Junior Preferred Stock, the Company
entered into a separate warrant agreement pursuant to which the Company issued
to such holders of Junior Preferred Stock warrants currently entitling the
holders thereof to purchase for a nominal exercise price 4,853,628 (3,892,628
after the Offering) shares of Class C Common Stock. The holders of such warrants
are entitled to notice of the consolidation, merger or sale of substantially all
of the assets of the Company, a reclassification of, tender offer or exchange
offer for, Common Stock, a granting by the Company of subscription rights to the
holders of Common Stock, or the voluntary or involuntary dissolution,
liquidation or winding up of the Company. The holders of such warrants have
certain anti-dilution protections that provide for, among other things, an
increase in the number of shares of Class C Common Stock for which each such
warrant is exercisable in the event of certain issuances of shares of Common
Stock by the Company at less than fair market value. In addition, the Company
has agreed under certain circumstances to permit the holders of shares of Class
C Common Stock that are issued upon the exercise of such warrants to exchange
such shares for a like number of shares of Class A Common Stock.

CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS

General. The provisions of the certificate of incorporation (the
"Certificate of Incorporation") and bylaws (the "Bylaws") and the Delaware
statutory law described in this section may delay or make more difficult
acquisitions or changes of control of the Company that are not approved by the
Company's board of directors.

Advance Notice for Raising Business or Making Nominations at Meetings. The
Bylaws establish an advance notice procedure for stockholder proposals to be
brought before a meeting of stockholders of the Company and for nominations by
stockholders of candidates for election as directors at an annual meeting or a
special meeting at which directors are to be elected. Subject to any other
applicable requirements, only such business may be conducted at a meeting of
stockholders as has been brought before the meeting by, or at the direction of,
the Company's board of directors, or by a stockholder who has given to the
Secretary of the Company timely written notice, in proper form, of the
stockholder's intention to bring that business before the meeting. The presiding
officer at such meeting has the authority to make such determinations. Only
persons

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who are nominated by a stockholder who has given timely written notice, in
proper form, to the Secretary prior to a meeting at which directors are to be
elected will be eligible for election as directors of the Company.

To be timely, notice of nominations or other business to be brought before
any meeting must be received by the Secretary of the Company not later than 120
days in advance of the anniversary date of the Company's proxy statement for the
previous year's annual meeting or, in the case of special meetings or the
Company's 1996 annual meeting of stockholders, at the close of business on the
seventh day following the date on which notice of such meeting is first given to
stockholders.

The notice of any stockholder proposal or nomination for election as a
director must set forth the information required under the Bylaws. The person
submitting the notice of nomination and any person acting in concert with such
person, must provide their names and business addresses, the name and address
under which they appear on the Company's books (if they so appear) and the class
and number of shares of the Company's capital stock that are beneficially owned
by them.

Preferred Stock and Additional Common Stock. Under the Certificate of
Incorporation, the Company's board of directors has the authority to provide by
board resolution for the issuance of shares of one or more series of preferred
stock. The Company's board of directors is authorized to fix by resolution the
terms and conditions of each such other series. See "General."

The Company believes that the availability of additional preferred stock,
issuable in series, and additional shares of the Common Stock could facilitate
certain financings and acquisitions and provide a means for meeting other
corporate needs that might arise. The authorized shares of preferred stock, as
well as authorized but unissued shares of Common Stock, will be available for
issuance without further action by the Company's stockholders, unless
stockholder action is required by applicable law or the rules of any stock
exchange on which any series of the Company's stock may then be listed.

These provisions give the Company's board of directors the power to approve
the issuance of a series of preferred stock, or additional shares of Common
Stock, that could, depending on its terms, either impede or facilitate the
completion of a merger, tender offer or other takeover attempt.

Limitation of Liability and Indemnification. As permitted by the Delaware
General Corporation Law, the Company's Certificate of Incorporation provides
that directors of the Company shall not 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 Delaware General Corporation Law or (iv) for
any transaction from which the director derives an improper personal benefit. In
addition, the Company's Bylaws provide that the Company shall, to the fullest
extent authorized by Section 145 of the Delaware General Corporation Law, as
amended from time to time, indemnify all director and officers and all persons
serving at the request of the company as director, trustee, officer, employee or
agent of another corporation or of a partnership, trust or other enterprise.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that, in the opinion
of the Commission, such indemnification is against public policy as expressed in
the Securities Act and, therefore, is unenforceable.

Delaware Business Combination Statute. Section 203 of the Delaware General
Corporation Law (Section 203) provides that, subject to certain exceptions
specified therein, an interested stockholder of a Delaware corporation shall not
engage in any business combination with the corporation for a three-year period
following the date that such stockholder becomes an interested stockholder
unless (i) prior to such date, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder, (ii) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
certain shares) or (iii) on or subsequent to such date, the business combination
is approved by the board of directors of the corporation and authorized at an
annual or special meeting of stockholders by the

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<PAGE> 77

affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. Except as otherwise specified in
Section 203, an interested stockholder is defined to include (x) any person that
is the owner of 15% or more of the outstanding voting stock of the corporation,
or is an affiliate or associate of the corporation and was the owner of 15% or
more of the outstanding voting stock of the corporation at any time within three
years immediately prior to the relevant date and (y) the affiliates and
associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. The certificate of incorporation does not exclude the Company from
the restrictions imposed under Section 203. The provisions of Section 203 may
encourage companies interested in acquiring the Company to negotiate in advance
with the Company's board of directors because the stockholder approval
requirement would be avoided if a majority of the directors then in office
approve either the business combination or the transaction which results in the
stockholder becoming an interested stockholder. Such provisions also may have
the effect of preventing changes in the management of the Company. It is
possible that such provisions could make it more difficult to accomplish
transactions which stockholders may otherwise deem to be in their best
interests.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A Common Stock is First
Union National Bank, Charlotte, North Carolina.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
38,521,854 shares of Class A Common Stock (40,105,854 if the Underwriters'
over-allotment option is exercised in full), which gives effect to the issuance
of 1,959,000 shares upon the exercise of warrants and options (2,775,000 if the
Underwriters' over-allotment option is exercised in full), 8,311,639 shares of
Class B Common Stock and no shares of Class C Common Stock, assuming no further
exercise of outstanding options and warrants. Of these shares, the 13,500,000
shares of Class A Common Stock sold in this Offering and 1,233,168 shares of
Class A Common Stock outstanding prior to this Offering will be freely tradeable
without restriction or further registration under the Securities Act, except
that any shares purchased by the Company's affiliates ("Affiliates"), as that
term is defined in Rule 144 under the Securities Act, may generally only be sold
in compliance with the limitations of Rule 144 described below. The remaining
23,788,686 shares of Class A Common Stock and all of the shares of Class B
Common Stock held by existing stockholders upon completion of this offering will
be restricted securities within the meaning of Rule 144 and may not be sold
except in compliance with the registration requirements of the Securities Act or
an applicable exemption under the Securities Act, including an exemption
pursuant to Rule 144.

SALES OF RESTRICTED SHARES

Upon completion of the Offering, approximately 23,252,543 shares of Class A
Common Stock and all of the outstanding shares of Class B Common Stock will be
eligible for sale in the public market pursuant to Rule 144 under the Securities
Act. In addition, 536,143 shares of Class A Common Stock will become eligible
for sale at various times in the public market pursuant to Rule 144. In
addition, certain existing holders of (i) 23,252,543 shares of Class A Common
Stock, (ii) warrants exercisable for 2,039,379 additional shares of Class A
Common Stock, (iii) all 8,311,639 shares of the Class B Common Stock (which are
convertible into the same number of shares of Class A Common Stock), (iv)
warrants exercisable for 679,793 shares of Class B Common Stock (which are
convertible into the same number of shares of Class A Common Stock), and (v)
warrants exercisable for 3,892,628 shares of Class C Common Stock (which are
convertible into the same number of shares of Class A Common Stock), will have
rights to require registration of their shares under certain circumstances.

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<PAGE> 78

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an Affiliate, who has beneficially owned
shares for at least two years (including the holding period of certain prior
owners), will be entitled to sell in brokers' transactions or to market makers,
within any three-month period commencing 90 days after the Company becomes
subject to the reporting requirements of Section 13 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), a number of shares that does not
exceed the greater of (i) 1% of the then outstanding shares of Class A Common
Stock (a limit of approximately 385,218 shares immediately after the Offering),
or (ii) the average weekly trading volume in the Common Stock during the four
calendar weeks immediately preceding such sale, subject, generally, to the
filing of a Form 144 with respect to such sales and certain other limitations
and restrictions. In addition, a person (or person whose shares are aggregated)
who is not deemed to have been an Affiliate at any time during the 90 days
immediately preceding the sale and who has beneficially owned the shares
proposed to be sold for at least three years, is entitled to sell such shares
under Rule 144(k) without regard to the limitations described above. Further,
Rule 144A under the Securities Act as currently in effect permits the immediate
sale of restricted shares to certain qualified institutional buyers without
regard to the volume restrictions described above. The Commission has proposed
an amendment to Rule 144 which would reduce the holding period required for
shares subject to Rule 144 to become eligible for sale in the public market from
two years to one year, and from three years to two years in the case of Rule
144(k). If this proposal is adopted, additional shares of Class A Common Stock
will become eligible for sale to the public sooner than would be the case under
Rule 144, as currently in effect.

OPTIONS

As of December 31, 1995, options to purchase 1,752,405 shares of Class A
Common Stock were outstanding under the Stock Incentive Plan, and 2,053,775
shares of Class A Common Stock were reserved for issuance under the Stock
Incentive Plan. The Company has filed a registration statement on Form S-8 under
the Securities Act with respect to the shares issuable under the Stock Incentive
Plan, and shares of Class A Common Stock issued under the Stock Incentive Plan
are therefore immediately eligible for sale in the public market. Executive
officers of the Company who are included in the Selling Stockholders have agreed
with the Underwriters that shares issuable to them under the Stock Incentive
Plan are subject to a 180-day lock-up period. See "Underwriting."

WARRANTS

Upon completion of the Offering, there will be outstanding warrants to
purchase 2,039,379 shares of Class A Common Stock (1,818,879 shares if the
Underwriter's over-allotment option is exercised in full), warrants to purchase
679,793 (606,293 shares if the Underwriter's over-allotment option is exercised
in full), shares of Class B Common Stock and warrants to purchase 3,892,628
(3,575,628 shares if the Underwriter's over-allotment option is exercised in
full), shares of Class C Common Stock. Shares of Class B Common Stock and Class
C Common Stock are convertible to shares of Class A Common Stock at the option
of the holder thereof on a one-for-one basis. The holders of warrants to
purchase Class B Common Stock or Class C Common Stock may elect, under certain
circumstances, to receive an identical number of shares of Class A Common Stock
in lieu of receiving shares of Class B Common Stock or Class C Common Stock.
Shares issuable pursuant to the exercise of warrants to purchase Class A Common
Stock or Class B Common Stock (including any shares of Class A Common Stock
issued as a result of the exercise of the right of a holder of warrants to
purchase Class B Common Stock to instead receive Class A Common Stock) will upon
issuance be eligible for sale in compliance with the limitations of Rule 144
previously described. Shares of Class A Common Stock that are issuable upon the
exercise of warrants to purchase shares of Class C Common Stock, or the
conversion or exchange of shares of Class C Common Stock which are issuable upon
the exercise of warrants to purchase shares of Class C Common Stock, shall be
eligible for sale in compliance with the limitations of Rule 144 after December
22, 1996. The holders of all of the warrants described above have agreed with
the Underwriters that any shares of Common Stock they may receive upon the
exercise of warrants are subject to a 180-day lock-up. See "Underwriting."

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REGISTRATION RIGHTS

Pursuant to registration rights granted in the Stockholders Agreement,
certain holders of Senior Preferred Stock may require the Company to register
with the Commission under and in accordance with the Securities Act all or part
of their "Registrable Shares" (as defined in the Stockholders Agreement).
Registrable Shares are defined to include shares issued or issuable as "Warrant
Shares" (as defined in the Stockholders Agreement) (as adjusted for certain
stock splits, stock dividends, recapitalizations and similar events) and any
securities issued to the holders of Senior Preferred Stock pursuant to their
exercise of certain rights of first refusal. The Company is required to
effectuate a demand registration at the request of holders of Senior Preferred
Stock only if (i) it has been requested and consented to by the holders of a
majority of the Registrable Shares held by the holders of Senior Preferred
Stock, and (ii) the shares as to which registration is requested represent at
least 25% of the aggregate Registrable Shares held by holders of Senior
Preferred Stock participating in such registration. Generally, the holders of
Senior Preferred Stock as a group are entitled to three demand registrations.

Pursuant to the registration rights granted in the Stockholders Agreement,
two holders of Junior Preferred Stock each have one demand registration right,
exercisable after six months from the date hereof, to require the Company to
register with the Commission under and in accordance with the Securities Act all
of its Registrable Shares.

Pursuant to the registration rights granted in the Stockholders Agreement,
the Management Investors (which are affiliates of Mr. Paxson) may require the
Company to register with the Commission under and in accordance with the
Securities Act all or part of their respective Registrable Shares. The Company
is required to effectuate a demand registration for the Management Investors
only if (i) it has been requested or consented to by Management Investors
holding a majority of the Registrable Shares held by the Management Investors,
and (ii) the shares as to which registration is requested represent at least 25%
of the aggregate Registrable Shares held by the Management Investors
participating in such registration. Generally, the Management Investors as a
group are entitled to five demand registrations.

If at any time the Company proposes to file on its own behalf or on behalf
of any holder or holders of any equity securities a registration statement under
the Securities Act (other than a registration statement on Form S-4 or Form S-8
or any successor form for the registration of securities to be offered pursuant
to an employee benefit plan), then the Company must give notice to the holders
of Senior Preferred Stock, the holders of Junior Preferred Stock, the Management
Investors and certain other stockholders of their respective rights to include
certain Registrable Shares held by such persons in a piggy-back registration.
The Company has the right to abandon any such registration.

In the case of a demand or certain piggy-back registrations, the Company
will pay all registration expenses except underwriting discounts and commissions
and transfer taxes. In the case of a piggy-back registration, each participating
holder of Senior Preferred Stock or Junior Preferred Stock, each participating
Management Investor and each of certain other participating parties shall pay
its pro rata share of the incremental registration filing fees and shall pay all
fees and disbursements of its counsel (other than a single counsel for certain
holders) incurred in connection therewith.

The registration rights provisions of the Stockholders Agreement allocate
Registrable Shares among participating holders of Senior Preferred Stock,
holders of Junior Stock Preferred Stock and the Management Investors if fewer
than all the requested shares are to be included in a registration statement.
The registration rights of such holders generally have priority over those of
other parties that may have registration rights.

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UNDERWRITING

Upon the terms and subject to the conditions stated in the U.S.
Underwriting Agreement dated the date of this Prospectus, each of the
underwriters of the U.S. Offering of Class A Common Stock named below (the "U.S.
Underwriters"), for whom Smith Barney Inc., PaineWebber Incorporated, CIBC Wood
Gundy Securities Corp., and BT Securities Corporation are acting as
representatives (the "Representatives"), has severally agreed to purchase, and
the Company and the Selling Stockholders have agreed to sell to each U.S.
Underwriter, the number of shares of Class A Common Stock set forth opposite the
name of such U.S. Underwriter.

<TABLE>
<S> <C>
Smith Barney Inc. ........................ 1,887,500
PaineWebber Incorporated.................. 1,887,500
CIBC Wood Gundy Securities Corp. ......... 1,887,500
BT Securities Corporation................. 1,887,500
Allen & Company Incorporated.............. 150,000
Bear, Stearns & Co. Inc. ................. 150,000
J.C. Bradford & Co. ...................... 100,000
Alex. Brown & Sons Incorporated........... 150,000
Cowen & Company........................... 100,000
Dain Bosworth Incorporated................ 100,000
Donaldson, Lufkin & Jenrette Securities
Corporation............................. 150,000
Duff & Phelps Securities Co. ............. 100,000
A.G. Edwards & Sons, Inc. ................ 150,000
First Equity Corporation of Florida....... 100,000
Furman Selz LLC........................... 100,000
Gabelli & Company, Inc. .................. 150,000
Gruntal & Co., Incorporated............... 150,000
Janco Partners, Inc. ..................... 100,000
Legg Mason Wood Walker, Incorporated...... 100,000
McDonald & Company Securities, Inc. ...... 100,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................ 150,000
Montgomery Securities..................... 150,000
Morgan Stanley & Co. Incorporated......... 150,000
Needham & Company, Inc. .................. 100,000
Oppenheimer & Co., Inc. .................. 150,000
Principal Financial Securities, Inc. ..... 100,000
Prudential Securities Incorporated........ 150,000
The Robinson-Humphrey Company, Inc. ...... 100,000
Schroder Wertheim & Co. Incorporated...... 150,000
Wheat, First Securities, Inc. ............ 100,000
----------
Total............................. 10,800,000
==========
</TABLE>

Under the terms and subject to the conditions stated in the International
Underwriting Agreement dated the date of this Prospectus, each of the managers
of the concurrent International Offering of Class A Common stock named below
(the "Managers"), for whom Smith Barney Inc., PaineWebber International (U.K.)
Ltd., CIBC Wood Gundy Securities Inc. and Bankers Trust International PLC are
acting as lead managers (the "Lead Managers") has severally agreed to purchase,
and the Company and the Selling Stockholders have agreed to sell to each
Manager, the number of shares of Class A Common Stock set forth opposite the
name of such Manager.

<TABLE>
<S> <C>
Smith Barney Inc. ........................ 581,250
PaineWebber International (U.K.) Ltd...... 581,250
CIBC Wood Gundy Securities Inc. .......... 581,250
Bankers Trust International PLC........... 581,250
Bayerische Landesbank Gironzentrale....... 75,000
Kleinwort Benson Limited.................. 75,000
Nomura International plc ................. 75,000
Banque Paribas............................ 75,000
UBS Limited............................... 75,000
---------
Total............................. 2,700,000
=========
</TABLE>

Each of the U.S. Underwriting Agreement and the International Underwriting
Agreement provides that the obligations of the several U.S. Underwriters and the
several Managers to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The U.S. Underwriters and the Managers are obligated to take and pay for all
shares of Class A Common Stock offered hereby (other than those covered by the
over-allotment option described below) if any such shares are taken.

The U.S. Underwriters and the Managers initially propose to offer part of
the shares of Class A Common Stock directly to the public at the public offering
price set forth on the cover page of this Prospectus and part of the shares to
certain dealers at such price less a concession not in excess of $0.48 per share
below the public offering price. The U.S. Underwriters and the Managers may
allow, and such dealers may reallow, a concession not in excess of $0.10 per
share to any other U.S. Underwriter or Manager, respectively, or to certain
other dealers. After the Offering, the public offering price and such
concessions may be changed by the U.S. Underwriters and the Managers.

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<PAGE> 81

The Company and the Selling Stockholders have granted to the U.S.
Underwriters an option, exercisable within 30 days from the date of this
Prospectus, to purchase up to an aggregate of 2,025,000 additional shares of
Class A Common Stock at the public offering price set forth on the cover page of
this Prospectus less underwriting discounts and commissions. The U.S.
Underwriters and the Managers may exercise such option to purchase additional
shares solely for the purpose of covering over-allotments, if any, incurred in
connection with the sale of the shares of Class A Common Stock offered hereby.
To the extent such option is exercised, each U.S. Underwriter and Manager will
become obligated, subject to certain conditions, to purchase approximately the
same percentage of such additional shares as the number of shares set forth next
to such U.S. Underwriter's or Manager's name in the preceding tables bears to
the total number of shares in such tables.

Of the shares of Class A Common Stock offered hereby, 1,854,000 shares will
be issued by the Company upon the exercise of warrants held by certain Selling
Stockholders. The Underwriters intend to purchase the warrants from such Selling
Stockholders at the aggregate public offering price of the underlying shares of
Common Stock less the underwriting discounts and commissions and less the
nominal exercise price of the warrants. The warrants have nominal exercise
prices per share, which will be paid to the Company by the Underwriters upon
exercise of the warrants at the closing. The Underwriters will offer the shares
issued upon exercise of the warrants in the same manner as all other shares in
the Offering.

The Company, the Selling Stockholders, the U.S. Underwriters and the
Managers have agreed to indemnify each other against certain liabilities,
including under the Securities Act.

The Company, its executive officers and directors, and certain of the
Company's existing stockholders have agreed that, for a period of 180 days from
the date of this Prospectus, they will not, without the prior written consent of
Smith Barney Inc., offer, sell, contract to sell, or otherwise dispose of, any
shares of Common Stock of the Company or any securities convertible into, or
exercisable or exchangeable for, Common Stock of the Company. Such restrictions
shall not apply to certain transfers among such parties and their affiliates or
to the exercise of warrants or conversion or exchange of shares of one class of
Common Stock to another class, as long as the transferred or resulting
securities remain subject to the terms of restriction for the remainder of such
period. In addition, such restrictions shall not apply to shares of Class A
Common Stock issued by the Company with respect to certain of the Proposed
Acquisitions as described herein, nor to certain issuances by the Company with
respect to any other acquisitions, as long as such shares remain subject to the
transfer restrictions for the remainder of such period.

The U.S. Underwriters and the Managers have entered into an agreement
between U.S. Underwriters and Managers pursuant to which each U.S. Underwriter
has agreed that, as part of the distribution of the 10,800,000 shares of Class A
Common Stock offered in the U.S. Offering (plus any of the shares acquired to
cover over-allotments): (i) it is not purchasing any such shares or warrants (or
shares issuable thereunder) for the account of anyone other than a U.S., or
Canadian Person and (ii) it has not offered or sold, and will not, offer, sell,
resell or deliver, directly or indirectly, any of such shares or distribute any
prospectus relating to the U.S. Offering outside the United States or Canada to
anyone other than a U.S or Canadian Person. In addition, each Manager has agreed
that as part of the distribution of the 2,700,000 shares offered in the
International Offering: (i) it is not purchasing any such shares or warrants (or
shares issuable thereunder) for the account of any U.S. or Canadian Person and
(ii) it has not offered or sold, and will not, offer, sell, resell or deliver,
directly or indirectly, any of such shares or distribute any prospectus relating
to the International Offering in the United States or Canada or to any U.S. or
Canadian Person. Each U.S. Underwriter and Manager has also agreed that it will
offer to sell shares only in compliance with all relevant requirements of any
applicable laws.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the U.S. Underwriting Agreement, the
International Underwriting Agreement and the Agreement Between U.S. Underwriters
and Managers, including: (i) certain purchases and sales between U.S.
Underwriters and the Managers, (ii) certain offers, sales, resales, deliveries
or distributions to or through investment advisors or other persons exercising
investment discretion, (iii) purchases, offers or sales by a U.S. Underwriter
who is also acting as Manager or by a Manager who is also acting as U.S.
Underwriter and

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<PAGE> 82

(iv) other transactions specifically approved by the Representatives. As used
herein, "U.S. or Canadian Person" means any resident or national of the United
States or Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada, or any estate or
trust the income of which is subject to U.S. or Canadian income taxation
regardless of the source of its income (other than the foreign branch of any
U.S. or Canadian Person), and includes any United States or Canadian branch of a
person other than a U.S. or Canadian Person.

Any offer of shares of Class A Common Stock in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
relevant province of Canada in which such offer is made.

Each Manager has represented and agreed that (i) it will not offer or sell
any shares of Class A Common Stock to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which will not involve an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995 ("the Regulations"); (ii) it will comply with all
applicable provisions of the Financial Services Act 1986 and the Regulations
with respect to anything done by it in relation to the shares of Class A Common
Stock in, from, or otherwise involving the United Kingdom; and (iii) it will
only issue or pass on to any person in the United Kingdom any document received
by it in connection with the offering of the shares of Class A Common Stock if
that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to
whom such document may otherwise lawfully be issued or passed on.

No action has been or will be taken in any jurisdiction by the Company or
the Managers that would permit an offering to the general public of the shares
of Class A Common Stock offered hereby in any jurisdiction other than the United
States.

Purchasers of the shares of Class A Common Stock offered hereby may be
required to pay stamp taxes and other charges in accordance with the laws and
practices of the country of purchase in addition to the offering price set forth
on the cover page of this Prospectus.

Pursuant to the Agreement Between U.S. Underwriters and Managers, sales may
be made between the U.S. Underwriters and the Managers of such number of shares
of Class A Common Stock as may be mutually agreed. The price of any shares of
Class A Common Stock so sold shall be the public offering price as then in
effect for shares of Class A Common Stock being sold by the U.S. Underwriters,
less all or any part of the selling concessions unless otherwise determined by
mutual agreement. To the extent that there are sales between the U.S.
Underwriters and the Managers pursuant to the Agreement Between U.S.
Underwriters and Managers, the number of shares of Class A Common Stock
initially available for sale by the U.S. Underwriters and by the Managers may be
more or less that the number of shares of Class A Common Stock appearing on the
front cover of this Prospectus.

BT Investment Partners, Inc., an affiliate of BT Securities Corporation,
one of the U.S. Underwriters, and Bankers Trust International PLC, one of the
Managers, is a holder of the Junior Preferred Stock and warrants to purchase
Class C Common Stock and is a Selling Stockholder in this Offering. Bankers
Trust Company, an affiliate of BT Securities Corporation, Bankers Trust
International PLC and BT Investment Partners, Inc., has in the past provided
commercial banking services for an affiliate of the Company, for which Bankers
Trust Company has received customary compensation and BT Securities Corporation
and its affiliates may provide other financial, advisory or commercial or
investment banking services to the Company or its affiliates in the future.

Smith Barney Inc. ("Smith Barney") and CIBC Wood Gundy Securities Corp.
("CIBC") participated as initial purchasers in connection with the sale by the
Company of its Notes in September 1995. In addition, an affiliate of CIBC,
Canadian Imperial Bank of Commerce, is a lender under the New Credit Facility
and, additionally, has provided Whitehead Media with a loan, the proceeds of
which were used in part to repay indebtedness to the Company incurred in
connection with the acquisition of stations WTVX-TV and WOAC-TV.

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<PAGE> 83

Smith Barney and CIBC have from time to time provided investment banking
and financial advisory services to the Company and may continue to do so in the
future. Smith Barney and CIBC have received customary fees for such services.

CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS

The following general discussion is a summary of certain U.S. federal
income and estate tax consequences of the ownership and disposition of Class A
Common Stock applicable to Non-U.S. Holders of such Class A Common Stock who
acquire and own such Class A Common Stock as a capital asset within the meaning
of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the
"Code"). A "Non-U.S. Holder" is a person other than (i) a citizen or resident of
the United States, (ii) a corporation or partnership created or organized in the
United States or under the laws of the United States or of any state, or (iii)
an estate or trust whose income is includable in gross income for United States
federal income tax purposes regardless of its source. For purposes of the
withholding tax on dividends discussed below, a non-resident fiduciary of an
estate or trust will be considered a Non-U.S. Holder.

This discussion does not consider specific facts and circumstances that may
be relevant to a particular Non-U.S. Holder's tax position and does not consider
U.S. state and local or non-U.S. tax consequences. This discussion also does not
consider the tax consequences to any person who is a stockholder, partner or
beneficiary of a holder of the Class A Common Stock. Further, it does not
consider Non-U.S. Holders subject to special tax treatment under the federal
income tax laws (including banks and insurance companies, dealers in securities,
and holders of securities held as part of a "straddle," hedge or "conversion
transaction").

The following discussion is based on provisions of the Code, the applicable
Treasury regulations promulgated and proposed thereunder and judicial authority
and administrative interpretations as of the date hereof. The foregoing are
subject to change, possibly on a retroactive basis, and any such change could
affect the continuing validity of this discussion.

THE FOLLOWING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION.
ACCORDINGLY, EACH PROSPECTIVE NON-U.S. HOLDER IS URGED TO CONSULT A TAX ADVISOR
WITH RESPECT TO UNITED STATES FEDERAL TAX CONSEQUENCES OF HOLDING AND DISPOSING
OF THE CLASS A COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE
UNDER THE LAWS OF ANY U.S. STATE, LOCAL OR OTHER U.S. OR NON-U.S. TAX
JURISDICTION.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder of the Class A Common Stock
will be subject to withholding of U.S. federal income tax at a 30% rate unless
such rate is reduced by an applicable income tax treaty. Dividends that are
effectively connected with such holder's conduct of a trade or business in the
United States or, if a tax treaty applies, attributable to permanent
establishment, or, in the case of an individual, a "fixed base," in the United
States ("U.S. trade or business income") are generally subject to U.S. federal
income tax at regular rates, but are not generally subject to the 30%
withholding tax if the Non-U.S. Holder files the appropriate form with the
payor. Any U.S. trade or business income received by a Non-U.S. Holder that is a
corporation may also, under certain circumstances, be subject to an additional
"branch profits tax" at the 30% rate or such lower rate as may be applicable
under an income tax treaty.

Dividends paid to an address in a foreign country are presumed (absent
actual knowledge to the contrary) to be paid to a resident of such country for
purposes of the withholding discussed above and, under the current
interpretation of U.S. Treasury regulations, for purposes of determining the
applicability of a tax treaty rate. Under proposed U.S. Treasury regulations not
currently in effect, however, a Non-U.S. Holder of the Class A Common Stock who
wishes to claim the benefit of an applicable treaty rate would be required to
satisfy applicable certification and other requirements, which would include the
requirement that the Non-U.S. Holder file a form which contains the holder's
name and address and an official statement by the competent authority in the
foreign country (as designated in the applicable tax treaty) attesting to the
holder's status as a resident thereof.

80
<PAGE> 84

A Non-U.S. Holder of the Class A Common Stock that is eligible for a
reduced rate of U.S. withholding tax pursuant to an income treaty may obtain a
refund of any excess amounts currently withheld by filing an appropriate claim
for a refund with the U.S. Internal Revenue Service.

DISPOSITION OF COMMON STOCK

Except as described below, a Non-U.S. Holder generally will not be subject
to U.S. federal income tax in respect of gain recognized on a disposition of
Class A Common Stock, provided that: (a) the gain is not U.S. trade or business
income, (b) the Non-U.S. Holder is not an individual who is present in the
United States for 183 or more days in the taxable year of the disposition and
who meets certain other requirements, (c) the Non-U.S. Holder is not subject to
tax pursuant to the provisions of the U.S. tax laws applicable to certain United
States expatriates and (d) either the Company is not a "U.S. real property
holding corporation" for federal income tax purposes or (i) the Class A Common
Stock is "regularly traded on an established securities market" (within the
meaning of the relevant provisions of the Code) and (ii) the Non-U.S. Holder has
not held, directly or indirectly, at any time during the 5-year period ending on
the date of disposition, more than 5% of the Class A Common Stock. The Company
believes that it is not now and has not been within the past five years, and
anticipates that it will not become, a U.S. real property holding corporation
for U.S. federal income tax purposes.

FEDERAL ESTATE TAXES

In general, an individual who is a Non-U.S. Holder for U.S. estate tax
purposes will incur liability for U.S. federal estate tax if the fair market
value of the property included in such individual's taxable estate for U.S.
federal estate tax purposes exceeds the statutory threshold amount. For these
purposes, Class A Common Stock owned or treated as owned by an individual who is
a Non-U.S. Holder at the time of death will be included in the individual's
taxable estate for U.S. federal estate tax purposes, unless an applicable estate
tax treaty provides otherwise.

U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX

The Company must report annually to the Internal Revenue Service and to
each Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply whether or
not withholding was reduced or eliminated by an applicable tax treaty. Copies of
these information returns may also be made available under the provisions of a
specific treaty or agreement to the tax authorities in the country in which the
Non-U.S. Holder resides. The United States backup withholding tax (which
generally is a withholding tax imposed at the rate of 31% on certain payments to
persons that fail to furnish the information required under the United States
information reporting requirements) will generally not apply to dividends paid
on the Class A Common Stock to a Non-U.S. Holder at an address outside the
United States.

Except as provided below, Non-U.S. Holders will not be subject to
information reporting or backup withholding with respect to the payment of
proceeds from the disposition of the Class A Common Stock effected by the
Non-U.S. office of a broker. However, if the broker is a U.S. person or a U.S.
related person, information reporting (but not backup withholding) would apply
unless the broker has documentary evidence in its records as to the Non-U.S.
Holder's Non-U.S. status, or the Non-U.S. Holder certifies as to its Non-U.S.
status under penalty of perjury or otherwise establishes an exemption. For this
purpose, a "U.S. related person" is (i) a "controlled foreign corporation" for
U.S. federal income tax purposes, or (ii) a Non-U.S. person 50% or more of whose
gross income from all sources for the three-year period ending with the close of
its taxable year preceding the payment (or for such part of the period that the
broker has been in existence) is derived from activities that are effectively
connected with the conduct of a U.S. trade or business.

Non-U.S. Holders will be subject to information and backup withholding at a
rate of 31% with respect to the payment of proceeds from the disposition of the
Class A Common Stock effected by or through the United States office of a
broker, U.S. or Non-U.S., unless the Non-U.S. Holder certifies as to its
Non-U.S. status under penalty of perjury or otherwise establishes an exemption.

81
<PAGE> 85

Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a credit against such Non-U.S. Holder's U.S.
federal income tax, and any amounts withheld in excess of such Non-U.S. Holder's
federal income tax liability would be refunded, provided that the required
information is furnished to the Internal Revenue Service.

LEGAL MATTERS

Certain legal matters with respect to the issuance of Class A Common Stock
will be passed upon for the Company by Holland & Knight (a partnership including
professional associations), and for the Underwriters by Cahill Gordon & Reindel
(a partnership including a professional corporation). Certain legal matters
under the Communications Act and the rules and regulations promulgated
thereunder by the FCC will be passed upon for the Company and the Underwriters
by Dow, Lohnes & Albertson (a professional limited liability company).

EXPERTS

The consolidated financial statements of the Company as of December 31,
1995 and 1994 and for each of the three years in the period ended December 31,
1995, the financial statements of KZKI-TV (a division of Sandino Telecasters) as
of and for the year ended January 31, 1995, the financial statements of Paugus
Television, Inc. (WGOT-TV) and WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.
as of and for the year ended December 31, 1994 included in this Prospectus have
been so included in reliance on the reports of Price Waterhouse LLP, independent
certified public accountants, given on authority of said firm as experts in
auditing and accounting (the reports related to the financial statements of
KZKI-TV (a division of Sandino Telecasters) and Paugus Television, Inc.
(WGOT-TV) contain an explanatory paragraph relating to the entities' ability to
continue as a going concern as described in Note 1 to such financial
statements). Price Waterhouse LLP has not examined, compiled or applied agreed
upon procedures to the Pro Forma Financial Information included in this
Prospectus and, consequently, assumes no responsibility for the Pro Forma
Financial Information and does not express an opinion or any other form of
assurance with respect thereto.

The combined financial statements for New Age Broadcasting, Inc. and The
Seventies Broadcasting Corporation for the year ended September 30, 1995, and
the financial statements for New Age Broadcasting, Inc. for the year ended
September 30, 1994 included in this Prospectus have been so included in reliance
on the reports of Voynow, Bayard and Company, independent certified public
accountants, given on the authority of said firm as experts in auditing and
accounting.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the shares of Class A Common Stock
offered by this Prospectus. For the purposes hereof, the term Registration
Statement means the original Registration Statement and any and all amendments
thereto, including the schedules and exhibits to such Registration Statement or
any such amendment. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, to which reference is hereby made. Each statement made in this
Prospectus concerning a document filed as an exhibit to the Registration
Statement is qualified in its entirety by reference to such exhibit for a
complete statement of its provisions.

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and other information with the
Commission. Reports, proxy statements, and other information filed by the
Company can be inspected and copied at the public reference facilities of the
Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as the following Regional Offices: 7 World Trade Center, Suite 1300, New
York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies can be obtained by mail at prescribed
rates. Requests should be directed to the Commission's Public Reference Section,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.

Reports, proxy statements, and other information concerning the Company can
also be inspected and copied at the offices of the American Stock Exchange, 86
Trinity Place, New York, NY 10006.

82
<PAGE> 86

INDEX TO PRO FORMA FINANCIAL INFORMATION

<TABLE>
<S> <C>
PRO FORMA FINANCIAL INFORMATION........................................................ P-2
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS:
For the Year Ended December 31, 1995................................................. P-3
Notes to Unaudited Pro Forma Consolidated Statement of Operations.................... P-4
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET:
At December 31, 1995................................................................. P-6
Notes to Unaudited Pro Forma Consolidated Balance Sheet.............................. P-7
</TABLE>

P-1
<PAGE> 87

PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma consolidated statement of operations for the year
ended December 31, 1995 gives effect to (i) the consummation of the Offering;
(ii) significant business acquisitions of KZKI-TV, WGOT-TV, and WTVX-TV; (iii)
the issuance of $230,000,000 Senior Subordinated Notes issued on September 28,
1995; (iv) proposed significant business acquisitions of WRMA-FM and WXDJ-FM;
and (v) the exercise of the Station Options, as if such events had occurred on
January 1, 1995. WRMA-FM and WXDJ-FM are the only Proposed Acquisitions which
are considered to be significant business acquisitions and all other Proposed
Acquisitions are asset acquisitions or are immaterial both individually and in
the aggregate and are therefore not required to be included in the Pro Forma
financial information. Prior operators' fiscal years have been conformed to the
Company's December 31, 1995 year end. In addition, depreciation and amortization
expense has been increased for the period to reflect preliminary purchase
accounting allocations for all stations included in the Proposed Acquisitions
and Station Options. The unaudited pro forma consolidated balance sheet at
December 31, 1995 gives effect to: (i) the consummation of the Offering; (ii)
the Proposed Acquisitions and related capital expenditures; (iii) capital
expenditures on existing properties; (iv) the exercise of the Station Options;
(v) the termination of the holders' put on the Class A and Class B common stock
warrants; (vi) acquisitions and dispositions which have closed subsequent to
December 31, 1995; and (vii) the acquisition of a note receivable from Mr.
Paxson, as if such events included in (i) through (vii) had occurred on December
31, 1995.

The Proposed Acquisitions will be accounted for using the purchase method
of accounting. The total cost of the Proposed Acquisitions will be allocated to
the tangible and intangible assets acquired and liabilities assumed based upon
their respective fair values. The allocation of the respective purchase prices
included in the pro forma financial information is preliminary. The Company does
not expect that the final allocation of the purchase prices will materially
differ from the preliminary allocation.

The pro forma adjustments are based upon available information and certain
assumptions that the Company believes are reasonable under the circumstances.
The pro forma consolidated financial information should be read in conjunction
with the Company's consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus. The unaudited pro forma statement of operations
data are not necessarily indicative of the results that would have occurred if
the Offering and the acquisitions had occurred on the dates indicated, nor are
they indicative of the Company's future results of operations. There can be no
assurance whether or when the Proposed Acquisitions will be consummated.

P-2
<PAGE> 88

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------------------------------------------------
WEST PALM
LOS ANGELES BEACH MIAMI
(KZKI- BOSTON (WTVX- (WRMA-FM AND PRO FORMA
COMPANY(A) TV)(B) (WGOT-TV)(B) TV)(B) WXDJ-FM)(B) ADJUSTMENTS PRO FORMA(C)
---------- ----------- ------------ --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Revenue............. $103,074 $ 1,019 $ 600 $ 3,124 $ 13,414 $ 1,627(d) $122,858
Operating expenses,
excluding depreciation,
amortization and option
plan compensation....... 82,103 351 583 2,682 6,858 (947)(e)
155(d) 91,785
Option plan compensation
(f)..................... 10,803 10,803
Depreciation and
amortization............ 18,719 279 128 294 1,033 18,093(g) 38,546
---------- ----------- ------ --------- ------------ ----------- ------------
Income (loss) from
operations.............. (8,551) 389 (111) 148 5,523 (15,674) (18,276)
Interest expense.......... (16,303) (271) (174) (532) (2,001) (12,007)(h) (31,288)
Interest income........... 1,709 47 (14)(i)
26(d) 1,768
Other income (expense),
net..................... (982) (10) (88) (111) 98(j) (1,093)
Benefit for income
taxes................... 1,280 1,280
Extraordinary item........ (10,626) (10,626)
---------- ----------- ------ --------- ------------ ----------- ------------
Net income (loss)......... $(33,473) $ 118 $ (295) $ (472) $ 3,458 $ (27,571) (58,235)
=========== =============== ========== ================ ===========
Dividends and accretion on
preferred stock and
common stock
warrants(k)............. (13,297) (13,297)
---------- ------------
Net loss attributable to
common stock............ ($46,770) $(71,532)
=========== =============
Loss per share data:
Net loss per share(l)..... $ (0.97) $ (1.25)
Net loss per share
attributable to common
stock(l)................ (1.36) (1.53)
Weighted average shares
outstanding-primary and
fully diluted........... 34,430 12,259(m) 46,689
=========== =========== =============
</TABLE>

P-3
<PAGE> 89

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

(a) Reflects the results of operations for (i) significant business
acquisitions of KZKI-TV, WGOT-TV and WTVX-TV since their respective dates of
acquisition; (ii) asset acquisitions and insignificant business acquisitions of
WYVN-TV, KLXV-TV, WFTL-AM, KTFH-TV, WTWS-TV, WSJT-FM, WTGI-TV and the Alabama
Radio Network since their respective dates of acquisition; (iii) operations
pursuant to brokerage agreements ("TBAs") for WOAC-TV, WTJC-TV, KUBD-TV and
WTVX-TV since their respective dates of commencement; and (iv) insignificant
terminated operations until such time of termination.

(b) Reflects prior operator results.

(c) Pro forma statement of operations for the year ended December 31, 1995,
gives effect to (i) the consummation of the Offering; (ii) significant business
acquisitions of KZKI-TV, WGOT-TV and WTVX-TV; (iii) the issuance of the Notes on
September 28, 1995; (iv) proposed significant business acquisitions of WRMA-FM
and WXDJ-FM; and (v) the exercise of the Station Options as if such acquisitions
had occurred on January 1, 1995. WRMA-FM and WXDJ-FM are the only Proposed
Acquisitions which are considered to be significant business acquisitions and
all other Proposed Acquisitions are asset acquisitions or are immaterial both
individually and in the aggregate and are therefore not required to be included
in the pro forma financial information. Prior operators' fiscal years have been
conformed to the Company's December 31, 1995 year end. In addition, depreciation
and amortization expense has been increased for the period to reflect
preliminary purchase accounting allocations for all stations included in the
Proposed Acquisitions and Station Options. Pro forma results have not been
included for the following transactions subsequent to December 31, 1995: (i) the
asset acquisitions of WHAI-TV and WAKC-TV; (ii) the commencement of TBA
operations of WRMY-TV, KWBF-TV and WCEE-TV; and (iii) the proposed acquisitions
of Channel 68, WNGM-TV, WHKE-TV, WJUE-TV, WHBI-TV, WOCD-TV, WOST-TV, KZAR-TV,
WFSJ-FM, WHUB-FM and WHUB-AM as such acquisitions are either asset acquisitions
or insignificant business acquisitions.

(d) Prior operators' results have been adjusted as follows to conform the
prior operators' fiscal year ends to the Company's December 31 year end: (i)
KZKI's January 31, 1995 year end has been conformed to the Company's year end by
including the period from January 1, 1995 through May 17, 1995; and (ii) WRMA-FM
and WXDJ-FM's September 30, 1995 year end has been conformed to the Company's
year end by including October, November and December 1995 and excluding October,
November and December 1994.

(e) To reflect (i) the elimination of $372 of general and administrative
costs which represent redundant facilities and staff for WTVX-TV; (ii) the
elimination of $69 which represents TBA fees paid to the prior licensee of
WRMA-FM; (iii) the elimination of $495 which represents TBA fees paid to prior
licensees for stations subject to exercise of the Station Options; (iv) the
increase in time brokerage expense of $104 for TBA fees for WTVX-TV; and (v) the
elimination of $115 which represents a non-recurring litigation settlement for
WRMA-FM.

(f) Option plan compensation represents a non-cash charge associated with
the granting of common stock options to employees under the Company's Stock
Incentive Plan. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Results of Operations" and "Management -- Stock
Incentive Plan."

P-4
<PAGE> 90

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

(g) To reflect the increase in depreciation and amortization expense for
purchase accounting allocations made for the acquisitions which have closed
since January 1, 1995, the Proposed Acquisitions and the exercise of the Station
Options as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1995
------------------
<S> <C>
Pro forma depreciation.............................................. $ 18,834
Pro forma amortization.............................................. 19,712
------------------
Total pro forma depreciation and amortization............. 38,546
Less: amounts as reported........................................... (20,453)
------------------
Total..................................................... $ 18,093
==============
</TABLE>

(h) Adjustment necessary to reflect interest expense associated with the
$230,000 Senior Subordinated Notes issued on September 28, 1995 and other pro
forma debt outstanding at December 31, 1995 which was incurred to fund
acquisitions, as if such debt had been outstanding since January 1, 1995, as
follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1995
------------------
<S> <C>
11 5/8% Senior Subordinated Notes due 2002.......................... $ 26,999
Other debt.......................................................... 2,756
Amortization of loan costs.......................................... 1,533
----------
Total pro forma interest expense.......................... 31,288
Less: amounts as reported........................................... (19,281)
----------
Total..................................................... $ 12,007
==============
</TABLE>

(i) To reflect the elimination of interest income earned on investments in
broadcast properties of $14 as such investments have been applied towards the
purchase price associated with the exercise of the Station Options.

(j) To reflect the elimination of $98 of non-recurring expenses relating to
bankruptcy reorganization of WTVX-TV.

(k) Dividends and accretion on preferred stock and common stock warrants
represent such amount for the Senior Preferred Stock (15% dividend rate),
redeemable Class A and B common stock warrants and Junior Preferred Stock (12%
dividend rate). Such capital stock is mandatorily redeemable and certain issues
accrete. See "Description of Capital Stock."

(l) The Company has agreed to acquire WRMA-FM and WXDJ-FM for a price of
either (i) $107.5 million in cash or (ii) $92 million in cash plus 1,277,778
shares of Class A Common Stock (subject to increase if the market value of the
Class A shares declines below $18 per share), as determined at the seller's
option prior to the execution of definitive purchase documentation. For purposes
of the information set forth in the unaudited pro forma consolidated statement
of operations, the Company has assumed that the sellers will elect to receive
the purchase price for the stations entirely in cash. Were the sellers to elect
to receive cash and Class A shares, the pro forma net loss per share and pro
forma net loss per share attributable to common stock would be $(1.21) and
$(1.49), respectively.

(m) To reflect the issuance of 13,500 Class A shares, net of 1,241 shares
which will be registered in the Offering, but were outstanding at December 31,
1995.

P-5
<PAGE> 91

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)

<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
-----------------------------------------------------------
TRANSACTIONS
SUBSEQUENT TO
DECEMBER 31, PRO FORMA
COMPANY 1995 ADJUSTMENTS PRO FORMA(A)
-------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................... $ 68,071 $ (29,000)(b) $ 155,420(e)
116(c) (147,300)(f)
(1,000)(d) (16,450)(g)
(1,454)(h) $ 28,403
Accounts receivable, net....................... 17,726 17,726
Prepaid expenses and other current assets...... 971 971
Current program rights......................... 1,413 1,413
-------- ------------- ----------- ------------
Total current assets.................... 88,181 (29,884) (9,789) 48,513
Property and equipment, net...................... 79,859 6,400(b) 22,800(f)
(116)(c) 16,450(g)
5,900(h) 131,293
Intangible assets, net........................... 84,318 33,600(b) 121,800(f)
10,738(h) 250,456
Other assets, net................................ 19,897 (2,800)(b) (4,700)(f) 12,397
Investments in broadcast properties.............. 21,192 9,500(b) 9,100(f)
1,000(d) (15,184)(h) 25,608
Program rights, net.............................. 385 385
-------- ------------- ----------- ------------
Total assets............................ $293,832 $ 17,700 $ 157,120 $468,652
========= ============ =========== =============
LIABILITIES, REDEEMABLE SECURITIES AND
COMMON STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities....... $ 5,031 $ 5,031
Accrued interest............................... 6,932 6,932
Current portion of program rights.............. 1,450 1,450
Current portion of long-term debt.............. 430 430
-------- ------------- ----------- ------------
Total current liabilities............... 13,843 0 0 13,843
Program rights payable......................... 433 433
Long-term debt................................. 12,484 $ 17,700(b) 30,184
Senior subordinated notes, net(i).............. 227,375 227,375
Redeemable Senior preferred stock(j)........... 16,824 16,824
Redeemable Class A and B common 6,465 $ (1,598)(e)
stock warrants(j)(k).........................
(4,867)(k) --
Redeemable Series B preferred stock(j)......... 2,353 2,353
Redeemable Junior preferred stock(j)........... 31,534 31,534
Class A Common Stock(j)........................ 26 12(e) 38
Class B Common Stock(j)........................ 8 8
Class C Common Stock(j)........................ -- --
Class A and B common stock -- 4,867(k) 4,867
warrants(k)..................................
Class C common stock warrants(j)............... 5,339 (1,056)(e) 4,283
Stock subscription notes receivable............ (116) (116)
Additional paid-in-capital..................... 34,342 1,700(f)
158,062(e) 194,104
Deferred option plan compensation.............. (1,384) (1,384)
Accumulated deficit............................ (55,694) (55,694)
-------- ------------- ----------- ------------
Total liabilities, redeemable securities $293,832 $ 17,700 $ 157,120 $468,652
and common stockholders' equity.......
========= ============ =========== =============
</TABLE>

P-6
<PAGE> 92

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)

(a) The pro forma balance sheet at December 31, 1995 gives effect to: (i)
the consummation of the Offering; (ii) the Proposed Acquisitions and related
capital expenditures; (iii) capital expenditures on existing properties; (iv)
the exercise of the Station Options; (v) the termination of the holders' put on
the Class A and Class B common stock warrants; (vi) acquisitions and
dispositions which have closed subsequent to December 31, 1995; and (vii) the
acquisition of a note receivable from Mr. Paxson, as if such events had occurred
on December 31, 1995.

(b) To reflect the use of cash and the increase in long-term debt for
acquisitions subsequent to December 31, 1995, preliminary purchase accounting
allocations for such acquisitions and related capital expenditures. Purchase
accounting allocations reflect the Company owning WHAI-TV and WAKC-TV and
financing the acquisitions of TBA operated stations for WRMY-TV, KWBF-TV and
WCEE-TV. Use of cash is net of $2,800 of funds escrowed at December 31, 1995 and
long-term debt incurred under the Company's $100,000,000 revolving credit
facility. Use of cash for acquisitions closed subsequent to December 31, 1995
are detailed as follows:

<TABLE>
<S> <C>
Property and equipment.................................................... $ 6,400
Intangible assets......................................................... 33,600
Other assets.............................................................. (2,800)
Investments in broadcast properties....................................... 9,500
Long-term debt............................................................ (17,700)
--------
Cash used for acquisitions...................................... $ 29,000
========
</TABLE>

(c) To reflect the sale of assets of the South Carolina Radio Network and
the World Travelers Network to Mr. Paxson subsequent to December 31, 1995 at
their respective net book values. The subsequent sale of the South Carolina
Radio Network by Mr. Paxson to a third party netted excess proceeds of
approximately $105 which was paid to the Company; such amount is not reflected
in the pro forma financial data as it is not material. See "Certain
Transactions."

(d) To reflect the use of cash to acquire a note receivable from CNI with
respect to a deposit on KLDT-TV. The note was previously held by Mr. Paxson and
was purchased at its face value. See "Certain Transactions."

(e) To reflect the proceeds from the Offering based on the $16 per share
public offering price, net of underwriting discounts and commissions and
estimated offering expenses.

(f) To reflect the use of proceeds for the Proposed Acquisitions,
preliminary purchase accounting allocations for such acquisitions and related
capital expenditures. Purchase accounting allocations reflect the Company owning
Channel 68, WHKE-TV, WOCD-TV, WXDJ-FM, WRMA-FM, WFSJ-FM, WHUB-FM and WHUB-AM,
financing the acquisition of TBA operated stations for WNGM-TV and WHBI-TV and
investing in the equity of stations for WSJN-TV, KZAR-TV, WJUE-TV and WOST-TV.
Use of proceeds is net of funds escrowed which are included in other assets at
December 31, 1995. In conjunction with the acquisition of WFSJ-FM, the Company
will issue Class A common stock for the stock of the station and will assume a
$1,550 note payable to Mr. Paxson which is assumed to be repaid through the use
of proceeds (see "The Proposed Acquisitions" and "Certain Transactions"). The
acquisition of WXDJ-FM and WRMA-FM will be consummated for either cash of
$107,500 or cash of $92,000 and approximately 1.3 million shares of Class A
Common Stock, at the option of the seller. The pro forma financial data assumes
the acquisition will

P-7
<PAGE> 93

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET -- (CONTINUED)
(DOLLARS IN THOUSANDS)

be consummated for cash of $107,500. Use of proceeds for Proposed Acquisitions
and related capital expenditures are detailed as follows:

<TABLE>
<S> <C>
Property and equipment.................................................... $ 22,800
Intangible assets......................................................... 121,800
Other assets.............................................................. (4,700)
Investments in broadcast properties....................................... 9,100
Additional paid-in capital................................................ (1,700)
--------
Proceeds used for Proposed Acquisitions and related capital
expenditures........................................................ $147,300
========
</TABLE>

(g) To reflect the use of proceeds for capital expenditures on existing
properties.

(h) To reflect the use of proceeds for the exercise of Station Options on
WFCT-TV, WCTD-TV, KUBD-TV, KWBF-TV, WCEE-TV and WTJC-TV, initial purchase price
allocations for such exercise of Station Options and the related change in
investment in broadcast properties, as follows:

<TABLE>
<S> <C>
Property and equipment.................................................... $ 5,900
Intangible assets......................................................... 10,738
Investments in broadcast properties....................................... (15,184)
--------
Use of proceeds for Station Options............................. $ 1,454
========
</TABLE>

(i) $230,000 Senior Subordinated Notes issued on September 28, 1995, net of
$2,700 original issue discount, due 2002.

(j) See "Description of Capital Stock."

(k) Upon consummation of the Offering, the holders' put right on the Class
A and Class B common stock warrants will be terminated and the unexercised
warrants reclassified to common equity.

For additional information with respect to specific prices and capital
expenditures for each Proposed Acquisition, see "The Proposed Acquisitions."

P-8
<PAGE> 94

PAXSON COMMUNICATIONS CORPORATION

INDEX OF FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PAXSON COMMUNICATIONS CORPORATION
Consolidated Financial Statements -- December 31, 1995, 1994 and 1993
Report of Independent Certified Public Accountants............................................. F-2
Consolidated Balance Sheets.................................................................... F-3
Consolidated Statements of Operations.......................................................... F-4
Consolidated Statements of Changes in Common Stockholders' Equity.............................. F-5
Consolidated Statements of Cash Flows.......................................................... F-6
Notes to Consolidated Financial Statements..................................................... F-7
KZKI-TV (A DIVISION OF SANDINO TELECASTERS)
Financial Statements -- January 31, 1995
Report of Independent Certified Public Accountants............................................. F-34
Balance Sheet.................................................................................. F-35
Statement of Operations........................................................................ F-36
Statement of Changes in Divisional Deficit..................................................... F-37
Statement of Cash Flows........................................................................ F-38
Notes to Financial Statements.................................................................. F-39
PAUGUS TELEVISION, INC. (WGOT-TV)
Financial Statements -- December 31, 1994
Report of Independent Certified Public Accountants............................................. F-42
Balance Sheet.................................................................................. F-43
Statement of Operations........................................................................ F-44
Statement of Changes in Stockholders' Deficit.................................................. F-45
Statement of Cash Flows........................................................................ F-46
Notes to Financial Statements.................................................................. F-47
WTVX-TV KRYPTON BROADCASTING OF FT. PIERCE, INC.
Financial Statements -- December 31, 1994
Report of Independent Certified Public Accountants............................................. F-51
Balance Sheet.................................................................................. F-52
Statement of Operations........................................................................ F-53
Statement of Changes in Shareholder's Deficit.................................................. F-54
Statement of Cash Flows........................................................................ F-55
Notes to Financial Statements.................................................................. F-56
NEW AGE BROADCASTING, INC. AND THE SEVENTIES BROADCASTING CORPORATION
Combined Financial Statements -- September 30, 1995
Independent Auditors' Report................................................................... F-60
Combined Balance Sheet......................................................................... F-61
Combined Statement of Income and Retained Earnings............................................. F-62
Combined Statement of Cash Flows............................................................... F-63
Notes to the Combined Financial Statements..................................................... F-64
NEW AGE BROADCASTING, INC. AND THE SEVENTIES BROADCASTING CORPORATION
Unaudited Interim Combined Financial Statements -- December 31, 1995 and 1994
Unaudited Combined Balance Sheets.............................................................. F-69
Unaudited Combined Statements of Income and Retained Earnings.................................. F-70
Unaudited Combined Statements of Cash Flows and Notes to Unaudited Combined Financial
Statements................................................................................... F-71
NEW AGE BROADCASTING, INC.
Financial Statements -- September 30, 1994
Independent Auditors' Report................................................................... F-72
Balance Sheet.................................................................................. F-73
Statement of Income and Retained Earnings...................................................... F-74
Statement of Cash Flows........................................................................ F-75
Notes to the Financial Statements.............................................................. F-76
</TABLE>

F-1
<PAGE> 95

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
of Paxson Communications Corporation

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in common
stockholders' equity and of cash flows present fairly, in all material respects,
the financial position of Paxson Communications Corporation and its subsidiaries
(the "Company") at December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ Price Waterhouse LLP
- ---------------------------------------------------------
PRICE WATERHOUSE LLP
Tampa, Florida
February 28, 1996

F-2
<PAGE> 96

PAXSON COMMUNICATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................. $ 68,070,990 $ 21,571,658
Accounts receivable, less allowance for doubtful accounts of $909,713 and $556,950,
respectively........................................................................ 17,726,415 13,569,198
Prepaid expenses and other current assets............................................. 971,363 1,579,954
Current deferred income taxes......................................................... -- 194,940
Current program rights................................................................ 1,412,544 1,980,000
------------ ------------
Total current assets............................................................ 88,181,312 38,895,750
Property and equipment, net............................................................. 79,859,080 45,350,430
Intangible assets, net.................................................................. 84,318,147 53,350,967
Other assets, net....................................................................... 19,896,694 13,078,346
Investments in broadcast properties..................................................... 21,192,030 1,750,000
Program rights, net..................................................................... 384,814 244,888
------------ ------------
Total assets.................................................................... $293,832,077 $152,670,381
=========== ===========
LIABILITIES, REDEEMABLE SECURITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities........................................ $ 5,030,692 $ 4,899,163
Accrued interest...................................................................... 6,932,342 224,528
Current portion of program rights payable............................................. 1,449,602 986,562
Current portion of long-term debt..................................................... 430,590 6,393,415
------------ ------------
Total current liabilities....................................................... 13,843,226 12,503,668
Program rights payable.................................................................. 432,750 562,770
Deferred income taxes................................................................... -- 1,474,940
Long-term debt.......................................................................... 12,484,024 76,013,542
Senior subordinated notes, net.......................................................... 227,374,911 --
Minority interest....................................................................... -- 1,217,314
Redeemable Cumulative Compounding Senior preferred stock, $0.001 par value; 15% dividend
rate per annum, 2,000 shares authorized, issued and outstanding....................... 16,824,082 14,060,054
Redeemable Class A & B common stock warrants............................................ 6,465,317 1,735,979
Redeemable Cumulative Compounding Series B preferred stock, $0.001 par value; 15%
dividend rate per annum, 714.286 shares authorized, issued and outstanding............ 2,352,654 1,274,671
Redeemable Cumulative Compounding Junior preferred stock, $0.001 par value; 12% dividend
rate per annum, 33,000 shares authorized, issued and outstanding...................... 31,533,910 26,808,053
Class A common stock, $0.001 par value; one vote per share; 150,000,000 shares
authorized, 26,226,826 and 26,042,561 shares issued and outstanding in 1995 and 1994,
respectively.......................................................................... 26,227 26,042
Class B common stock, $0.001 par value; ten votes per share; 35,000,000 shares
authorized and 8,311,639 shares issued and outstanding................................ 8,312 8,312
Class C common stock, $0.001 par value; non-voting; 12,500,000 shares authorized; no
shares issued and outstanding......................................................... -- --
Class C common stock warrants........................................................... 5,338,952 5,338,952
Stock subscription notes receivable..................................................... (115,714) (77,666)
Additional paid-in capital.............................................................. 34,342,086 20,647,647
Deferred option plan compensation....................................................... (1,384,267) --
Accumulated deficit..................................................................... (55,694,393) (8,923,897)
Commitments and contingencies (Note 17)
------------ ------------
Total liabilities, redeemable securities and common stockholders' equity........ $293,832,077 $152,670,381
=========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.

F-3
<PAGE> 97

PAXSON COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
------------ ----------- ------------
<S> <C> <C> <C>
Revenues:
Local and national advertising...................... $ 94,653,514 $56,668,983 $ 29,405,559
Retail and other.................................... 5,352,044 2,779,215 1,655,155
Trade and barter.................................... 3,068,354 2,619,245 1,001,317
------------ ----------- ------------
Total revenues.............................. 103,073,912 62,067,443 32,062,031
------------ ----------- ------------
Operating expenses:
Direct.............................................. 24,921,653 16,789,757 9,479,408
Programming......................................... 12,822,813 8,750,624 5,291,237
Sales and promotion................................. 9,093,769 5,753,025 3,507,480
Technical........................................... 4,955,588 2,113,117 1,543,583
General and administrative.......................... 22,138,236 11,689,343 7,323,352
Trade and barter.................................... 2,604,950 2,426,118 1,029,105
Time brokerage agreement fees....................... 993,893 503,698 698,463
Sports rights fees.................................. 2,806,121 2,379,516 --
Option plan compensation............................ 10,803,241 -- --
Program rights amortization......................... 1,765,942 820,754 --
Depreciation and amortization....................... 18,719,109 12,403,528 9,350,633
------------ ----------- ------------
Total operating expenses.................... 111,625,315 63,629,480 38,223,261
------------ ----------- ------------
Loss from operations.................................. (8,551,403) (1,562,037) (6,161,230)
Other income (expense):
Interest expense.................................... (16,302,641) (5,210,148) (2,052,406)
Interest income..................................... 1,708,942 335,438 112,719
Gain on sale of radio broadcasting station.......... -- 28,105 427,397
Other income (expense), net......................... (982,461) (33,432) (318,333)
------------ ----------- ------------
Loss before benefit (provision) for income taxes and
extraordinary item.................................. (24,127,563) (6,442,074) (7,991,853)
Benefit (provision) for income taxes.................. 1,280,000 1,680,000 (2,960,000)
------------ ----------- ------------
Loss before extraordinary item........................ (22,847,563) (4,762,074) (10,951,853)
Extraordinary item.................................... (10,625,727) -- (457,147)
------------ ----------- ------------
Net loss.............................................. (33,473,290) (4,762,074) (11,409,000)
Dividends and accretion on preferred stock and common
stock warrants...................................... (13,297,206) (3,385,456) (151,367)
------------ ----------- ------------
Net loss attributable to common stock................. $(46,770,496) $(8,147,530) $(11,560,367)
=========== ========== ===========
Per share data (Note 1):
Loss before extraordinary item...................... $ (0.66) $ (0.14) $ (0.35)
Extraordinary item.................................. (0.31) -- (0.01)
------------ ----------- ------------
Net loss............................................ (0.97) (0.14) (0.36)
Dividends and accretion on preferred stock and
common stock warrants............................ (0.39) (0.10) (0.01)
------------ ----------- ------------
Net loss attributable to common stock................. $ (1.36) $ (0.24) $ (0.37)
=========== ========== ===========
Weighted average shares outstanding -- primary & fully
diluted............................................. 34,429,517 33,430,116 31,581,948
=========== ========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.

F-4
<PAGE> 98

PAXSON COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
CLASS C STOCK
COMMON STOCK COMMON SUBSCRIPTION ADDITIONAL DEFERRED
--------------------------- COMMON STOCK NOTES PAID-IN OPTION PLAN ACCUMULATED
CLASS A CLASS B CLASS C STOCK WARRANTS RECEIVABLE CAPITAL COMPENSATION DEFICIT
------- ------- ------- ------ ---------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1992............ $1 $23,611,002 $ (9,283,047)
Stockholder
capital
contributions... 13,351,668
Net loss prior to
reorganization
on December 15,
1993............ (10,784,000)
Reclassification
of undistributed
deficit prior to
reorganization... (20,067,047) 20,067,047
Dividends on
redeemable
preferred
stock........... (97,808)
Accretion on
Senior
redeemable
preferred
stock........... (15,144)
Accretion on Class
A & B common
stock
warrants........ (38,415)
Net loss
subsequent to
reorganization
on December 15,
1993............ (625,000)
------- ------- ------- ------ ---------- ------------ ----------- ------------ ------------
Balance at
December 31,
1993............ -- -- -- 1 -- -- 16,895,623 -- (776,367)
Recapitalization
of common
stock........... $15,791 $ 5,264 (1) (21,054)
Stock issued for
ANG
acquisition..... 1,570 277 $ (77,666) 3,784,530
Net proceeds from
issuance of
common stock
warrants........ $5,338,952
Dividends on
redeemable
preferred
stock........... (2,216,137)
Accretion on
Senior
redeemable
preferred
stock........... (325,147)
Accretion on
Series B
preferred
stock........... (7,968)
Accretion on
Junior preferred
stock........... (15,648)
Accretion on Class
A & B common
stock
warrants........ (820,556)
Net loss.......... (4,762,074)
Stock dividend.... 8,681 2,771 (11,452)
------- ------- ------- ------ ---------- ------------ ----------- ------------ ------------
Balance at
December 31,
1994............ 26,042 8,312 -- -- 5,338,952 (77,666) 20,647,647 -- (8,923,897)
Stock issued for
Cookeville
acquisition..... 95 1,199,905
Deferred option
plan
compensation.... 12,187,508 $(12,187,508)
Option plan
compensation.... 10,803,241
Stock options
exercised....... 90 307,026
Increase in stock
subscription
receivable...... (48,029)
Repayments of
stock
subscription
receivable...... 9,981
Dividends on
redeemable
preferred
stock........... (7,275,516)
Accretion on
Senior
redeemable
preferred
stock........... (332,156)
Accretion on
Series B
preferred
stock........... (325,208)
Accretion on
Junior preferred
stock........... (634,988)
Accretion on Class
A & B common
stock
warrants........ (4,729,338)
Net loss.......... (33,473,290)
------- ------- ------- ------ ---------- ------------ ----------- ------------ ------------
Balance at
December 31,
1995............ $26,227 $ 8,312 $-- $-- $5,338,952 $ (115,714) $34,342,086 $ (1,384,267) $(55,694,393)
======= ====== ===== ====== ========= ========= ========== =========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.

F-5
<PAGE> 99

PAXSON COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss................................................................ $ (33,473,290) $ (4,762,074) $(11,409,000)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization......................................... 18,719,109 12,403,528 9,350,633
Option plan compensation.............................................. 10,803,241 -- --
Program rights amortization........................................... 1,765,942 820,754 --
Provision for doubtful accounts....................................... 1,098,181 344,706 89,681
Deferred income taxes................................................. (1,280,000) (1,680,000) 2,960,000
(Gain) loss on sale of assets......................................... 145,857 (28,105) (427,397)
Loss on extinguishment of long-term debt.............................. 10,625,727 -- 457,147
Decrease (increase) in accounts receivable............................ (5,255,398) (1,683,664) 470,942
Decrease in prepaid expenses and other current assets................. 608,591 234,301 1,308,404
Decrease (increase) in intangible assets.............................. (1,200,000) -- 175,452
Decrease (increase) in other assets................................... 1,564,822 (392,504) (20,731)
(Decrease) increase in accounts payable and other accrued
liabilities......................................................... 131,529 (313,225) (138,259)
Increase in accrued interest.......................................... 6,707,814 135,683 28,768
------------- ------------ ------------
Net cash provided by operating activities......................... 10,962,125 5,079,400 2,845,640
------------- ------------ ------------
Cash flows from investing activities:
Acquisitions of broadcasting properties................................. (58,510,509) (56,143,061) (32,145,000)
Increase in investments in broadcast properties......................... (19,442,030) -- (1,750,000)
Deposits on broadcasting properties..................................... (2,381,619) (4,291,241) --
Purchases of property and equipment..................................... (25,016,816) (5,916,512) (1,962,553)
Deposits on buildings and equipment..................................... (735,074) (642,890) --
Proceeds from sale of radio broadcasting station........................ -- 200,000 5,010,000
Proceeds from sale of fixed assets...................................... 466,820 -- --
------------- ------------ ------------
Net cash used in investing activities............................. (105,619,228) (66,793,704) (30,847,553)
------------- ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt, net....................................... 327,539,000 50,000,000 38,100,000
Payments of long-term debt.............................................. (169,722,340) (401,500) (27,001,362)
Accretion of discount on senior subordinated notes...................... 65,911 -- --
Payments of loan origination costs...................................... (15,896,473) (5,030,352) (3,730,836)
Payments for program rights............................................. (1,098,731) (335,646) --
Net proceeds from issuance of redeemable preferred stock................ -- 26,694,761 11,521,955
Net proceeds from issuance of common stock warrants..................... -- 5,338,952 2,125,218
Net stockholder capital contributions................................... -- -- 13,351,668
Proceeds from exercise of common stock options.......................... 307,116 -- --
Increase in stock subscription notes receivable......................... (48,029) -- --
Repayments of stock subscription notes receivable....................... 9,981 -- - --
------------- ------------ ------------
Net cash provided by financing activities......................... 141,156,435 76,266,215 34,366,643
------------- ------------ ------------
Increase in cash and cash equivalents..................................... 46,499,332 14,551,911 6,364,730
Cash and cash equivalents at beginning of year............................ 21,571,658 7,019,747 655,017
------------- ------------ ------------
Cash and cash equivalents at end of year.................................. $ 68,070,990 $ 21,571,658 $ 7,019,747
============ =========== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest.................................................. $ 8,292,274 $ 4,765,800 $ 2,321,400
============ =========== ===========
Cash paid for income taxes.............................................. $ -- $ -- $ --
============ =========== ===========
Non-cash operating and financing activities:
Issuance of common stock in connection with the merger with ANG......... $ -- $ 3,786,377 $ --
============ =========== ===========
Issuance of common stock for Cookeville acquisition..................... $ 1,200,000 $ -- $ --
============ =========== ===========
Dividends accreted on redeemable preferred stock........................ $ 7,275,516 $ 2,216,137 $ 97,808
============ =========== ===========
Accretion on redeemable securities...................................... $ 6,021,690 $ 1,169,319 $ 53,559
============ =========== ===========
Issuance of Series B preferred stock.................................... $ -- $ 1,248,209 $ --
============ =========== ===========
Trade and barter revenue................................................ $ 3,068,354 $ 2,619,245 $ 1,001,317
============ =========== ===========
Trade and barter expense................................................ $ 2,604,950 $ 2,426,118 $ 1,029,105
============ =========== ===========
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.

F-6
<PAGE> 100

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

Paxson Communications Corporation (the "Company"), a Delaware corporation,
was organized in December 1993 for the purpose of owning and operating radio and
television broadcasting stations and networks. In January 1995, the Company
began operating its Infomall Television Network (the "Infomall TV Network" or
"inTV"). The radio broadcasting activities were previously operated by
businesses under common control of Mr. Lowell W. Paxson which were reorganized
into the Company on December 15, 1993, in exchange for Company common stock. The
reorganization was accounted for in a manner similar to the pooling of interests
accounting method which included the operating results prior to December 15,
1993 because the transactions took place among entities under common control.

On April 14, 1994, the Company acquired 68.1% of the common voting stock of
The American Network Group, Inc. ("ANG"), a Nasdaq Small-Cap Market traded
company. The Company has consolidated the financial results of ANG since that
time. On November 4, 1994, ANG stockholders approved the merger of ANG into the
Company through an exchange of common stock, which resulted in the Company's
Class A common stock becoming publicly-held. In connection with the merger with
ANG, the Company amended its capital structure to provide two classes of common
voting stock, Class A common stock and Class B common stock. The per share pro
forma effect of the merger and recapitalization has been presented on the
Company's statement of operations for the two years ended December 31, 1994
based on the weighted average common shares outstanding (Note 15).

Operations

<TABLE>
<CAPTION>
INFOMALL TV NETWORK
<S> <C> <C> <C> <C>
COMMENCEMENT
OF
TV MARKET SERVED(1) STATION OPERATIONS OWNERSHIP
------------------------- -------- ------------ ---------------
Owned or TBA Operated:
Los Angeles, CA........ KZKI-TV 1995 Owned
Philadelphia, PA....... WTGI-TV 1995 Owned
San Francisco, CA...... KLXV-TV 1995 Owned
Boston, MA............. WGOT-TV 1995 Owned
Washington, D.C........ WYVN-TV 1996 Owned
Atlanta, GA............ WTLK-TV 1994 Owned
Houston, TX............ KTFH-TV 1995 Owned
Cleveland, OH.......... WOAC-TV 1995 Time Brokerage
Tampa, FL.............. WFCT-TV 1994 Time Brokerage
Miami, FL.............. WCTD-TV 1994 Time Brokerage
Denver, CO............. KUBD-TV 1995 Time Brokerage
Orlando, FL............ WIRB-TV 1994 Time Brokerage
Hartford, CT........... WTWS-TV 1995 Owned
Dayton, OH............. WTJC-TV 1995 Time Brokerage
</TABLE>

F-7
<PAGE> 101

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PAXSON RADIO
RADIO MARKET SERVED(1) FORMAT
------------------------- ---------
Miami, FL................ WLVE-FM Smooth Jazz 1993 Owned
WZTA-FM Modern Rock 1992 Owned
WINZ-AM News/Sports 1992 Owned
WFTL-AM Talk/Sports 1995 Owned
Tampa, FL................ WHPT-FM Rock AC 1991 Owned
WSJT-FM Smooth Jazz 1995 Owned
WHNZ-AM News/Sports 1991 Owned
WNZE-AM Sports 1994 Owned
Orlando, FL.............. WMGF-FM Soft AC 1992 Owned
WJRR-FM Modern Rock 1992 Owned
WWNZ-AM News 1992 Owned
WWZN-AM Sports 1994 Owned
Jacksonville, FL......... WROO-FM Young Country 1991 Owned
WPLA-FM Alternative Rock 1992 Owned
WNZS-AM Sports 1993 Owned
WZNZ-AM News 1992 Owned
Cookeville, TN........... WGSQ-FM Country 1994 Owned
WPTN-AM Talk 1994 Owned
RADIO NETWORK
-------------------------
Alabama Radio Network.... News 1995 Owned
Florida Radio Network.... News 1993 Owned
South Carolina Radio
Network(2)............. News 1994 Owned
Tennessee Radio
Network................ News 1994 Owned
University of Florida
Sports Network......... Sports 1994 Owned
Miami Sports Network..... Sports 1995 Owned
Penn State Sports
Network................ Sports 1994 Owned
Virginia Tech Sports
Network(2)............. Sports 1994 Owned

PAXSON NETWORK-AFFILIATED
TELEVISION
TV MARKET SERVED(1) AFFILIATION
------------------------- -----------
Owned or TBA Operated:
West Palm Beach, FL...... WPBF-TV ABC 1994 Owned
West Palm Beach, FL...... WTVX-TV Warner/UPN 1995 Time Brokerage
</TABLE>

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

(1) Each station is licensed by the Federal Communications Commission to serve a
specific community, which is included in the listed market.
(2) The Company sold the South Carolina Radio Network in January 1996 and will
not renew the rights to Virginia Tech Sports Network which will expire in
March 1996.

F-8
<PAGE> 102

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Principles of Consolidation

The consolidated financial statements include accounts of the Company and
its wholly-owned subsidiaries. All intercompany balances and transactions have
been eliminated.

Cash and Cash Equivalents

Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.

On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", the effect of which was immaterial. At December 31, 1995,
approximately $58 million of debt securities, all classified as held to maturity
and consisting of money market accounts, commercial paper and overnight
repurchase agreements, were included in cash and cash equivalents because they
had original maturities of three months or less.

Property and Equipment

Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized at cost
and depreciated on a straight-line basis over their estimated useful lives as
follows:

<TABLE>
<S> <C>
Broadcasting towers and equipment..................................... 6-13 years
Office furniture and equipment........................................ 6-10 years
Buildings and building improvements................................... 40 years
Leasehold improvements................................................ Term of lease
Vehicles and other.................................................... 5 years
</TABLE>

Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.

Intangible Assets

The excess of cost over the fair value of acquired net assets has been
capitalized as goodwill. Intangible assets are being amortized using the
straight-line method over their estimated useful lives as follows (Note 5):

<TABLE>
<S> <C>
FCC licenses.......................................................... 25 years
Covenants not to compete.............................................. Contract term
Favorable lease and other contracts................................... Contract term
Goodwill.............................................................. 25 years
</TABLE>

Investments in Broadcast Properties

Investments in broadcast properties represent the Company's financing of
television and radio station acquisitions by third parties. The Company has
entered into time brokerage agreements ("TBAs") with such third parties for the
television station operations and has written options to purchase certain of the
related station assets and Federal Communications Commission ("FCC") licenses at
various amounts and terms (Notes 7 and 18).

Program Rights

F-9
<PAGE> 103

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

for the program rights acquired and a liability is recorded for the obligation
incurred, at the gross amount of the liability when available to air. Program
rights are amortized on a method that approximates the straight-line basis over
the related term. Program rights which will not be aired are charged to expense.
Current program rights represent programs which will be amortized during the
next year; current liabilities represent program rights which will be paid
within the next year under contractual arrangements (Note 8).

Other Assets

Loan origination costs are stated at cost and are amortized to interest
expense over the life of the loan or agreement using the effective interest
method. Escrow funds represent funds held in escrow on acquisitions pending FCC
approval. Other assets are stated at cost (Note 6).

SFAS 121 Impairment of Long-Lived Assets and Identifiable Intangibles

On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets To Be Disposed Of", the effect of which was immaterial. The
Company reviews long-lived assets, identifiable intangibles and goodwill and
will reserve for impairment whenever events or changes in circumstances indicate
the carrying amount of the assets may not be fully recoverable.

Minority Interest

Minority interest at December 31, 1994 represented the third party's
limited partner's interest in the radio broadcasting stations located in
Cookeville, Tennessee. The Company purchased this minority interest in 1995
(Note 2).

Stock Subscription Notes Receivable

Stock subscription notes receivable were assumed in conjunction with the
merger with ANG. Stock subscription notes receivable also include employee
receivables issued upon exercise of stock options in conjunction with the
Company's stock incentive plan (Note 12).

Revenue Recognition

Revenue is recognized as advertising air time is broadcast.

Trade and Barter Agreements

The Company enters into trade and barter agreements which give rise to
sales of advertising air time in exchange for products, services and
programming. Sales from trade and barter agreements are recognized at the fair
market value of products, services or programs received as the related
advertising air time is broadcast. Products, services and programs received are
expensed when used or when programs are broadcast. If the Company uses trade
products or services before advertising air time is provided, a trade liability
is recognized. At times, the Company trades air time for property and equipment.

Time Brokerage Agreements

The Company operates certain stations under a time brokerage agreement
("TBA") whereby the Company has agreed to purchase from the broadcast station
licensee certain broadcast time on the station and to provide programming to and
sell advertising on the station during the purchased time. Accordingly, the
Company receives all the revenue derived from the advertising sold during the
purchased time, pays certain expenses of the station and performs other
functions. The broadcast station licensee retains responsibility for

F-10
<PAGE> 104

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ultimate control of the station in accordance with FCC policies. At December 31,
1995, the Company operated seven stations under TBAs which expire from April
1999 through October 2005.

Stock Based Compensation

The Company will adopt Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("SFAS 123") during 1996. Upon
adoption of SFAS 123, the Company intends to retain the intrinsic value method
of accounting for stock based compensation and disclose pro forma net loss and
loss per share amounts.

Income Taxes

Provisions are made to record deferred income taxes for items reported in
different periods for financial reporting purposes than for federal and state
income tax purposes. The Company records deferred income taxes using the
liability method in accordance with Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes".

Extraordinary Item

The extraordinary item for the years ended December 31, 1995 and 1993
relates to the write-off of loan origination costs associated with the
extinguishment of certain debt agreements. See a description of the tax effect
in Note 11.

Per Share Data

Per share data for the years ended December 31, 1994 and 1993 give a pro
forma effect to the Company's amended capital structure related to the merger
with ANG and the stock dividend on common shares outstanding on January 1, 1995
(Note 15). Due to net losses, the effect of stock options and warrants is anti-
dilutive and therefore these common stock equivalents are not included in the
calculation of weighted average shares outstanding.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to the prior years' financial
statements to conform with the 1995 presentation.

F-11
<PAGE> 105

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. ACQUISITIONS, INVESTMENTS AND DISPOSITIONS:

Acquisitions and investments:

During 1995 and 1994, the Company acquired the assets of certain broadcast
properties. Purchases were accounted for using the purchase method of accounting
and the financial results of TBA operated stations have been included in the
Company's statement of operations since the commencement of the TBA.
Acquisitions and investments closed subsequent to December 31, 1995 are outlined
in Note 18. Acquisitions, investments and dispositions during 1995 and 1994 are
as follows:

<TABLE>
<CAPTION>
ACQUISITION PRICE/
STATION/ INVESTMENT
ACQUISITION/TBA DATE NETWORK MARKET (1) AMOUNT(2)
- -------------------- ------------------------------------ -------------------- ------------------
<S> <C> <C> <C>
Owned:
October 1995 WYVN-TV(3) Washington, D.C. $ 1,900,000
June 1995 KLXV-TV San Francisco, CA 5,000,000
June 1995 WFTL-AM Miami, FL 2,000,000
May 1995 KZKI-TV Los Angeles, CA 18,000,000
May 1995 WGOT-TV Boston, MA 3,050,000
July/March 1995 KTFH-TV Houston, TX 7,900,000
March 1995 WTWS-TV Hartford, CT 2,700,000
March/February 1995 WSJT-FM Tampa, FL 4,675,000
February 1995 WTGI-TV Philadelphia, PA 10,200,000
January 1995 Alabama Radio Network Alabama 750,000
August 1994 WNZE-AM Tampa, FL 1,100,000
December 1994 WWZN-AM Orlando, FL 1,550,000
July 1994 WPBF-TV West Palm Beach, FL 32,500,000
July/April 1994 WTLK-TV Atlanta, GA 9,500,000
April 1994 WGSQ-FM(4) Cookeville, TN --
April 1994 WPTN-AM(4) Cookeville, TN --
April 1994 Florida Sports Network(5) Florida --
April 1994 Tennessee Radio Network(5) Tennessee --
April 1994 South Carolina Radio Network(5)(6) South Carolina --
April 1994 Penn State Sports Network(5) Pennsylvania --
April 1994 Virginia Tech Sports Network(5)(6) Virginia --
April 1994 Georgia Sports Network(5) Georgia --

TBA Operated:
October 1995 WOAC-TV(7) Cleveland, OH --
October 1995 WTJC-TV(7) Dayton, OH 3,500,000
August 1995 KUBD-TV(7) Denver, CO 6,500,000
August 1995 WTVX-TV(7) West Palm Beach, FL --
December 1994 WIRB-TV Orlando, FL 3,800,000
August 1994 WFCT-TV(7) Tampa, FL 1,120,000
April 1994 WCTD-TV(7)(8) Miami, FL 3,300,000
</TABLE>

- ---------------
(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) Represents the purchase price paid by the Company for owned stations or the
initial amount of financing provided to the broadcast station licensee for
TBA operated stations with outstanding financings at December 31, 1995. The
outstanding financings at December 31, 1995 are reflected in investments in
broadcast properties (Note 7).
(3) Station is not currently on the air.

F-12
<PAGE> 106

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) A minority interest was acquired in connection with the merger with ANG
(Note 1). The remaining interest was purchased during 1995 for
approximately $3.4 million which consisted of cash paid, stock issued and
the forgiveness of outstanding debt.
(5) Acquired in conjunction with the merger with ANG (Note 1).
(6) The Company sold the South Carolina Radio Network in January 1996 and will
not renew the rights to Virginia Tech Sports Network which will expire in
March 1996. (Note 3)
(7) The Company currently holds an option to purchase the station from the
licensee (Note 7).
(8) Investment amount reflects the price paid by the Company for fixed assets
acquired.

Dispositions:

During 1995, the Company abandoned certain ancillary operations and did not
renew the rights to the Georgia Sports Network. The Company included the results
of operations of an aggregate net loss of $799,000 in the consolidated statement
of operations for such abandoned operations. During 1994, the Company disposed
of the assets of WWZN-AM for $300,000, resulting in a gain on disposition of
approximately $28,000. During 1993, the Company disposed of the assets of
WWNZ-FM for $5,010,000, resulting in a gain on disposition of approximately
$427,000.

Pro Forma (unaudited):

The Company's results of operations for the years ended December 31, 1995
and 1994 include the results of operations for acquisitions and investments in
broadcast properties from their respective dates of commencement. The following
unaudited pro forma statement of operations data give effect to significant
business acquisitions, investments or dispositions since January 1, 1994 as if
they had occurred on January 1, 1994. In addition, depreciation and amortization
has been increased each period to reflect initial purchase price allocation on
all acquisitions and investments (whether businesses or assets), and interest
expense on associated debt financing as if such transactions and debt had
occurred on January 1, 1994.

<TABLE>
<CAPTION>
PRO FORMA
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------

1995 1994
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenues.......................................................... $108,106,000 $ 79,595,000
=========== ===========
Loss from operations.............................................. $ (7,612,000) $ (6,054,000)
=========== ===========
Loss before extraordinary item.................................... $(35,289,000) $(34,052,000)
=========== ===========
Net loss attributable to common stock............................. $(59,212,000) $(57,143,000)
=========== ===========
Net loss per share attributable to common stock................... $ (1.72) $ (1.71)
=========== ===========
Pro forma weighted average shares outstanding..................... 34,429,517 33,430,116
=========== ===========
</TABLE>

3. CERTAIN TRANSACTIONS:

The Company enters into and maintains certain operating and financing
transactions with related parties as described below.

Christian Network, Inc.

The Company has entered into several agreements with The Christian Network,
Inc. and certain of its for profit subsidiaries (individually and collectively
referred to herein as "CNI"). The Christian Network, Inc. is

F-13
<PAGE> 107

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

a section 501(c)(3) not-for-profit corporation to which Mr. Paxson was a
substantial contributor and was a director.

Investment in Broadcast Properties. At December 31, 1995, the Company had
investments in broadcast properties of $16,481,345 related to the Company's
financing of certain broadcasting acquisitions for CNI. In conjunction with
these financings, the Company has obtained TBAs with these stations and has
obtained options to purchase certain of these stations (Note 7).

KLDT-TV. During 1995, in connection with CNI securing the rights to
acquire television station KLDT-TV in Dallas, Texas and, prior to such
acquisition, operate the station pursuant to a TBA, Mr. Paxson initially loaned
CNI $1,000,000 to make a deposit in respect to such acquisition and guaranteed
the obligations of CNI under the purchase agreement and the TBA. On January 9,
1996, the Company purchased such note from Mr. Paxson at its face value.

CNI Agreement. The Company and CNI entered into an agreement in May 1994
(the "CNI Agreement") under which the Company agreed that, if the tax exempt
status of CNI were jeopardized by virtue of its relationships with the Company
and its subsidiaries, the Company would take certain actions to try and ensure
that CNI's tax exempt status would no longer be so jeopardized. Such steps could
include, but not be limited to, rescission of one or more transactions or
payment of additional funds by the Company. The Company believes that all of its
agreements with CNI have been on terms at least as favorable to CNI as it would
obtain in arm's length transactions. The Company intends any future agreements
with CNI to be at least as favorable to CNI as CNI would obtain in arm's length
transactions. Accordingly, if the Company's activities with CNI are consistent
with the terms governing their relationship, the Company believes that it will
not be required to take any actions under the CNI Agreement. However, there can
be no assurance that the Company will not be required to take any actions under
the CNI Agreement at a material cost to the Company.

WFCT-TV Transactions. On December 17, 1993, Bradenton Broadcast
Television, Ltd. ("BBTC") entered into an agreement whereby CNI would make
available to BBTC up to $3,120,000 for certain expenses in connection with the
redemption of a limited partnership interest in BBTC and the construction of
television station WFCT-TV, Bradenton, Florida (the "BBTC Loan Agreement"). In
connection with the loan, BBTC granted to CNI an irrevocable, exclusive option
to purchase the assets owned by BBTC that are used or useful in the construction
or operation of WFCT-TV, including the license issued by the FCC for WFCT-TV,
subject to the satisfaction of certain conditions and the receipt of necessary
regulatory approvals. CNI's option may be exercised, subject to the prior
approval of the FCC, at any time during the ten year period beginning on the
first anniversary of the completion of construction of WFCT-TV. The price
payable to BBTC upon exercise of the option is $91,000 in cash and the
forgiveness of all outstanding indebtedness under the loan of $1,120,000.
WFCT-TV commenced broadcasting operations on August 1, 1994. The Company leases
certain broadcasting assets to BBTC for fees of $60,000 per annum. Additionally,
the Company entered into a partial TBA with BBTC and CNI, whereby the Company
purchases up to twelve hours per day of broadcasting time from BBTC for a
monthly fee of approximately $3,500. In connection with the foregoing
transactions, Mr. Paxson agreed to lend CNI up to $3,120,000 to fund the loan to
BBTC. On June 15, 1994, CNI and BBTC revised the BBTC Loan Agreement to reduce
the maximum amount of the loan from $3,120,000 to $1,400,000, and to provide
that BBTC lease rather than purchase the equipment and related tangible personal
property required to construct WFCT-TV from the Company. Mr. Paxson assigned his
rights and interests in the CNI loan to the Company in the amount of $1,120,000
(representing the then outstanding principal balance owed by CNI), and CNI
agreed that the maximum principal amount of the loan would be reduced from
$3,120,000 to $1,400,000. On June 15, 1994, CNI assigned to the Company the
option to acquire the WFCT-TV assets from CNI for $191,000 after CNI exercises
its option to purchase such assets from BBTC. On June 15, 1994, CNI assigned to
the Company its rights and interests under the TBA to provide up to twelve hours
per day of programming on WFCT-TV.

F-14
<PAGE> 108

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Worship Channel Studio. On January 1, 1993, Mr. Paxson agreed to lend CNI
up to $2,500,000 to fund CNI's acquisition of certain equipment and related
tangible property used in the production of television programming. Mr. Paxson
assigned his rights and interests under the loan to the Company, in
consideration for the Company's promissory note in the principal amount of
$2,500,000, which the Company subsequently repaid. In accordance with the terms
of an agreement dated as of June 15, 1994, CNI sold to the Company CNI's
production assets in consideration for the cancellation of CNI's $2,500,000
promissory note held by the Company. CNI and the Company have also contracted,
effective as of August 1, 1994, for Paxson-66 to lease CNI's television
production and distribution facility to the Company for the purpose of producing
television programming for the Infomall TV Network.

Airplane

During 1994, the Company purchased an aircraft for $250,000 from a company
controlled by Mr. Paxson. The Company believes that the terms of such
transaction were at least as favorable as they would have been if obtained in an
arm's length transaction with an unaffiliated third party.

Whitehead Media, Inc.

The Company initially financed the acquisition by Whitehead Media, Inc.
("Whitehead Media") of WTVX-TV and WOAC-TV. Whitehead Media subsequently
obtained financing from Banque Paribas, an affiliate of a holder of the
Company's Junior preferred stock, the proceeds of which were used to repay the
debt owed by Whitehead Media to the Company and will be used to fund Whitehead
Media's acquisition of WNGM-TV. The third party financing provided to Whitehead
Media is unconditionally guaranteed by Mr. Paxson and Second Crystal Diamond,
Limited Partnership ("Second Crystal") an affiliate controlled by Mr. Paxson and
through which he beneficially owns and controls a substantial portion of the
Company's Class A common stock and Class B common stock. Such guarantees are
secured by a pledge of a significant portion of Second Crystal's Class A common
stock. The Company is permitted to operate stations WTVX-TV and WOAC-TV pursuant
to TBAs and as a result of the third party financing to Whitehead Media has an
option to purchase each of such stations, which options to purchase would
otherwise be prohibited under FCC rules and regulations because each of such
stations serves a market in which the Company has or will own another television
station.

Home Shopping Network, Inc.

In connection with the departure in 1990 of Mr. Paxson from Home Shopping
Network, Inc. ("HSN"), he executed a consulting agreement containing various
restrictions upon activities by him that might be considered competitive with
HSN, including activities as an investor in competitive and other enterprises.
Although Mr. Paxson's consulting services to HSN terminated in 1994, certain of
the restrictions survived. As the Company's business evolved, the possible
effect of the consulting agreement upon Mr. Paxson's role as the Company's chief
executive officer and controlling stockholder became unclear. The Company
considered it advisable to eliminate doubts concerning, among other matters, Mr.
Paxson's role as a chief executive officer and controlling stockholder as the
Company's business developed, and the scope of HSN's rights under the consulting
agreement. Accordingly, on August 25, 1995, the Company and Mr. Paxson agreed
with HSN to, among other things, terminate HSN's rights under the consulting
agreement in consideration of a payment to HSN by the Company of $1,200,000. In
conjunction with this transaction Mr. Paxson advanced $1,200,000 to the Company
in the form of a note bearing interest at 6%. The Company repaid the note in
October 1995. Shortly before the transaction with HSN, Mr. Paxson agreed with
the Company that upon termination of HSN's rights under the consulting
agreement, he will not compete with the Company for a period ending on

F-15
<PAGE> 109

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

December 31, 1999 (the date that the HSN consulting agreement would have
otherwise terminated) or the date of a change in control (as defined with
respect thereto) of the Company. An intangible asset has been recorded for
$1,200,000 which will be amortized through maturity of the agreement.

Todd Communications, Inc.

In 1993, Mr. Paxson contributed to the Company, a demand note receivable in
the amount of $1,750,000 from Todd Communications, Inc. ("Todd Communications"),
a company which owns WFSJ-FM (St. Augustine, Florida) and is beneficially owned
by a member of Mr. Paxson's family. The note receivable accrues interest at the
short-term annual applicable federal rate prescribed by the Internal Revenue
Service with the balance of principal and interest due upon demand. Interest
income recognized related to the note aggregated approximately $110,000, $70,900
and $6,560 for the years ended December 31, 1995, 1994 and 1993, respectively.
The Company also performs limited sales support and administrative functions for
Todd Communications under a joint sales agreement. Todd Communications is billed
for efforts expended on terms comparable to those generally available from
unaffiliated third parties (Note 18).

World Travelers Network

On January 1, 1996, Mr. Paxson purchased the assets of the World Travelers
Network from the Company at their net book value of approximately $70,000.

South Carolina Radio Network

Effective January 1, 1996, Mr. Paxson purchased the assets of the South
Carolina Radio Network from the Company at their net book value of approximately
$45,000. Mr. Paxson subsequently sold such assets to a third party for $150,000,
with the excess over $45,000 being paid to the Company in accordance with the
parties' agreement.

Board of Directors

The Company has entered into transactions with certain members of its Board
of Directors.

Communications Equity Associates, Inc. ("CEA"). The Chairman of the Board
and Chief Executive Officer of CEA has been a director of the Company since
February 1995. The Company engaged CEA as a financial advisor in connection with
certain private placements and various other lending relationships. Fees paid to
CEA for these services totaled approximately $1,300,000, $1,855,000 and
$1,060,000 for the years ended December 31, 1995, 1994 and 1993, respectively.

Stockholder Agreements. Certain redeemable preferred stock and common
stock warrants are held by entities controlled by Mr. Paxson and entities which
are affiliates of two directors of the Company (Notes 13 and 14).

S. William Scott. S. William Scott, a director of the Company since
February 1995, has an arrangement with the Company to provide consulting
services to the Company with respect to the development of its news programming
for its radio and television broadcast business and its radio network business.
Mr. Scott was paid approximately $80,000, $84,000 and $84,000 for such services
during the years ended December 31, 1995, 1994 and 1993, respectively.
Additionally, Mr. Scott received benefits under the Company's health and
benefits plan and was granted options to purchase 10,000 shares of stock under
the Company's stock incentive plan.

F-16
<PAGE> 110

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT:

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Broadcasting towers and equipment......................... $ 70,179,364 $ 39,445,071
Office furniture and equipment............................ 8,370,232 5,075,412
Buildings and leasehold improvements...................... 9,447,395 4,302,476
Land and land improvements................................ 7,418,039 3,142,532
Vehicles and other........................................ 4,851,576 3,877,851
------------ ------------
100,266,606 55,843,342
Accumulated depreciation.................................. (20,407,526) (10,492,912)
------------ ------------
Property and equipment, net............................... $ 79,859,080 $ 45,350,430
=========== ===========
</TABLE>

Depreciation expense aggregated $10,083,135, $5,433,038 and $2,804,157 for
the years ended December 31, 1995, 1994 and 1993, respectively.

5. INTANGIBLE ASSETS:

Intangible assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
FCC licenses.............................................. $ 76,313,074 $ 42,332,125
Covenants not to compete.................................. 14,502,375 11,811,375
Favorable lease and other contracts....................... 6,801,433 6,514,507
Goodwill.................................................. 9,444,500 7,819,778
------------ ------------
107,061,382 68,477,785
Accumulated amortization.................................. (22,743,235) (15,126,818)
------------ ------------
Intangible assets, net.................................... $ 84,318,147 $ 53,350,967
=========== ===========
</TABLE>

Amortization expense related to intangible assets aggregated $7,621,848,
$5,940,575 and $5,927,744 for the years ended December 31, 1995, 1994 and 1993,
respectively.

6. OTHER ASSETS:

Other assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Loan origination costs...................................... $10,722,939 $ 7,739,288
Escrow funds for station acquisitions....................... 6,672,860 4,291,241
Deposits on building and equipment.......................... 1,377,964 642,890
Organization costs.......................................... 768,307 407,672
Other assets................................................ 917,361 1,708,638
----------- -----------
20,459,431 14,789,729
Accumulated amortization.................................... (562,737) (1,711,383)
----------- -----------
Other assets, net........................................... $19,896,694 $13,078,346
========== ==========
</TABLE>

F-17
<PAGE> 111

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Amortization expense related to other assets aggregated $1,014,126,
$1,029,915 and $618,732 for the years ended December 31, 1995, 1994 and 1993,
respectively.

Loan origination costs of $10,625,727 associated with debt extinguished
through proceeds from the senior subordinated notes are reflected in the 1995
statement of operations as an extraordinary item.

7. INVESTMENTS IN BROADCAST PROPERTIES:

Investments in broadcast properties represent the Company's financing of
broadcasting asset acquisitions by third party licensees, including CNI and Todd
Communications (Note 3). In conjunction with the financings, the Company has
obtained the right to provide programming for the related stations pursuant to
TBAs and has obtained options to purchase certain stations. Interest rates range
from LIBOR plus 1/2% (6.18% at December 31, 1995) to 12 1/8% with loans
maturing in five to seven years. Unpaid principal balances will be applied
toward the acquisition cost upon exercise of purchase options. The Company
records interest on certain investments as received. Investments in broadcast
properties at December 31, 1995 consist of:

<TABLE>
<CAPTION>
INVESTMENT OPTION OPTION
INVESTMENT TO/STATION AMOUNT EXPIRATION PRICE
----------------------------------------------- ----------- ------------- --------
<S> <C> <C> <C>
CNI: $16,481,345
WTJC-TV(1)*.................................. October 2005 $100,000
WFCT-TV(1)*.................................. December 2003 191,000
WCTD-TV(1)(2)*............................... April 1999 100,000
KUBD-TV(1)*.................................. August 2005 100,000
WCEE-TV(1)(3)*............................... January 2006 100,000
WIRB-TV...................................... -- --
WHITEHEAD MEDIA:
WOAC-TV(4)................................... December 2000 1,000
WTVX-TV(4)................................... December 2000 1,000
TODD COMMUNICATIONS: 1,750,000
WFSJ-FM...................................... -- --
OTHER: 2,960,685
WRMY-TV(5)................................... -- --
WHBI-TV(6)................................... -- --
WACC-AM(7)................................... -- --
-----------
$21,192,030
==========
</TABLE>

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

(1) Upon exercise of the option, the Company will apply the unpaid principal
balance towards the acquisition price.
(2) Upon exercise of the option, the Company will repay the remaining principal
balance on a third party note payable (Note 3).
(3) Purchase transaction consummated in 1996. Investment at December 31, 1995
represents initial advances.
(4) The Company initially financed the acquisition which was subsequently repaid
(Note 3). In addition to the option price, the Company will pay Whitehead
Media $500,000 for each station, plus the value of the station based upon
certain calculations.
(5) Investment represents financings for the construction of the station in
1996. Upon consummation of the transaction, the Company will have acquired a
40% interest in the station for $1,500,000.
(6) The station is not currently on the air. The investment relates to financed
expenditures for the build-out of the station.
(7) The Company has an option to purchase a 49% interest in exchange for its
initial advance to this station.
* The Company intends to exercise these options which became permissible with
the recent enactment of the Telecommunications Act of 1996.

F-18
<PAGE> 112

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. PROGRAM RIGHTS:

Program rights relate to the broadcast operations of Paxson
Network-Affiliated Television stations as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Program rights.............................................. $ 4,290,715 $ 3,045,642
Accumulated amortization.................................... (2,493,357) (820,754)
----------- -----------
1,797,358 2,224,888
Less current program rights................................. (1,412,544) (1,980,000)
----------- -----------
Program Rights, net......................................... $ 384,814 $ 244,888
========== ==========
</TABLE>

Program rights amortization expense aggregated $1,765,942, $820,754 and $0
for the years ended December 31, 1995, 1994 and 1993, respectively.

Program rights payable represent the obligation incurred to secure the
right to broadcast program material in accordance with related contractual
agreements. Future minimum annual payments under these contractual agreements as
of December 31, 1995, are as follows:

<TABLE>
<CAPTION>
BROADCAST RIGHTS BARTER RIGHTS TOTAL
PAYMENTS EXPIRATION RIGHTS
---------------- ------------- ----------
<S> <C> <C> <C>
1996............................................ $1,139,402 $ 310,200 $1,449,602
1997............................................ 235,853 -- 235,853
1998............................................ 196,897 -- 196,897
---------------- ------------- ----------
$1,572,152 $ 310,200 $1,882,352
============ ========== =========
</TABLE>

9. LONG-TERM DEBT:

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revolving credit loans, total commitment of $150,000,000,
interest at LIBOR plus 2.75%, extinguished in September
1995...................................................... $ -- $82,000,000
Revolving credit facility, total commitment of $100,000,000,
interest at LIBOR plus 3.25% (8.93% at December 31,
1995)..................................................... 10,000,000 --
Mortgage note payable, $200,055 principal, interest at 10%,
principal and interest payment of $3,000 due monthly
through April 1999, remaining balance due April 1999...... 184,705 200,055
Mortgage note payable, $825,000 principal, interest at
8.83%, principal and interest payment of $8,284 due
monthly from June 1995 to May 2010........................ 812,083 --
</TABLE>

F-19
<PAGE> 113

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Notes payable, $2,155,000 aggregate principal, interest at
8% to 9.325%, aggregate principal and interest payments of
$41,646 due monthly, maturing at varying dates through
April 2001, secured by purchased assets................... $ 1,917,826 --
Mortgage note payable, $211,000 principal, interest at
9.75%, extinguished in August 1995........................ -- $ 206,902
----------- -----------
12,914,614 82,406,957
Less current portion........................................ (430,590) (6,393,415)
----------- -----------
$12,484,024 $76,013,542
========== ==========
</TABLE>

In September 1995, the Company extinguished its $150,000,000 revolving
credit agreement utilizing proceeds from the issuance of senior subordinated
notes. Additionally during 1995, the Company executed and subsequently
extinguished a $75,000,000 revolving credit agreement utilizing proceeds from
the issuance of senior subordinated notes (Note 10).

On December 19, 1995, the Company executed a $100,000,000 senior secured
revolving credit facility. The aggregate revolving commitment under the credit
facility will decrease by $10 million on December 31, 1997 and by $3.75 million
to $7.5 million each subsequent quarter thereafter until the termination of the
credit facility on June 30, 2002. Borrowings under the revolving credit facility
will bear interest at a rate equal to, at the option of the Company, either (i)
the base rate (which is defined as the higher of 1/2% plus the Federal Funds
rate or the prime rate most recently announced by the agent under the credit
facility) or (ii) LIBOR, in each case plus an applicable margin determined by
reference to the ratio of total debt to cash flow of the Company. Interest on
the current amounts drawn under the facility accrues at an initial rate of LIBOR
plus 3.25%. This revolving credit facility is secured by substantially all of
the Company's assets (as well as a negative pledge on all real property
interests) and subsidiary guarantees.

The reducing revolving credit facility contains a number of covenants that
restrict, among other things, the Company's ability to incur additional
indebtedness, incur liens, make investments, pay dividends or make other
restricted payments, consummate certain asset sales, consolidate with any other
person or sell, assign, transfer, lease, convey or otherwise dispose of
substantially all of the assets of the Company. Prior to making any advance
under the new credit facility, the Company will be required to be in compliance
with all financial and operating covenants. Certain acquisitions to be funded
under the new credit facility are expected to require approval by 66 2/3% of the
lenders thereunder. The lenders under the new credit facility will be paid a
commitment fee at the rate of 0.5% per year on unused commitments, payable
quarterly.

Aggregate maturities of long-term debt at December 31, 1995 are as follows:

<TABLE>
<S> <C>
1996........................................................ $ 430,590
1997........................................................ 482,952
1998........................................................ 503,993
1999........................................................ 636,785
2000........................................................ 220,372
Thereafter.................................................. 10,639,922
-----------
$12,914,614
==========
</TABLE>

F-20
<PAGE> 114

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. SENIOR SUBORDINATED NOTES:

On September 28, 1995, the Company issued $230,000,000 of senior
subordinated notes (the "Notes") at a discount, netting proceeds of $227,309,000
to the Company. The Company accretes the original issue discount over the term
of the Notes using the effective interest method. At December 31, 1995, the
discount was $2,625,089. Interest on the Notes accrues at 11.625% to yield an
effective rate of 11.875%. Interest payments are payable semiannually on each
April 1 and October 1, commencing on April 1, 1996. The principal balance is due
at maturity on October 1, 2002. As part of the Note agreement, the Company filed
a registration statement relating to the Notes with the Securities and Exchange
Commission (the "SEC"), and commenced an offer to exchange the registered notes
for the Notes beginning January 24, 1996.

The Notes contain certain covenants which, among other things, restrict
additional indebtedness, payment of dividends, stock issuance of subsidiaries,
certain investments and transfers or sales of assets, and provide for the
repurchase of the Notes in the event of a change in control of the Company. The
Notes are general unsecured obligations of the Company subordinate in right of
payment to all existing and future senior indebtedness of the Company and senior
in right to all future subordinated indebtedness of the Company.

The Notes become redeemable at the option of the Company on October 1,
1999, 2000 and 2001 at a redemption price of 104%, 102% and 100%, respectively,
of the outstanding principal amount, plus accrued interest. Additionally, the
Company may redeem up to 25% of the original principal amount of the Notes with
proceeds from certain sales of Company stock or assets at any time prior to
October 1, 1998 at a redemption price of 110% of the outstanding principal
amount, plus accrued interest. There are no mandatory redemption requirements.

11. INCOME TAXES:

Prior to the reorganization and consolidation on December 15, 1993, the
Company's businesses operated in the form of partnerships and S corporations for
federal and state income tax purposes. Therefore, all income and losses prior to
that date were taxed at the partner and stockholder level and no provision for
income taxes was recorded.

As a result of the reorganization and consolidation on December 15, 1993,
the tax status of the Company changed to a taxable entity. Reflected in the 1993
tax provision for continuing operations is the cumulative difference between the
tax bases and book bases of assets and liabilities arising prior to this date.
Significant components of the (benefit) provision for income taxes are as
follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
Current tax expense
Federal.................................... $ -- $ -- $ --
State...................................... -- -- --
----------- ----------- ----------
Total current...................... -- -- --
----------- ----------- ----------
Deferred tax (benefit) expense
Federal.................................... (1,152,000) (1,503,200) 2,674,000
State...................................... (128,000) (176,800) 286,000
----------- ----------- ----------
Total deferred..................... (1,280,000) (1,680,000) 2,960,000
----------- ----------- ----------
Total (benefit) provision.......... $(1,280,000) $(1,680,000) $2,960,000
========== ========== =========
</TABLE>

F-21
<PAGE> 115

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred tax assets and deferred tax liabilities reflect the tax effect of
the following differences between financial statement carrying amounts and tax
bases of assets and liabilities:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------ -----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts........................ $ 385,000 $ 194,940
Net operating loss carryforwards....................... 13,599,000 4,126,507
Deferred compensation.................................. 3,725,000 --
------------ -----------
17,709,000 4,321,447
Deferred tax asset valuation allowance for net
operating loss carryforwards and deferred
compensation........................................ (15,009,000) (4,126,507)
------------ -----------
Deferred tax assets, net............................... 2,700,000 194,940
Deferred tax liabilities:
Tax over book depreciation and amortization............ (2,700,000) (1,474,940)
------------ -----------
Total.......................................... $ -- $(1,280,000)
=========== ==========
</TABLE>

A valuation allowance has been provided when management believes it is more
likely than not that a portion of the deferred tax asset will not be realized. A
portion of the net operating losses were acquired in the acquisition of ANG.
Future recognition of the benefit from these acquired losses will be applied
first to reduce goodwill related to the acquisition, then to reduce other
non-current intangible assets related to the acquisition and then to reduce
income tax expense.

The Company and its subsidiaries have filed consolidated tax returns for
all periods subsequent to December 15, 1993.

A pro forma provision for income taxes to reflect the effect on the
statement of operations for the year ended December 31, 1993 had the Company's
business operations filed a consolidated income tax return for 1993, prior to
December 15, 1993, would result in a tax benefit of approximately $3,159,000 for
net operating losses and a corresponding valuation allowance resulting in no pro
forma provision for income taxes.

The reconciliation of income tax benefit attributable to continuing
operations, computed at U.S. Federal Statutory tax rates, to the provision for
income taxes is:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
Tax benefit at U.S. Federal Statutory tax
rates........................................ $(11,417,000) $(2,190,305) $(2,717,230)
State income tax benefit, net of federal tax... (1,343,000) (257,682) (290,104)
Tax benefits attributable to losses recognized
for book purposes in periods that the Company
operated as non-taxable entities............. -- -- 3,397,783
Deferred taxes attributable to income
recognized on accrual basis for book
purposes, in period that the Company operated
as non-taxable entities, but recognized for
tax purposes after reorganization............ -- -- 2,334,364
Non-deductible items........................... 597,000 83,000 --
Valuation allowance............................ 10,883,000 684,987 235,187
------------ ----------- -----------
(Benefit) provision for income taxes........... $ (1,280,000) $(1,680,000) $ 2,960,000
=========== ========== ==========
</TABLE>

F-22
<PAGE> 116

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The extraordinary items relate to debt retirements. The 1993 retirements
occurred in the period before the Company reorganized on December 15, 1993, were
taxable at the stockholder level and, accordingly, are not tax affected. No tax
effect has been included related to the 1995 debt retirement as the
extraordinary item is included in the Company's net operating loss carryforward
for which a valuation allowance has been provided.

The Company has net operating loss carryforwards for income tax purposes
subject to certain carryforward limitations of approximately $35,700,000 at
December 31, 1995 expiring through 2010. A portion of the net operating losses
relate to ANG and are limited to annual utilization as a result of the change in
ownership.

12. EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS:

Savings and Profit Sharing Plan

The Company has retirement savings and cafeteria plans pursuant to Sections
401(k) and 125 of the Internal Revenue Code which cover substantially all of the
Company's employees. Employer contributions to the retirement savings plan are
discretionary. The Company elected not to make retirement savings contributions
for the three plan years ended December 31, 1995. Under the cafeteria plan,
employees may elect to participate in health, dental, life and disability
insurance benefit plans funded through employee payroll deductions.

Stock Incentive Plan

In November 1994, the Company established the Stock Incentive Plan (the
"Plan") to provide incentives to officers and other employees through the
issuance of options and restricted stock. The number of options, exercise prices
and exercise dates granted under the Plan are at the discretion of the Company's
Compensation Committee and may be in the form of either incentive or
non-qualified stock options or awards of restricted stock. At December 31, 1995,
301,370 shares of Class A common stock were available for issuance under the
Plan. When options are granted, a non-cash charge representing the difference
between the exercise price and the fair market value of the vested options on
the date of grant is recorded as option plan compensation expense. For the year
ended December 31, 1995, the Company recognized approximately $10,800,000 of
option plan compensation expense and expects to recognize approximately an
additional $1,400,000 of expense over the next five years as such options vest.

At December 31, 1995, 49 employees had been granted options under the Plan
pursuant to a five-year vesting cycle commencing retroactively to the employee's
date of employment or exercisable in full at the date of grant. At December 31,
1995, approximately 1,100,000 shares were vested and fully exercisable. In
January 1996, 10,000 options were granted at $3.42 per option and 8,928 were
granted at $0.01 per option. All options granted expire over a ten year period.
Transactions under the Plan are as follows:

<TABLE>
<CAPTION>
NUMBER OF PRICE PER
OPTIONS OPTION
--------- ---------
<S> <C> <C>
Outstanding, December 31, 1994........................................... -- --
Granted.................................................................. 1,847,005 $3.42
Forfeited................................................................ (4,800) 3.42
Exercised................................................................ (89,800) 3.42
---------
Outstanding, December 31, 1995........................................... 1,752,405
========
</TABLE>

Employment Agreements

Mr. Paxson is employed under an employment agreement providing for him to
be employed through December 31, 1999, unless sooner terminated. The agreement
provides that Mr. Paxson's salary will be

F-23
<PAGE> 117

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$385,000 in 1996, $423,500 in 1997, $465,850 in 1998 and $500,000 in 1999. In
addition to his base salary, Mr. Paxson may receive an annual bonus at the
discretion and in an amount set by members of the Compensation Committee that
are not employees of the Company.

The Company has other employment agreements with individuals under which
the individuals are paid a base salary and may receive annual incentives based
on revenue amounts and stock options based on the cash flow of the stations they
manage.

13. REDEEMABLE PREFERRED STOCK:

Redeemable Senior Preferred Stock

Redeemable Senior preferred stock was originally issued with 225 detachable
redeemable common stock purchase warrants on December 15, 1993 in exchange for
$14,000,000. The holder of preferred stock is entitled to preferential
cumulative dividends at a rate of 15% of the liquidation price, per annum,
payable quarterly commencing on December 31, 1993. On January 1 of each year,
accrued and unpaid dividends are added to the liquidation price of the stock.
The holders of the Senior preferred stock, voting as a class, are entitled to
elect 25% of the Company's Board of Directors.

The Senior preferred stock is redeemable, at the option of the holder, on
or after the seventh anniversary of the issue date (December 15, 2000) at $7,000
per share plus accrued and unpaid dividends to date. The shares may also be
redeemed, at the option of the Company, on or after the fourth anniversary of
the issue date (December 15, 1997) at $7,000 per share plus accrued and unpaid
dividends to date. The shares also provide redemption features in the event of
certain changes in ownership control of the Company, bankruptcy, and twelve
month dividend arrearages after the fifth anniversary of the issue date
(December 15, 1998).

Cumulative preferred dividends in arrears aggregated $4,644,352 and
$2,197,808 at December 31, 1995 and 1994, respectively.

Redeemable Series B Preferred Stock

Redeemable Series B preferred stock was issued on December 22, 1994 as a
result of the exercise of 94.6223 detachable redeemable common stock purchase
warrants into 1,310,779 shares of Class A common stock and 436,926 shares of
Class B common stock which were then surrendered for Series B preferred stock.
The holder of Series B preferred stock is entitled to cumulative dividends at a
per annum rate of 15% per share, payable quarterly commencing on December 31,
1994. On January 1 of each year, accrued and unpaid dividends are added to the
liquidation price of the stock. Series B preferred stock ranks prior to all
classes of Junior preferred stock.

The Series B preferred shares are redeemable, at the option of the holder,
on or after December 15, 2000 at $7,000 per share plus accrued and unpaid
dividends to date. The shares may also be redeemed at the option of the Company,
on or after December 15, 1997 at $7,000 per share plus accrued and unpaid
dividends to date.

Cumulative Series B preferred dividends in arrears aggregated $771,269 and
$18,493 at December 31, 1995 and 1994, respectively.

Redeemable Junior Preferred Stock

Redeemable Junior preferred stock was issued with 4,853,628 detachable
Class C common stock warrants (after giving effect to the stock dividend during
January 1995) on December 22, 1994 in exchange for $33,000,000. The holder of
Junior preferred stock is entitled to cumulative dividends at a rate of 12% per
annum prior to the seventh anniversary of the issue date (December 22, 2001),
13% per annum from the seventh through the eighth anniversary of the issue date
(December 22, 2002), and 14% per annum after the

F-24
<PAGE> 118

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

eighth anniversary of the issue date. Semi-annual dividend payments are required
commencing December 31, 1999.

The Junior preferred shares are redeemable, at the option of the Company,
at $1,030 plus unpaid, deferred, and accrued dividends prior to the third
anniversary of the issue date (December 22, 1997), $1,020 plus unpaid, deferred,
and accrued dividends after the third and prior to the fourth anniversary of the
issue date (December 22, 1998), and $1,000 plus unpaid, deferred, and accrued
dividends per share on or after the fourth anniversary of the issue date. A
mandatory redemption is scheduled on the ninth anniversary of the issue date
(December 22, 2003).

Cumulative Junior preferred dividends in arrears aggregated $4,188,512 and
$97,644 at December 31, 1995 and 1994, respectively.

Redemption Features of Preferred Stock

The following table presents the redemption value of the three classes of
preferred stock should each be redeemed in the indicated year, assuming no
dividends are paid prior to redemption, unless required:

<TABLE>
<CAPTION>
SENIOR SERIES B JUNIOR
PREFERRED(1) PREFERRED(1) PREFERRED(2)
------------ ------------ ------------
<S> <C> <C> <C>
1996............................................ $ 42,775,013
1997............................................ $ 24,657,155 $ 7,632,502 47,939,640
1998............................................ 28,355,728 8,777,377 53,412,616
1999............................................ 32,609,087 10,093,984 59,102,420
2000............................................ 37,500,450 11,608,082 59,102,420
</TABLE>

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

(1) Redeemable at the option of the Company on or after December 15, 1997 and at
the option of the holder on or after December 15, 2000.
(2) Mandatorily redeemable on the ninth anniversary (December 22, 2003),
redeemable by the Company prior to that date.

14. COMMON STOCK WARRANTS:

Redeemable Common Stock Warrants

In connection with the 1993 Redeemable Senior preferred stock issuance, the
Company issued 225 detachable redeemable common stock purchase warrants
entitling the holder to purchase one common share per warrant at an exercise
price of $0.01 per share. On December 22, 1994, 94.6223 of the warrants were
exercised for 1,310,779 shares of Class A common stock and 436,926 shares of
Class B common stock and were then surrendered for the redeemable Series B
preferred stock. The remaining 130.3777 redeemable common stock purchase
warrants entitle the holders to purchase 2,709,129 Class A common shares and
903,043 Class B common shares (after giving effect to the stock dividend).

The stock purchase warrants include a put provision requiring the Company
to repurchase any warrants, at the option of the holder, at the fair market
value per share on or after the seventh anniversary of issue date (December 15,
2000). At December 31, 1995, using the fair value of the underlying stock, the
stock purchase warrants would accrete to approximately $49,600,000 at their
mandatory redemption date of December 15, 2000. The holders of the warrants are
entitled to demand registration rights and piggyback registration rights
following certain offerings of shares to the public.

Class C Common Stock Warrants

In connection with the Redeemable Junior preferred stock issuance on
December 22, 1994, the Company issued 4,853,628 detachable Class C common stock
purchase warrants (after giving effect to the stock

F-25
<PAGE> 119

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

dividend), entitling the holder to purchase one Class C common share per warrant
at an exercise price of $0.001 per share. Certain holders of these purchase
warrants are entitled to demand registration rights subsequent to the third
anniversary of the issuance date and piggyback registration rights six months
following certain offerings of shares to the public.

15. COMMON STOCK:

On December 15, 1993, in connection with the reorganization and
consolidation of its radio broadcasting activities, the Company authorized 1,500
shares and issued 1,200 shares of unclassified common stock.

In November 1994, in connection with the merger with ANG, the Company
amended its capital structure to provide two classes of common voting stock,
Class A common stock (45,000,000 shares authorized) and Class B common stock
(7,000,000 shares authorized). Upon consummation of the recapitalization, the
Company's unclassified common stock outstanding was converted into 15,790,974
shares of Class A common stock and 5,263,658 shares of Class B common stock.
Upon consummation of the merger, the holders of ANG common stock received Class
A common stock in exchange for ANG common stock outstanding and such shares of
Class A common stock which where exchanged for the ANG common stock were listed
on the Nasdaq Small-Cap Market.

On December 22, 1994, the Company further amended its capital structure to
increase authorized shares of Class A common stock to 150,000,000 shares and
Class B common stock to 35,000,000 shares, and to designate a third class of
non-voting common stock, Class C common stock, 12,500,000 shares authorized.

On January 1, 1995, the Company announced a stock dividend for its common
stock of an additional one-half share for each common share outstanding for
holders of record on January 1, 1995. Weighted average shares outstanding for
the years ended December 31, 1994 and 1993 give effect to the Company's amended
capital structure related to the merger with ANG, and the stock dividend on
common shares outstanding on January 1, 1995.

On July 10, 1995, the Company's Class A common stock was listed on the
American Stock Exchange under the symbol of PXN. These publicly traded shares
represent approximately 5% of Class A common shares outstanding at December 31,
1995 and less than 2% of the Company's voting power.

Voting rights allow the voting common stockholders to elect up to 75% of
the Company's Board of Directors, but do not allow the common stockholders to
change the rights and privileges of the preferred stockholders without a
majority affirmative vote of the preferred stockholders. Class A common stock
and Class B common stock will vote as a single class in 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; Class C
common stock is nonvoting. Each share of Class B common stock is convertible, at
the option of its holder, into one share of Class A common stock at any time,
and under certain circumstances, Class C common stock may be converted, at the
option of the holder, into Class A common stock.

16. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The estimated fair value of financial instruments has been determined by
the Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting data
to develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The fair value estimates presented herein
are based on pertinent information available to management as of December 31,
1995. Although management is not aware of any factors that would significantly
affect the estimated fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements since that
date and current estimates of fair value may differ significantly from the

F-26
<PAGE> 120

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

amounts presented herein. The following methods and assumptions were used to
estimate the fair value of each class of financial instruments:

Cash and cash equivalents, accounts receivable, accounts payable and
accrued expenses. The fair values approximate the carrying values due to
their short term nature.

Investments in broadcast properties. The fair value of investments in
broadcast properties is estimated based on the net present value of the
future cash flows using a discount rate approximating current market rates.
The fair value approximates the carrying value.

Interest rate caps. The Company's interest rate cap agreements were
originally entered into to meet covenants under variable rate revolving
credit loan agreements outstanding in prior periods, which were
extinguished during the year ended December 31, 1995, and currently do not
serve as a hedging vehicle. As a result, interest rate cap agreements
previously amortized to interest expense have been marked to market and net
losses of approximately $800,000 were recognized during the year ended
December 31, 1995 which are reflected in the consolidated statement of
operations as other income (expense). The Company has interest rate cap
agreements outstanding at December 31, 1995 with notional amounts totaling
$75 million. Variable rate debt outstanding at December 31, 1995 totaled
approximately $10 million. The interest rate cap agreements have
termination dates of March 1996 through December 1997 and result in the
Company receiving payments when the LIBOR rate exceeds between 5% and
7 1/4%.

Program rights payable. The fair value of program rights payable is
estimated based on the net present value of the future cash flows using a
discount rate approximating current market rates. The fair value
approximates the carrying value.

Long-term debt and Senior subordinated notes. The fair values of
long-term debt and senior subordinated notes are estimated based on current
market rates and instruments with the same risk and maturities. The fair
values approximate the carrying value.

Mandatorily redeemable securities. Redeemable preferred stock
(Senior, Series B and Junior) is being accreted to its respective
redemption values and redeemable common stock warrants (Class A and B) are
accreted to the estimated fair value of the underlying common stock upon
redemption. Estimated fair value at redemption is reviewed on a quarterly
basis to reflect changes in the underlying stock value.

17. COMMITMENTS AND CONTINGENCIES:

The Company incurred total expenses of approximately $5,334,000, $2,406,000
and $1,218,000 for the years ended December 31, 1995, 1994 and 1993,
respectively, under operating leases for broadcasting facilities and equipment
and for employment agreements. Future minimum annual payments under these non-
cancelable operating leases and agreements, as of December 31, 1995, are as
follows:

<TABLE>
<S> <C>
1996........................................................ $ 5,151,000
1997........................................................ 3,941,000
1998........................................................ 3,234,000
1999........................................................ 2,189,000
2000........................................................ 1,127,000
Thereafter.................................................. 7,150,000
-----------
$22,792,000
==========
</TABLE>

The Company has entered into commitments for radio broadcast rights related
to sporting events that are not currently available for broadcast and are
therefore not included in the financial statements. The Company

F-27
<PAGE> 121

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

incurred total rights expenses of approximately $2,806,000 for the year ended
December 31, 1995 and had total commitments of approximately $3,503,000 as of
December 31, 1995.

As of December 31, 1995, the Company had entered into TBAs with seven FCC
licensees which require monthly TBA payments ranging from $3,500 to $35,000 and
have termination dates ranging from seven to ten years.

As of December 31, 1995, the Company has agreements to purchase significant
assets of, provide financing for, or enter into time brokerage arrangements with
the following television stations, all of which are subject to various
conditions, including the receipt of regulatory approvals:

<TABLE>
<CAPTION>
PURCHASE PRICE/
STATION MARKET SERVED(1) INVESTMENT AMOUNT
--------------------------------------------- -------------------- -----------------
<S> <C> <C>
Channel 68................................... Dallas, TX $ 3,000,000
WNGM-TV(2)................................... Atlanta, GA --
WHKE-TV(2)................................... Milwaukee, WI 4,000,000
WJUE-TV(3)................................... Grand Rapids, MI 1,000,000
WHBI-TV(4)................................... West Palm Beach, FL 6,300,000
WOCD-TV...................................... Albany, NY 2,500,000
WSJN-TV(5)................................... San Juan, PR 4,000,000
</TABLE>

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

(1) Each station is licensed by the FCC to serve a specific community which is
included in the listed market.
(2) To be operated pursuant to a TBA.
(3) 70% ownership interest to be acquired.
(4) The Company financed certain build-out costs of the station prior to
December 31, 1995 (Note 7). The Company expects to enter into an
affiliation agreement after the construction of the station.
(5) 50% ownership interest to be acquired; station signal will be satellite
simulcast in the San Juan area on WKPV-TV and WJWN-TV, stations in which
the Company is also acquiring a 50% interest. This station is currently
being operated pursuant to a TBA.

Affiliation Agreements

During 1995, the Company entered into inTV affiliation agreements with two
television licensees. Under the agreements, the licensees agree to broadcast
programming provided by inTV during certain times of the day and are compensated
based on the monthly advertising collected and the number of cable homes covered
by the licensees. inTV may terminate these agreements with a ninety day written
notice. The minimum amounts due under these agreements at December 31, 1995
totals approximately $531,000.

Legal Proceedings

The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, the ultimate resolution of
these matters will not have a material effect on the Company's consolidated
financial position or results of operations and cash flows.

F-28
<PAGE> 122

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

18. SUBSEQUENT EVENTS:

Investments in Broadcast Properties:

Subsequent to year end, the Company made the following investments in
broadcast properties through the financing of third party purchases of
television broadcasting stations. Concurrent with these transactions, the
Company executed TBAs and option purchase agreements (Note 7).

<TABLE>
<CAPTION>
STATION MARKET SERVED(1) INVESTMENT AMOUNT
- -------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
WRMY-TV(3).............................................. Raleigh, NC $ 5,500,000
KWBF-TV(2).............................................. Phoenix, AZ 1,400,000
WCEE-TV(2).............................................. St. Louis, MO 3,200,000
</TABLE>

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

(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) The Company currently holds an option to purchase the station from the
licensee.
(3) Investment amount consists of a $1,500,000 option to purchase a 40% interest
in the station and construction financing, of which approximately $600,000
was outstanding at December 31, 1995.

Purchases:

Subsequent to December 31, 1995, the Company entered into agreements to
purchase significant assets of or acquire ownership in the following television
and radio stations, all of which are subject to various conditions, including
receipt of regulatory approvals:

<TABLE>
<CAPTION>
PURCHASE
PRICE/
INVESTMENT
STATION MARKET SERVED(1) AMOUNT
-------------------------------------------------- -------------------- --------------
<S> <C> <C>
WOST-TV(2)........................................ Providence, RI $ 1,000,000
KZAR-TV(2)........................................ Salt Lake City, UT 850,000
WHUB-FM,WHUB-AM(3)................................ Cookeville, TN 3,800,000
WFSJ-FM(4)........................................ Jacksonville, FL 5,000,000
WRMA-FM,WXDJ-FM(5)................................ Miami, FL 115,000,000
Channel 23(6)..................................... New York, NY 2,000,000
Channel-38(6)..................................... New York, NY 1,500,000
</TABLE>

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

(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) The Company will acquire 50% ownership interest pursuant to a management
agreement. The station is currently under construction.
(3) The Company will acquire both the FM and AM stations.
(4) The Company will issue stock valued at approximately $1.70 million, apply
the note receivable from Todd Communications and assume the Todd
Communications note payable to Mr. Paxson of approximately $1.55 million to
acquire the station.
(5) The Company will acquire these stations simultaneously for either a cash
payment of $107,500,000 or cash of $92 million and approximately 1.3 million
shares of Company common stock at the option of the seller.
(6) The Company will acquire these "low power" stations, the signals of which
will be augmented by simulcasting the signal of WHAI-TV, a station currently
owned by the Company.

Subsequent to year end the Company purchased substantially all of the
assets of WHAI-TV, New York, NY and WAKC-TV, Cleveland, OH for approximately $22
million and $18 million, respectively.

F-29
<PAGE> 123

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Public Offering:

The Company intends to file a registration statement with the SEC for the
proposed sale of 11.5 million shares of its Class A common stock, 10.3 million
of which will be sold by the Company. The Company intends to use the net
proceeds to acquire or enter into TBAs with television and radio stations, make
capital expenditures and for other general corporate purposes.

Telecommunications Reform:

On February 8, 1996, new telecommunications regulations were enacted into
law, allowing, among other things, an expanded number of radio and television
stations under common ownership. As a result, the Company has exercised options
to acquire television stations WFCT-TV, WCTD-TV, WTJC-TV, KUBD-TV, WCEE-TV and
KWBF-TV from CNI (Note 7).

Other Transactions

On January 9, 1996, the Company purchased from Mr. Paxson, at its face
value, a $1 million note related to CNI's acquisition of KLDT-TV.

Subsequent to December 31, 1995, the Company entered into a joint venture
agreement with L.L. Knickerbocker Company, Inc. for the purpose of identifying
products and services for long-form advertising and developing marketing
strategies and infomercials for such products and services.

Subsequent to year end, the Company entered into two inTV affiliation
agreements with station licensees. inTV may terminate these agreements with a
ninety day written notice. The minimum amounts due under these agreements at
December 31, 1995 totals approximately $380,000.

Subsequent to December 31, 1995, the Company entered into a limited
partnership agreement as a general partner for the Bobcats, an Arena football
franchise in South Florida. Additionally, Mr. Paxson acquired a portion of the
Company's limited partnership interest in the same partnership.

19. SEGMENT DATA:

The Company operates three business segments: (1) the Infomall TV Network
is a nationwide network of owned, operated and affiliated television stations
dedicated to the airing of long form paid programming consisting primarily of
infomercials; (2) Paxson Radio consists of radio broadcasting stations, radio
news and sports networks and billboard operations; and (3) Paxson
Network-Affiliated Television includes network-affiliated television
broadcasting stations in West Palm Beach, Florida. In January 1995, four
stations which had previously aired long form paid programming were reclassified
as inTV stations. The financial information related to these four stations prior
to January 1, 1995 has been reclassified to conform with the 1995 presentation.
Corporate and other operations represent revenue earned through commissions,
non-broadcast activities, expenses incurred for such activities, and corporate
overhead expenses, including management expenses which are not allocated to the
individual segments.

F-30
<PAGE> 124

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Selected financial information for these segments follows:

<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------------------
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
INFOMALL TV NETWORK
Total revenue......................................... $ 29,653,278 $ 3,287,285 $ --
Operating expenses, less depreciation, amortization
and option plan compensation........................ 16,266,563 3,401,328 --
Depreciation and amortization......................... 4,545,683 1,344,986 --
Option plan compensation.............................. 37,506 -- --
------------ ------------ -----------
Income (loss) from operations......................... $ 8,803,526 $ (1,459,029) $ --
=========== =========== ==========
Total identifiable assets............................. $104,106,341 $ 16,212,828 $ --
=========== =========== ==========
Capital expenditures.................................. $ 7,703,973 $ 2,527,903 $ --
=========== =========== ==========
PAXSON RADIO
Total revenue......................................... $ 54,752,191 $ 50,363,294 $31,058,472
Operating expenses, less depreciation, amortization
and option plan compensation........................ 44,227,935 39,002,002 25,012,435
Depreciation and amortization......................... 10,357,042 9,124,969 9,128,847
Option plan compensation.............................. 1,751,238 -- --
------------ ------------ -----------
Income (loss) from operations......................... $ (1,584,024) $ 2,236,323 $(3,082,810)
=========== =========== ==========
Total identifiable assets............................. $ 68,886,153 $ 67,201,401 $61,686,096
=========== =========== ==========
Capital expenditures.................................. $ 9,610,186 $ 2,491,959 $ 1,962,553
=========== =========== ==========
PAXSON NETWORK-AFFILIATED TELEVISION
Total revenue......................................... $ 16,537,406 $ 7,477,508 $ --
Operating expenses, less depreciation and
amortization........................................ 11,793,824 5,003,272 --
Depreciation and amortization......................... 3,102,665 1,542,286 --
------------ ------------ -----------
Income from operations................................ $ 1,640,917 $ 931,950 $ --
=========== =========== ==========
Total identifiable assets............................. $ 37,421,642 $ 39,409,693 $ --
=========== =========== ==========
Capital expenditures.................................. $ 2,825,249 $ 657,375 $ --
=========== =========== ==========
CORPORATE AND OTHER
Total revenue......................................... $ 2,131,037 $ 939,356 $ 1,003,559
Operating expenses, less depreciation, amortization
and option plan compensation........................ 9,814,643 3,819,350 3,860,193
Depreciation and amortization......................... 713,719 391,287 221,786
Option plan compensation.............................. 9,014,497 -- --
------------ ------------ -----------
Loss from operations.................................. $(17,411,822) $ (3,271,281) $(3,078,420)
=========== =========== ==========
Total identifiable assets............................. $ 83,417,941 $ 29,846,459 $ 4,888,512
=========== =========== ==========
Capital expenditures.................................. $ 4,877,408 $ 239,275 $ --
=========== =========== ==========
</TABLE>

F-31
<PAGE> 125

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
FOR THE 1995 QUARTERS ENDED
---------------------------------------------------------
DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
Total revenue............................. $ 31,550,195 $ 27,167,369 $ 23,736,645 $20,619,703
Operating expenses, less depreciation,
amortization and option plan
compensation............................ 23,124,962 21,332,736 18,963,733 18,681,534
Depreciation and amortization............. 5,640,068 5,024,785 4,269,627 3,784,629
Option plan compensation.................. 994,136 404,976 9,404,129 --
------------ ------------- ------------ -----------
Income (loss) from operations............. $ 1,791,029 $ 404,872 $ (8,900,844) $(1,846,460)
========== =========== =========== ==========
Loss before extraordinary item............ $ (5,566,169) $ (2,851,681) $(11,176,729) $(3,252,984)
Extraordinary item(1)..................... -- (10,625,727) -- --
------------ ------------- ------------ -----------
Net loss.................................. $ (5,566,169) $ (13,477,408) $(11,176,729) $(3,252,984)
========== =========== =========== ==========
Net loss attributable to common stock..... $ (9,741,895) $ (16,734,727) $(14,849,938) $(5,443,936)
========== =========== =========== ==========
Per share data:
Loss before extraordinary item.......... $ (0.16) $ (0.08) $ (0.32) $ (0.09)
Net loss................................ $ (0.16) $ (0.39) $ (0.32) $ (0.09)
Net loss attributable to common stock... $ (0.28) $ (0.49) $ (0.43) $ (0.16)
Weighted average common shares
outstanding............................. 34,503,666 34,458,766 34,448,665 34,354,201
========== =========== =========== ==========
Stock price(2):
High.................................... $ 16 3/8 $ 15 3/4 $ 14 $ 12 5/8
Low..................................... $ 11 1/2 $ 12 $ 8 $ 9
</TABLE>

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

(1) Extraordinary item relates to the write-off of loan origination costs
associated with the extinguishment of certain debt agreements during the
third quarter (Note 9).
(2) The Company's Class A common stock is listed on the American Stock Exchange
under the symbol PXN. Prior to July 10, 1995, the Company's Class A common
stock was listed on the NASDAQ Small-Cap Market.

F-32
<PAGE> 126

PAXSON COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
FOR THE 1994 QUARTERS ENDED
---------------------------------------------------------
DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
Total revenue............................. $ 22,226,226 $ 18,327,456 $ 12,148,603 $ 9,365,158
Operating expenses, less depreciation and
amortization............................ 18,413,022 14,219,712 10,268,884 8,324,334
Depreciation and amortization............. 3,845,370 3,292,245 2,855,767 2,410,146
------------ ------------- ------------ -----------
Income (loss) from operations............. $ (32,166) $ 815,499 $ (976,048) $(1,369,322)
========== =========== =========== ==========
Loss before extraordinary item............ $ (1,972,628) $ (672,445) $ (318,376) $(1,798,625)
========== =========== =========== ==========
Net loss.................................. $ (1,972,628) $ (672,445) $ (318,376) $(1,798,625)
========== =========== =========== ==========
Net loss attributable to common stock..... $ (2,950,626) $ (1,492,845) $ (1,121,630) $(2,582,429)
========== =========== =========== ==========
Pro forma per share data (Note 1):
Pro forma loss before extraordinary
item................................. $ (0.06) $ (0.02) $ (0.01) $ (0.06)
Pro forma net loss...................... $ (0.06) $ (0.02) $ (0.01) $ (0.06)
Pro forma net loss attributable to
common stock......................... $ (0.09) $ (0.04) $ (0.03) $ (0.08)
Pro forma weighted average common shares
outstanding............................. 33,430,116 33,430,116 32,506,032 31,581,948
========== =========== =========== ==========
Stock price (1):
High(2)................................. $ 16 $ -- $ -- $ --
Low(2).................................. $ 10 5/8 $ -- $ -- $ --
</TABLE>

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

(1) The Company's Class A common stock is listed on the American Stock Exchange
under the symbol PXN. Prior to July 10, 1995, the Company's Class A common
stock was listed on the NASDAQ Small-Cap Market.
(2) Stock price after giving effect to the January 1, 1995 stock dividend (Note
15).

F-33
<PAGE> 127

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
of KZKI-TV (a division of Sandino Telecasters)

In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in divisional deficit and of cash flows present
fairly, in all material respects, the financial position of KZKI-TV (a division
of Sandino Telecasters), (the "Station") at January 31, 1995 and the results of
its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Station's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

The accompanying financial statements have been prepared assuming that the
Station will continue as a going concern. As discussed in Note 1 to the
financial statements, the Station has incurred cumulative net losses and has
significant notes payable which are due on demand, which raise substantial doubt
about the Station's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

/s/ Price Waterhouse LLP
- --------------------------------------
PRICE WATERHOUSE LLP

Tampa, Florida
July 17, 1995

F-34
<PAGE> 128

KZKI-TV (A DIVISION OF SANDINO TELECASTERS)

BALANCE SHEET

<TABLE>
<CAPTION>
JANUARY
MAY 17, 31,
1995 1995
----------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 22,053 $ 91,180
Accounts receivable............................................... 3,289 6,695
Prepaid expenses and other assets................................. 3,733 10,813
----------- ----------
Total current assets...................................... 29,075 108,688
Property and equipment, net......................................... 2,008,203 2,180,634
Intangible assets, net.............................................. 6,685,736 6,792,333
----------- ----------
Total assets $ 8,723,014 $9,081,655
========= =========
LIABILITIES AND DIVISIONAL DEFICIT
Current liabilities:
Accounts payable and accrued liabilities.......................... $ 30,399 $ 41,261
Unearned revenue.................................................. 34,915 71,074
Related party payables
Accrued interest............................................... 2,920,897 2,650,378
Notes payable.................................................. 8,872,874 9,572,874
----------- ----------
Total current liabilities................................. 11,859,085 12,335,587
----------- ----------
Divisional deficit.................................................. (3,136,071) (3,253,932)
----------- ----------
Commitments and contingencies (see Note 6)
Total liabilities and divisional deficit.................. $ 8,723,014 $9,081,655
========= =========
</TABLE>

The accompanying Notes to Financial Statements
are an integral part of the financial statements.

F-35
<PAGE> 129

KZKI-TV (A DIVISION OF SANDINO TELECASTERS)

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
MAY 17, JANUARY 31,
1995 1995
------------ -----------
(UNAUDITED)
<S> <C> <C>
Revenue:
Network programming................................................ $ 330,413 $ 871,701
Paid programming and other......................................... 688,142 840,210
------------ -----------
Total revenue.............................................. 1,018,555 1,711,911
------------ -----------
Operating expenses:
Technical.......................................................... 113,671 395,512
Direct............................................................. 15,150 64,363
Programming........................................................ 9,758 22,215
General and administrative......................................... 212,568 558,220
Depreciation and amortization...................................... 279,028 743,396
------------ -----------
Total operating expenses................................... 630,175 1,783,706
------------ -----------
Income (loss) from operations........................................ 388,380 (71,795)
Related party interest expense....................................... (270,519) (855,800)
------------ -----------
Net income (loss).......................................... $ 117,861 $ (927,595)
========== =========
</TABLE>

The accompanying Notes to Financial Statements
are an integral part of the financial statements.

F-36
<PAGE> 130

KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)

STATEMENT OF CHANGES IN DIVISIONAL DEFICIT

<TABLE>
<S> <C>
Balance at February 1, 1994..................................................... $(2,326,337)
Net loss........................................................................ (927,595)
-----------
Balance at January 31, 1995..................................................... (3,253,932)
Net income through May 17, 1995 (unaudited)..................................... 117,861
-----------
Balance at May 17, 1995 (unaudited)............................................. $(3,136,071)
==========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-37
<PAGE> 131

KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
MAY 17, JANUARY 31,
1995 1995
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................. $ 117,861 $ (927,595)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization..................................... 279,028 743,396
Decrease (increase) in accounts receivable........................ 3,406 (5,297)
Decrease (increase) in prepaid expenses and other assets.......... 7,080 (7,069)
(Decrease) increase in accounts payable and accrued liabilities... (10,862) 31,209
(Decrease) increase in unearned revenue........................... (36,159) 56,228
Increase in related party accrued interest........................ 270,519 855,800
------------ -----------
Net cash provided by operating activities......................... 630,873 746,672
------------ -----------
Cash flows from investing activities:
Purchases of property and equipment............................... -- (204,410)
------------ -----------
Cash flows from financing activities:
Proceeds from related party note payable.......................... -- 418,588
Payments of related party note payable............................ (700,000) (935,000)
------------ -----------
Net cash used for financing activities............................ (700,000) (516,412)
------------ -----------
(Decrease) increase in cash and cash equivalents.................... (69,127) 25,850
Cash and cash equivalents at beginning of year...................... 91,180 65,330
------------ -----------
Cash and cash equivalents at end of period.......................... $ 22,053 $ 91,180
========== =========
Supplemental disclosure of cash flow information:
Cash paid for interest............................................ $ 0 $ 0
========== =========
Cash paid for income taxes........................................ $ 0 $ 0
========== =========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-38
<PAGE> 132

KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)

NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

KZKI-TV (A division of Sandino Telecasters) (the "Station"), is engaged in
the operation of a television broadcasting station in the Los Angeles,
California market. Sandino Telecasters operates the television station under a
license granted by the Federal Communications Commission.

The Station has incurred cumulative net losses through January 31, 1995
totaling approximately $3,254,000. Additionally, the Station owes approximately
$12,223,000 on demand notes payable and accrued interest to a related party. The
Station does not have sufficient means to repay the notes payable if called (see
Note 4). These conditions raise substantial doubt regarding the Station's
ability to continue as a going concern. Owners plan to liquidate the Station's
liabilities through a sale of the Station's assets (see Note 7).

Cash and cash equivalents

Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.

Property and equipment

<TABLE>
<S> <C>
Broadcasting tower and equipment.............................. 10 years
Leasehold improvements........................................ Term of lease
Office furniture and equipment................................ 6 years
</TABLE>

Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.

Intangible assets

Intangible assets consists of the FCC license which is stated at cost and
is being amortized using the straight-line method over the estimated useful life
of 25 years.

Revenue recognition

Revenue is recognized as advertising air time is broadcast.

Income taxes

The Station's operating results have been included in the tax return filed
by Sandino Telecasters. A provision for intercompany income taxes, which
approximates the income tax provision calculated for Station income on a
standalone basis was calculated to be $0 based upon cumulative net losses.

Interim financial data

The interim financial data of the Station is unaudited; however, in the
opinion of Station management, the interim financial data includes all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation of results of the interim period. The results of operations
for the period from February 1, 1995 through May 17, 1995 are not necessarily
indicative of the results that could be expected for the entire fiscal year
ending January 31, 1996.

F-39
<PAGE> 133

KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 31, 1995

2. PROPERTY AND EQUIPMENT:

Property and equipment consists of the following:

<TABLE>
<CAPTION>
JANUARY
31,
1995
----------
<S> <C>
Broadcasting tower and equipment................................. $2,171,897
Leasehold improvements........................................... 473,413
Office furniture and equipment................................... 33,002
----------
2,678,312
Accumulated depreciation......................................... (497,678)
----------
Property and equipment, net...................................... $2,180,634
=========
Depreciation expense for the year................................ $ 459,396
=========
</TABLE>

3. INTANGIBLE ASSETS:

Intangible assets consist of the following:

<TABLE>
<CAPTION>
JANUARY 31,
1995
-----------
<S> <C>
FCC licenses................................................. $ 7,100,000
Accumulated amortization..................................... (307,667)
-----------
Intangible assets, net....................................... $ 6,792,333
=========
Amortization expense for the year............................ $ 284,000
=========
</TABLE>

4. RELATED PARTY NOTES PAYABLE:

Related party notes payable consist of the following:

<TABLE>
<CAPTION>
JANUARY 31,
1995
-----------
<S> <C>
Note payable, prime + 1% interest compounded annually,
interest and principal due on demand....................... $ 7,100,000
Revolving credit note payable, prime + 1% interest compounded
annually, interest and principal due on demand............. 2,472,874
-----------
$ 9,572,874
=========
</TABLE>

In 1991, the Station borrowed $7,100,000 from Astrum Management Group
("Astrum"), a minority shareholder of Sandino Telecasters, in order to purchase
the FCC license and begin operations (see Note 5). The note accrues interest at
prime + 1% and is due on demand. At January 31, 1995, accrued interest payable
on the note was $2,319,638; no interest or principal repayments have been made
to date.

Additionally, the Station entered into a revolving credit agreement with
Astrum, whereby Astrum funded initial construction of the Station and continues
to fund working capital shortfalls. The working capital note accrues interest at
prime + 1% and is due on demand. At January 31, 1995, accrued interest payable
on the note was $330,740; no interest repayments have been made to date.

F-40
<PAGE> 134

KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 31, 1995

5. RELATED PARTY TRANSACTIONS:

The Station has entered into several agreements with related parties. As
discussed in Note 4, the Station has significant outstanding notes payable and
accrued interest payable with Astrum, a minority shareholder of Sandino
Telecasters. Additionally, Astrum provides financial management and accounting
services for the Station. The value of these services based on estimated hours
expended by Astrum was approximately $6,000, for the year ended January 31,
1995. All other overhead, debt and interest allocations have been appropriately
reflected in the Station's financial statements.

6. COMMITMENTS AND CONTINGENCIES:

The Station incurred expenses of approximately $44,922 for the year ended
January 31, 1995 under a non-cancelable operating lease for office space.
Additionally, the Station incurred expenses of approximately $10,695 for a
special use permit from the U.S. Department of Forestry for use of the land
surrounding the station's tower. Future minimum annual payments under the
operating lease as of January 31, 1995, are $31,820, due during fiscal year
1996.

7. SUBSEQUENT EVENT:

On May 17, 1995, the Owners sold the Station's assets to Paxson
Communications Corporation for approximately $18,000,000.

F-41
<PAGE> 135

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
of Paugus Television, Inc.

In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in stockholders' deficit and of cash flows present
fairly, in all material respects, the financial position of Paugus Television,
Inc. (the "Company"), at December 31, 1994 and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
accompanying financial statements, the Company has incurred cumulative net
losses from operations and has significant notes payable which are due on demand
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1 to
the accompanying financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Price Waterhouse LLP
- --------------------------------------
PRICE WATERHOUSE LLP

Tampa, Florida
August 21, 1995

F-42
<PAGE> 136

PAUGUS TELEVISION, INC. (WGOT-TV)

BALANCE SHEET

<TABLE>
<CAPTION>
MAY 17, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 42,148 $ 14,127
Accounts receivable, less allowance for doubtful accounts of
$14,948 and $23,965, respectively.......................... 92,659 124,510
Prepaid expenses and other assets............................. 35,120 21,319
Current program rights........................................ 42,971 68,754
------------ ------------
Total current assets.................................. 212,898 228,710
Property and equipment, net..................................... 111,526 202,203
Intangible assets, net.......................................... 574,923 587,318
Program rights, net............................................. 34,671 34,671
------------ ------------
Total assets.......................................... $ 934,018 $ 1,052,902
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities...................... $ 8,121 $ 135,340
Other payables................................................ 168,306 182,051
Current program rights payable................................ 106,060 111,594
Related party payables:
Accrued interest payable................................... 1,217,469 1,043,505
Notes payable.............................................. 6,931,243 6,767,800
------------ ------------
Total current liabilities............................. 8,431,199 8,240,290
Program rights payable.......................................... 21,400 36,089
------------ ------------
Total liabilities..................................... 8,452,599 8,276,379
Stockholders' deficit:
Common stock, $1 par, 300 shares authorized, 284.38 shares
issued and outstanding..................................... 284 284
Additional paid-in capital.................................... 2,843,516 2,843,516
Retained deficit.............................................. (10,362,381) (10,067,277)
------------ ------------
Total stockholders' deficit........................... (7,518,581) (7,223,477)
------------ ------------
Commitments and contingencies (see Note 8)
Total liabilities and stockholders' deficit........... $ 934,018 $ 1,052,902
=========== ===========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-43
<PAGE> 137

PAUGUS TELEVISION, INC. (WGOT-TV)

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
MAY 17, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenue:..........................................................
Local and national advertising.................................. $ 296,586 $ 877,165
Trade........................................................... 62,834 305,821
Production and other............................................ 240,395 38,698
------------ ------------
Total revenue..................................................... 599,815 1,221,684
------------ ------------
Operating expenses:
Technical....................................................... 82,967 194,241
News............................................................ 49,670 193,583
Direct.......................................................... 87,086 184,081
Sales........................................................... 54,992 141,393
Production...................................................... 54,769 131,089
Programming and promotion....................................... 81,278 116,631
General and administrative...................................... 113,831 534,430
Trade........................................................... 58,495 275,352
Program rights amortization..................................... 25,784 174,034
Depreciation and amortization................................... 101,729 203,456
------------ ------------
Total operating expenses.......................................... 710,601 2,148,290
------------ ------------
Loss from operations.............................................. (110,786) (926,606)
Other income (expense):
Related party interest expense.................................. (174,155) (331,815)
Loss on sale of assets.......................................... -- (13,146)
Other expense, net.............................................. (10,163) (37,951)
------------ ------------
Net loss.......................................................... $ (295,104) $ (1,309,518)
========== ==========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-44
<PAGE> 138

PAUGUS TELEVISION INC. (WGOT-TV)

STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
STOCKHOLDERS' DEFICIT
---------------------------------------------------
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL DEFICIT TOTAL
------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1994................... $284 $2,843,516 $ (8,757,759) $(5,913,959)
Net loss..................................... (1,309,518) (1,309,518)
------ ---------- ------------ -----------
Balance at December 31, 1994................. 284 2,843,516 (10,067,277) (7,223,477)
Net loss through May 17, 1995 (unaudited).... (295,104) (295,104)
------ ---------- ------------ -----------
Balance at May 17, 1995 (unaudited).......... $284 $2,843,516 $(10,362,381) $(7,518,581)
====== ========= =========== ==========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-45
<PAGE> 139

PAUGUS TELEVISION, INC. (WGOT-TV)

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE
YEAR
FOR THE ENDED
PERIOD ENDED DECEMBER
MAY 17, 31,
1995 1994
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................ $ (295,104) $(1,309,518)
Adjustments to reconcile net loss to net cash used for operating
activities:
Depreciation and amortization................................... 101,729 203,456
Program rights amortization..................................... 25,784 174,034
Allowance for doubtful accounts................................. (9,017) 708
Loss on sale of assets.......................................... -- 13,146
Decrease (increase) in accounts receivable...................... 40,868 (62,644)
(Increase) decrease in prepaid expenses and other assets........ (13,801) 157,833
(Decrease) increase in accounts payable and accrued
liabilities.................................................. (127,219) 8,466
Decrease in other payables...................................... (13,745) (193,227)
Increase in related party accrued interest...................... 173,964 322,947
------------ -----------
Net cash used for operating activities.......................... (116,541) (684,799)
------------ -----------
Cash flows from investing activities:
Purchases of property and equipment............................. -- (43,374)
Sale of property and equipment.................................. 1,342 42,000
------------ -----------
Net cash used for investing activities.......................... 1,342 (1,374)
------------ -----------
Cash flows from financing activities:
Payments for program rights..................................... (20,223) (142,581)
Proceeds from related party notes payable....................... 163,443 791,888
------------ -----------
Net cash provided by financing activities....................... 143,220 649,307
------------ -----------
Increase (decrease) in cash and cash equivalents.................. 28,021 (36,866)
Cash and cash equivalents at beginning of year.................... $ 14,127 $ 50,993
------------ -----------
Cash and cash equivalents at end of period........................ $ 42,148 $ 14,127
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest.......................................... $ 0 $ 0
========== ==========
Non-cash operating activities:
Trade revenue................................................... $ 62,834 $ 305,821
========== ==========
Trade expense................................................... $ 58,495 $ 275,352
========== ==========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-46
<PAGE> 140

PAUGUS TELEVISION, INC. (WGOT-TV)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Paugus Television, Inc. (the "Company"), a Delaware Corporation, was
organized in 1988 for the purpose of owning and operating a television station,
WGOT-TV, in Manchester, New Hampshire, serving the Boston, Massachusetts market.

The Company has incurred substantial cumulative net losses through December
31, 1994 totalling approximately $10,067,000. Additionally, the Company owes
approximately $7,811,000 on demand notes payable and accrued interest to a
related party. The Company does not have sufficient means to repay the notes
payable (see Note 6). These conditions raise substantial doubt regarding the
Company's ability to continue as a going concern. Management plans to liquidate
the Company's liabilities through a sale of the Company's assets (see Note 9).

Property and equipment

<TABLE>
<S> <C>
Broadcasting tower and equipment.............................. 7 years
Office furniture equipment and other.......................... 5 years
Leasehold improvements........................................ Term of lease
</TABLE>

Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.

Intangible assets

Intangible assets are stated at cost and are being amortized using the
straight-line method over the estimated useful life as follows:

<TABLE>
<S> <C>
Goodwill...................................................... 25 years
Favorable lease agreement..................................... Term of lease
Organization costs............................................ 5 years
</TABLE>

Program rights

The Company obtains licenses for program rights which allow the Company to
broadcast program material in accordance with contractual agreements. Pursuant
to a licensing agreement, an asset is recorded for the program rights acquired
and a liability is recorded for the obligation incurred, at the gross amount of
the liability. Program rights are amortized on a method that approximates the
straight-line basis over the related term. Program rights which will not be
aired are charged to expense. Current program rights represent programs which
will be amortized during the next year, current liabilities represent program
rights which will be paid within the year under contractual agreement.

Income taxes

Provisions are made to record deferred income taxes in recognition of items
reported differently for financial reporting purposes than for federal and state
income tax purposes. The Company records deferred income taxes using the
liability method in accordance with Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes".

F-47
<PAGE> 141

PAUGUS TELEVISION, INC. (WGOT-TV)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

Revenue recognition

Revenue is recognized as advertising air time is broadcast.

Trade agreements

The Company enters into trade agreements which give rise to sales of
advertising air time in exchange for products and services. Sales from trade
agreements are recognized at the fair market value of products or services
received as advertised air time is broadcast. Products and services received are
expensed when used in the broadcast operations. If the Company uses exchanged
products or services before advertising air time is provided, a trade liability
is recognized.

Interim financial data

The interim financial data of the Company is unaudited; however, in the
opinion of the Company's management, the interim data includes all adjustments,
consisting of only normal recurring adjustments, necessary for a fair statement
of results for the interim periods. The results of operations for the period
ended May 17, 1995 are not necessarily indicative of the results that can be
expected for the entire fiscal year ending December 31, 1995.

2. PROPERTY AND EQUIPMENT:

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER
31,
1994
-----------
<S> <C>
Broadcasting tower and equipment................................ $ 1,138,870
Office furniture, equipment and other........................... 188,992
Leasehold improvements.......................................... 122,491
-----------
1,450,353
Accumulated depreciation........................................ (1,248,150)
Property and equipment, net..................................... $ 202,203
==========
Depreciation expense for the year............................... $ 170,537
==========
</TABLE>

3. INTANGIBLE ASSETS:

Intangible assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Goodwill........................................................ $ 734,245
Favorable lease agreement....................................... 119,500
Organization costs.............................................. 14,705
------------
868,450
Accumulated amortization........................................ (281,132)
------------
Intangible assets, net.......................................... 587,318
------------
Amortization expense for the year............................... $ 32,919
==========
</TABLE>

F-48
<PAGE> 142

PAUGUS TELEVISION, INC. (WGOT-TV)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

4. PROGRAM RIGHTS:

Program rights consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Program rights............................................... $ 305,751
Accumulated amortization..................................... (202,326)
------------
103,425
Less current program rights.................................. (68,754)
------------
$ 34,671
==========
Amortization expense for the year............................ $ 174,034
==========
</TABLE>

5. PROGRAM RIGHTS PAYABLE:

Program rights payable represent the obligation incurred to secure the
right to broadcast program material in accordance with a contractual agreement.
Future minimum annual payments under these contractual agreements as of December
31, 1994, are as follows:

6. RELATED PARTY NOTES PAYABLE:

Related party notes payable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Note payable to stockholder, interest at Federal Funds Rate +1%,
principal and interest due on demand.................................. $3,853,650
Note payable to stockholder, interest at Federal Funds Rate +1%,
principal and interest due on demand.................................. 2,914,150
------------
$6,767,800
==========
</TABLE>

The Company has entered into multiple note payable agreements with its
primary stockholders, the Perceival Lowell Trust and the Roger L. Putnam Trust
(the "Trusts") whereby the Trusts fund working capital shortfalls on a monthly
basis. The notes payable are secured by all assets of the Company, including the
FCC license, accrue interest at the Federal Funds rate +1% and are due on
demand. At December 31, 1994, accrued interest payable on the notes was $569,047
and $474,458, respectively. No principal or interest payments were made for the
year ended December 31, 1994.

F-49
<PAGE> 143

PAUGUS TELEVISION, INC. (WGOT-TV)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

7. INCOME TAXES:

Deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Assets
Fixed assets.......................................................... $ 9,432
Allowance for doubtful accounts....................................... 9,255
Net operating loss carryforwards...................................... 4,038,004
Valuation allowance................................................... (4,049,045)
Liabilities
Intangible assets..................................................... (7,646)
------------
$ 0
==========
</TABLE>

A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. A valuation allowance
has been provided for the net operating loss carryforwards.

8. COMMITMENTS AND CONTINGENCIES:

The Company incurred expenses of approximately $94,652 for the year ended
December 31, 1994 under non-cancelable operating leases for office equipment and
tower space. Future minimum annual payments under these non-cancelable operating
leases as of December 31, 1994, are as follows:

<TABLE>
<CAPTION>
PAYMENT
--------
<S> <C>
1995.............................................................. $ 95,320
1996.............................................................. 15,600
--------
$110,920
========
</TABLE>

9. SUBSEQUENT EVENT:

On May 17, 1995, the Company sold the assets to Paxson Communications
Corporation for approximately $3,100,000.

F-50
<PAGE> 144

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Trustee of
WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc.

In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in accumulated shareholders' deficit and of cash flows
present fairly, in all material respects, the financial position of WTVX-TV,
Krypton Broadcasting of Ft. Pierce, Inc. (the "Company") at December 31, 1994
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.

/s/ PRICE WATERHOUSE LLP
- --------------------------------------
Price Waterhouse LLP

Tampa, Florida
October 11, 1995

F-51
<PAGE> 145

WTVX-TV, KRYPTON BROADCASTING OF FT. PIERCE, INC.

BALANCE SHEET

AUGUST 4, DECEMBER 31,
1995 1994
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 870,689 $ 592,898
Accounts receivable, net of allowance for doubtful accounts
of $56,794 and $68,491....................................... 707,061 824,324
Current program rights.......................................... 30,816 82,318
Other current assets............................................ 67,180 44,129
----------- -----------
Total current assets.................................... 1,675,746 1,543,669
Property and equipment, net....................................... 4,382,814 4,485,318
Intangible assets, net............................................ 1,959,868 1,994,077
Program rights, net............................................... 31,130 51,436
----------- -----------
Total assets............................................ $ 8,049,558 $ 8,074,500
=========== ===========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Liabilities:
Accounts payable and accrued liabilities........................ $ 132,786 $ 127,640
Current program rights payable.................................. 67,104 128,217
Accrued interest................................................ 1,660,227 1,128,077
Liabilities subject to Chapter 11 proceedings................... 3,647,033 3,647,033
----------- -----------
Total current liabilities............................... 5,507,150 5,030,967
Program rights payable............................................ 4,775 33,983
Debt.............................................................. 8,535,260 8,535,260
----------- -----------
Total liabilities....................................... 14,047,185 13,600,210
Commitments and contingencies (Note 8)
Shareholder's deficit............................................. (5,997,627) (5,525,710)
----------- -----------
Total liabilities and shareholder's deficit............. $ 8,049,558 $ 8,074,500
=========== ===========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-52
<PAGE> 146

WTVX-TV, KRYPTON BROADCASTING OF FT. PIERCE, INC.

STATEMENT OF OPERATIONS

FOR THE FOR THE
PERIOD ENDED YEAR ENDED
AUGUST 4, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Local and national advertising................................. $2,580,512 $4,167,639
Production and other........................................... 17,853 58,398
Trade and barter............................................... 430,875 792,036
Tower rent..................................................... 94,992 172,292
------------ ------------
Total revenue.......................................... 3,124,232 5,190,365
------------ ------------
Operating expenses:
Direct......................................................... 522,928 845,679
Technical...................................................... 378,343 513,743
Sales and promotions........................................... 795,345 844,417
Programming.................................................... 184,690 487,165
General and administrative..................................... 295,974 445,116
Trade and barter............................................... 433,256 787,155
Program rights amortization.................................... 71,808 149,607
Depreciation and amortization.................................. 293,514 521,147
------------ ------------
Total operating expenses............................... 2,975,858 4,594,029
Income from operations........................................... 148,374 596,336
Interest expense................................................. (532,150) (747,547)
Reorganization expenses (Note 1)................................. (98,371) (131,431)
Other income..................................................... 10,230 7,143
------------ ------------
Loss before income taxes......................................... (471,917) (275,499)
Provision for intercompany income taxes.......................... -- --
------------ ------------
Net loss............................................... $ (471,917) $ (275,499)
========== ==========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-53
<PAGE> 147

WTVX-TV, KRYPTON BROADCASTING OF FT. PIERCE, INC.

STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIT

<TABLE>
<S> <C>
Balance at January 1, 1994...................................................... $(5,250,211)
Net loss........................................................................ (275,499)
-----------
Balance at December 31, 1994.................................................... (5,525,710)
Net loss through August 4, 1995 (unaudited)..................................... (471,917)
-----------
Balance at August 4, 1995 (unaudited)........................................... $(5,997,627)
==========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-54
<PAGE> 148

WTVX-TV, KRYPTON BROADCASTING OF FT. PIERCE, INC.

STATEMENT OF CASH FLOWS

FOR THE FOR THE
PERIOD ENDED YEAR ENDED
AUGUST 4, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss......................................................... $ (471,917) $ (275,499)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization.................................... 293,514 521,147
Program rights amortization...................................... 71,808 149,607
Allowance for doubtful accounts.................................. (11,697) 39,267
(Increase)/decrease in accounts receivable....................... 128,960 (169,954)
(Increase) in other current assets............................... (23,051) (16,765)
Increase/(decrease) in accounts payable and accrued
liabilities................................................... 5,146 (28,022)
Increase in accrued interest..................................... 532,150 747,547
--------- ---------
Net cash provided by operating activities........................ 524,913 967,328
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment.............................. (156,801) (346,703)
--------- ---------
Net cash used for investing activities........................... (156,801) (346,703)
--------- ---------
Cash flows from financing activities:
Payment of program rights payable................................ (90,321) (199,195)
--------- ---------
Net cash used for financing activities........................... (90,321) (199,195)
--------- ---------
Increase in cash and cash equivalents.............................. 277,791 421,430
Cash and cash equivalents at beginning of period................... 592,898 171,468
--------- ---------
Cash and cash equivalents at end of period......................... $ 870,689 $ 592,898
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest........................................... $ 0 $ 0
========= =========
Non-cash operating activities:
Trade and barter revenue......................................... $ 430,875 $ 792,036
========= =========
Trade and barter expense......................................... $ 433,256 $ 787,155
========= =========
</TABLE>

The accompanying Notes to Financial Statements are
an integral part of the financial statements.

F-55
<PAGE> 149

WTVX-TV, KRYPTON BROADCASTING OF FT. PIERCE, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

WTVX-TV, Krypton Broadcasting of Ft. Pierce, Inc. (the "Company"),
operating as a subsidiary of Krypton International Corporation, is engaged in
the operation of a television broadcasting station in Ft. Pierce, Florida,
serving the West Palm Beach, Florida market.

On June 1, 1993, the Company filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code in Miami, Florida. On
August 4, 1995, the Company sold all the assets, as specified in the related
asset purchase agreement, to Whitehead Media Corporation for approximately
$17,175,000, which exceeded recorded net assets.

Reorganization expenses included in the Statement of Operations for the
year ended December 31, 1994 is comprised of professional and attorney fees of
$131,431.

Cash and cash equivalents

Cash and cash equivalents are highly liquid investments with original
maturities of three months or less. Cash and cash equivalents are recorded at
fair value.

Property and equipment

<TABLE>
<S> <C>
Broadcasting tower and equipment......................................... 7-40 years
Building and improvements................................................ 40 years
Office furniture, equipment and other.................................... 7 years
Vehicles................................................................. 5 years
</TABLE>

Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.

Intangible assets

Intangible assets consist of the FCC license, which is stated at cost and
is being amortized using the straight-line method over 25 years.

Program rights

The Company obtains licenses for program rights which allow the Company to
broadcast program material in accordance with contractual agreements. Pursuant
to a licensing agreement, an asset is recorded for the program rights acquired
and a liability is recorded for the obligation incurred, at the gross amount of
the liability. Program rights are amortized on a method that approximates the
straight-line basis over the related term. Program rights which will not be
aired are charged to expense. Current program rights represent programs which
will be amortized during the next year; current liabilities represent program
rights which will be paid within the year under contractual agreements. Program
rights payable represent the obligation incurred to secure the right to
broadcast program material in accordance with a contractual agreement.

Income taxes

The Company's operating results have been included in the consolidated tax
returns of Krypton International Corporation, and a provision for intercompany
income taxes, which approximates the income tax provision calculated for the
Company on a standalone basis, has been included in the financial statements.

F-56
<PAGE> 150

WTVX-TV, KRYPTON BROADCASTING OF FT. PIERCE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

Revenue recognition

Revenue is recognized as advertising air time is broadcast.

Trade agreements

The Company enters into trade agreements which give rise to sales of
advertising air time in exchange for products and services. Sales from trade
agreements are recognized at the fair market value of products or services
received as advertising air time is broadcast. Products and services received
are expensed when used in the broadcast operations. If the Company uses
exchanged products or services before advertising air time is provided, a trade
liability is recognized.

Interim financial data

The interim financial data of the Company is unaudited; however, in the
opinion of the Company, the interim data includes all adjustments, consisting of
only normal recurring adjustments necessary for a fair statement of results of
the interim periods. The results of operations for the period ended August 4,
1995 are not necessarily indicative of the results that can be expected for the
entire fiscal year ending December 31, 1995.

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Broadcasting tower and equipment........................................ $ 5,097,621
Building, land and improvements......................................... 704,823
Office furniture, equipment and other................................... 219,986
Vehicles................................................................ 26,145
------------
6,048,575
Less accumulated depreciation........................................... (1,563,257)
------------
Property and equipment, net............................................. $ 4,485,318
==========
Depreciation expense for the year....................................... $ 427,309
==========
</TABLE>

3. INTANGIBLE ASSETS

Intangible assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
FCC license............................................................. $2,356,473
Less accumulated amortization........................................... (362,396)
------------
Intangible assets, net.................................................. $1,994,077
==========
Amortization expense for the year....................................... $ 93,838
==========
</TABLE>

F-57
<PAGE> 151

WTVX-TV, KRYPTON BROADCASTING OF FT. PIERCE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

4. PROGRAM RIGHTS:

Program rights consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Program rights......................................................... $231,925
Less accumulated amortization.......................................... (98,171)
----------
133,754
Less current program rights............................................ 82,318
----------
$ 51,436
==========
Amortization expense for the year...................................... $149,607
==========
</TABLE>

5. LIABILITIES SUBJECT TO CHAPTER 11 PROCEEDINGS:

The principal categories of claims classified in the Balance Sheet as
liabilities subject to Chapter 11 proceedings at December 31, 1994 are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Accounts payable....................................................... $ 392,102
Accrued interest....................................................... 650,932
Program license contracts.............................................. 2,603,999
-----------
$3,647,033
==========
</TABLE>

Reorganization expenses included in the statement of operations consist
primarily of professional and attorney fees related directly to the bankruptcy
proceedings (Note 1).

6. INCOME TAXES:

Deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Assets:
Intangible assets..................................................... $ 24,231
Allowance for doubtful accounts....................................... 25,773
Net operating loss carryforwards...................................... 780,419
Valuation allowance................................................... (830,423)
--------
$ 0
========
</TABLE>

A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. A valuation allowance
has been provided for the deferred tax assets.

7. DEBT:

A portion of the Krypton International Corporation's debt and interest
costs which are directly related to WTVX-TV were allocated to the Company based
on the original purchase price of the station. Debt allocated at December 31,
1994 was approximately $8,535,000. Interest expense allocated for the year ended

F-58
<PAGE> 152

WTVX-TV, KRYPTON BROADCASTING OF FT. PIERCE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994

December 31, 1994 was approximately $748,000. There are no other costs pushed
down by Krypton International Corporation as there are no others which are
directly related to the Company.

8. COMMITMENTS AND CONTINGENCIES:

The Company incurred expenses of approximately $64,900 for the year ended
December 31, 1994 under non-cancelable operating leases for office equipment and
office space. Future minimum annual payments under these non-cancelable
operating leases as of December 31, 1994, are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
<S> <C>
1995............................................................ $ 44,668
1996............................................................ 4,538
1997............................................................ 3,492
1998............................................................ 873
1999............................................................ --
----------
$ 53,571
==========
</TABLE>

F-59
<PAGE> 153

INDEPENDENT AUDITORS' REPORT

The Shareholders
New Age Broadcasting, Inc. and
The Seventies Broadcasting Corporation
Miami, Florida 33145

Gentlemen:

We have audited the accompanying combined balance sheet of New Age
Broadcasting, Inc. and the Seventies Broadcasting Corporation (both S
corporations) as of September 30, 1995 and the related combined statements of
income, retained earnings and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly in
all material respects, the financial position of New Age Broadcasting, Inc. and
The Seventies Broadcasting Corporation as of September 30, 1995, and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.

/s/ VOYNOW, BAYARD AND COMPANY

--------------------------------------
VOYNOW, BAYARD AND COMPANY
Certified Public Accountants

Ft. Lauderdale, Florida
November 7, 1995

F-60
<PAGE> 154

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED BALANCE SHEET
SEPTEMBER 30, 1995

<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6F)............................... $ 1,413,127
Accounts receivable:
Trade (net of allowance for doubtful accounts of $64,757)...... $ 2,326,187
Barter (Note 1D)............................................... 52,484
-----------
2,378,671
Prepaid expenses.................................................. 117,220
-----------
3,909,018
PLANT, PROPERTY AND EQUIPMENT (Note 1E)
Technical equipment, studio and tower............................. 1,757,993
Office equipment and fixtures, and transportation equipment....... 503,188
Capitalized tower lease (Note 3).................................. 643,686
-----------
2,904,867
Accumulated depreciation.......................................... 913,455
-----------
1,991,412
OTHER ASSETS (Note 1F)
Transmitter site leasehold interests, trademark, FCC licenses and
goodwill (net of amortization of $1,848,071)................... 25,739,435
Deferred financing costs (net of amortization of $66,139)......... 429,891
Lease costs (net of amortization of $2,849)....................... 1,789
Deposits.......................................................... 273,035
-----------
26,444,150
-----------
TOTAL ASSETS.............................................. $32,344,580
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt (Notes 2 and 3)................. $ 1,500,713
Accounts payable, Trade........................................... 210,398
Accrued expenses.................................................. 283,401
-----------
1,994,512
LONG-TERM DEBT
Notes payable (Note 2):
AT&T Commercial Finance Corporation............................ $23,435,921
Transportation equipment financing............................. 19,628
Stockholders (Note 2C)......................................... 1,450,000
Capital lease obligation (Note 3).............................. 641,523
-----------
25,547,072
Less: Current portion............................................. 1,500,713
-----------
24,046,359
-----------
TOTAL LIABILITIES......................................... 26,040,871
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY
Capital stock (Note 5)............................................ 1,080,000
Retained earnings................................................. 5,223,709
-----------
TOTAL STOCKHOLDERS' EQUITY................................ 6,303,709
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................ $32,344,580
==========
</TABLE>

See independent auditors' report.
The accompanying notes are an integral part of the financial statements.

F-61
<PAGE> 155

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED SEPTEMBER 30, 1995

<TABLE>
<S> <C> <C>
TOTAL REVENUE....................................................... $13,414,345
OPERATING EXPENSES
Technical......................................................... $ 1,591,184
Agency and national commissions................................... 1,793,697
Sales............................................................. 2,203,143
General and administrative........................................ 923,126
Officer compensation.............................................. 347,500
Amortization...................................................... 669,832
Depreciation...................................................... 363,590
-----------
7,892,072
-----------
INCOME FROM OPERATIONS.............................................. 5,522,273
OTHER INCOME (EXPENSES)
Interest income................................................... 46,667
Interest expense.................................................. (2,000,679)
Abandonment loss.................................................. (110,527)
-----------
(2,064,539)
-----------
NET INCOME................................................ 3,457,734
RETAINED EARNINGS, BEGINNING........................................ 4,006,630
-----------
7,464,364
LESS: DISTRIBUTIONS................................................. 2,240,655
-----------
RETAINED EARNINGS, ENDING........................................... $ 5,223,709
==========
</TABLE>

See independent auditors' report.
The accompanying notes are an integral part of the financial statements.

F-62
<PAGE> 156

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1995

<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME........................................................ $ 3,457,734
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Add (deduct) expenses not using cash
Depreciation and amortization................................ $ 1,043,401
Loss on abandonment of assets................................ 110,527
Decrease in bad debt allowance............................... (46,869)
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable........................................ (831,486)
Prepaid expenses........................................... (1,802)
Deposit.................................................... (8,026)
Increase in:
Accounts payable and accrued expenses........................ 219,853
------------
485,598
------------
Net Cash Provided by Operating Activities............... 3,943,332
CASH FLOWS FROM INVESTING ACTIVITIES
Cash purchase of property and equipment......................... (1,541,440)
Expenditures for license acquisition............................ (18,548,970)
Expenditures for trademark...................................... (1,120)
------------
Net Cash (Used in) Investing Activities................. (20,091,530)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of bank loan, net...................................... 22,137,858
Repayment of shareholder debt................................... (117,345)
Distributions paid.............................................. (2,240,655)
Repayment of bank debt.......................................... (2,140,000)
Expenditures for loan costs..................................... (447,210)
------------
Net Cash Provided by Financing Activities............... 17,192,648
------------
NET INCREASE IN CASH AND CASH EQUIVALENTS......................... 1,044,450
CASH AND CASH EQUIVALENTS, BEGINNING.............................. 368,677
------------
CASH AND CASH EQUIVALENTS, ENDING................................. $ 1,413,127
===========
SUPPLEMENTAL INFORMATION
Interest paid................................................... $ 1,908,049
===========
</TABLE>

See independent auditors' report.
The accompanying notes are an integral part of the financial statements.

F-63
<PAGE> 157

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and Operations

New Age Broadcasting, Inc. and The Seventies Broadcasting Corporation are
incorporated under the laws of the State of Florida with principal offices and
places of business in the Miami, Florida area. The corporations are engaged in
the business of operating FM radio stations, WXDJ-FM and WRMA-FM. Revenue is
earned from the sale of commercial time.

B. Principles of Combination

The financial statements of the two corporations have been presented on a
combined basis, as of September 30, 1995, because of their identical operation,
management and ownership. In addition, a common sales staff offers commercial
advertisements to customers from either one or both stations. All material
intercompany transactions and balances are eliminated in combination.

C. Station Acquisitions

New Age Broadcasting, Inc. acquired the operating assets of WXDJ-FM on
December 1, 1987 for a purchase price of $8,100,000. The Seventies Broadcasting
Corporation acquired the operating assets of WRMA-FM on January 26, 1995 for a
purchase price of $21,250,000. The total purchase price was allocated to the
assets acquired in proportion to their relative estimated fair market values
based on independent appraisals obtained by management. The allocations are
summarized as follows:

<TABLE>
<CAPTION>
WXDJ WRMA
---------- -----------
<S> <C> <C>
Station furniture, fixtures and equipment.................. $ 472,210 $ 1,451,030
Transmitter site leasehold interest, FCC license and
goodwill................................................. 7,627,790 19,798,970
---------- -----------
Total Purchase Price............................. $8,100,000 $21,250,000
========= ==========
</TABLE>

D. Barter Transactions

Reciprocal trade agreement transactions for advertising time are recorded
at the fair market value of the merchandise or services received and are
included in broadcast revenues and expenses. Any incomplete transactions are
recorded in accounts receivable or payable where appropriate.

E. Plant, Property and Equipment

Plant, property and equipment is stated at cost; additions and major
improvements are capitalized; expenditures for maintenance, repairs and minor
renewals are expensed as incurred. Any gain or loss on disposition of assets is
reflected in the statement of income. Depreciation of assets is computed by use
of the straight-line method over the estimated useful lives of the respective
assets, ranging from 5 to 10 years.

F-64
<PAGE> 158

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1995

F. Intangible Assets

Costs of acquiring the leasehold interest and FCC license, as well as
financing costs, are capitalized. These intangible assets are being amortized
over the following estimated lives on a straight-line basis:

<TABLE>
<CAPTION>
AMORTIZATION EXPENSE
YEAR ENDED
ASSET COST LIFE SEPTEMBER 30, 1995
-------------------------------------------- ----------- -------- --------------------
<S> <C> <C> <C>
Transmitter site leaseholds, FCC licenses
and goodwill.............................. $27,552,060 40 years $523,807
Trademark................................... 35,431 14 years 885
Deferred financing costs.................... 496,040 5 years 144,216*
Lease costs, new tower...................... 4,638 5 years 924
-----------
$669,832
================
</TABLE>

- ---------------
* Includes $39,755 of unexpired cost of old debt at time of refinancing.

G. Statement of Cash Flows

For purposes of the statement of cash flows, the companies consider all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

2. FINANCING ARRANGEMENTS

A. Note Payable, AT&T Commercial Finance Corporation

A term note was secured on January 26, 1995 from AT&T Commercial Finance
Corporation with the original principal amount of approximately $25,400,000. The
financing was used in the acquisition of the assets of WRMA-FM and the
refinancing of the remaining debt balance of WXDJ-FM, amounting to $3,322,000.
Monthly principal payments are required under the loan agreement as follows:

<TABLE>
<S> <C>
03/01/95 through 02/01/96................................................. $ 80,000
03/01/96 through 02/01/97................................................. 150,000
03/01/97 through 02/01/98................................................. 165,000
03/01/98 through 02/01/99................................................. 180,000
03/01/99 through 01/01/2000............................................... 200,000
</TABLE>

The remaining balance of the debt is due in full on February 1, 2000.

Interest is due monthly on the debt calculated at a rate based on the
commercial paper rate plus four percent. At September 30, 1995 this rate was
9.86%.

Substantially all corporate assets have been pledged to secure this
obligation. In addition, the stockholders have extended their personal
guarantees in the aggregate amount of $5,000,000. The debt agreements include
stipulations limiting capital expenditures, compensation, investments, dividends
and for the maintenance of minimum levels of working capital.

F-65
<PAGE> 159

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1995

B. Notes Payable, Transportation Equipment

The company has secured financing for station vehicles in 1993 and 1994
from a local commercial bank. Forty-eight monthly payments of $742 are due
including interest. The debts are secured by the vehicles financed, as well as
by the personal guarantees of certain stockholders.

C. Notes Payable, Stockholders

Financing has been arranged from the stockholders on a demand basis in the
amount of $1,450,000. Annual interest has been accrued at the rate of six
percent. This debt has been subordinated to the AT&T Commercial Finance
Corporation obligation.

D. The notes mature over the next five years as follows:

<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30,
- -------------
<S> <C>
1996..................................................................... $ 1,458,903
1997..................................................................... 1,913,903
1998..................................................................... 2,086,822
1999..................................................................... 2,300,000
2000..................................................................... 17,245,921
-----------
$25,005,549
==========
</TABLE>

3. CAPITAL LEASE

As part of the acquisition of WRMA-FM, the company assumed the obligation
of a lease for space on the transmission tower. The lease is for a fifty year
term which commenced February 1, 1988. Based on the provisions of Financial
Accounting Standards Board Statement No. 13, the lease meets the criteria of a
capital lease and, accordingly, has been recorded as an asset with a capitalized
cost of $643,686. Depreciation of $9,979 and interest of $25,700, related to
this asset, have been charged to operations and included in technical expenses
on the income statement.

In the initial year of the lease the annual base rent amounted to $36,100
payable monthly. The rent increases annually by the U.S. Department of Labor
Consumer Price Index but never by more than 10%.

Future minimum lease payments inclusive of CPI increases to date, under the
capitalized lease are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30,
- -------------
<S> <C>
1996...................................................................... $ 44,576
1997...................................................................... 44,576
1998...................................................................... 44,576
1999...................................................................... 44,576
2000...................................................................... 44,576
Thereafter................................................................ 1,663,872
----------
Total.............................................................. 1,886,752
Less amount representing interest assuming an implicit effective rate of
6%........................................................................ 1,245,231
----------
Present value of minimum lease payments................................... $ 641,521
=========
</TABLE>

F-66
<PAGE> 160

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1995

4. INCOME TAXES

Both New Age Broadcasting, Inc., effective March 1, 1988, and The Seventies
Broadcasting Corporation, effective July 8, 1994 have elected to be taxed under
the provisions of Subchapter S of the Internal Revenue Code and the State of
Florida Code with fiscal years ending on September 30 and December 31,
respectively. Under these provisions, the companies do not pay federal or state
corporate income taxes on its income. The individual stockholders are liable for
federal and state income taxes on their respective shares of the companies'
taxable income.

From inception to February 29, 1988, New Age Broadcasting, Inc. was taxed
under provisions of subchapter C of the code in which the company is taxed
directly on its income. The company had incurred net operating losses of
$360,260, for tax purposes, which are available to be carried over to offset
taxable income in future years up to year 2002 should "S" status be terminated
at some future date prior to year 2002.

5. CAPITAL STOCK

New Age Broadcasting, Inc. is authorized to issue 1,000 shares of common
stock with a par value of $10. At the time of issuance, this stock was
designated to be either voting or nonvoting by action of the Board of Directors.
The company issued on February 29, 1988 and has outstanding 180 shares,
consisting of 49 voting shares and 131 nonvoting shares.

Seventies Broadcasting Corporation is authorized to issue 7,500 shares of
common stock with a par value of $.01. The company issued on July 8, 1994 and
has outstanding 1,000 shares.

6. COMMITMENTS AND CONTINGENCIES

A. Office Space Leases

Each company has secured office space in Miami, Florida under a five-year
lease which expires on April 30, 2000 with a five year renewal option
exercisable at that time.

B. Antenna Tower Lease

New Age Broadcasting, Inc. has secured antenna tower space at a facility in
Miami and is currently operating at that site under a temporary FCC operating
permit. The lease covering these facilities is for a five-year period, with six
five-year renewal periods, commencing September 1, 1992 with monthly rents of
$3,500 plus sales tax.

The antenna facility lease contains provisions allowing for the subletting
of the facility subject to typical landlord approval policies. The company is in
the process of obtaining a new site for its permanent transmitter facility. In
the event that the company relocates its antenna facility prior to the
expiration of the lease term, a duplicate rental payment would be expected if a
suitable replacement tenant cannot be located for the existing facility.

The Seventies Broadcasting Corporation antenna tower facility arrangement
is detailed in Note 3.

F-67
<PAGE> 161

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1995

C. Minimum rentals required under the above noncancellable operating leases
are as follows:

<TABLE>
<CAPTION>
ANTENNA
OFFICE SPACE TOWER
YEAR ENDING --------------- -------
SEPTEMBER 30, WXDJ WRMA WXDJ TOTAL
- ------------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
1996.................................................. 64,332 70,875 42,000 177,207
1997.................................................. 66,444 70,875 42,000 179,319
1998.................................................. 66,444 70,875 38,500 175,819
1999.................................................. 66,444 70,875 137,319
2000.................................................. 22,150 23,625 45,775
</TABLE>

Rent expense for the year ended September 30, 1995 amounted to $239,249.

D. Station Vehicles

The Seventies Broadcasting Corporation has assumed vehicle leases acquired
in the acquisition. Remaining payments on these leases which expire in 1996 are
$5,695.

E. Temporary Operating Permit

New Age Broadcasting, Inc. is broadcasting from the facility in Miami,
Florida under the authority of a special temporary authorization granted by the
FCC. This authorization was necessary due to the destruction of the permanent
tower by Hurricane Andrew. This special temporary authorization expires on
February 14, 1996. Although an extension has not yet been granted and the
company has not returned to its original facility, management expects no
interruption in operations due to a construction permit granted by the FCC for a
new antenna and tower location and a pending application for a city of license
change which would allow WXDJ to remain at the existing temporary tower location
on a permanent basis.

F. The companies have bank deposits of $74,537 at September 30, 1995 in excess
of federally insured limits. The companies at September 30, 1995 have $1,178,295
on deposit with the Merrill Lynch Institutional Fund (an uninsured fund).

G. Litigation

The Seventies Broadcasting Corporation is involved in a lawsuit over a
lease for office space occupied by the company when it acquired WRMA. Management
believes that the lease is unenforceable and the company has since relocated
from these premises. Management believes that it will prevail in this legal
action and has, accordingly, made no provision in the financial statements for
any amounts under the lease obligation.

7. RELATED PARTY TRANSACTIONS

Affiliated companies will occasionally utilize the stations as part of
their promotional programming. Rates and terms for these spots are similar to
those offered to other customers. During the fiscal year, revenue from these
cash spots amounted to $273,680.

F-68
<PAGE> 162

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

UNAUDITED COMBINED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................................... $ 2,618,864 $ 271,416
Accounts receivable:
Trade (net of allowance for doubtful accounts of $64,757 and $104,720,
respectively)........................................................... 2,751,327 1,773,451
Barter.................................................................... 44,362 35,184
Prepaid expenses............................................................ 98,181 75,238
----------- -----------
5,512,734 2,155,289
----------- -----------
PLANT, PROPERTY AND EQUIPMENT
Technical equipment, studio and tower....................................... 1,799,094 576,130
Office equipment and fixtures and transportation equipment.................. 507,415 275,021
Capitalized tower lease..................................................... 643,686 --
----------- -----------
2,950,195 851,151
Accumulated depreciation.................................................... 991,527 564,266
----------- -----------
1,958,668 286,885
----------- -----------
OTHER ASSETS
Transmitter site leasehold interests, trademark, FCC licenses and goodwill
(net of amortization of $2,016,937 and $1,368,225, respectively).......... 25,571,675 6,421,417
Deferred financing costs (net of amortization of $99,422 and $54,865,
respectively)............................................................. 396,608 201,511
Lease costs (net of amortization of $3,080 and $2,156, respectively)........ 1,558 2,482
Deposits.................................................................... 273,035 1,515,009
----------- -----------
26,242,876 8,140,419
----------- -----------
TOTAL ASSETS......................................................... $33,714,278 $10,582,593
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt........................................... $ 1,500,713 $ 433,404
Accounts payable, trade..................................................... 170,755 199,208
Accrued expenses............................................................ 339,338 326,077
----------- -----------
2,010,806 958,689
----------- -----------
LONG TERM DEBT
Notes payable:
AT&T Commercial Finance Corporation....................................... 23,195,921 3,322,000
Transportation equipment financing........................................ 17,402 26,305
Stockholders.............................................................. 1,450,000 1,450,000
Capital lease obligation.................................................. 640,689 --
----------- -----------
25,304,012 4,798,305
Less: Current portion....................................................... 1,500,713 433,404
----------- -----------
23,803,299 4,364,901
----------- -----------
TOTAL LIABILITIES.................................................... 25,814,105 5,323,590
----------- -----------
STOCKHOLDERS' EQUITY
Capital stock............................................................... 1,080,000 1,080,000
Retained earnings........................................................... 6,820,173 4,179,003
----------- -----------
Total Stockholders' Equity........................................... 7,900,173 5,259,003
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........................... $33,714,278 $10,582,593
============ ============
</TABLE>

F-69
<PAGE> 163

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

UNAUDITED COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1995
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
TOTAL REVENUE....................................................... $4,350,353 $2,837,439
---------- ----------
OPERATING EXPENSES
Technical......................................................... 387,578 341,035
Agency and national commissions................................... 552,212 377,178
Sales............................................................. 569,142 623,476
General and administrative........................................ 334,340 263,900
Officer compensation.............................................. 62,500 30,000
Amortization...................................................... 201,274 50,302
Depreciation...................................................... 74,330 24,380
---------- ----------
2,181,376 1,710,271
---------- ----------
INCOME FROM OPERATIONS.............................................. 2,168,977 1,127,168
---------- ----------
OTHER INCOME (EXPENSES)
Interest income................................................... 26,440 --
Interest expense.................................................. (598,953) (272,139)
---------- ----------
(572,513) (272,139)
---------- ----------
NET INCOME................................................ 1,596,464 855,029
RETAINED EARNINGS, BEGINNING........................................ 5,223,709 4,006,629
---------- ----------
6,820,173 4,861,658
LESS: DISTRIBUTIONS................................................. -- 682,655
---------- ----------
RETAINED EARNINGS, ENDING........................................... $6,820,173 $4,179,003
========= =========
</TABLE>

F-70
<PAGE> 164

NEW AGE BROADCASTING, INC.
AND
THE SEVENTIES BROADCASTING CORPORATION

UNAUDITED COMBINED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
1995 1994
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME.......................................................... $1,596,464 $ 855,029
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Add (deduct) expenses not using cash
Depreciation and amortization.................................. 279,346 74,682
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable.......................................... (417,018) (308,319)
Prepaid expenses............................................. 19,039 40,180
Increase (decrease) in:
Accounts payable and accrued expenses........................ 16,294 251,339
---------- ---------
Net Cash Provided by Operating Activities................. 1,494,125 912,911
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash purchases of property and equipment.......................... (45,328) (20,883)
Expenditures for trademark........................................ -- (1,120)
Expenditures for loan costs....................................... -- (80,945)
---------- ---------
Net Cash (Used in) Investing Activities................... (45,328) (102,948)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of shareholder debt, net................................ -- (117,345)
Distributions paid................................................ -- (682,655)
Repayment of bank debt............................................ (243,060) (107,224)
---------- ---------
Net Cash (Used in) Financing Activities................... (243,060) (907,224)
---------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.................................................. 1,205,737 (97,261)
CASH AND CASH EQUIVALENTS, BEGINNING................................ 1,413,127 368,677
---------- ---------
CASH AND CASH EQUIVALENTS, ENDING................................... $2,618,864 $ 271,416
========= =========
SUPPLEMENTAL INFORMATION
Interest paid..................................................... $ 598,953 $ 272,139
========= =========
</TABLE>

NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS

NOTE 1 -- BASIS OF PRESENTATION -- New Age Broadcasting, Inc. and The Seventies
Broadcasting Corporation (the "Companies") combined financial information
contained in the financial statements and notes thereto as of December 31, 1995
and 1994, and for the three month periods ended December 31, 1995 and 1994, are
unaudited. In the opinion of management, all adjustments necessary for the fair
presentation of such financial information have been included. These adjustments
are of a normal recurring nature. There have been no changes in accounting
policies since the period ended September 30, 1995. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. These financial statements, footnotes, and discussions should be read
in conjunction with the September 30, 1995 financial statements and related
footnotes and discussions contained in such financial statements.

NOTE 2 -- SUBSEQUENT EVENTS -- The Companies have agreed to sell substantially
all of their station operating assets to a third party for a price of either (i)
$107.5 million in cash or (ii) $92 million in cash plus publicly traded stock
valued at approximately $23 million, at the option of the Companies. Further,
the Companies have recorded an accrued expense of approximately $115,000 in
connection with the office space lawsuit described in the notes to the September
30, 1995 financial statements.

F-71
<PAGE> 165

INDEPENDENT AUDITORS' REPORT

The Shareholders
New Age Broadcasting, Inc.
Miami, Florida 33145

Gentlemen:

We have audited the accompanying balance sheet of New Age Broadcasting,
Inc. (an S corporation) as of September 30, 1994 and the related statements of
income, retained earnings and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion the financial statements referred to above present fairly in
all material respects, the financial position of New Age Broadcasting, Inc. as
of September 30, 1994, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

/s/ VOYNOW, BAYARD AND COMPANY

--------------------------------------
VOYNOW, BAYARD AND COMPANY
Certified Public Accountants

Ft. Lauderdale, Florida
December 2, 1994

F-72
<PAGE> 166

NEW AGE BROADCASTING, INC.

BALANCE SHEET
SEPTEMBER 30, 1994

<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash (Note 6F)................................................................ $ 209,618
Cash, restricted funds (Note 2)............................................... 100,000
Accounts receivable:
Trade (net of allowance for doubtful accounts of $111,626).................. $1,343,103
Barter (Note 1E)............................................................ 86,436 1,429,539
----------
Prepaid expenses.............................................................. 58,742
----------
Total Current Assets................................................... 1,797,899
PLANT, PROPERTY AND EQUIPMENT (Note 1C)
Technical equipment, studio and tower......................................... 546,091
Office equipment and fixtures, and transportation equipment................... 275,021
----------
821,112
Accumulated depreciation...................................................... 539,886
----------
Net Plant, Property and Equipment...................................... 281,226
OTHER ASSETS (Note 1F)
Transmitter site leasehold interest, trademark, FCC license and goodwill (net
of amortization of $1,324,485).............................................. 6,464,036
Deferred financing costs (net of amortization of $48,534)..................... 78,077
Lease costs (net of amortization of $1,925)................................... 2,713
Deposits...................................................................... 265,009
----------
Total Other Assets..................................................... 6,809,835
----------
TOTAL ASSETS........................................................... $8,888,960
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt (Note 3).................................... $ 655,249
Accounts payable:
Trade....................................................................... 42,694
Barter (Note 1E)............................................................ 15,855
Accrued expenses.............................................................. 119,342
----------
Total Current Liabilities.............................................. 833,140
LONG-TERM DEBT
Notes payable (Note 3)
AT&T Commercial Finance Company............................................. 3,427,000
Transportation equipment financing.......................................... 28,531
Stockholders (Note 3C)...................................................... 217,345
----------
Total.................................................................. 3,672,876
Less: Current portion......................................................... 655,249
----------
Total Long-Term Debt................................................... 3,017,627
----------
TOTAL LIABILITIES...................................................... 3,850,767
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY
Capital stock (par value $10; 1,000 shares authorized, 180 shares issued and
outstanding) (Note 5)....................................................... 1,800
Additional paid in capital.................................................... 998,200
Retained earnings............................................................. 4,038,193
----------
Net Stockholders' Equity............................................... 5,038,193
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................. $8,888,960
==========
</TABLE>

See independent auditors' report.
The accompanying notes are an integral part of the financial statements.

F-73
<PAGE> 167

NEW AGE BROADCASTING, INC.

STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED SEPTEMBER 30, 1994

<TABLE>
<S> <C> <C>
NET REVENUE........................................................... $8,339,045
OPERATING EXPENSES
Technical........................................................... $ 765,129
Agency and national commissions..................................... 1,029,036
Sales............................................................... 1,475,112
General and administrative.......................................... 423,845
Officer compensation................................................ 220,000
Amortization........................................................ 229,305
Depreciation........................................................ 98,946
----------
Total Operating Expenses.................................... 4,241,373
----------
INCOME FROM OPERATIONS................................................ 4,097,672
OTHER INCOME, (EXPENSES)
Interest income..................................................... 57,771
Interest expense, bank.............................................. (314,252)
Interest expense, shareholders...................................... $ (152,599)
----------
Net Other Expenses.......................................... (409,080)
----------
NET INCOME.................................................. 3,688,592
RETAINED EARNINGS, BEGINNING.......................................... 349,601
----------
RETAINED EARNINGS, ENDING............................................. $4,038,193
=========
</TABLE>

See independent auditors' report.
The accompanying notes are an integral part of the financial statements.

F-74
<PAGE> 168

NEW AGE BROADCASTING, INC.

STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1994

<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME.......................................................... $ 3,688,592
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Add (deduct) expenses not using cash
Depreciation and amortization.................................. $ 328,251
Increase in bad debt allowance................................. 90,186
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable............................................ (373,497)
Prepaid expenses............................................... 14,230
(Decrease) in:
Accounts payable and accrued expenses.......................... (251,382)
-----------
Total Adjustments......................................... (192,212)
-----------
Net Cash Provided by Operating Activities................. 3,496,380
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property and equipment........................... (95,703)
Expenditures for trademark acquisition............................ (35,432)
-----------
Net Cash Used in Investing Activities..................... (131,135)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of new financing, equipment........................... 17,623
Repayment of bank debt............................................ (409,334)
Repayment of shareholder debt..................................... $(3,697,401)
-----------
Net Cash Used in Financing Activities..................... (4,089,112)
-----------
NET DECREASE IN CASH................................................ (723,867)
CASH, BEGINNING..................................................... 1,033,485
-----------
CASH, ENDING........................................................ 309,618
-----------
SUPPLEMENTAL INFORMATION
Interest paid..................................................... $ 453,224
-----------
</TABLE>

See independent auditors' report.
The accompanying notes are an integral part of the financial statements.

F-75
<PAGE> 169

NEW AGE BROADCASTING, INC.

NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1994

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization

New Age Broadcasting, Inc. was incorporated on November 19, 1987 under the
laws of the State of Florida. Its principal office and place of business is in
the Miami, Florida area.

B. Operations

The corporation is engaged in the business of operating an FM radio
station, WXDJ-FM. Revenue is gained from the sale of commercial time to third
parties.

C. Plant, Property and Equipment

All plant, property and equipment accounts are stated at cost; additions
and major improvements are capitalized; expenditures for maintenance, repairs
and minor renewals are expensed as incurred. Any gain or loss on disposition of
assets is reflected in the statement of income. Depreciation of assets is
computed by use of the straight-line method over the estimated useful lives of
the respective assets, ranging from 5 to 7 years.

D. Station Acquisition

The corporation acquired the operating assets of WXDJ-FM on December 1,
1987 for a purchase price of $8,100,000. The total purchase price was allocated
to the assets in proportion to their relative estimated fair market values based
on independent appraisals obtained by management. The allocation of the purchase
price is summarized, as follows:

<TABLE>
<S> <C>
Station furniture, fixtures and equipment................................ $ 472,210
Transmitter site leasehold interest, FCC license and goodwill............ 7,627,790
----------
Total Allocated Purchase Price................................. $8,100,000
=========
</TABLE>

E. Barter Transactions

Reciprocal trade agreement transactions for advertising time are recorded
at fair market value of the merchandise or services received and are included in
broadcast revenues and expenses. Any uncompleted transactions are recorded in
accounts receivable and payable as appropriate.

F. Intangible Assets

Costs of acquiring the leasehold interest and FCC license, as well as
financing and organization costs, are capitalized. These intangible assets are
being amortized over the following estimated lives on a straight-line basis:

<TABLE>
<CAPTION>
AMORTIZATION
EXPENSE FISCAL
YEAR ENDED
SEPTEMBER 30,
ASSET COST LIFE 1994
--------------------------------------------------- ---------- --------- --------------
<S> <C> <C> <C>
Transmitter site leasehold, FCC license and
goodwill......................................... $7,753,090 40 years $202,835
Trademark.......................................... 35,431 14 years 221
Deferred financing costs........................... 126,612 5 years 25,322
Lease costs, new tower............................. 4,638 5 years 927
-----------
$229,305
===========
</TABLE>

F-76
<PAGE> 170

NEW AGE BROADCASTING, INC.

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1994

2. CASH, RESTRICTED FUNDS

The company has placed $100,000 in a restricted bank account to comply with
State of Florida regulation related to a current promotional contest. The
restriction is expected to be removed from these funds at the contest conclusion
during the next quarter.

3. FINANCING ARRANGEMENTS

A. Notes Payable, AT&T Commercial Finance Corporation

A term note was secured on October 29, 1992 from AT&T Commercial Finance
Corporation in the original amount of $4,150,000. Monthly principal payments are
required under the loan agreements as follows:

<TABLE>
<S> <C>
03/1/93 through 11/1/93.................................................... $40,000
12/1/93 through 11/1/94.................................................... 33,000
12/1/94 through 11/1/95.................................................... 36,000
12/1/95 through 11/1/96.................................................... 40,000
12/1/96 through 10/1/97.................................................... 44,000
</TABLE>

The remaining balance of the debt is due in full on November 1, 1997.

Interest is due monthly on the debt calculated at a rate based on the prime
rate plus two percent. At September 30, 1994 this rate was 9.75%.

Substantially all corporate assets have been pledged to secure this
obligation. In addition, the stockholders have pledged their stock and have
given their personal guarantees to secure the obligation. The debt agreements
include stipulations limiting capital expenditures, compensation, investments
and dividends and for maintenance of a minimum level of working capital.

B. Notes Payable, Transportation Equipment

C. Notes Payable, Stockholders

Financing has been arranged from the stockholders on a demand basis. The
original amount of this financing was $3,510,000 with the related accrued,
unpaid interest amounting to $1,944,746 as of October 1, 1993. Due to
stipulations contained in the AT&T Commercial Finance Corporation loan
agreements described above, this debt and the related accrued, unpaid interest
has previously been classified as long term obligations of the company. By
agreement between the parties in fiscal year 1994, the company was permitted to
use excess cash to repay stockholder debt. As of September 30, 1994, $217,345
remained due to the stockholders and was repaid in October, 1994.

D. The notes mature over the next three years as follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
- -------------------------
<S> <C>
1995 $ 655,249
1996 484,905
1997 2,532,722
----------
$3,672,876
=========
</TABLE>

F-77
<PAGE> 171

NEW AGE BROADCASTING, INC.

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1994

4. INCOME TAXES

Effective March 1, 1988, the company elected to be taxed under the
provisions of Subchapter S of the Internal Revenue Code and the State of Florida
Code with a fiscal year ending on September 30. Under these provisions, the
company does not pay federal or state corporate income taxes on its income. The
individual stockholders are liable for federal and state income taxes on their
respective shares of the company's taxable income.

From inception to February 29, 1988, the company was taxed under provisions
of Chapter C of the code which taxes the company directly on its income. The
company had incurred net operating losses of $360,260, for tax purposes, which
are available to be carried over to offset taxable income in future years up to
2002 should "C" status be elected at some future date prior to 2002.

5. CAPITAL STOCK

The company is authorized to issue 1,000 shares of common stock with a par
value of $10. At the time of issuance, this stock is designated to be either
voting or nonvoting by action of the Board of Directors. On February 29, 1988,
the company issued and has outstanding 180 shares of common stock, which consist
of 49 voting shares and 131 nonvoting shares.

6. COMMITMENTS AND CONTINGENCIES

A. Office Space Lease

The company has secured office space in Miami, Florida under a lease which
commenced May 21, 1991. The company has exercised its second renewal option
under that lease for the period June 1, 1994 through May 31, 1996.

B. Antenna Tower Lease

The company has secured antenna tower space at a facility in Miami and is
currently operating at that site under a temporary FCC operating permit. The
lease covering these facilities is for a five-year period, with six five-year
renewal periods, commencing September 1, 1992 with monthly rents of $3,500 plus
sales tax.

C. Minimum rents are required under the above leases as follows:

<TABLE>
<CAPTION>
OFFICE ANTENNA
YEAR ENDING SEPTEMBER 30, SPACE TOWER TOTAL
- ------------------------- ------- ------- -------
<S> <C> <C> <C> <C>
1995........................................... 60,472 44,940 105,412
1996........................................... 42,190 44,940 87,130
1997........................................... -- 41,195 41,195
------- ------- -------
102,662 131,075 233,737
======= ======= =======
</TABLE>

Rent expense for the year ended September 30,1994 amounted to $108,783.

D.The company has obtained office equipment under the terms of a lease which
has been recorded as a capitalized lease transaction. In this transaction,
both the asset and the corresponding liability have been

F-78
<PAGE> 172

NEW AGE BROADCASTING, INC.

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1994

recorded. The terms of the lease agreement require the payment of 60 monthly
installments of $141 including interest.

E. Temporary Operating Permit

The company is broadcasting from a facility in Miami, Florida under the
authority of a special temporary authorization granted by the FCC. This
authorization was necessary due to the destruction of the permanent tower by
Hurricane Andrew. This special temporary authorization expires on February 14,
1995. The company has filed an application of extension, which is being reviewed
by the FCC. Although an extension has not yet been granted and the company has
not returned to its original facility, management expects no interruption in
operations due to its continuing efforts in obtaining a permanent transmitter
facility.

F.The company had bank deposits of $109,618 at September 30, 1994 in excess of
federally insured limits.

7. RELATED PARTY TRANSACTIONS

Affiliated companies will utilize the station as part of their promotional
programming from time to time. Rates and terms for these spots are similar to
those offered to other customers. During the fiscal year, these cash spots
amounted to $58,775 of gross billings.

8. SUBSEQUENT EVENT

An agreement has been made by the owners of the corporation to acquire the
assets and operations of another radio station in the South Florida area. The
acquisition will actually be undertaken by a new corporation with identical
ownership as the company. It is expected that the acquisition financing
arrangements will involve a refinancing of the debt discussed in note 3A, with
the new loan balance secured by the assets of both companies.

F-79
<PAGE> 173

[PAXSON LOGO]
<PAGE> 174

- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY MANAGER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF THE SHARES OF CLASS A COMMON
STOCK OFFERED HEREBY IN THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE
FINANCIAL SERVICES ACT 1986 AND THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995
WITH RESPECT TO ANYTHING DONE BY ANY PERSON IN RELATION TO THE CLASS A COMMON
STOCK IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM MUST BE COMPLIED WITH.
SEE "UNDERWRITING."
IN THIS PROSPECTUS, EACH REFERENCE TO "DOLLARS" AND "$" IS TO UNITED STATES
DOLLARS.
------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Certain Definitions and Market and
Industry Data........................ ii
Prospectus Summary..................... 1
Risk Factors........................... 12
The Proposed Acquisitions.............. 20
Use of Proceeds........................ 21
Price Range of Class A Common Stock.... 22
Dividend Policy........................ 22
Dilution............................... 22
Capitalization......................... 24
The Company............................ 25
Selected Historical and Pro Forma
Financial Data....................... 25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 28
Business............................... 32
Management............................. 59
Certain Transactions................... 64
Principal and Selling Stockholders..... 68
Description of Capital Stock........... 69
Shares Eligible for Future Sale........ 74
Underwriting........................... 77
Certain United States Tax Consequences
to Non-United States Holders......... 80
Legal Matters.......................... 82
Experts................................ 82
Available Information.................. 82
Index to Pro Forma Financial
Information.......................... P-1
Index to Financial Statements.......... F-1
</TABLE>

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

13,500,000 SHARES

PAXSON LOGO

PAXSON COMMUNICATIONS
CORPORATION
CLASS A COMMON STOCK
------------
PROSPECTUS
MARCH 29, 1996
------------
SMITH BARNEY INC.
PAINEWEBBER INTERNATIONAL
CIBC WOOD GUNDY SECURITIES CORP.
BANKERS TRUST INTERNATIONAL PLC
- ------------------------------------------------------
- ------------------------------------------------------