SPANISH BROADCASTING SYSTEM INC, S-1, 1999-08-18

SPANISH BROADCASTING SYSTEM INC
S-1, 1999-08-18
RADIO BROADCASTING STATIONS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1999

REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

SPANISH BROADCASTING SYSTEM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 4832 13-3827791
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

<TABLE>
<S> <C>
RAUL ALARCON, JR.
3191 CORAL WAY 3191 CORAL WAY
MIAMI, FLORIDA 33145 MIAMI, FLORIDA 33145
(305) 441-6901 (305) 441-6901
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL NUMBER,
EXECUTIVE OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>

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

COPIES TO:

<TABLE>
<S> <C>
JASON L. SHRINSKY, ESQ. BONNIE A. BARSAMIAN, ESQ.
WILLIAM E. WALLACE, JR., ESQ. G. DAVID BRINTON, ESQ.
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP ROGERS & WELLS LLP
425 PARK AVENUE 200 PARK AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10166
(212) 836-8000 (212) 878-8000
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(2)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Common Stock............................... $300,000,000 $83,400
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes shares issuable upon exercise of an over-allotment option granted
to the underwriters.

(2) Computed in accordance with Rule 457(o) under the Securities Act of 1933.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Subject to Completion, dated August , 1999

PROSPECTUS
Shares

[LOGO]

SPANISH BROADCASTING SYSTEM, INC.
Class A Common Stock
- --------------------------------------------------------------------------------

This is our initial public offering of shares of Class A Common Stock. We are
offering shares of our Class A Common Stock and the selling
stockholders are offering shares of Class A Common Stock. We will
receive no proceeds from the sale of Class A Common Stock by the selling
stockholders. Of the shares of Class A Common Stock being offered,
shares are being offered in the United States and Canada and
shares are being offered outside the United States and Canada.

We are authorized to issue Class A Common Stock and Class B Common Stock. The
rights of each class are essentially identical, except each share of Class A
Common Stock entitles its holder to one vote per share and each share of Class B
Common Stock entitles its holder to ten votes per share.

No public market currently exists for our Class A Common Stock. We will apply to
have our shares of Class A Common Stock quoted on The Nasdaq Stock Market's
National Market under the symbol " ." Anticipated price range
$ to $ per share.

INVESTING IN OUR CLASS A COMMON STOCK INVOLVES RISKS. RISK FACTORS BEGIN ON PAGE
.

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- ------
<S> <C> <C>
Public Offering Price....................................... $ $
Underwriting Discount....................................... $ $
Proceeds to SBS............................................. $ $
Proceeds to Selling Stockholders............................ $ $
</TABLE>

We have granted the underwriters a 30-day option to purchase up to an additional
shares of Class A Common Stock on the same terms as set forth
above to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

Lehman Brothers Inc., on behalf of the underwriters, expects to deliver the
shares of Class A Common Stock on or about , 1999.
- --------------------------------------------------------------------------------

LEHMAN BROTHERS
MERRILL LYNCH & CO.
CIBC WORLD MARKETS

, 1999
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................ 1
Risk Factors....................... 10
Use of Proceeds.................... 17
Dividend Policy.................... 18
Dilution........................... 19
Capitalization..................... 20
Selected Historical Consolidated
Financial Information............ 21
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 24
Business........................... 34
Management......................... 59
Executive Compensation............. 61
Principal Stockholders............. 64
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Selling Stockholders............... 65
Certain Relationships and Related
Transactions..................... 66
Description of Capital Stock....... 68
Description of Indebtedness........ 74
Shares Eligible for Future Sale.... 77
Certain Federal Income Tax
Considerations................... 78
Underwriting....................... 81
Legal Matters...................... 86
Experts............................ 86
Where You Can Find More
Information...................... 87
Index to Consolidated Financial
Statements....................... F-1
</TABLE>

ABOUT THIS PROSPECTUS

- - You should rely only on the information contained in this prospectus or to
which we have referred you. We have not, and our underwriters have not,
authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely
on it. We are not, and the underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. The
information in this prospectus may only be accurate on the date of this
prospectus.

- - You should read the entire prospectus before making an investment decision.
The information in this prospectus may not contain all of the information that
may be important to you.

- - All references to "we", "us", "our", "SBS" or "our Company" in this prospectus
mean Spanish Broadcasting System, Inc., a Delaware corporation, and all
entities owned or controlled by Spanish Broadcasting System, Inc. and, if
prior to 1994, refer to our predecessor parent company SBS-NJ.

- - All references to "SBS-NJ" in this prospectus mean our predecessor parent
company Spanish Broadcasting System, Inc., a New Jersey corporation.

- - All references to "FCC" in this prospectus refer to the Federal Communications
Commission.

- - When citing Arbitron Survey data, all references to the "United States"
include the 50 states, the District of Columbia and the Commonwealth of Puerto
Rico.

- - Unless otherwise indicated, all references to "U.S. Hispanic", "Hispanic
markets in the United States" and similar phrases in this prospectus include
Hispanics in the United States and the Commonwealth of Puerto Rico.

- - All references to "N/A" in this prospectus mean "not available."

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<PAGE> 4

- - The term "broadcast cash flow" means operating income before depreciation,
amortization and corporate expenses. Broadcast cash flow should not be
considered in isolation from, or as a substitute for, net income or cash flow
and other consolidated income or cash flow statement data or as a measure of
our profitability or liquidity. Although broadcast cash flow is not a measure
of performance calculated in accordance with generally accepted accounting
principles, broadcast cash flow is widely used in the broadcasting industry as
a measure of a broadcasting company's operating performance.

- - The term "EBITDA" means earnings before extraordinary items, gain on sale of
AM stations, net interest expense, income taxes, depreciation, amortization
and other income or expenses. We have included information concerning EBITDA
in this prospectus because it is used by some investors as a measure of a
company's ability to service its debt obligations. Although EBITDA is not a
measure of performance calculated in accordance with generally accepted
accounting principles, EBITDA is widely used in the broadcasting industry as a
measure of a broadcasting company's operating performance.

- - The term "after-tax cash flow" means income before income tax benefit
(expense) and extraordinary items, minus net gain on sale of AM stations (net
of tax) and the current income tax provision, plus depreciation and
amortization expense. Although after-tax cash flow is not a measure of
performance calculated in accordance with generally accepted accounting
principles, after-tax cash flow is widely used in the broadcasting industry as
a measure of a broadcasting company's operating performance.

- - Unless we tell you otherwise, all information in this prospectus has been
adjusted to reflect (1) the redesignation of our previously outstanding shares
of Class A Common Stock into shares of currently outstanding Class B Common
Stock which occurred prior to the date of this prospectus, pursuant to our
Second Amended and Restated Certificate of Incorporation (filed as an exhibit
to the registration statement of which this prospectus is a part) and (2) a
-for-one stock split of our Class B Common Stock.

- - Our fiscal year is the twelve months ended on the last Sunday in September.

- - Unless we tell you otherwise, the information in this prospectus assumes that
the underwriters will not exercise their over-allotment option to purchase up
to additional shares of Class A Common Stock.

iii
<PAGE> 5

SOURCES OF INFORMATION

- - Unless otherwise indicated, all market revenue share and revenue rankings in
this prospectus are based on information for calendar year 1999 contained in
James H. Duncan, Jr., Duncan's Radio Market Guide (1999 ed.), Miller, Kaplan,
Arase & Co., Certified Public Accountants, Executive Summary, June 1999
(Miller Kaplan), Hungerford Radio Revenue Reports, 1999 (Hungerford) and BIA
Research, Inc.'s, Investing in Radio, 1999 Market Report (BIA Research).

- - Revenue rank and revenue share information are reported cumulatively for each
calendar quarter and, therefore, include the period from January 1 through the
date indicated.

- - Unless otherwise indicated, rank in audience share data in this prospectus is
based on the "12+ average quarter hour share." This refers to the number of
persons, aged 12 and over, who listen to a radio station for at least five
minutes in a quarter-hour segment Monday through Sunday, 6:00 a.m. to midnight
in the most recent survey period (Spring 1999) as reported by the Arbitron
Company, Arbitron Radio Market Reports (copyright 1999). Further, and unless
otherwise noted, references in this prospectus to the rank of a station among
all the radio stations within a market have been determined with reference to
all radio stations rated by Arbitron within the applicable market.

- - Unless otherwise indicated, all references to the demographic statistics in
this prospectus are derived from the Strategy Research Corporation -- 1998
United States Hispanic Market Study, the 1990 and 1997 reports by the Bureau
of the U.S. Census and Hispanic Business Magazine. This market study is
sponsored by advertisers and other businesses targeting the Hispanic market,
including SBS and many of our principal competitors.

iv
<PAGE> 6

SUMMARY

This summary contains a general discussion of our business, this offering
and summary financial information. It likely does not contain all the
information that may be important to you. You should read the entire prospectus
and the documents we have referred you to, including the financial data and the
information set forth under the heading "Risk Factors" for a more complete
understanding of Spanish Broadcasting System, Inc. and this offering.

OUR COMPANY

INTRODUCTION

Spanish Broadcasting System, Inc. was founded in 1983 and is the second
largest Spanish-language radio broadcasting company in the United States. We own
and operate 13 FM radio stations. Eleven of our stations are located in six of
the largest Hispanic markets in the United States, including Los Angeles, Puerto
Rico, New York, Miami, Chicago and San Antonio. Our radio stations reach over
51% of the U.S. Hispanic population. Our WSKQ-FM station in New York is ranked
in the Spring 1999 Arbitron ratings as the number one station in its target
demographic group (men and women, ages 25-54).

Our strategy is to maximize the profitability of our radio station
portfolio and to expand in our existing markets and into additional markets that
have a significant Hispanic population. We believe that the favorable
demographics of the U.S. Hispanic population and the rapid increase in
advertising targeting Hispanics provide us with significant opportunities for
growth. We also believe that we have competitive advantages in the radio
industry due to our focus on formats targeting U.S. Hispanic audiences and our
skill in programming and marketing to these audiences.

Our Internet strategy complements our existing business and enables us to
capitalize on our U.S. Hispanic market expertise. We recently purchased 80% of
JuJu Media, Inc., the owner of LaMusica.com, a bilingual Spanish-English
Internet web site and on-line community that focuses on the U.S. Hispanic
market. LaMusica.com is a provider of original information and interactive
content related to Latin music, entertainment, news and culture. LaMusica.com
provides our advertisers with an additional means of reaching the U.S. Hispanic
consumer markets and is a growing revenue source for us.

Due to the successful implementation of our strategy, we have achieved
significant growth over the last two years. From the twelve-month period ended
June 29, 1997 to the twelve-month period ended June 27, 1999, our:

- net revenues grew at a compound annual rate of 29.3%, from $55.0 million
to $91.9 million;

- broadcast cash flow grew at a compound annual rate of 35.8%, from $26.5
million to $48.9 million; and

- EBITDA grew at a compound annual rate of 35.5%, from $21.5 million to
$39.5 million.

SBS is led by Mr. Raul Alarcon, Jr., who has been our Chief Executive
Officer and President since 1986. The Alarcon family has been involved in
Spanish-language radio broadcasting since the 1950's, when Mr. Raul Alarcon,
Sr., the Chairman of our Board of Directors, established the first radio network
in Camaguey, Cuba. Members of our senior
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management team, on average, have over 25 years of experience in
Spanish-language media and radio broadcasting.

MARKET OPPORTUNITY

Our radio stations target the largest Hispanic markets in the United
States, including Puerto Rico. We believe that these markets have significant
growth potential for the following reasons:

- HISPANIC POPULATION GROWTH. The U.S. Hispanic population, approximately
34.3 million people, is the fastest growing segment of the U.S.
population, growing at approximately four times the rate of the
population as a whole. By 2005, Hispanics are projected to become the
largest minority group in the United States and by 2010, the second
largest Spanish-speaking population in the world.

- SIGNIFICANT GEOGRAPHIC CONCENTRATION. The U.S. Hispanic population is
highly concentrated with over 62% of U.S. Hispanics residing in the top
ten U.S. Hispanic markets. Because our stations are located in six of
these markets, advertisers can reach the U.S. Hispanic population more
cost effectively by advertising on our stations rather than advertising
through competing national media.

- ATTRACTIVE DEMOGRAPHIC GROUP FOR ADVERTISERS. The U.S. Hispanic
population accounted for estimated consumer spending of $380.0 billion in
1998 (7.4% of total U.S. consumer spending), an increase of 78.4% since
1990. By 2000, U.S. Hispanics are expected to account for estimated
consumer spending of $457.8 billion (8.2% of total U.S. consumer
spending), and by 2010 are expected to account for estimated consumer
spending of $965.3 billion (12% of total U.S. consumer spending), far
outpacing the expected growth of overall U.S. consumer spending during
the same period.

- USE OF SPANISH LANGUAGE. Approximately 69% of U.S. Hispanics speak
Spanish at home and this percentage is projected to remain relatively
constant through the year 2010. We believe that the continued use of
Spanish by U.S. Hispanics and their preference for Spanish-language music
will contribute to the continued popularity of Spanish-language radio as
a source of entertainment, information and culture for the U.S. Hispanic
population.

- INTERNET USAGE. Approximately 36% of the U.S. Hispanic population
(excluding Puerto Rico) currently accesses the Internet, a percentage
which we expect will increase over the next few years. We believe the
Internet represents a complementary medium for our advertisers to reach
our target audience.
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<PAGE> 8

\ SBS AND OUR MARKETS

The table below lists the six markets where we currently own and operate
radio stations in the United States.

<TABLE>
<CAPTION>
1999
HISPANIC AUDIENCE TOTAL TOTAL ANNUAL MARKET 1998 POPULATION
MARKET SHARE AUDIENCE REVENUE RADIO RANKING --------------------
NUMBER AUDIENCE RANK SHARE % SHARE % REVENUE BY SIZE OF TOTAL HISPANIC
OF SHARE (BY TARGET (GENERAL (GENERAL ALL MARKETS HISPANIC (IN % OF
MARKET STATIONS RANK AUDIENCE) MARKET) MARKET) ($ MILLIONS) POPULATION MILLIONS) TOTAL
- ------ -------- --------- ---------- -------- -------- ------------ ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Los Angeles.......... 1 3 8 3.0 2.7 $727 1 16.3 38.7
Puerto Rico.......... 3 N/A 2, 12, 25 6.7 N/A 90 2 3.8 99.6
New York............. 2 1, 2 1, 11 8.0 7.3 688 3 20.1 18.1
Miami................ 3 3, 4, 5 7, 10, 14 9.4 11.7 233 4 3.7 38.1
Chicago.............. 1 1 7 2.4 2.6 471 6 9.4 12.7
San Antonio.......... 1 3 8 2.5 2.7 78 8 2.1 51.6
--
Total................ 11
</TABLE>

- Audience share and audience share rank data were obtained from the Spring
1999 Arbitron Survey.

- Revenue share information for all markets other than Chicago was obtained
from BIA Research and Miller Kaplan data. Revenue share information for
the Chicago market was obtained from Hungerford data.

- Population data were derived from the Strategy Research
Corporation -- 1998 U.S. Hispanic Market Report and 1990 and 1997
population reports from the Bureau of the U.S. Census.

- In Puerto Rico, we own three radio stations, WCMA-FM (formerly WDOY-FM),
WMEG-FM and WEGM-FM. WMEG-FM and WEGM-FM are simulcast, but have separate
Arbitron ratings.

- We own and operate one radio station in each of Key West and Key Largo,
WVMQ-FM and WZMQ-FM, respectively, which are simulcast but are not rated
by Arbitron. Information with respect to these stations is not included
in this table. We are seeking regulatory approvals to relocate our Key
Largo tower closer to the Miami market. See "Business -- Radio Station
Portfolio -- Miami and the Florida Keys."

BUSINESS STRATEGY

We focus on maximizing the profitability of our radio station portfolio by
strengthening the performance of our existing radio stations and making
additional strategic station acquisitions in both our existing markets and in
new markets that have a significant Hispanic population. In addition, we are
implementing an Internet strategy in order to develop new revenue sources.

OPERATING STRATEGY. Our operating strategy focuses on maximizing our radio
stations' appeal to our audience and our advertisers while minimizing operating
expenses, in order to grow revenue and cash flow. To achieve these goals, we
focus on:

- providing high-quality Spanish-language programming;

- retaining strong local management teams;
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- utilizing aggressive sales efforts;

- controlling operating costs;

- making effective use of promotions and special events; and

- maintaining strong community involvement.

ACQUISITION STRATEGY. Our acquisition strategy is to acquire radio
stations in the largest U.S. Hispanic markets. We consider acquisitions of
stations in our existing markets, as well as acquisitions in other markets with
a large Hispanic population where we can maximize our revenues through
aggressive sales to U.S. Hispanic and general market advertisers. These
acquisitions may include stations that do not currently target the U.S. Hispanic
market, but which we believe can be successfully reformatted.

INTERNET STRATEGY. Our Internet strategy is designed to complement our
existing business and to enable us to capitalize on our U.S. Hispanic market
expertise. The centerpiece of our strategy is LaMusica.com, an Internet web site
and on-line community focused on the U.S. Hispanic market. This web site will
offer all of our radio stations' broadcasts through the use of audio streaming
technology and will provide our advertisers with a complementary means of
reaching their target audience.

CONCURRENT SENIOR SUBORDINATED NOTES OFFERING AND FINANCING PLAN

The net proceeds we will receive from this offering and the concurrent
offering of $235.0 million aggregate principal amount of our senior subordinated
notes due 2009 are estimated to be approximately $ million and $
million, respectively. We will not receive any proceeds from the sale of Class A
Common Stock by the selling stockholders. This offering of our Class A Common
Stock is not conditioned upon any other offering. The senior subordinated notes
offering is conditioned upon the completion of this offering. Upon completion of
both offerings, we intend to enter into a senior credit facility arranged by
Lehman Commercial Paper, Inc., an affiliate of Lehman Brothers Inc. The senior
credit facility is conditioned upon the closing of this offering and our senior
subordinated notes offering. The senior credit facility will consist of (1) a
$ million six-year revolving credit facility, maturing in 2005, and
(2) a $ million six-year delayed draw ( months to draw) term loan
facility, maturing in 2005.

We intend to use the net proceeds from this offering and the concurrent
senior subordinated notes offering to redeem our preferred stock and for general
corporate purposes, including the refinancing of our existing debt. We cannot
assure you that we will complete the concurrent senior subordinated notes
offering or the senior credit facility on terms that are favorable to us, or at
all. This prospectus relates only to the offering of our Class A Common Stock
and not to any other securities. If only this offering of our Class A Common
Stock is completed, we would use the net proceeds to redeem our outstanding
preferred stock. The remaining proceeds, if any, would be used for general
corporate purposes other than the refinancing of our existing debt. The
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following table presents the sources and uses of funds (1) pro forma for this
offering, and (2) pro forma as adjusted for this offering and the senior
subordinated notes offering:

<TABLE>
<CAPTION>
PRO FORMA FOR THIS PRO FORMA AS ADJUSTED
OFFERING FOR BOTH OFFERINGS
------------------ ---------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
SOURCES OF FUNDS:
This offering............................................ $ $
-------- --------
Senior subordinated notes offering.......................
-------- --------
Cash on hand.............................................
-------- --------
Total............................................. $ $
======== ========
USES OF FUNDS:
Redemption of preferred stock............................ $ $
-------- --------
General corporate purposes...............................
-------- --------
Estimated fees and expenses..............................
-------- --------
Total............................................. $ $
======== ========
</TABLE>

THIS OFFERING

Class A Common Stock offered
by SBS(1)..................... ________ shares in the United States and Canada
________ shares outside the United States and
Canada
________ Total shares offered by SBS

Class A Common Stock offered
by selling stockholders....... ________ shares in the United States and Canada
________ shares outside the United States and
Canada
________ Total shares offered by selling
stockholders

Common stock to be outstanding
after this offering(1)...... ________ shares of Class A Common Stock
________ shares of Class B Common Stock

Voting Rights................. Holders of Class A Common Stock are entitled to
one vote per share. Holders of Class B Common
Stock are entitled to ten votes per share. Our
Class B Common Stock is convertible at the
option of its holder into an equal number of
shares of Class A Common Stock. Class B Common
Stock automatically converts to Class A Common
Stock, on a share-for-share basis, upon
transfer to any entity or person other than an
affiliate of a holder of shares of Class B
Common Stock. After this offering, our Chief
Executive Officer and President will
beneficially own shares of Class B Common Stock
having approximately % of the combined
voting power of the outstanding shares of
common stock.

Other Rights.................. Except as to voting and conversion rights, each
class of common stock has the same rights.
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Use of Proceeds............... We estimate that the net proceeds we will
receive from this offering will be
approximately $ million, based on an
offering price at the mid-point of the range
stated on the cover page of this prospectus. We
will not receive any proceeds from the Class A
Common Stock sold by the selling stockholders.
This offering of our Class A Common Stock is
not conditioned upon any other offering. We
estimate that the net proceeds from the
concurrent senior subordinated notes offering
will be approximately $ million. We intend
to use the proceeds of these offerings to
redeem our preferred stock and for general
corporate purposes, including the refinancing
of our existing debt. If only our Class A
Common Stock offering is completed, then we
would use the net proceeds of this offering to
redeem our outstanding preferred stock. The
remaining proceeds, if any, would be used for
general corporate purposes other than the
refinancing of our existing debt.

Proposed Nasdaq National
Market symbol................. " "
- ---------------
(1) Excludes shares of Class A Common Stock that may be issued to cover
over-allotment shares, if any.
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<PAGE> 12

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT RATIOS, SHARES OUTSTANDING AND PER SHARE DATA)

The following table contains summary historical financial year-end
information derived from our audited consolidated financial statements, which
have been audited by KPMG LLP, independent certified public accountants. The
table also contains summary unaudited historical financial information for the
nine months ended June 27, 1999 and June 28, 1998. The table also contains
summary unaudited pro forma financial information.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------
PRO FORMA AS
PRO FORMA FOR ADJUSTED FOR
FISCAL YEAR ENDED NINE MONTHS ENDED THIS OFFERING BOTH OFFERINGS
------------------------------ ------------------- ------------- --------------
9/29/96 9/28/97 9/27/98 6/28/98 6/27/99 6/27/99 6/27/99
-------- -------- -------- -------- -------- ------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:

Gross revenues............................ $ 55,338 $ 67,982 $ 86,766 $ 62,099 $ 80,437

Less: agency commissions.................. 6,703 7,972 10,623 7,508 10,082
-------- -------- -------- -------- --------

Net revenues............................ 48,635 60,010 76,143 54,591 70,355

Station operating expenses................ 27,876 31,041 39,520 28,298 31,782

Depreciation and amortization............. 4,556 7,619 8,877 6,867 7,223

Corporate expenses........................ 3,748 5,595 6,893 5,122 7,658
-------- -------- -------- -------- --------

Operating income........................ 12,455 15,755 20,853 14,304 23,692

Interest expense, net..................... (16,533) (22,201) (20,860) (16,002) (15,736)

Other income (expense), net............... (1,574) (791) (213) -- (485)

Gain on sale of AM stations............... -- -- 36,242 36,247 --
-------- -------- -------- -------- --------

Income (loss) before income taxes and
extraordinary items................... (5,652) (7,237) 36,022 34,549 7,471

Income tax expense (benefit).............. (1,166) (2,715) 15,624 13,820 3,177
-------- -------- -------- -------- --------

Income (loss) before extraordinary
items................................. (4,486) (4,522) 20,398 20,729 4,294

Extraordinary gain (loss) net of income
taxes................................... -- (1,647) (1,613) (1,613) --
-------- -------- -------- -------- --------

Net income (loss)....................... $ (4,486) $ (6,169) $ 18,785 $ 19,116 $ 4,294
======== ======== ======== ======== ========

Dividends on preferred stock.............. (2,994) (17,044) (30,270) (22,391) (26,001)
-------- -------- -------- -------- --------

Net income (loss) applicable to common
stock................................. $ (7,480) $(23,213) $(11,485) $ (3,275) $(21,707)
======== ======== ======== ======== ========

Dividends per share on common stock....... $ -- $ -- $ 5.60 $ 5.60 $ --
======== ======== ======== ======== ========

Earnings (loss) per common share:

Basic and diluted (before extraordinary
item)................................. $ (12.33) $ (35.55) $ (16.27) $ (2.74) $ (34.31)

Basic and diluted....................... $ (12.33) $ (38.26) $ (18.93) $ (5.40) $ (34.31)

Weighted average common shares
outstanding:

Basic and diluted....................... 606,668 606,668 606,668 606,668 632,598

OTHER FINANCIAL DATA:

Broadcast cash flow....................... $ 20,759 $ 28,969 $ 36,623 $ 26,293 $ 38,573

Broadcast cash flow margin................ 42.7% 48.3% 48.1% 48.2% 54.8%

EBITDA.................................... $ 17,011 $ 23,374 $ 29,730 $ 21,171 $ 30,915

After-tax cash flow....................... 70 3,097 7,530 5,848 11,517

Capital expenditures...................... 3,811 2,022 1,645 1,290 1,684

Ratio of total debt and preferred stock to EBITDA...............................................

Ratio of EBITDA to interest expense, net........................................................
</TABLE>

7
<PAGE> 13

<TABLE>
<CAPTION>
AS OF JUNE 27, 1999 (UNAUDITED)
-------------------------------------------
PRO FORMA AS
PRO FORMA FOR ADJUSTED FOR
HISTORICAL THIS OFFERING BOTH OFFERINGS
---------- ------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:

Cash and cash equivalents................................... $ 20,895

Total assets................................................ 359,501

Total debt (including current portion)...................... 172,767

Preferred stock............................................. 218,851

Total stockholders' equity (deficiency)..................... (67,897)
</TABLE>

- - Our summary historical consolidated financial data should be read in
conjunction with our historical consolidated financial statements as of and
for each of the fiscal years in the three-year period ended September 27,
1998, the related notes and independent auditor's report included in this
prospectus. For additional information, see the financial section of this
prospectus and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

- - The financial information for the nine months ended June 27, 1999 and June 28,
1998 is unaudited, but in our opinion reflects all adjustments necessary for a
fair presentation of the financial information.

- - Operating results for the nine months ended June 27, 1999 are not necessarily
indicative of the results that may be expected for the fiscal year ended
September 26, 1999. Our summary unaudited pro forma consolidated financial
information does not purport to represent what our results of operations or
financial condition would actually have been had the transactions described
below occurred on the dates indicated or to project our results of operations
or financial condition for any future period or date.

- - The pro forma amounts for the period ended June 27, 1999, in the column "Pro
Forma for this Offering" are adjusted to give effect to this offering, the
redemption of all of our preferred stock, the redesignation of our Class A
Common Stock to shares of Class B Common Stock and a -for-one stock split of
our Class B Common Stock as if each had occurred as of the beginning of the
period.

- - The pro forma amounts for the period ended June 27, 1999, in the column "Pro
Forma As Adjusted for Both Offerings" are adjusted to give effect to the
transactions described above and further adjusted for the offering of
approximately $235.0 million aggregate principal amount of % senior
subordinated notes due 2009 and the refinancing of our existing debt as if
they had occurred as of the beginning of the period.

- - The pro forma balance sheet data are adjusted to give effect to the
transactions described above as if they had occurred as of June 27, 1999.

- - The term "EBITDA" means earnings before extraordinary items, gain on sale of
AM stations, net interest expense, income taxes, depreciation, amortization
and other income or expense. We have included information concerning EBITDA in
this prospectus because it is used by some investors as a measure of a
company's ability to service its debt obligations. Although EBITDA is not a
measure of performance calculated in accordance with generally accepted
accounting principles, EBITDA is widely used in the broadcasting industry as a
measure of a broadcasting company's operating performance.

RISK FACTORS

You should carefully consider the following factors and other information
in this prospectus before deciding to invest in our shares of Class A Common
Stock.

SUBSTANTIAL DEBT -- OUR SUBSTANTIAL LEVEL OF DEBT COULD LIMIT OUR ABILITY TO
GROW AND COMPETE.

Our consolidated debt is substantial when compared to our common
stockholders' equity. As of June 27, 1999, on a pro forma basis after giving
effect to the transactions described in this prospectus, we had outstanding long
term debt (including current portions) of approximately $ million and a
stockholders' equity of $ million. We may incur more debt when we enter into
the senior credit facility upon completion of this offering and the senior
subordinated notes offering.

Our substantial level of debt could have several important consequences to
the holders of our securities, including the following:
- a significant portion of our cash flow from operations will be dedicated
to servicing our debt obligations and will not be available for
operations, future business opportunities or other purposes;
- our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate or other
purposes may be limited; and
- our substantial debt could make us more vulnerable to economic downturns,
limit our ability to withstand competitive pressures and reduce our
flexibility in responding to changing business and economic conditions.

Our ability to satisfy all of our debt obligations depends upon our future
operating performance. Our operating performance will be affected by prevailing
economic conditions and financial, business and other factors, some of which are
beyond our control. We believe that our operating cash flow will be sufficient
to meet our operating expenses and to service our debt requirements as they
become due. However, if we are unable to pay our debts, whether upon
acceleration of our debt or in the ordinary course of business, we will be
forced to pursue alternative strategies such as selling assets, restructuring or
refinancing our debt, or seeking additional equity capital. We cannot assure you
that we can successfully complete any of these strategies on satisfactory terms
or that the approval of the FCC could be obtained on a timely basis, or at all,
for the transfer of any of the stations' licenses in connection with a proposed
sale of assets.

RESTRICTIONS IMPOSED BY OUR DEBT -- THE TERMS OF OUR DEBT RESTRICT US FROM
ENGAGING IN MANY ACTIVITIES AND REQUIRE US TO SATISFY VARIOUS FINANCIAL TESTS.

The indenture governing the senior subordinated notes to be issued in our
concurrent senior subordinated notes offering will contain covenants that
restrict, among other things, our ability to:
- incur additional debt;
- create liens;
- pay dividends, distributions or make other specified restricted payments;
- sell assets;
- enter into transactions with affiliates;
- sell capital stock of our subsidiaries; and
- merge or consolidate with any other person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of our
assets.

If an event of default occurs under this indenture, the noteholders could
elect to declare all amounts outstanding under the indenture, together with
accrued interest, to be immediately due

10
<PAGE> 16

and payable. In addition, there is a change of control provision in the
indenture which would require us to make an offer to repurchase all of our notes
in the event that we experience a change of control. If we do not complete the
concurrent senior subordinated notes offering, we will continue to be subject to
the indentures that govern our existing 12 1/2% notes and 11% notes, which
contain similar, but more restrictive, covenants. See "Description of
Indebtedness -- 12 1/2% Notes" and "Description of Indebtedness -- 11% Notes."

Similarly, if we enter into the senior credit facility it will contain
covenants that restrict, among other things, our ability to incur additional
debt, pay cash dividends, repurchase our capital stock, make capital
expenditures, make investments or other restricted payments, swap or sell
assets, engage in transactions with related parties, secure non-senior debt with
our assets, or merge, consolidate or sell all or substantially all of our
assets.

Our senior credit facility will require us to get our lenders' consent
before we make acquisitions involving the payment of cash or assumption of
indebtedness in excess of $ . This restriction may make it more
difficult to pursue our acquisition strategy. Our senior credit facility will
also require us to maintain specific financial ratios. Events beyond our control
could affect our ability to meet those financial ratios, and we cannot assure
you that we will meet them.

Our senior credit facility will mature in 2005 and will be (1) guaranteed
by our subsidiaries (other than those subsidiaries which own broadcast
licenses); (2) secured by all of our assets and our subsidiaries' assets other
than the assets of the broadcasting license subsidiaries; and (3) secured by the
stock of our subsidiaries, including the stock of our broadcasting license
subsidiaries. A breach of any of the covenants contained in our senior credit
facility could allow our lenders to declare all amounts outstanding under the
senior credit facility to be immediately due and payable. In addition, our
lenders could proceed against the collateral granted to them to secure that
indebtedness. If the amounts outstanding under the senior credit facility are
accelerated, we cannot assure you that our assets will be sufficient to repay in
full the money owed to the banks or to our other debt holders.

HISTORY OF NET LOSSES -- WE HAVE EXPERIENCED NET LOSSES IN THE PAST AND TO THE
EXTENT THAT WE EXPERIENCE LOSSES IN THE FUTURE, OUR ABILITY TO RAISE CAPITAL AND
THE MARKET PRICES OF OUR SECURITIES, INCLUDING OUR COMMON STOCK AND ANY NOTES TO
BE ISSUED IN THE SENIOR SUBORDINATED NOTES OFFERING, COULD BE ADVERSELY
AFFECTED.

We have experienced net losses in fiscal years 1996 and 1997. The primary
reasons for these losses are interest expense and significant charges for
depreciation and amortization related to the acquisition of radio stations and
refinancing costs. If we acquire additional stations, these charges will
probably increase. After giving effect to this offering and the concurrent
senior subordinated notes offering, as if they had occurred on September 27,
1998, we had a net loss of $ million for the nine months period ended
June 27, 1999.

We cannot assure you that we will achieve or sustain profitability. Failure
to achieve profitability may adversely affect the market price of our common
stock, which in turn may adversely affect our ability to raise additional equity
capital and to incur additional debt.

11
<PAGE> 17

IMPORTANCE OF THE NEW YORK, LOS ANGELES AND MIAMI MARKETS -- A LARGE PORTION OF
OUR NET BROADCAST REVENUE AND BROADCAST CASH FLOW COMES FROM THESE MARKETS.

Based upon the stations we owned and operated as of June 27, 1999, our
radio stations in New York, Los Angeles and Miami collectively accounted for
85.1% of our net broadcast revenue and for 88.6% of our broadcast cash flow for
the nine-month period ended June 27, 1999. A significant decline in net
broadcast revenue or broadcast cash flow from our stations in any of these
markets could have a material adverse effect on our financial position and
results of operations.

DEPENDENCE ON KEY PERSONNEL -- LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR
BUSINESS.

Our business depends upon the efforts, abilities and expertise of our
executive officers and other key employees, including Raul Alarcon, Jr., our
Chief Executive Officer and President. The loss of any of these officers and key
employees could have a material adverse effect on our business. We do not
maintain key man life insurance on any of our personnel.

COMPETITION -- WE COMPETE FOR ADVERTISING REVENUE WITH OTHER RADIO GROUPS AS
WELL AS TELEVISION AND OTHER MEDIA, MANY OPERATORS OF WHICH HAVE GREATER
RESOURCES THAN WE DO.

Broadcasting is a highly competitive business. Our radio stations compete
in their respective markets for audiences and advertising revenues with other
radio stations of all formats, as well as with other media, such as newspapers,
magazines, television, cable television, outdoor advertising, the Internet and
direct mail. As a result of this competition, our stations' audience ratings and
market shares may decline and any adverse change in a particular market could
have a material adverse effect on the revenue of our stations located in that
market.

Although we believe that each of our stations is able to compete
effectively in its respective market, we cannot assure you that any station will
be able to maintain or increase its current audience ratings and advertising
revenues. Radio stations can change formats quickly. Any other radio station
currently broadcasting could shift its format to duplicate the format of any of
our stations. If a station converts its programming to a format similar to that
of one of our stations, or if one of our competitors strengthens its operations,
the ratings and broadcast cash flow of our station in that market could be
adversely affected. In addition, other radio companies which are larger and have
more resources may also enter markets in which we operate.

CONTROLLING STOCKHOLDER -- OUR CEO AND PRESIDENT WILL HAVE MAJORITY CONTROL.

After this offering, Raul Alarcon, Jr., our Chief Executive Officer and
President, will own shares of Class B Common Stock having approximately %
of the combined voting power of our outstanding shares of common stock.
Accordingly, Mr. Alarcon, Jr. will have the ability to elect all of our
directors and will effectively have control of our policies and affairs. This
control may discourage certain types of transactions involving an actual or
potential change of control of SBS such as a merger or sale of SBS.

12
<PAGE> 18

TECHNOLOGY CHANGES, NEW SERVICES AND EVOLVING STANDARDS -- WE MUST BE ABLE TO
RESPOND TO RAPIDLY CHANGING TECHNOLOGY, SERVICES AND STANDARDS WHICH
CHARACTERIZE OUR INDUSTRY IN ORDER TO REMAIN COMPETITIVE.

The FCC is considering ways to introduce new technologies to the radio
broadcast industry, including satellite and terrestrial delivery of digital
audio broadcasting, and the standardization of available technologies which
significantly enhance the sound quality of AM and FM broadcasts. We cannot
predict the effect new technology of this nature will have on our financial
condition and the results of our operations. Several new media technologies are
being developed, including the following:

- cable television operators have introduced a service commonly referred to
as "cable radio" which provides cable television subscribers with several
high-quality channels of music, news and other information;

- the Internet is poised to offer new and diverse forms of program
distribution;

- direct satellite broadcast television companies are supplying subscribers
with several high quality music channels;

- the introduction of satellite digital audio radio technology could result
in new satellite radio services with sound quality equivalent to that of
compact discs; and

- the introduction of in-band on-channel digital radio could provide
multi-channel, multi-format digital radio services in the same bandwidth
currently occupied by traditional AM and FM radio services.

GOVERNMENT REGULATION -- OUR BUSINESS DEPENDS ON MAINTAINING OUR FCC LICENSES.
WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO MAINTAIN THESE LICENSES.

The domestic broadcasting industry is subject to extensive federal
regulation which, among other things, requires approval by the FCC for the
issuance, renewal, transfer and assignment of broadcasting station operating
licenses and limits the number of broadcasting properties we may acquire.
Federal regulations create significant new opportunities for broadcasting
companies but also create uncertainties as to how these regulations will be
interpreted and enforced by the courts.

Our success depends in part on acquiring and maintaining broadcast licenses
issued by the FCC, which are typically issued for a maximum term of eight years
and are subject to renewal. While we believe that the FCC will approve
applications for renewal of our existing broadcasting licenses when made, we
cannot guarantee that pending or future renewal applications submitted by us
will be approved, or that renewals will not include conditions or qualifications
that could adversely affect our operations. Although we may apply to renew our
FCC licenses, interested third parties may challenge our renewal applications.
In addition, if we or any of our stockholders, officers, or directors violate
the FCC's rules and regulations or the Communications Act of 1934, or are
convicted of a felony, the FCC may commence a proceeding to impose sanctions
upon us. Examples of possible sanctions include the imposition of fines; the
revocation of our broadcast licenses; or the renewal of one or more of our
broadcasting licenses for a term of fewer than eight years. If the FCC were to
issue an order denying a license renewal application or revoking a license, we
would be required to cease operating the radio station covered by the license
only after we had exhausted administrative and judicial review without success.

13
<PAGE> 19

The radio broadcasting industry is subject to extensive and changing
federal regulation. Among other things, the Communications Act and FCC rules and
policies limit the number of broadcasting properties that any person or entity
may own (directly or by attribution) in any market and require FCC approval for
transfers of control and assignments. The filing of petitions or complaints
against SBS or any FCC licensee from which we acquire a station could result in
the FCC delaying the grant of, or refusing to grant or imposing conditions on
its consent to the assignment or transfer of licenses. The Communications Act
and FCC rules also impose limitations on non-U.S. ownership and voting of the
capital stock of SBS.

Moreover, governmental regulations and policies may change over time and we
cannot assure you that those changes would not have a material adverse impact
upon our business, financial position or results of operations. In addition, the
loss of any of our existing Los Angeles or New York stations' broadcasting
licenses, is an event of default under the indenture that governs our 12 1/2%
notes, and could cause an acceleration of amounts due under those notes prior to
maturity.

ANTITRUST MATTERS -- WE MAY FACE REGULATORY REVIEW FOR ADDITIONAL ACQUISITIONS
IN OUR EXISTING MARKETS AND, POTENTIALLY, NEW MARKETS.

An important part of our growth strategy is the acquisition of additional
radio stations. After the passage of the Telecommunications Act of 1996, the
U.S. Department of Justice has become more aggressive in reviewing proposed
acquisitions of radio stations and radio station networks. The Justice
Department is particularly concerned when the proposed buyer already owns one or
more radio stations in the market of the station it is seeking to buy. Recently,
the Justice Department has challenged a number of radio broadcasting
transactions. Some of those challenges ultimately resulted in consent decrees
requiring, among other things, divestitures of certain stations. In general, the
Justice Department has more closely scrutinized radio broadcasting acquisitions
that result in market shares in excess of 40% of local radio advertising
revenue. Similarly, the FCC has announced new procedures to review proposed
radio broadcasting transactions even if the proposed acquisition otherwise
complies with the FCC's ownership limitations. In particular, the FCC may invite
public comment on proposed radio transactions that the FCC believes, based on
its initial analysis, may present ownership concentration concerns in a
particular local radio market.

RECESSION OR DOWNTURN IN THE ECONOMY -- NATIONAL OR REGIONAL RECESSIONS COULD
IMPAIR OUR REVENUES.

Our broadcasting revenues could be adversely affected by a recession or
downturn in the United States economy since advertising expenditures generally
decrease as the economy slows down. In addition, our operating results in
individual geographic markets could be adversely affected by local or regional
economic downturns. Our broadcasting revenues have been materially adversely
affected by past recessions. Future economic downturns might have a material
adverse effect on our ability to generate advertising revenue and might
materially and adversely affect our financial condition and operating results.

14
<PAGE> 20

NO PRIOR MARKET FOR COMMON STOCK -- OUR INVESTORS WILL PAY A PRICE FOR OUR CLASS
A COMMON STOCK THAT WAS NOT DETERMINED IN A COMPETITIVE MARKET.

Prior to this offering, there has not been any market for the Class A
Common Stock. We will apply to have our shares of Class A Common Stock quoted on
The Nasdaq Stock Market's National Market under the symbol " ."
We do not know the extent to which investor interest in our business will lead
to the development of a trading market or how liquid that market might be. If
you purchase shares of Class A Common Stock in this offering, you will pay a
price that was not established in a competitive market. Rather, you will pay a
price that was negotiated between us and our underwriters. The price of the
Class A Common Stock that will prevail in the market after this offering may be
higher or lower than the price you pay. For a description of the factors we will
consider in negotiating the public offering price, see "Underwriting."

In addition, in recent years, the stock market has experienced extreme
price fluctuations, sometimes without regard to the performance of particular
companies. Broad market and industry fluctuations may adversely affect the
trading price of the Class A Common Stock, regardless of our actual operating
performance.

SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE -- FUTURE SALES BY EXISTING
STOCKHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR CLASS A COMMON STOCK.

The market price of our Class A Common Stock could drop as a result of
sales of a large number of shares of Class A Common Stock or Class B Common
Stock (convertible into Class A Common Stock) by our existing stockholders after
this offering, or the perception that these sales may occur. These factors could
make it more difficult for us to raise funds through future offerings of our
Class A Common Stock.

The shares of Class B Common Stock held by Pablo Raul Alarcon, Sr., Raul
Alarcon, Jr. and Jose Grimalt not being offered by this prospectus are subject
to "lock-up" agreements that prohibit them from selling these shares for 180
days after the date of this prospectus. When the 180-day "lock-up" period
expires, or if Lehman Brothers Inc., in its sole discretion, consents to an
earlier sale, Messrs. Alarcon, Sr., Alarcon, Jr. and Grimalt will be able to
sell their shares in the open market, subject to certain legal restrictions.

Holders of shares of Class B Common Stock (which were Class A Common Stock
prior to our redesignation) issued upon exercise of the 1994 and 1997 warrants
have demand registration rights (permitting them to have their shares registered
for resale within 180 days of making such demand for registration) and piggyback
registration rights (permitting them to have their shares registered in this
offering, subject to reduction upon determination by Lehman Brothers Inc. as the
managing underwriter of this offering). There are currently
shares outstanding which enjoy the benefit of these registration rights and are
not subject to "lock-up" agreements. Upon registration, these shareholders will
be able to sell their shares in the open market without restriction.

Upon completion of this offering, there will be outstanding shares of
Class A Common Stock. The shares of Class A Common Stock sold in this offering
will be freely tradable without restriction, except for any shares acquired by
one of our affiliates, which can be sold under Rule 144 of the Securities Act of
1933 subject to certain volume and other restrictions.

15
<PAGE> 21

YEAR 2000 -- COMPUTER PROGRAMS AND MICROPROCESSORS THAT HAVE DATE SENSITIVE
SOFTWARE MAY RECOGNIZE A DATE USING "00" AS YEAR 1900 RATHER THAN 2000, OR NOT
RECOGNIZE THE DATE AT ALL, WHICH COULD RESULT IN MAJOR SYSTEM FAILURES OR
MISCALCULATIONS.

We rely, directly and indirectly, on information technology systems to
operate our radio stations, provide our radio stations with up-to-date news and
perform a variety of administrative services, including accounting, financial
reporting, advertiser spot scheduling, payroll and invoicing. We also use
non-information technology systems, such as microchips, for dating and other
automated functions. We are in the process of assessing and remediating
potential risks to our business related to the year 2000 problem. Although we
believe that, as a result of these efforts, our critical systems are or will be
substantially year 2000 compliant, we cannot assure you that this will be the
case. One of our greatest potential year 2000 risks may be that third parties
with whom we deal will fail to be year 2000 compliant. For example, if our
programming suppliers or key advertisers experience significant disruptions in
their businesses because of the year 2000 problem, we may lose access to
programming and significant advertising revenue. We are in the process of
developing a contingency plan to address any possible failures by us or our
vendors related to year 2000 compliance.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, including statements
under the captions "Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business" and
elsewhere in this prospectus, concerning our expectations of future sales, gross
profits, research and development expenses, selling, general and administrative
expenses, product introductions and cash requirements. Forward-looking
statements often include words or phrases such as "will likely result",
"expect", "will continue", "anticipate", "estimate", "intend", "plan",
"project", "outlook" or similar expressions. The statements are not guarantees
of future performance and are subject to certain risks, uncertainties and other
factors, some of which are beyond our control, are difficult to predict and
could cause actual results to differ materially from those expressed in the
forward-looking statements. Actual results may vary materially from those
expressed in forward-looking statements. Factors which could cause actual
results to differ from expectations include those in the "Risk Factors" section
of this prospectus. We cannot assure you that our results of operations will not
be adversely affected by one or more of these factors. We caution you not to
place undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this prospectus. We are not obligated
to update these statements or publicly release the results of any revisions to
them to reflect events or circumstances occurring after the date of this
prospectus or to reflect the occurrence of unanticipated events.

16
<PAGE> 22

USE OF PROCEEDS

The net proceeds we will receive from this offering and the concurrent
senior subordinated notes offering are estimated to be approximately
$ million and $ million, respectively. We will not
receive any proceeds from the shares of Class A Common Stock being sold by the
selling stockholders. This offering of our Class A Common Stock is not
conditioned upon any other offering. The senior subordinated notes offering is
conditioned upon the completion of this offering. We intend to use the net
proceeds of this offering and the concurrent senior subordinated notes offering
to redeem our preferred stock and for general corporate purposes, including the
refinancing of our existing debt. We cannot assure you that we will complete the
concurrent senior subordinated notes offering on terms that are favorable to us
or at all. If only this offering is completed, we would use the net proceeds to
redeem our outstanding preferred stock. The remaining proceeds, if any, would be
used for general corporate purposes other than the refinancing of our existing
debt. The following table presents the sources and uses of funds (1) pro forma
for this offering, and (2) pro forma as adjusted for this offering and the
senior subordinated notes offering:

<TABLE>
<CAPTION>
PRO FORMA
AS ADJUSTED
PRO FORMA FOR BOTH
FOR THIS OFFERING OFFERINGS
----------------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
SOURCES OF FUNDS:
This offering......................................... $ $
------- -------
Senior subordinated notes offering....................
------- -------
Cash on hand..........................................
------- -------
Total....................................... $ $
======= =======
USES OF FUNDS:
Redemption of preferred stock......................... $ $
------- -------
General corporate purposes............................
------- -------
Estimated fees and expenses...........................
------- -------
Total....................................... $ $
======= =======
</TABLE>

Preferred Stock. As of June 27, 1999 we had outstanding $229.5 million
aggregate liquidation preference of our preferred stock. Our preferred stock
accrues dividends at a rate of 14 1/4% per year payable semi-annually. We can
redeem our preferred stock at 105% of its liquidation preference plus
accumulated and unpaid dividends.

Existing Debt. As of June 27, 1999 we had outstanding $93.9 million
aggregate principal amount of our 12 1/2% senior notes due 2002 and $75.0
million aggregate principal amount of our 11% senior notes 2004. The 12 1/2%
notes accrue interest at an annual rate of 12 1/2% and mature on June 15, 2002.
The 11% notes accrue interest at an annual rate of 11% and mature on March 15,
2004.

17
<PAGE> 23

DIVIDEND POLICY

We intend to retain future earnings for use in our business and do not
anticipate declaring or paying any cash or stock dividends on shares of our
common stock in the foreseeable future. In addition, any determination to
declare and pay dividends will be made by our board of directors in light of our
earnings, financial position, capital requirements and other factors that the
board of directors deems relevant. Furthermore, the indentures governing the
senior subordinated notes to be issued in the concurrent senior subordinated
notes offering, our 12 1/2% notes and our 11% notes, and the agreement governing
the senior credit facility each contain restrictions on our ability to pay
dividends. See "Description of Indebtedness." We previously declared and paid an
extraordinary dividend in March 1998, pursuant to which some of our
warrantholders elected to increase the conversion rates of their warrants
instead of receiving cash. We do not expect to make any similar dividends in the
near future.

18
<PAGE> 24

DILUTION

Purchasers of the Class A Common Stock offered by this prospectus will
suffer an immediate and substantial dilution in net tangible book value per
share. Dilution is the amount by which the initial public offering price paid by
the purchasers of the shares of Class A Common Stock will exceed the net
tangible book value per share of common stock after this offering. The net
tangible book value per share of common stock is determined by subtracting total
liabilities from the total book value of the tangible assets and dividing the
difference by the number of shares of common stock deemed to be outstanding on
the date the book value is determined. As of June 27, 1999, we had a pro forma
negative tangible book value of $ million or $ per share after
giving effect to the issuance of Class B Common Stock upon the exercise of the
1994 and 1997 warrants, the redesignation and -for-one stock split of the
Class B Common Stock, but excluding this offering. Assuming the sale of
shares at an initial public offering price of $ per share
and deducting the underwriters' discounts and commissions and estimated offering
expenses, our pro forma tangible book value as of June 27, 1999 would have been
a negative $ million or $ per share. This represents an immediate increase
in pro forma net tangible book value to existing stockholders of $ per share
and an immediate dilution to new investors of $ per share. The following
table illustrates this per share dilution:

<TABLE>
<CAPTION>
PER SHARE
---------
<S> <C> <C>
Assumed initial public offering price....................... $
--------
Pro forma net negative tangible book value before this
offering............................................... $ ()
--------
Increase in net tangible book value per share attributable
to this offering.......................................
--------
Pro forma net tangible book value after this offering....... ()
--------
Dilution to new investors................................... $
========
</TABLE>

The following table summarizes, on a pro forma adjusted basis as of June
27, 1999, the number of shares of Class A Common Stock purchased from us, the
estimated value of the total consideration paid for or attributed to the Class A
Common Stock, and the average price per share paid by or attributable to
existing stockholders and the new investors purchasing shares in this offering
at an initial offering price of $ per share.

<TABLE>
<CAPTION>
AVERAGE
SHARES OF COMMON TOTAL CASH PRICE PER
STOCK PURCHASED CONSIDERATION SHARE OF
----------------- ----------------- COMMON
NUMBER PERCENT NUMBER PERCENT STOCK
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders......................... % % $
------ ------ -------
New investors................................. % %
------ ------ -------
Total............................... 100% 100% $
====== ====== =======
</TABLE>

19
<PAGE> 25

CAPITALIZATION

The table below sets forth our capitalization as of June 27, 1999 on an
actual basis, on a pro forma basis giving effect to this offering, and on a pro
forma as adjusted basis giving effect to this offering and our concurrent senior
subordinated notes offering.

<TABLE>
<CAPTION>
AS OF JUNE 27, 1999 (UNAUDITED)
-------------------------------------------------
PRO FORMA
PRO FORMA FOR AS ADJUSTED FOR
ACTUAL THIS OFFERING BOTH OFFERINGS
-------------- -------------- ---------------
(IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents............................. $ 20,895 $ $
======== ======== ========
Long-term debt (including current portion):
12 1/2% notes....................................... 92,114
11% notes........................................... 75,000
Senior subordinated notes........................... --
Other debt, including current portion............... 5,653
-------- -------- --------
Total long-term debt........................ 172,767
Preferred stock....................................... 218,851
Stockholders' equity (deficiency):
Class A Common Stock................................ --
Class B Common Stock................................ 8
Additional paid-in capital.......................... 6,865
Accumulated deficit................................. (72,311)
Less: loans receivable from stockholders............ (2,459)
-------- -------- --------
Total stockholders' equity (deficiency)..... (67,897)
-------- -------- --------
Total capitalization.................................. $323,721 $ $
======== ======== ========
</TABLE>

- When you read this table, it is important that you also read "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our financial statements and related
notes.

- The actual amounts give effect to (1) the issuance of our formerly
outstanding Class A Common Stock upon the exercise of the 1994 and 1997
warrants, (2) the redesignation of our formerly outstanding shares of
Class A Common Stock into currently outstanding shares of Class B Common
Stock and (3) the -for-one stock split of our Class B Common Stock
as if they had occurred as of June 27, 1999.

- The pro forma amounts for the period ended June 27, 1999, in the column
"Pro Forma for this Offering" are adjusted to give effect to this
offering and redemption of all of our outstanding preferred stock as if
each had occurred as of June 27, 1999.

- The pro forma amounts as of June 27, 1999, in the column "Pro Forma As
Adjusted for Both Offerings" are adjusted to give effect to the
transactions described above and further adjusted for the concurrent
offering of approximately $235.0 million aggregate principal amount of
our % senior subordinated notes due 2009 and the refinancing of our
existing debt as if they had occurred as of June 27, 1999.

20
<PAGE> 26

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT RATIOS, SHARES OUTSTANDING AND PER SHARE DATA)

The following table sets forth the historical financial information of our
business. The selected historical consolidated financial information presented
below under the caption "Statement of Operations Data" for each of the fiscal
years in the five-year period ended September 27, 1998 are derived from our
historical consolidated financial statements, which have been audited by KPMG
LLP, independent certified public accountants. The financial information for the
nine months ended June 27, 1999 and June 28, 1998 are unaudited, but in our
opinion reflect all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the financial information.
Operating results for the nine months ended June 27, 1999 are not necessarily
indicative of the results that may be expected for the fiscal year ending
September 26, 1999. Our selected historical consolidated financial data should
be read in conjunction with our historical consolidated financial statements as
of and for each of the fiscal years in the three-year period ended September 27,
1998, the related notes and independent auditor's report, included elsewhere in
this prospectus. For additional information see the financials section of this
prospectus and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
----------------------------------------------------- -------------------
9/25/94 9/24/95 9/29/96 9/28/97 9/27/98 6/28/98 6/27/99
-------- -------- --------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenues.................................. $ 45,825 $ 54,152 $ 55,338 $ 67,982 $ 86,766 $ 62,099 $ 80,437
Less: agency commissions........................ 5,688 6,828 6,703 7,972 10,623 7,508 10,082
-------- -------- -------- -------- -------- -------- --------
Net revenues.................................. 40,137 47,324 48,635 60,010 76,143 54,591 70,355
Station operating expenses(1)................... 22,145 22,998 27,876 31,041 39,520 28,298 31,782
Depreciation and amortization................... 3,256 3,389 4,556 7,619 8,877 6,867 7,223
Corporate expenses.............................. 2,884 4,281 3,748 5,595 6,893 5,122 7,658
-------- -------- -------- -------- -------- -------- --------
Operating income.............................. 11,852 16,656 12,455 15,755 20,853 14,304 23,692
Interest expense, net(2)........................ (14,203) (12,874) (16,533) (22,201) (20,860) (16,002) (15,736)
Other income (expense), net(3).................. (3,423) (381) (1,574) (791) (213) -- (485)
Gain on sale of AM stations..................... -- -- -- -- 36,242 36,247 --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes and
extraordinary items........................... (5,774) 3,401 (5,652) (7,237) 36,022 34,549 7,471
Income tax expense (benefit).................... (2,231) 1,411 (1,166) (2,715) 15,624 13,820 3,177
-------- -------- -------- -------- -------- -------- --------
Income (loss) before extraordinary items...... (3,543) 1,990 (4,486) (4,522) 20,398 20,729 4,294
Extraordinary gain (loss) net of income
taxes(4)...................................... 70,255 -- -- (1,647) (1,613) (1,613) --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............................. $ 66,712 $ 1,990 $ (4,486) $ (6,169) $ 18,785 $ 19,116 $ 4,294
======== ======== ======== ======== ======== ======== ========
Dividends on preferred stock.................... -- -- (2,994) (17,044) (30,270) (22,391) (26,001)
-------- -------- -------- -------- -------- -------- --------
Net income (loss) applicable to common
stock....................................... $ 66,712 $ 1,990 $ (7,480) $(23,213) $(11,485) $ (3,275) $(21,707)
======== ======== ======== ======== ======== ======== ========
Dividends per share on common stock............. $ -- $ -- $ -- $ -- $ 5.60 $ 5.60 $ --
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per common share:
Basic (before extraordinary item)............. $ (17.93) $ 3.28 $ (12.33) $ (35.55) $ (16.27) $ (2.74) $ (34.31)
Diluted (before extraordinary item)........... (17.93) 2.79 (12.33) (35.55) (16.27) (2.74) (34.31)
Basic......................................... 337.53 3.28 (12.33) (38.26) (18.93) (5.40) (34.31)
Diluted....................................... 337.53 2.79 (12.33) (38.26) (18.93) (5.40) (34.31)

Weighted average common shares outstanding:
Basic......................................... 197,646 606,668 606,668 606,668 606,668 606,668 632,598
Diluted....................................... 197,646 713,727 606,668 606,668 606,668 606,668 632,598
</TABLE>

21
<PAGE> 27

<TABLE>
<CAPTION>
AS OF
---------------------------------------------------------------------------
9/25/94 9/24/95 9/29/96 9/28/97 9/27/98 6/28/98 6/27/99
-------- -------- --------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....................... $ 12,137 $ 17,817 $ 5,468 $ 12,288 $ 37,642 $ 32,134 $ 20,895
Total assets.................................... 98,733 103,629 176,860 334,367 351,034 347,506 359,501
Total debt (including current portion).......... 93,573 95,523 135,914 183,013 171,126 170,894 172,767
Preferred stock................................. -- -- 35,939 171,262 201,368 186,448 218,851
Total stockholders' deficiency.................. (2,960) (1,150) (3,569) (32,047) (46,193) (37,982) (67,897)
</TABLE>

NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

(1) Station operating expenses include engineering, programming, selling and
general and administrative expenses.

(2) Interest expense includes non-cash interest, such as the accretion of
principal, the amortization of discounts on debt and the amortization of
deferred financing costs.

(3) During the 1996 and 1997 fiscal years, we wrote down the value of our land
and building located on Sunset Boulevard in Los Angeles by $697,741 and
$487,973, respectively. For the nine months ended June 27, 1999, we wrote
down the value of this land and building by $451,048. The write-downs were
based on current market values of real estate in the Los Angeles area.
Financing costs are also included in other income (expenses).

(4) On June 29, 1994, we sold 107,059 units, each consisting of $1,000 principal
amount of our 12 1/2% notes and warrants to purchase one share of common
stock per unit. The 12 1/2% notes were issued at a substantial discount from
their principal amount. The sale of the 12 1/2% notes and warrants generated
gross proceeds of $94,000,000 and proceeds to us of $87,774,002, net of
financing costs of $6,225,998. Of the $94,000,000 of gross proceeds from the
sale of the 12 1/2% notes and warrants, $88,603,000 was allocated to the
12 1/2% notes and $5,397,000 was determined to be the value of the warrants.
Of the net proceeds from the sale of the 12 1/2% notes and the warrants,
$83,000,000 was used to satisfy in full our obligations to our two former
principal lenders and the balance was used to settle litigation with a
former stockholder and for general corporate purposes. We realized a gain of
$70,254,772 in connection with our repayment of all obligations to our two
former principal lenders because we were able to satisfy in full these
obligations at substantial discounts to their face amounts in accordance
with restructuring agreements between us and the lenders.

For the fiscal year ended September 28, 1997, we recorded an extraordinary
loss resulting from the redemption of our 12 1/4% senior secured notes due
2001 at par which was approximately $1.5 million in excess of their carrying
value and from the write-off of the related unamortized deferred financing
costs of approximately $1.3 million, net of the related tax benefit of
approximately $1.1 million.

22
<PAGE> 28

For the fiscal year ended September 27, 1998, we recorded an extraordinary
loss resulting from the repurchase of $13.2 million par value of 12 1/2%
notes, at a premium of approximately $2.2 million in excess of their
carrying value and from the write-off of the related unamortized deferred
financing costs of approximately $0.5 million, net of the related tax
benefit of approximately $1.1 million.

(5) The term "broadcast cash flow" means operating income before depreciation,
amortization and corporate expenses. Broadcast cash flow should not be
considered in isolation from, or as a substitute for, net income or cash
flow and other consolidated income or cash flow statement data or as a
measure of our profitability or liquidity. Although broadcast cash flow is
not a measure of performance calculated in accordance with generally
accepted accounting principles, broadcast cash flow is widely used in the
broadcasting industry as a measure of a broadcasting company's operating
performance.

(6) The term "EBITDA" means earnings before extraordinary items, gain on sale of
AM stations, net interest expense, income taxes, depreciation, amortization
and other income or expense. We have included information concerning EBITDA
in this prospectus because it is used by some investors as a measure of a
company's ability to service its debt obligations. Although EBITDA is not a
measure of performance calculated in accordance with generally accepted
accounting principles, EBITDA is widely used in the broadcasting industry as
a measure of a broadcasting company's operating performance.

(7) The term "after-tax cash flow" means income before income tax benefit
(expense) and extraordinary items, minus net gain on sale of AM stations
(net of tax) and the current income tax provision, plus depreciation and
amortization expense. Although after-tax cash flow is not a measure of
performance calculated in accordance with generally accepted accounting
principles, after-tax cash flow is widely used in the broadcasting industry
as a measure of a broadcasting company's operating performance.

23
<PAGE> 29

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

The following information should be read in conjunction with "Selected
Historical Consolidated Financial Information" and the Financial Statements and
the related notes included elsewhere in this prospectus.

BACKGROUND

We commenced operations with the purchase of our first radio station,
WXLX-AM (formerly WSKQ-AM) serving the New York metropolitan area in 1983. Since
1983 we have purchased 15 stations, including two additional AM stations in six
U.S. markets. Today, we are the second largest Spanish-language radio
broadcasting company in the United States, owning and operating a total of 13 FM
radio stations. Eleven of our stations are located in six of the largest
Hispanic markets in the United States, including Los Angeles, Puerto Rico, New
York, Miami, Chicago and San Antonio. In total, our radio stations reach over
51% of the U.S. Hispanic population.

Our financial results depend on a number of factors, including the strength
of the national economy and the local economies served by our stations, total
advertising dollars dedicated to the markets served by our stations, advertising
dollars targeted to the Hispanic consumers in the markets served by our
stations, our stations' audience ratings, our ability to provide popular
programming, local market competition from other radio stations and other
advertising media, and government regulations and policies.

We report our revenues and expenses on a broadcast month basis. "Broadcast
month basis" means a four or five week period ending on the last Sunday of each
calendar month. For the nine months ended June 27, 1999, and the nine months
ended June 28, 1998, we reported 39 weeks of revenues and expenses. For fiscal
year 1996, we reported 53 weeks of revenues and expenses compared to 52 weeks
for each of fiscal year 1997 and 1998.

As is true of other radio groups, our performance is customarily measured
by our ability to generate broadcast cash flow, EBITDA and after-tax cash flow.
Broadcast cash flow consists of operating income before depreciation,
amortization and corporate expenses. EBITDA consists of earnings before
extraordinary items, gain on sale of AM stations, net interest expense, income
taxes, depreciation, amortization and other income or expenses. After-tax cash
flow consists of income before income tax benefit (expense) and extraordinary
items, minus net gain on sale of AM stations (net of tax) and the current income
tax provision, plus depreciation and amortization expense. Although broadcast
cash flow, EBITDA and after-tax cash flow are not measures of performance
calculated in accordance with generally accepted accounting principles, we
believe that broadcast cash flow, EBITDA and after-tax cash flow are useful in
evaluating us because these measures are accepted by the broadcasting industry
as generally recognized measures of performance and are used by securities
industry analysts who publish reports on the performance of broadcasting
companies. In addition, we have included information concerning broadcast cash
flow, EBITDA and after-tax cash flow in this prospectus because it is used by
some investors as a measure of a company's ability to service its debt
obligations and it is also the basis for determining compliance with certain
covenants contained in the indentures governing our debt securities and in the
certificate of designation governing our preferred stock. Broadcast cash flow,
EBITDA and after-tax cash flow are not intended to be substitutes for operating
income as determined in accordance with generally accepted accounting
principles, or alternatives to cash flow from operating activities (as a measure
of liquidity) or net income.

24
<PAGE> 30

REVENUES

Our primary source of revenue is the sale of advertising time on our radio
stations to local and national advertisers. Our revenues are affected primarily
by the advertising rates that our radio stations are able to charge as well as
the overall demand for radio advertising time in a market. Advertising rates are
based primarily on (1) a radio station's audience share in the demographic
groups targeted by advertisers, as measured principally by periodic reports
developed by Arbitron, (2) the number of radio stations in the market competing
for the same demographic groups, and (3) the supply of and demand for radio
advertising time. Advertising rates fluctuate daily and are generally highest
during the morning and afternoon commuting hours. Seasonal net broadcasting
revenue fluctuations are common in the radio broadcasting industry and are due
primarily to fluctuations in advertising expenditures by local and national
advertisers. Our second fiscal quarter (January through March) generally
produces the lowest net broadcasting revenue for the year because of normal
post-holiday decreases in advertising expenditures.

Our advertising contracts are generally short term, usually for periods of
three months or less, and we generate most of our revenues from local
advertising. In the 1998 fiscal year, approximately $63.1 million, or 72.7% of
our gross broadcasting revenues, was generated from local advertising and
approximately $23.7 million, or 27.3% of our gross broadcasting revenues, was
generated from national advertising. Each of our station's local sales staff
solicits advertising directly from local advertisers or through an advertising
agency representing local advertisers. For national advertising sales, we have
engaged Caballero Spanish Media, LLC, a subsidiary of Interep National Radio
Sales, Inc., a national representative company.

In the broadcasting industry, radio stations sometimes utilize trade or
barter agreements to reduce cash expenses by exchanging advertising time for
advertising time with other media, and for goods and services related to
promotional campaigns. In each of our 1996, 1997 and 1998 fiscal years, we sold
approximately 5.9%, 4.4% and 3.1%, respectively, of our available advertising
time for trade or barter. We believe that our percentage of advertising time
sold for trade or barter will continue to decrease in the future.

EXPENSES

Our most significant expenses are employee compensation, rating services,
advertising and promotion expenses, lease expenses for studios and transmission
tower space and music license fees. We strive to control expenses by (1)
centralizing functions such as finance, accounting, payables, budgeting, legal,
human resources, management information systems and the overall programming
management function, and (2) using our multiple stations, market presence and
purchasing power to negotiate favorable rates with certain vendors and national
representative selling agencies. Depreciation of fixed assets and amortization
of costs associated with the acquisition of additional stations and interest
carrying charges are also significant factors in determining our overall expense
level.

Our operating results in any period may be affected by advertising and
promotion expenses that do not produce commensurate broadcast revenue in the
period in which such expenses are incurred. We generally incur advertising and
promotion expenses in order to increase listenership and Arbitron ratings.
Increased advertising revenue may wholly or partially lag behind the incurrence
of such advertising and promotion expenses because Arbitron only reports
complete ratings information on a quarterly basis.

25
<PAGE> 31

CERTAIN TRANSACTIONS

From fiscal year 1996 through fiscal year 1998, we acquired five radio
stations, disposed of all of our AM radio stations and issued and repurchased
certain of our securities. The impact of these transactions on our results of
operations is described below:

- In March 1996, we acquired the FCC broadcast license and substantially
all of the assets of WPAT-FM in New York for $86.4 million, including
closing costs of $1.8 million. The acquisition of WPAT-FM was financed by
cash on hand and by the issuance of senior secured notes and redeemable
preferred stock, each of which was subsequently redeemed in March 1997 in
connection with the refinancing associated with the purchase of WRMA-FM,
WXDJ-FM and WLEY-FM. Pursuant to the terms of a local marketing
agreement, we began operating WPAT-FM on January 26, 1996 and the
revenues and operating expenses of WPAT-FM are included in our operating
results from that date.

- In March 1997, we issued (1) $175.0 million of our 14 1/4% preferred
stock, (2) warrants to purchase 74,900 shares of our Class B Common
Stock, and (3) $75.0 million aggregate principal amount of our 11% notes
due 2004 (collectively, the "1997 Financings"). In connection with the
1997 Financings, we capitalized finance costs of $5.7 million related to
the 11% notes due 2004 and charged issuance costs of $9.0 million related
to our preferred stock and warrants. A portion of the proceeds from the
1997 Financings was used to retire all of our then outstanding redeemable
preferred stock and 12 1/4% senior secured notes due 2001. We realized a
loss on the retirement of the 12 1/4% senior secured notes due 2001 of
approximately $1.6 million, net of taxes of approximately $1.1 million.
This amount has been classified as an extraordinary item in the
accompanying "Consolidated Statement of Operations" in the financial
statements of this prospectus.

- In March 1997, we acquired the FCC broadcast licenses and substantially
all of the assets of WRMA-FM and WXDJ-FM in Miami for $112.1 million,
including closing costs of $1.1 million. The acquisitions of WRMA-FM and
WXDJ-FM were financed by the proceeds we received from the 1997
Financings. Our results include the operation of WRMA-FM and WXDJ-FM from
their respective dates of acquisition.

- In March 1997, we acquired the FCC broadcast license and substantially
all of the assets of WLEY-FM in Chicago for $33.2 million including
closing costs of $0.2 million. The acquisition of WLEY-FM was financed by
the proceeds we received from the 1997 Financings and a note payable to
the seller of WLEY-FM for $3.0 million. Our results include the operation
of WLEY-FM from its date of acquisition.

- In September 1997, we sold the assets and FCC licenses of WXLX-AM
(serving the New York market) and WCMQ-AM (serving the Miami area) for
$26.0 million. We recorded a gain of $18.6 million on the sale which is
classified under other income as "Gain on sale of AM stations" in the
accompanying "Consolidated Statement of Operations" in the financial
statements of this prospectus.

- In October and November 1997, we repurchased through a tender offer and
open-market purchases $13.2 million in principal amount of our 12 1/2%
senior notes due 2002. The total amount paid by us for these notes was
$15.0 million, plus accrued interest of $0.7 million. We recognized a
loss on the tender offer of $1.6 million, net of income taxes of $1.1
million, due to the premium paid for the notes and the write-off of the
deferred financing costs and original issue discounts related to the
notes purchased. This amount has been

26
<PAGE> 32

classified as an extraordinary item in the accompanying "Consolidated Statement
of Operations" in the financial statements of this prospectus.

- In December 1997, we sold the assets and FCC license of KXMG-AM (serving
the Los Angeles metropolitan area) for $18.0 million. We recorded a gain
of $17.6 million on the sale which is classified under other income as
"Gain on sale of AM stations" in the accompanying Consolidated Statement
of Operations" in the financial statements of this prospectus.

- On May 13, 1998, we acquired the FCC broadcast license and substantially
all of the assets of KLEY-FM (formerly KRIO-FM) in San Antonio, Texas for
$9.3 million, including closing costs of $0.1 million. The acquisition of
KLEY-FM was financed with cash on hand. Our results include the operation
of this station from the date of its acquisition.

During fiscal year 1999, we acquired three stations, WCMA-FM (formerly
WDOY-FM), WMEG-FM and WEMG-FM (all serving Puerto Rico), and eighty percent of
the issued and outstanding capital stock of JuJu Media, Inc., the owner of
LaMusica.com. The acquisitions of WCMA-FM, WMEG-FM and WEGM-FM were financed by
cash on hand. The acquisition of JuJu Media, Inc. was financed by cash on hand
and the issuance of promissory notes. The results of these acquisitions did not
meet the significance test for pro forma presentation and, consequently, no pro
forma results have been included with respect to these acquisitions. Our results
include the operations of these stations and JuJu Media, Inc. from the date of
their respective acquisitions.

RESULTS OF OPERATIONS

Nine Months Ended June 27, 1999 Compared to the Nine Months Ended June 28, 1998

Net Revenues. Our net revenues were $70.4 million for the nine months
ended June 27, 1999, compared to $54.6 million for the nine months ended June
28, 1998, an increase of $15.8 million or 28.9%. The increase in net revenues
was mostly attributable to the Chicago and New York market stations where our
net revenues increased 34.3% and 31.7%, respectively, due to high ratings,
robust local economies and increased advertising rates. All of the markets in
which we operate stations experienced strong increases in net revenues,
including our Los Angeles FM station where net revenue increased by 19.4%.

Station Operating Expenses. Total station operating expenses were $31.8
million for the nine months ended June 27, 1999, compared to $28.3 million for
the nine months ended June 28, 1998, an increase of $3.5 million or 12.4%. The
higher station operating expenses were caused mainly by the inclusion of the
results of the recent acquisitions in San Antonio and Puerto Rico as well as
JuJu Media, Inc. accounting for $2.7 million or 77.1% of the increase in station
operating expenses. To a lesser extent, all of our other radio stations
experienced a 2.7% increase in operating expenses due to higher commissions and
music license fees associated with higher sales. In the New York and Miami
markets, we had an increase in advertising, promotional and audience research
expenses. This increase in operating expenses was offset by lower general and
administrative expenses due to improved collections.

Broadcast Cash Flow. Broadcast cash flow was $38.6 million for the nine
months ended June 27, 1999, compared to $26.3 million for the nine months ended
June 28, 1998, an increase of $12.3 million or 46.8%. This increase was
attributable to strong revenue growth and effective management of operating
expenses. Our broadcast cash flow margin increased to 54.8% for the nine months
ended June 27, 1999 compared to 48.2% for the nine months ended June 28, 1998.

27
<PAGE> 33

Corporate Expenses. Total corporate expenses were $7.7 million for the
nine months ended June 27, 1999, compared to approximately $5.1 million for the
nine months ended June 28, 1998, an increase of $2.6 million or 51.0%. The
increase in corporate expenses resulted mainly from performance bonuses paid to
our Chief Executive Officer, increases in the number of our employees and
increased travel and other corporate overhead expenses relating to our expansion
into new markets.

EBITDA. EBITDA was $30.9 million for the nine months ended June 27, 1999,
compared to $21.2 million for the nine months ended June 29, 1998, an increase
of $9.7 million or 45.7%. Our EBITDA margin was 43.9% for the nine months ended
June 27, 1999, compared to 38.8% for the nine months ended June 28, 1998. The
increase in EBITDA and EBITDA margin was caused by the increase in net revenues
which was partially offset by the increase in station operating expenses and
corporate expenses.

Depreciation and Amortization. Depreciation and amortization expense was
$7.2 million for the nine months ended June 27, 1999, compared to $6.9 million
for the nine months ended June 28, 1998, an increase of $0.3 million or 4.3%.
The increase was related to an increase in amortization costs as a result of the
stations purchased in Puerto Rico, WCMA-FM, WMEG-FM and WEGM-FM.

Operating Income. Operating income was $23.7 million for the nine months
ended June 27, 1999, compared to $14.3 million for the nine months ended June
28, 1998, an increase of $9.4 million or 65.7%. The increase was due to the
increase in net revenues, partially offset by the increase in operating
expenses.

Interest Expense, Net. Interest expense was $15.7 million for the nine
months ended June 27, 1999, compared to $16.0 million for the nine months ended
June 28, 1998, a decrease of $0.3 million or 1.9%. This decrease was due to the
repurchase of $13.2 million aggregate principal amount of our 12 1/2% notes due
2002 in the first quarter of fiscal 1998.

Other Income (Expense). We had other expenses of $0.5 million for the nine
months ended June 27, 1999, compared to other income of $36.2 million for the
nine months ended June 28, 1998. The other expenses in 1999 resulted primarily
from an additional write-down of owned vacant real estate in the Los Angeles
area. The other income in 1998 was the result of a gain on the sale of our AM
stations during the nine months ended June 28, 1998.

Net Income. Our net income was $4.3 million for the nine months ended June
27, 1999, compared to $19.1 million for the nine months ended June 28, 1998, a
decrease of $14.8 million or 77.5%. The decrease was caused by the absence of
the gain on the sale of our AM stations.

After-Tax Cash Flow. After-tax cash flow was $11.5 million for the nine
months ended June 27, 1999, compared to $5.8 million for the nine months ended
June 28, 1998, an increase of $5.7 million or 98.3%. This increase was primarily
attributable to an increase in EBITDA offset by higher income taxes.

Fiscal Year 1998 Compared to Fiscal Year 1997

Net Revenues. Net revenues were $76.1 million for fiscal year 1998,
compared to $60.0 million for fiscal year 1997, an increase of $16.1 million or
26.8%. This increase was due primarily to the inclusion of the full year results
of WRMA-FM, WXDJ-FM and WLEY-FM which we purchased on March 27, 1997. The
increase in net revenues also resulted from a significant increase in the net
revenues of our New York stations, WPAT-FM and WSKQ-FM, and our Miami station,
WCMQ-FM, each of whose results were positively impacted by

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<PAGE> 34

increased ratings. The increase in net revenues at each of our stations was
partially offset by a decrease in net revenues from our Los Angeles station,
KLAX-FM, in addition to the loss of revenues attributable to the sale of our AM
stations in New York, Miami and Los Angeles.

Station Operating Expenses. Total station operating expenses were $39.5
million for fiscal year 1998, compared to $31.0 million for the fiscal year
1997, an increase of $8.5 million or 27.4%. The increase in operating expenses
was caused mainly by the inclusion of the full year results of WRMA-FM, WXDJ-FM
and WLEY-FM.

Broadcast Cash Flow. Broadcast cash flow was $36.6 million for fiscal year
1998, compared to $29.0 million for fiscal year 1997, an increase of $7.6
million or 26.2%. This increase was attributable to significant increases in net
revenues partially offset by increased station operating expenses. Our broadcast
cash flow margin was 48.1% for fiscal year 1998, compared to 48.3% for fiscal
year 1997.

Corporate Expenses. Total corporate expenses were $6.9 million for fiscal
year 1998, compared to $5.6 million for fiscal year 1997, an increase of $1.3
million or 23.2%. The increase in corporate expenses was caused mainly by
increased professional fees resulting from potential acquisitions and related
financings.

EBITDA. EBITDA was $29.7 million for fiscal year 1998, compared to $23.4
million for fiscal year 1997, an increase of $6.3 million or 26.9%. The increase
in EBITDA was caused by the increase in net revenues, partially offset by
increases in broadcasting operating expenses and corporate expenses, as
described above. Our EBITDA margin was 39.0% for each of the fiscal years 1998
and 1997.

Depreciation and Amortization. Depreciation and amortization expense was
$8.9 million for fiscal year 1998, compared to $7.6 million for fiscal year
1997, an increase of $1.3 million or 17.1%. The increase was related to an
increase in amortization costs as a result of the acquisitions of WRMA-FM,
WXDJ-FM and WLEY-FM offset by the decrease attributable to the sale of the AM
stations.

Operating Income. Operating income was $20.9 million for fiscal year 1998,
compared to $15.8 million for fiscal year 1997, an increase of $5.1 million or
32.3%. The increase was due to the significant increase in net revenues,
partially offset by the increase in operating expenses.

Interest Expense, Net. Interest expense was $20.9 million for fiscal year
1998 compared to $22.2 million for fiscal year 1997, a decrease of $1.3 million
or 5.9%. The decrease was primarily due to the repurchase of $13.2 million
aggregate principal amount of our 12 1/2% notes due 2002 in the first quarter
of 1998.

Other Income (Expense). Other income was $36.0 million for fiscal year
1998, including gain on sale of AM stations of $36.2 million, compared to other
expense of $0.8 million for fiscal year 1997. The other income in 1998 was due
to the gain on the sale of the AM stations. The other expense in 1997 was due
primarily to an additional write-down of owned vacant real estate in the Los
Angeles area.

Net Income (Loss). Our net income for fiscal year 1998 was $18.8 million,
compared to a net loss of $6.2 million for fiscal year 1997. The net income
resulted from the increase in operating income, the gain from the sale of the AM
stations and a slight decrease in interest expenses, partially offset by
additional income taxes.

After-Tax Cash Flow. After-tax cash flow was $7.5 million for fiscal year
1998, compared to $3.1 million for fiscal year 1997, an increase of $4.4 million
or 141.9%. This increase was

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<PAGE> 35

primarily attributable to an increase in EBITDA, decrease in net interest
expense and gain offset by higher income taxes.

Fiscal Year 1997 Compared to Fiscal Year 1996

Net Revenues. Net revenues were $60.0 million for fiscal year 1997,
compared to $48.6 million for fiscal year 1996, an increase of $11.4 million, or
23.5%. This increase was due primarily to the inclusion of results of WRMA-FM
and WXDJ-FM, which we purchased on March 27, 1997, and the inclusion of the
results of WPAT-FM for the entire year. The increase in net revenues also
resulted from an increase of $1.1 million in net revenues from our Los Angeles
stations and our acquisition of WLEY-FM in Chicago which increased net revenues
by $0.4 million. These increases in net revenues were offset by decreases in net
revenues from certain of our existing stations, including a decrease of $3.0
million from the operations of WCMQ-AM and WCMQ-FM, and a decrease of $0.5
million from the operations of WSKQ-FM and WXLX-AM.

Station Operating Expenses. Total station operating expenses were $31.0
million for fiscal year 1997, compared to $27.9 million for fiscal year 1996, an
increase of $3.1 million, or 11.1%. The increase in station operating expenses
was caused mainly by the inclusion of the results of WRMA-FM and WXDJ-FM in
Miami and our station in Chicago, WLEY-FM, as well as the inclusion of a full
year of expenses for WPAT-FM.

Broadcast Cash Flow. Broadcast cash flow was $29.0 million for fiscal year
1997, compared to $20.8 million for fiscal year 1996, an increase of $8.2
million or 39.4%. Our broadcast cash flow margin was 48.3% for fiscal year 1997,
compared to 42.8% for fiscal year 1996. The increases in broadcast cash flow and
broadcast cash flow margin were attributable to our purchase of WRMA-FM and
WXDJ-FM which contributed to an increase in sales generated by our Miami
stations of $4.6 million, partially offset by increased expenses of $0.3
million.

Corporate Expenses. Total corporate expenses were $5.6 million for fiscal
year 1997, compared to $3.7 million for fiscal year 1996, an increase of $1.9
million or 51.4%. The increase in corporate expenses was caused by higher salary
expense and higher professional fees associated with potential acquisitions and
related financings.

EBITDA. EBITDA was $23.4 million for fiscal year 1997, compared to $17.0
million for fiscal year 1996, an increase of $6.4 million or 37.6%. The increase
in EBITDA was caused by the increase in net revenues, partially offset by an
increase in operating expenses, as described above. Our EBITDA margin was 39.0%
for fiscal year 1997, compared to 35.0% for fiscal year 1996. This increase was
attributable to the increased broadcast cash flow margin offset by the increased
corporate expenses related to operating more stations.

Depreciation and Amortization. Depreciation and amortization expense was
$7.6 million for fiscal year 1997, compared to $4.6 million for fiscal year
1996, an increase of $3.0 million or 65.2%. The significant increase was related
to an increase in amortization costs as a result of the acquisition of WRMA-FM,
WXDJ-FM, WLEY-FM and WPAT-FM.

Operating Income. Operating income was $15.8 million for fiscal year 1997,
compared to $12.5 million for fiscal year 1996, an increase of $3.3 million, or
26.4%. The increase was due to the significant increase in net revenues
partially offset by the increase in operating expenses.

Interest Expense, Net. Interest expense was $22.2 million for fiscal year
1997 compared to $16.5 million for fiscal year 1996, an increase of $5.7 million
or 34.5%. The increase was caused

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<PAGE> 36

primarily by the increase in interest expense associated with our 11% notes
issued to partially finance the acquisitions of WRMA-FM, WXDJ-FM and WLEY-FM.

Other Expense. Other expense for fiscal year 1997 was $0.8 million
compared to $1.6 million for fiscal year 1996, a decrease of $0.8 million or
50.0%. This expense was due primarily to an additional write-down of owned
vacant real estate in the Los Angeles area.

Net Loss. Our net loss for fiscal year 1997 was $6.2 million, compared to
a net loss of $4.5 million for fiscal year 1996, an increase in the net loss of
$1.7 million, or 37.8%. The increase in the net loss was a result of an
extraordinary loss on the retirement of old debt for an amount paid in excess of
our carrying value and the write-off of the related unamortized debt issuance
costs.

After-Tax Cash Flow. After-tax cash flow was $3.1 million for fiscal year
1997, compared to $0.1 million for fiscal year 1996, an increase of $3.0
million. This increase was attributable to increased EBITDA offset by higher
interest expense.

LIQUIDITY AND CAPITAL RESOURCES

Our primary source of liquidity is cash provided by operations and, to the
extent necessary, undrawn commitments that will be available under the senior
credit facility we intend to enter into after the completion of this offering
and the concurrent senior subordinated notes offering. We intend to use a
significant portion of our capital resources to make future acquisitions. These
acquisitions will be funded from the senior credit facility and internally
generated cash flow.

If we enter into the senior credit facility, our sources of liquidity will
also include amounts available under the revolving credit line included in the
senior credit facility. Our ability to borrow in excess of the commitments
provided by the senior credit facility will be limited by the terms of the
indenture governing our % senior subordinated notes due 2009 to be issued
in the concurrent senior subordinated notes offering. Additionally, such terms
will place restrictions on us with respect to the sale of assets, liens,
investments, dividends, debt repayments, capital expenditures, transactions with
affiliates and consolidations and mergers, among other things.

Net cash flows provided by operating activities were $11.7 million and $5.0
million for the nine months ended June 27, 1999 and June 28, 1998, respectively.
Net cash flows provided by operating activities were $10.9 million, $6.4 million
and $8.8 million for fiscal years 1998, 1997 and 1996, respectively. Changes in
our net cash flow from operating activities are primarily a result of changes in
advertising revenues and station operating expenses which are affected by the
acquisition and disposition of stations during those periods.

Net cash flows used in investing activities were $28.0 million for the nine
months ended June 27, 1999 and net cash flows provided by investing activities
were $32.5 million for the nine months ended June 28, 1998. Net cash flows
provided by investing activities were $32.2 million for fiscal year 1998 and net
cash flows used in investing activities were $144.4 million and $90.2 million
for fiscal years 1997 and 1996, respectively. Net cash flows used in financing
activities were $0.4 million and $17.7 million for the nine months ended June
27, 1999 and June 28, 1998, respectively. Net cash flows used in financing
activities were $17.8 million for fiscal year 1998 and net cash flows provided
by financing activities were $144.8 million and $69.0 million for fiscal years
1997 and 1996, respectively.

For fiscal year 1999, management anticipates total capital expenditures to
be between $2.0 million and $2.4 million. We anticipate that these expenditures
will be financed by funds from operations.

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Management believes that cash from operating activities, together with cash
on hand, should be sufficient to permit us to meet our obligations for the
foreseeable future, including: (1) required significant cash interest payments
pursuant to the terms of the senior subordinated notes due 2009, (2) operating
obligations, and (3) capital expenditures. We base these beliefs on the
following assumptions, but cannot assure you that they will be true:

- the economic conditions within the radio broadcasting market and economic
conditions in general will not deteriorate in any material respect;

- we will be able to successfully implement our business strategy;

- we will not incur any material unforeseen liabilities, including, without
limitation, environmental liabilities; and

- no future acquisitions will adversely affect our liquidity.

We continuously review, and are currently reviewing, opportunities to
acquire additional radio stations, primarily in the top 10 Hispanic markets in
the United States. Although we engage in discussions regarding potential
acquisitions from time to time in the ordinary course of business, as of the
date of this prospectus, we have no written understandings, letter of intent or
contracts to acquire radio stations. We anticipate that any future radio station
acquisitions would be financed through funds generated from operations, equity
financings, permitted debt financings or a combination of these sources.
However, there can be no assurance that financing from any of these sources, if
available, will be available on favorable terms.

IMPACT OF INFLATION, MARKET RISK EXPOSURE, CURRENCY FLUCTUATIONS

We believe that inflation has not had a material impact on our results of
operations for each of our fiscal years in the three-year period ended September
27, 1998 and in the nine month period ended June 27, 1999. However, there can be
no assurance that future inflation would not have an adverse impact on our
operating results and financial condition.

We do not have significant market risk exposure since we do not have any
outstanding variable rate debt or derivative financial and commodity instruments
as of June 27, 1999. We are not subject to currency fluctuations since we do not
have any international operations.

YEAR 2000 ISSUE

The year 2000 issue is the result of computer programs which use two digits
rather than four to define the applicable year. Any of our computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could cause
system failures or miscalculations at our broadcast and corporate locations
which in turn could cause disruptions of our operations, including, among other
things, a temporary inability to: produce broadcast signals, process financial
transactions, or engage in similar normal business activities.

We have performed a preliminary analysis of potential problems related to
the year 2000 issue. Internally, we bear some risks in the following areas:
computer hardware and software for our accounting and administrative functions,
computer-controlled programming of music and the transmission of our signals.
Externally, we are at risk, like most companies, of losing power and phone
lines.

In the administrative area, the vast majority of our hardware and software
has been purchased over the past two years and is year 2000 compliant. We have
no more than 30

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computers that may need to be replaced or upgraded. In the programming areas we
utilize a system which is year 2000 compliant. Studio equipment, transmitters
and other broadcasting equipment are not date sensitive and, consequently, do
not pose a significant year 2000 threat, although we will continue to seek
assurances and/or upgrades from all significant vendors. Our MIS manager and one
of our engineers have visited the majority of our locations and reported to
upper management on definitive problems and solutions. Prior to September 1,
1999, they will have visited and inspected all of our stations. As of June 27,
1999 we have spent $0.1 million to upgrade/replace non-compliant systems and
equipment.

The greatest threat to our ability to continue broadcasting on and after
January 1, 2000 comes from the utilities upon which we are dependent. To date,
we are not aware of any external utility vendor with a year 2000 issue that
would materially impact our results of operations, liquidity, or capital
resources. However, we have no means for ensuring that such vendor will be year
2000 compliant. The inability of such vendors to adequately address the year
2000 issue on a timely basis could have a material adverse effect on us,
including loss of revenue, and substantial unanticipated costs and service
interruptions. In addition, disruptions in the economy generally resulting from
the year 2000 issue could also materially adversely affect us.

While we believe our efforts will provide reasonable assurance that
material disruptions will not occur due to internal failure, the possibility of
interruption still exists. We do not anticipate spending more than an additional
$0.2 million to become year 2000 compliant. We are performing this analysis with
our MIS manager, our engineers and our accounting staff. We have anticipated
that all assessments and solutions will be in place by the fourth quarter of
fiscal year 1999. We are in the process of developing a contingency plan to
address possible failures by us or our vendors related to Year 2000 compliance.

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BUSINESS

- net revenues grew at a compound annual rate of 29.3%, from $55.0 million
to $91.9 million;

- broadcast cash flow grew at a compound annual rate of 35.8%, from $26.5
million to $48.9 million; and

- EBITDA grew at a compound annual rate of 35.5%, from $21.5 million to
$39.5 million.

SBS is led by Mr. Raul Alarcon, Jr., who has been Chief Executive Officer
and President since 1986. The Alarcon family has been involved in
Spanish-language radio broadcasting since the 1950's, when Mr. Raul Alarcon,
Sr., the Chairman of our Board of Directors, established the first radio network
in Camaguey, Cuba. Members of our senior management team, on average, have over
25 years of experience in Spanish-language media and radio broadcasting.

MARKET OPPORTUNITY

Our radio stations target the largest Hispanic markets in the United
States, including Puerto Rico. We believe that these markets have significant
growth potential for the following reasons:

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Spanish-speaking population in the world. We believe that these factors
will lead to significant increases in demand for Spanish-language radio,
music and entertainment.

- ATTRACTIVE DEMOGRAPHIC GROUP FOR ADVERTISERS. The U.S. Hispanic
population accounted for consumer spending of $380.0 billion in 1998
(7.2% of total U.S. consumer spending), an increase of 78.4% since 1990.
By 2000, U.S. Hispanics are expected to account for estimated consumer
spending of $457.8 billion (8.2% of total U.S. consumer spending), and by
2010 are expected to account for estimated consumer spending of $965.3
billion (12% of total U.S. consumer spending), far outpacing the expected
growth of overall U.S. consumer spending during the same period. Although
Hispanic consumer spending represented 7.2% of total consumer spending in
the United States in 1998, advertising expenditures targeted at Hispanics
represented only 1.4% of total advertising expenditures. We believe that
as U.S. Hispanic consumer spending continues to grow relative to overall
consumer spending, the advertising expenditures targeted at Hispanics
will increase significantly, eventually closing the gap between the
current level of advertising targeted at Hispanics and the buying power
that the Hispanic population in the United States represents. In addition
to increasing buying power, according to market research and compared to
the population as a whole, U.S. Hispanics (1) generally spend a larger
percentage of their household income on consumer goods, (2) have larger
households (3.6 persons per household compared to the average 2.5
persons), (3) are generally younger (median 26 years compared to 35
years) and, (4) on average, tend to be more brand conscious. These
factors make U.S. Hispanics an attractive target audience for many major
U.S. advertisers.

- GROWTH IN SPANISH-LANGUAGE ADVERTISER SPENDING. In 1998, a total of $1.7
billion was spent on Spanish-language advertising, compared to $1.1
billion in 1995. This represents a compound annual growth rate of 17.2%,
which is more than double the total advertising growth rate over the same
period. Approximately 26% of the $1.7 billion spent on Spanish-language
advertising was directed to Spanish-language radio. We believe that major
advertisers have found that Spanish-language advertising, and
Spanish-language radio advertising in particular, is a more effective
means of reaching the growing U.S. Hispanic audience compared to
English-language media.

- GROWTH IN SPANISH-LANGUAGE ADVERTISING RATES. We believe
Spanish-language advertising rates have been rising at a faster rate in
recent years than rates for general media, yet Spanish-language
advertising rates are still generally lower than for comparable
English-language media. We estimate that our stations in New York
currently receive approximately 63% of the advertising rates that a
similarly rated English-language station would receive, compared to only
39% in fiscal year 1997. In Los Angeles, we estimate that our station
currently receives 73% of the rates of a similarly rated English-language
station, compared to only 46% in fiscal year 1997. We believe that as
advertisers continue to recognize the buying power of the U.S. Hispanic
population, the gap in advertising rates between Spanish-language and
English-language media will continue to narrow.

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BUSINESS STRATEGY

OPERATING STRATEGY

Our operating strategy focuses on maximizing our radio stations' appeal to
our audience and our advertisers while minimizing operating expenses in order to
grow revenue and cash flow. To achieve these goals, we focus on:

Providing High-Quality Spanish-Language Programming. We format the
programming of each of our stations to capture a significant share of the
Spanish-language audience. We use extensive market research including third
party consultants and periodic music testing to assess listener preferences in
each station's target demographic audience. We then refine our programming to
reflect the results of this research and testing. Because the U.S. Hispanic
population is so diverse, consisting of numerous identifiable groups from many
different countries of origin each with its own cultural and musical heritage,
we strive to make ourselves intimately familiar with the musical tastes and the
preferences of each of the various ethnic Hispanic groups and customize our
programming accordingly.

Retaining Strong Local Management Teams. We employ local management teams
in each of our markets who are responsible for the day-to-day operations of our
radio stations. Our key local managers generally consist of a general station
manager, general sales manager and programming director. Stations are staffed
with managers who have experience and knowledge of the local radio market and
the local Hispanic market. Because of the cultural diversity of the Hispanic
population from region to region in the United States, decisions regarding
day-to-day programming, sales and promotional efforts are made by local
managers. We believe this approach improves our flexibility and responsiveness
to changing conditions in each of the markets we serve.

Utilizing Aggressive Sales Efforts. Our sales force focuses on converting
audience share into advertising revenue. In order to encourage an aggressive and
focused sales force, we have developed compensation structures tied to
advertising revenue. We seek to maximize our sales to national advertisers
because national advertising generally commands a higher rate per advertising
spot than does local advertising. We have attracted key sales executives from
general market radio who have applied their expertise and relationships with the
advertising community to increase our share of advertising from leading general
market advertisers. We believe that our

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focused sales efforts are working to increase media spending targeted at the
U.S. Hispanic consumer market and will enable us to continue to achieve
significant revenue growth, and to narrow the gap between the level of
advertising currently targeted at U.S. Hispanics and the potential buying power
of the U.S. Hispanic population.

Controlling Operating Costs. By employing a disciplined approach to
operating our radio stations, we have been able to achieve operating margins
which we believe are among the highest in the radio broadcast industry. We
emphasize control of each station's operating costs through detailed budgeting,
tight control over staffing levels and expense analysis. While local management
is responsible for the day-to-day operation of each station, corporate
management is responsible for long-range and strategic planning, establishing
policies and procedures, maximizing cost savings where centralized activity is
appropriate, allocating resources and maintaining overall control of the
stations.

Making Effective Use of Promotions and Special Events. We believe that
effective promotional efforts play a significant role in both adding new
listeners and increasing listener loyalty. Our promotional and marketing
campaigns focus on increasing Hispanic consumer awareness of advertisers'
products and services. Our goal is to use our expertise at marketing to the
Hispanic consumer in each of the markets in which we own and operate stations,
thereby attracting a large share of advertising revenue. We have organized
special promotional appearances, such as station van appearances at client
events, concerts and tie-ins to major events which form an important part of our
marketing strategy. Many of these events build advertiser loyalty because they
enable us to offer advertisers an additional means of reaching the Hispanic
consumer. In many instances, these events are co-sponsored by local television
and newspapers, allowing our advertisers to reach a larger combined audience.

Maintaining Strong Community Involvement. We have historically been, and
will continue to be, actively involved within the local communities that we
serve. Our radio stations participate in numerous community programs,
fund-raisers and activities benefitting the local community and Hispanics
abroad. Other examples of our community involvement include free public service
announcements, free equal-opportunity employment announcements, tours and
discussions held by radio station personalities with school and community groups
designed to limit drug and gang involvement, free concerts and events designed
to promote family values within the local Hispanic communities, and extended
coverage, when necessary, of significant events which have an impact on the U.S.
Hispanic population. Our stations and members of our management have received
numerous community service awards and acknowledgments from government entities
and community and philanthropic organizations for their service to the
community. We believe that this involvement helps to build and maintain station
awareness and listener loyalty.

ACQUISITION STRATEGY

Our acquisition strategy is to acquire radio stations in the largest U.S.
Hispanic markets. We consider acquisitions of stations in our existing markets,
as well as acquisitions of stations in other markets with a large Hispanic
population, where we can maximize our revenues through aggressive sales to U.S.
Hispanic and general market advertisers. These acquisitions may include stations
which do not currently target the U.S. Hispanic market, but which we believe can
be successfully reformatted.

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In analyzing potential radio station acquisition candidates, we consider
many factors including:

- the size of the Hispanic market;

- anticipated growth, demographics, and other characteristics of the
market;

- the nature and number of competitive stations in the market;

- the nature of other media competition in the station's market;

- the probability of achieving operating synergies through multiple station
ownership within the target market;

- the existing or potential quality of the broadcast signal and
transmission facility;

- the station's ratings, revenue and operating cash flow; and

- the price and terms of the purchase.

By implementing our operating strategy, we are successful in many markets
where our competitors have greater resources than we do. For example:

- WPAT-FM -- NEW YORK. When we acquired WPAT-FM in March of 1996, the
station had net broadcasting revenues of $8.1 million for the year ended
December 1995. Following our acquisition of WPAT-FM, we changed the
station's format to Spanish Adult Contemporary and integrated the station
into our existing New York operations. For the nine-month period ended
June 27, 1999, WPAT-FM generated net broadcasting revenues of $9.6
million, and according to the Spring 1999 Arbitron Survey was the number
two ranked Spanish-language radio station in the New York market and one
of the top 20 most listened to radio stations in the United States.

- WLEY-FM -- CHICAGO. When we acquired WLEY-FM (formerly WYSY-FM) in March
of 1997, the station had net broadcasting revenues of $5.0 million for
the 12-month period ended December 31, 1996. Following our acquisition of
WLEY-FM, we hired new management, changed the station's format to
Regional Mexican. For the nine-month period ended June 27, 1999, WLEY-FM
generated net broadcasting revenues of $7.4 million and according to the
Spring 1999 Arbitron Survey was the number one ranked Spanish-language
radio station in Chicago.

- KLEY-FM -- SAN ANTONIO. When we acquired KLEY-FM in May of 1998, the
station had net broadcasting revenues of $1.2 million for the 12-month
period ended February 28, 1998, and was the number four ranked
Spanish-language radio station in San Antonio. Following our acquisition
of KLEY-FM, we hired new management, changed the station's format to
Tejano-Regional Mexican. For the nine-month period ended June 27, 1999,
KLEY-FM generated net broadcasting revenues of $1.3 million and according
to the Spring 1999 Arbitron Survey was the number three ranked
Spanish-language radio station in San Antonio.

INTERNET STRATEGY

Our Internet strategy is designed to complement our existing business and
to enable us to capitalize on our U.S. Hispanic market expertise. The
centerpiece of our strategy is LaMusica.com, an Internet web site and on-line
community focused on the U.S. Hispanic market. This web site will offer all of
our radio stations' broadcasts through the use of audio

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streaming technology and will provide our advertisers with a complementary means
of reaching their target audience.

TOP 10 HISPANIC RADIO MARKETS IN THE UNITED STATES

The shaded areas in the table below indicate markets where we currently own
and operate radio stations in the United States. Population estimates are for
1998 and are based upon statistics provided by the U.S. Bureau of the Census and
the Strategy Research Corporation -- 1998 U.S. Hispanic Market Report.

<TABLE>
<CAPTION>
HISPANIC % HISPANIC OF % OF TOTAL
POPULATION TOTAL POPULATION U.S. HISPANIC
RANK MARKET (000) IN THE MARKET POPULATION
- ---- --------------------------- ---------- ---------------- -------------
<C> <S> <C> <C> <C>
1. Los Angeles 6,325.9 38.7% 18.3%
2. Puerto Rico 3,811.7 99.6 11.0
3. New York 3,645.1 18.1 10.5
4. Miami 1,422.6 38.1 4.1
5. San Francisco/San Jose 1,243.0 18.4 3.6
6. Chicago 1,198.3 12.7 3.5
7. Houston 1,141.0 24.2 3.3
8. San Antonio 1,064.7 51.6 3.1
9. McAllen/Brownsville (Texas) 823.7 89.5 2.4
10. Dallas/Ft. Worth 786.9 14.9 2.3
TOP 10 HISPANIC MARKETS 21,462.9 29.3% 62.7%
</TABLE>

PROGRAMMING

We format the programming of each of our stations to capture a substantial
share of the U.S. Hispanic audience. The U.S. Hispanic population is diverse,
consisting of numerous identifiable groups from many different countries of
origin, each with its own musical and cultural heritage. The music, culture,
customs and Spanish dialects vary from one radio market to another. We strive to
be very familiar with the musical tastes and preferences of each of the various
ethnic Hispanic groups and customize our programming to match the local
preferences of our target demographic audience in each market we serve. We have
an in-house research department in Miami of 16 employees who conduct extensive
radio market research on a daily, weekly, monthly and annual basis. By employing
listener study groups and telephone surveys modeled after Arbitron written
survey methodology, but with even larger sample sizes than Arbitron, we are able
to assess listener preferences, track trends and gauge our success on a daily
basis, well before Arbitron results are published. In this manner, we can
respond immediately to changing listener preferences and trends by refining our
programming to reflect the results of our research and testing. Each of our
programming formats is described below.

- Spanish Tropical. The Spanish Tropical format primarily consists of
salsa, merengue, and cumbia music. Salsa is dance music combining Latin
Caribbean rhythms with jazz originating from Puerto Rico, Cuba and the
Dominican Republic, which is popular with Hispanics living in New York
and Miami. Merengue music is up-tempo dance music originating from the
Dominican Republic. Cumbia is a festive, folkloric music which originated
in Colombia.

- Regional Mexican. The Regional Mexican format consists of various types
of music played in different regions of Mexico such as ranchera, nortena,
banda and cumbia. Ranchera music, originating from Jalisco, Mexico, is a
traditional folkloric sound

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<PAGE> 45

commonly referred to as mariachi music. Mariachi music features
acoustical instruments and is considered the music indigenous to Mexicans
who live in country towns. Nortena means northern, and is representative
of Northern Mexico. Featuring an accordion, nortena has a polka sound
with a distinct Mexican flavor. Banda is a regional format from the state
of Sinaloa, Mexico and is popular in California. Banda resembles up-tempo
marching band music with synthesizers.

- Tejano. The Tejano format consists of music based on Mexican themes but
which originated in Texas. Tejano music is a combination of contemporary
rock, ranchera and country music, the lyrics of which are primarily sung
in Spanish.

- Spanish Adult Contemporary. The Spanish Adult Contemporary format
includes pop, Latin rock, and ballads. This format is similar to English
Adult Contemporary featured on contemporary hit radio stations.

- Spanish Adult Top 40. The Spanish Adult Top 40 format consists of a
variety of Latin hit songs from the 1980's and 1990's.

- Spanish Oldies. The Spanish Oldies format includes a variety of Latin
music mainly from the 1950's, 1960's and 1970's.

- Dance. The Dance format consists of upbeat dance and house rhythms,
mainly from the 1980's and 1990's, that are played in dance clubs, and it
includes English-language music.

The programming formats of our radio stations and the target demographic of
each station are as follows:

<TABLE>
<CAPTION>
TARGET
DEMOGRAPHIC
CITY STATION FORMAT (BY AGE)
---- ------- -------------------------- -----------
<S> <C> <C> <C>
New York WSKQ-FM Spanish Tropical 25-54
WPAT-FM Spanish Adult Contemporary 25-54

Los Angeles KLAX-FM Regional Mexican 18-34

Puerto Rico WCMA-FM Spanish Adult Top 40 18-34
WMEG-FM Dance 18-34
WEGM-FM Dance 18-34

Miami WRMA-FM Spanish Adult Contemporary 25-49
WXDJ-FM Spanish Tropical 18-34
WCMQ-FM Spanish Oldies 35-54

The Florida Keys WVMQ-FM Spanish Adult Top 40 25-54
WZMQ-FM Spanish Adult Top 40 25-54

Chicago WLEY-FM Regional Mexican 18-34

San Antonio KLEY-FM Tejano-Regional Mexican 18-34
</TABLE>

RADIO STATION PORTFOLIO

The following is a general description of each of our markets and our radio
stations within each of these markets. Audience share and audience share rank
data for the New York, Los Angeles, Miami, Chicago and San Antonio markets are
from the Spring 1999 Arbitron Survey based on surveys reported four times a
year. Audience share and audience share rank data for the Puerto Rico market are
from the Spring 1999 Arbitron Survey, based on surveys reported twice a year.
Revenue share information for our Chicago market is derived from Hungerford
data, and for all other markets, revenue share information is derived from BIA
Research and

40
<PAGE> 46

Miller Kaplan data. Revenue rank and revenue share information are reported
cumulatively for each calendar quarter and, therefore, include the period from
January 1 through the date indicated.

NEW YORK

The New York market is the second largest radio market in terms of
advertising revenues which are projected to be $688.1 million in 1999. In 1998,
the New York market had the third largest U.S. Hispanic population, with
approximately 3.6 million Hispanics, which is approximately 18.1% of the New
York market's total population. We believe that we own the strongest franchise
in terms of audience share and number of Spanish-language radio stations in the
New York market, with two of the three FM Spanish-language radio stations. New
York experienced annual radio revenue growth of 10.3% between 1992 and 1998, and
radio revenue in New York is expected to continue growing at an annual rate of
9.7% between 1999 and 2002.

<TABLE>
<CAPTION>
SUMMER
SPRING 1999 WINTER 1999 FALL 1998 1998
WSKQ-FM ----------- ----------- --------- ------
<S> <C> <C> <C> <C>
Audience share (12-plus)............................. 4.8 4.5 5.2 6.0
Audience share rank (12-plus)........................ 3 3 3 1
Audience share (25-54)............................... 5.9 5.6 6.2 7.2
Audience share rank (25-54).......................... 1 2 2 1
</TABLE>

<TABLE>
<CAPTION>
YTD YTD YTD YTD
6/30/99 3/31/99 12/31/98 9/30/98
----------- ----------- --------- -------
<S> <C> <C> <C> <C>
Revenue share........................................ 5.2 4.7 4.8 4.6
Revenue rank......................................... 8 10 11 11
</TABLE>

<TABLE>
<CAPTION>
SUMMER
SPRING 1999 WINTER 1999 FALL 1998 1998
WPAT-FM ----------- ----------- --------- ------
<S> <C> <C> <C> <C>
Audience share (12-plus)............................. 3.2 2.9 3.0 3.2
Audience share rank (12-plus)........................ 11 13 12 12
Audience share (25-54)............................... 3.6 3.3 3.6 4.0
Audience share rank (25-54).......................... 11 12 9 7
</TABLE>

<TABLE>
<CAPTION>
YTD YTD YTD YTD
6/30/99 3/31/99 12/31/98 9/30/98
----------- ----------- --------- -------
<S> <C> <C> <C> <C>
Revenue share........................................ 2.1 1.9 2.0 1.9
Revenue rank......................................... 21 20 19 19
</TABLE>

- WSKQ-FM. In January 1989, we acquired WSKQ-FM for $52.5 million. WSKQ-FM
was the first Spanish-language FM station to serve the New York market,
making its debut in 1989. In 1993, after extensive research, we changed
the station's format to Spanish Tropical. This format is a mix of salsa
and merengue rhythms. The Spanish Tropical format has proven to be very
successful and according to the Spring 1999 Arbitron Survey, WSKQ-FM is
New York's number one ranked Spanish-language radio station and the
number three ranked station overall. WSKQ-FM is ranked number one in its
targeted audience, the 25-54 age demographic, with a 5.9 share.

- WPAT-FM. In March 1996, we purchased WPAT-FM for $86.4 million,
including closing costs of $1.8 million, because we believed that the New
York Spanish-language radio market was underserved. Consequently, we
reformatted WPAT-FM with a Spanish Adult Contemporary format designed to
complement WSKQ-FM's upbeat salsa and merengue format. According to the
Spring 1999 Arbitron Survey, WPAT-FM is New York's number two ranked
Spanish-language radio station and the number eleven ranked

41
<PAGE> 47

station overall. WPAT-FM is ranked number eleven in its targeted
audience, the 25-54 age demographic, with a 3.6 share.

LOS ANGELES

The Los Angeles market is the largest radio market in terms of advertising
revenues which are projected to be $726.5 million in 1999. In 1998, the Los
Angeles market had the largest U.S. Hispanic population, with approximately 6.3
million Hispanics, which is approximately 38.7% of the Los Angeles market's
total population. Los Angeles experienced annual radio revenue growth of 7.5%
between 1992 and 1998, and radio revenue in Los Angeles is expected to continue
growing at an annual rate of 10.3% between 1999 and 2002.

<TABLE>
<CAPTION>
SUMMER
SPRING 1999 WINTER 1999 FALL 1998 1998
KLAX-FM ----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Audience share (12-plus).......................... 3.0 3.3 4.1 3.2
Audience share rank (12-plus)..................... 9 9 3 11
Audience share (18-34)............................ 4.6 5.0 6.3 5.1
Audience share rank (18-34)....................... 8 8 4 6
</TABLE>

<TABLE>
<CAPTION>
YTD YTD YTD YTD
6/30/99 3/31/99 12/31/98 9/30/98
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Revenue share..................................... 2.7 2.4 2.4 2.3
Revenue rank...................................... 19 18 20 19
</TABLE>

- KLAX-FM. In February 1988, we acquired KLAX-FM for $15.0 million. The
station features a Regional Mexican format. According to the Spring 1999
Arbitron Survey, KLAX-FM is Los Angeles' number three ranked
Spanish-language radio station and the number nine ranked station
overall. KLAX-FM is ranked number eight in its targeted audience, the
18-34 age demographic, with a 4.6 share.

PUERTO RICO

The Puerto Rico market is the twenty-eighth largest radio market in terms
of advertising revenues which are projected to be $90.0 million in 1999. In
1998, the Puerto Rico market had the second largest U.S. Hispanic population,
with approximately 3.8 million Hispanics, which is approximately 99.6% of the
Puerto Rico market's total population. Puerto Rico experienced annual radio
revenue growth of 5.4% between 1992 and 1998, and radio revenue in Puerto Rico
is expected to continue growing at an annual rate of 5.7% between 1999 and 2002.
We have not included results for Fall 1998 because we did not own the Puerto
Rico stations during that rating period. Additionally, revenue share and revenue
rank data are not yet available.

42
<PAGE> 48

<TABLE>
<CAPTION>
SPRING 1999
WCMA-FM -----------
<S> <C>
Audience share (12-plus).................................. 2.3
Audience share rank (12-plus)............................. 11
Audience share (18-34).................................... 3.0
Audience share rank (18-34)............................... 12
YTD 6/30/99
---
Revenue share............................................. N/A
Revenue rank.............................................. N/A
WMEG-FM SPRING 1999
---
Audience share (12-plus).................................. 3.8
Audience share rank (12-plus)............................. 7
Audience share (18-34).................................... 7.4
Audience share rank (18-34)............................... 2
YTD 6/30/99
---
Revenue share............................................. N/A
Revenue rank.............................................. N/A
WEGM-FM SPRING 1999
---
Audience share (12-plus).................................. 0.6
Audience share rank (12-plus)............................. 38
Audience share (18-34).................................... 1.2
Audience share rank (18-34)............................... 25
YTD 6/30/99
---
Revenue share............................................. N/A
Revenue rank.............................................. N/A
</TABLE>

- WCMA-FM. In December 1998, we acquired WCMA-FM (formerly WDOY-FM) for
$8.3 million. WCMA-FM's format is Spanish Adult Top 40. According to the
Spring 1999 Arbitron Survey, WCMA-FM is Puerto Rico's number eleven
ranked radio station. WCMA-FM is ranked number twelve in its targeted
audience, the 18-34 age demographic, with a 3.0 share.

- WMEG-FM. In April 1999, we acquired WMEG-FM and WEGM-FM for $16.1
million. The format of WMEG-FM is Dance. According to the Spring 1999
Arbitron Survey, WMEG-FM is Puerto Rico's number seven ranked radio
station. WMEG-FM is ranked number two in its targeted audience, the 18-34
age demographic, with a 7.4 share.

- WEGM-FM. The format of WEGM-FM, which is simulcast with WMEG-FM, is
Dance. According to the Spring 1999 Arbitron Survey, WEGM-FM is Puerto
Rico's number thirty-eight ranked radio station. WEGM-FM is ranked number
twenty-five in its targeted audience, the 18-34 age demographic, with a
1.2 share.

MIAMI AND THE FLORIDA KEYS

The Miami market is the twelfth largest radio market in terms of
advertising revenues which are projected to be $233.0 million in 1999. In 1998,
the Miami market had the fourth largest U.S. Hispanic population, with
approximately 1.4 million Hispanics, which is approximately 38.1% of the Miami
market's total population. Miami experienced annual radio revenue

43
<PAGE> 49

growth of 12.1% between 1992 and 1998, and radio revenue in Miami is expected to
continue growing at an annual rate of 9.0% between 1999 and 2002.

<TABLE>
<CAPTION>
SUMMER
SPRING 1999 WINTER 1999 FALL 1998 1998
WCMQ-FM ----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Audience share (12-plus)............................ 2.4 3.1 2.8 2.7
Audience share rank (12-plus)....................... 18 13 18 17
Audience share (35-54).............................. 4.1 4.2 4.4 3.4
Audience share rank (35-54)......................... 10 8 6 12
</TABLE>

<TABLE>
<CAPTION>
YTD YTD YTD YTD
6/30/99 3/31/99 12/31/98 9/30/98
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Revenue share....................................... 2.4 2.4 2.1 2.1
Revenue rank........................................ 17 17 19 20
</TABLE>

<TABLE>
<CAPTION>
SUMMER
SPRING 1999 WINTER 1999 FALL 1998 1998
WRMA-FM ----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Audience share (12-plus)............................ 3.1 2.9 3.3 3.3
Audience share rank (12-plus)....................... 13 18 10 12
Audience share (25-49).............................. 3.0 3.5 3.4 3.7
Audience share rank (25-49)......................... 14 14 14 11
</TABLE>

<TABLE>
<CAPTION>
YTD YTD YTD YTD
6/30/99 3/31/99 12/31/98 9/30/98
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Revenue share....................................... 3.8 3.7 4.1 14.7
Revenue rank........................................ 15 15 14 3
</TABLE>

<TABLE>
<CAPTION>
SUMMER
SPRING 1999 WINTER 1999 FALL 1998 1998
WXDJ-FM ----------- ----------- --------- ------
<S> <C> <C> <C> <C>
Audience share (12-plus)............................. 3.9 3.4 3.1 2.9
Audience share rank (12-plus)........................ 8 10 12 14
Audience share (18-34)............................... 5.0 4.4 3.1 3.4
Audience share rank (18-34).......................... 7 8 10 11
</TABLE>

<TABLE>
<CAPTION>
YTD YTD YTD YTD
6/30/99 3/31/99 12/31/98 9/30/98
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenue share........................................ 5.5 5.0 5.5 20.0
Revenue rank......................................... 7 11 8 2
</TABLE>

- WCMQ-FM. In November 1986, we acquired WCMQ-FM (and WCMQ-AM) for $15.0
million. In 1997, we sold WCMQ-AM for $8.0 million. In October 1996, to
complement WRMA-FM and WXDJ-FM, we reformatted WCMQ-FM by implementing a
Spanish Oldies format. According to the Spring 1999 Arbitron Survey,
WCMQ-FM is Miami's number five ranked Spanish-language radio station and
the number eighteen ranked station overall. WCMQ-FM is ranked number ten
in its targeted audience, the 35-54 age demographic, with a 4.1 share.

- WRMA-FM. In March 1997, we purchased WRMA-FM and WXDJ-FM for $112.2
million, including closing costs of $1.2 million. A Spanish Adult
Contemporary station, WRMA-FM features a blend of ballads and pop songs
from the 1970's to the present. According to the Spring 1999 Arbitron
Survey, WRMA-FM is Miami's number four ranked Spanish-language radio
station and the number thirteen ranked station overall. WRMA-FM is ranked
number fourteen in its targeted audience, the 25-49 age demographic, with
a 3.0 share.

44
<PAGE> 50

- WXDJ-FM. By blending salsa and merengue, this station's Spanish Tropical
format targets the emerging musical tastes of the rapidly changing Miami
Hispanic population. According to the Spring 1999 Arbitron Survey,
WXDJ-FM is Miami's number three ranked Spanish-language radio station and
the number eight ranked station overall. WXDJ-FM is ranked number seven
in its targeted audience, the 18-34 age demographic, with a 5.0 share.

We acquired our two stations in the Florida Keys to supplement our Miami
operations by targeting Miami listeners vacationing in the Keys. We believe that
we have the strongest position in terms of audience share and number of
Spanish-language radio stations in the Keys market, with the only two FM
Spanish-language radio stations. Arbitron ratings and BIA Research data do not
exist for the Keys market.

- WVMQ-FM (KEY WEST). In 1994, we acquired WVMQ-FM (formerly WSKP-FM) for
$0.2 million. The format of WVMQ-FM is Spanish Adult Top 40.

- WZMQ-FM (KEY LARGO). In 1989, we acquired WZMQ-FM for $0.3 million. The
format of WZMQ-FM, which is simulcast with WVMQ-FM, is also Spanish Adult
Top 40.

We are actively seeking regulatory approvals from government agencies to
relocate our Key Largo tower closer to Miami to enhance our presence in the
Miami market. We cannot assure you that we will be able to obtain the necessary
regulatory approvals to accomplish this goal.

CHICAGO

The Chicago market is the third largest radio market in terms of
advertising revenues which are projected to be $471.0 million in 1999. In 1998,
the Chicago market had the sixth largest U.S. Hispanic population, with
approximately 1.2 million Hispanics, which is approximately 12.7% of the Chicago
market's total population. We believe that we own the strongest franchise in the
Chicago market with the number one ranked FM Spanish-language radio station.
Chicago experienced annual radio revenue growth of 8.7% between 1992 and 1998,
and radio revenue in Chicago is expected to continue growing at an annual rate
of 9.0% between 1999 and 2002.

<TABLE>
<CAPTION>
SUMMER
SPRING 1999 WINTER 1999 FALL 1998 1998
WLEY-FM ----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Audience share (12-plus)............................ 2.4 2.6 2.3 1.9
Audience share rank (12-plus)....................... 18 15 18 21
Audience share (18-34).............................. 4.2 4.4 4.1 3.3
Audience share rank (18-34)......................... 7 6 7 10
</TABLE>

<TABLE>
<CAPTION>
YTD YTD YTD YTD
6/30/99 3/31/99 12/31/98 9/30/98
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Revenue share....................................... 2.6 2.3 2.5 2.5
Revenue rank........................................ 18 20 20 19
</TABLE>

- WLEY-FM. In March 1997, we acquired WLEY-FM (formerly WYSY-FM) for $33.0
million because we believed that the Chicago Spanish-language radio
market was underserved and offered significant opportunities for growth.
In July 1997, after extensive research, we changed WLEY-FM's format from
70's rock to a Regional Mexican format. According to the Spring 1999
Arbitron Survey, WLEY-FM is Chicago's number one ranked Spanish-language
radio station and the number eighteen ranked station overall.

45
<PAGE> 51

WLEY-FM is ranked number seven in its targeted audience, the 18-34 age
demographic, with a 4.2 share.

SAN ANTONIO

The San Antonio market is the thirty-second largest radio market in terms
of advertising revenues which are projected to be $78.4 million in 1999. In
1998, San Antonio had the eighth largest U.S. Hispanic population, with
approximately 1.1 million Hispanics, which is approximately 51.6% of the San
Antonio market's total population. San Antonio experienced annual radio revenue
growth of 8.8% between 1992 and 1998, and radio revenue in San Antonio is
expected to continue growing at an annual rate of 7.7% between 1999 and 2002.

<TABLE>
<CAPTION>
SUMMER
SPRING 1999 WINTER 1999 FALL 1998 1998
KLEY-FM ----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Audience share (12-plus)............................ 2.5 3.5 3.2 1.9
Audience share rank (12-plus)....................... 15 13 12 16
Audience share (18-34).............................. 4.0 4.4 3.3 1.8
Audience share rank (18-34)......................... 8 8 9 12
</TABLE>

<TABLE>
<CAPTION>
YTD YTD YTD YTD
6/30/99 3/31/99 12/31/98 9/30/98
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Revenue share....................................... 2.7 2.1 1.5 1.4
Revenue rank........................................ 14 14 16 16
</TABLE>

- KLEY-FM. In May 1998, we acquired KLEY-FM (formerly KRIO-FM) for $9.3
million. At the time, KLEY-FM was programmed as a strictly Tejano
station. In July 1998, we expanded the format to Regional Mexican and
Tejano. According to the Spring 1999 Arbitron Survey, KLEY-FM is San
Antonio's number three ranked Spanish-language radio station and the
number fifteen ranked station overall. KLEY-FM is ranked number eight in
its targeted audience, the 18-34 age demographic, with a 4.0 share.

LATIN MUSIC ON-LINE ("LAMUSICA.COM")

LaMusica.com is a bilingual Spanish-English Internet web site and on-line
community that focuses on the U.S. Hispanic market. LaMusica.com is a provider
of original information and interactive content related to Latin music,
entertainment, news and culture. We believe that LaMusica.com, together with our
radio station portfolio, enables our audience to enjoy additional targeted and
culturally-specific entertainment options, such as concert listings, CD reviews,
local entertainment calendars, and interactive content on popular Latin
recording artists and musicians. Similarly, LaMusica.com enables our advertisers
to cost-effectively reach their targeted Hispanic consumer through an
additional, dynamic and rapidly growing medium.

LaMusica.com is currently developing links to the web sites for all of our
radio stations which we intend to become operational in the near future. This
network of web sites will, among other things, permit our target audiences to
listen to streaming audio of live radio broadcasts from each of our radio
stations from anywhere in the United States and the world. In addition to our
network of station web sites and our production of original interactive content
relating to Latin music and entertainment, we plan to offer enhanced community
features on LaMusica.com such as branded e-mail, bulletin boards, fan clubs,
chat rooms, personals and horoscopes.

We anticipate LaMusica.com will generate revenues primarily from two
distinct sources: (1) advertising and sponsorship and (2) electronic commerce
opportunities, such as on-line music sales. We will use our stations' on-air
marketing power to draw visitors to LaMusica.com.

46
<PAGE> 52

We are currently initiating a nationwide advertising campaign on our radio
stations in order to increase audience awareness of LaMusica.com. We will also
utilize our strong relationships with advertisers and the music industry to
develop banner advertising and sponsorships. With respect to electronic
commerce, we are developing a business model to sell music directly to consumers
on our web sites, as music represents the most frequently purchased item
on-line. We plan to utilize the services of a leading music order fulfillment
company in order to facilitate our on-line music sales. As music technology and
industry standards evolve, we will explore additional opportunities for the sale
of music on-line, including downloads of digital music and the sale of
customized compact discs. We also plan to sell t-shirts, posters and other Latin
music-related merchandise.

In addition to the rapidly growing U.S. Hispanic population, we believe
that LaMusica.com will benefit from the following:

- the percentage of Hispanics in the United States (excluding Puerto Rico)
accessing the Internet either at home or at work is currently estimated
at 36%, a percentage which we believe will increase substantially over
the next few years;

- the percentage of Hispanic households in the United States (excluding
Puerto Rico) that own a computer is estimated at 26%;

- $571.0 million was spent on Latin music CDs, cassettes and music videos
in 1998, an increase in dollar terms of 16.0% from 1997, representing the
fastest growing segment of the music industry;

- approximately two-thirds of respondents in Arbitron surveys expressed
interest in purchasing music from web sites maintained by radio stations;
and

- we believe that the U.S. Hispanic market is currently underserved by the
Internet and that there are a limited number of on-line businesses
targeting the U.S. Hispanic consumer.

We plan to use our knowledge of our Internet user base to help advertisers
create more effective on-line advertising campaigns. In addition, we intend to
use advertising techniques and tracking technologies to:

- target advertising to users with specific demographic profiles;

- gather extensive data on our users; and

- use daily tracking data to analyze a particular campaign's effectiveness.

Our management team has been developing LaMusica.com for the past four
years and has extensive technological knowledge and experience in the
development and creation of original content. LaMusica.com has been recognized
for its excellence in Latin music content on the Internet and received a "Top
5%" award from Lycos(R), has been named a "Top Latino" web site by Tesoros del
Web, received a "Best of the Web" award from Home PC and is a snap.com editor's
choice for Latin music on-line.

MANAGEMENT AND PERSONNEL

As of July 16, 1999, we had 388 full-time employees, 10 of whom were
primarily involved in senior management, 163 in programming, 119 in sales, 82 in
general administration and 14 in technical activities.

47
<PAGE> 53

To facilitate efficient management from our Miami, Florida headquarters, we
access and utilize computerized accounting systems from our properties to
provide current information to management on station operations and to assist in
cost control and the preparation of monthly financial statements. Corporate
executives regularly visit each station to monitor its operations and ensure
that our policies are properly followed.

SEASONALITY

Seasonal net broadcasting revenue fluctuations are common in the radio
broadcasting industry and are due primarily to fluctuations in advertising
expenditures by local and national advertisers. Our second fiscal quarter
(January through March) generally produces the lowest net broadcasting revenue
for the year because of normal post-holiday decreases in advertising
expenditures.

ADVERTISING

Virtually all radio station revenue is derived from advertising. This
revenue is usually classified in one of two categories -- "national" or "local."
"National" refers to advertising that is solicited by a national representative
firm that represents the station and is paid commissions based on collected net
revenues. Our national sales representative is Caballero Spanish Media, LLC, a
division of Interep National Radio Sales, Inc. "Local" refers to advertising
purchased by advertisers in the local community served by a particular station.

We believe that radio is one of the most efficient and cost-effective means
for advertisers to reach targeted demographic groups. Advertising rates charged
by a radio station are based primarily on the station's ability to attract
listeners in a given market and on the attractiveness to advertisers of the
station's listener demographics. Rates vary depending upon a program's
popularity among the listeners an advertiser is seeking to attract, the number
of advertisers vying for available air time and the availability of alternative
media in the market. Radio advertising rates generally are highest during the
morning and afternoon drive-time hours which are the peak hours for radio
audience listening. We believe that having multiple stations in a market is
desirable to national advertisers enabling the broadcaster to command higher
advertising rates. We believe we will be able to increase our rates as new and
existing advertisers recognize the increasing desirability of targeting the
growing Hispanic population in the United States.

Each station broadcasts a predetermined number of advertisements each hour
with the actual number depending upon the format of a particular station. We
determine the number of advertisements broadcast hourly that can maximize the
station's available revenue dollars without jeopardizing its audience listener
levels. While there may be shifts from time to time in the number of
advertisements broadcast during a particular time of the day, the total number
of advertisements broadcast on a particular station generally does not vary
significantly from year to year.

Our revenue mix between local and national advertising varies significantly
by market. We strive to increase the level of national advertising since
national advertising generally commands a higher dollar rate per advertising
spot than does local advertising. Currently, approximately 73% of our
advertising is local and 27% is national.

Although the majority of our advertising contracts are short-term
(generally running for less than three months), we have long-term relationships
with some of our advertisers. In each of our broadcasting markets, we employ
salespeople to obtain local advertising revenues. We believe that our local
sales force is crucial to maintaining relationships with key local advertisers
and

48
<PAGE> 54

agencies and identifying new advertisers. We generally pay sales commissions to
our local sales staff upon the receipt from advertisers of the payments related
to these sales. We offer assistance to local advertisers by providing them with
studio facilities to produce 60-second commercials free of charge.

COMPETITION

The success of each of our stations depends significantly upon its audience
ratings and its share of the overall advertising revenue within its market. The
radio broadcasting industry is a highly competitive business. Each of our radio
stations competes with both Spanish-language and English-language radio stations
in its market as well as with other advertising media such as newspapers,
broadcast television, cable television, the Internet, magazines, outdoor
advertising, transit advertising and direct mail marketing. Several of the
stations with which we compete are subsidiaries of large national or regional
companies that have substantially greater resources than we do. Factors which
are material to competitive position include management experience, the
station's rank in its market, signal strength and frequency, and audience
demographics, including the nature of the Spanish market targeted by a
particular station.

Although the radio broadcasting industry is highly competitive, some
barriers to entry exist. These barriers can be mitigated to some extent by
changing existing radio station formats and upgrading power, among other
actions. The operation of a radio station requires a license or other
authorization from the FCC, and the number of radio stations that can operate in
a given market is limited by the availability of FM and AM radio frequencies
allotted by the FCC to communities in that market. In addition, the FCC's
multiple ownership rules regulate the number of stations that may be owned and
controlled by a single entity in a given market. However, in recent years, these
rules have changed significantly. For a discussion of FCC regulation, see
"Federal Regulation of Radio Broadcasting."

The radio industry is also subject to competition from new media
technologies that are being developed or introduced, such as the delivery of
audio programming by cable television systems, by satellite and by terrestrial
delivery of digital audio broadcasting (known as "DAB"). DAB may deliver to
nationwide and regional audiences, multi-channel, multi-format, digital radio
services with sound quality equivalent to that of compact discs. The FCC has
recently authorized spectrum for the use of a new technology, satellite digital
audio radio services (known as "SDARS"), to deliver audio programming. SDARS may
provide a medium for the delivery by satellite of multiple new audio programming
formats to local and national audiences. It is not known at this time whether
digital technology also may be used in the future by existing radio broadcast
stations either on existing or alternate broadcasting frequencies. There are
also proposals before the FCC to permit a new "low power" radio or
"microbroadcasting" service which could open up opportunities for low cost
neighborhood service on frequencies which would not interfere with existing
stations. No FCC action has been taken on these proposals to date.

The delivery of information through the presently unregulated Internet also
could create a new form of competition. The radio broadcasting industry
historically has grown despite the introduction of new technologies for the
delivery of entertainment and information, such as television broadcasting,
cable television, audio tapes and compact discs. A growing population and the
greater availability of radios, particularly car and portable radios, have
contributed to this growth. We cannot assure you, however, that the development
or introduction in the future of any new media technology will not have an
adverse effect on the radio broadcasting industry.

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We cannot predict what other matters might be considered in the future by
the FCC, nor can we assess in advance what impact, if any, the implementation of
any of these proposals or changes might have on our business. See "Federal
Regulation of Radio Broadcasting."

ANTITRUST

An important part of our growth strategy is the acquisition of additional
radio stations. After the passage of the Telecommunications Act of 1996, the
Justice Department has become more aggressive in reviewing proposed acquisitions
of radio stations and radio station networks. The Justice Department is
particularly aggressive when the proposed buyer already owns one or more radio
stations in the market of the station it is seeking to buy. Recently, the
Justice Department has challenged a number of radio broadcasting transactions.
Some of those challenges ultimately resulted in consent decrees requiring, among
other things, divestitures of certain stations. In general, the Justice
Department has more closely scrutinized radio broadcasting acquisitions that
result in local market shares in excess of 40% of radio advertising revenue.
Similarly, the FCC staff has announced new procedures to review proposed radio
broadcasting transactions even if the proposed acquisition otherwise complies
with the FCC's ownership limitations. In particular, the FCC may invite public
comment on proposed ratio transactions that the FCC believes, based on its
initial analysis, may present ownership concentration concerns in a particular
local radio market.

FEDERAL REGULATION OF RADIO BROADCASTING

The radio broadcasting industry is subject to extensive and changing
regulation by the FCC of programming, technical operations, employment and other
business practices. The FCC regulates radio broadcast stations pursuant to the
Communications Act. The Communications Act permits the operation of radio
broadcast stations only in accordance with a license issued by the FCC upon a
finding that the grant of a 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. Among other things, the FCC:

- assigns frequency bands for radio broadcasting;

- determines the particular frequencies, locations and operating power of
radio broadcast stations;

- issues, renews, revokes and modifies radio broadcast station licenses;

- establishes technical requirements for certain transmitting equipment
used by radio broadcast stations;

- adopts and implements regulations and policies that directly or
indirectly affect the ownership, operation, program content and
employment and business practices of radio broadcast stations; and

- has the power to impose penalties, including monetary forfeitures, for
violations of its rules and the Communications Act.

The Communications Act prohibits the assignment of an FCC license, or other
transfer of control of an FCC licensee, without the prior approval of the FCC.
In determining whether to approve assignments or transfers, and in determining
whether to grant or renew a radio broadcast license, the FCC considers a number
of factors pertaining to the licensee (and any proposed

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licensee), including restrictions on foreign ownership, compliance with FCC
media ownership limits and other FCC rules, licensee character and compliance
with the Anti-Drug Abuse Act of 1988.

The following is a brief summary of certain provisions of the
Communications Act and specific FCC rules and policies. This summary does not
purport to be complete and is subject to the text of the Communications Act, the
FCC's rules and regulations, and the rulings of the FCC. You should refer to the
Communications Act and these FCC rules and rulings for further information
concerning the nature and extent of federal regulation of radio broadcast
stations.

A licensee's failure to observe the requirements of the Communications Act
or FCC rules and policies may result in the imposition of various sanctions,
including admonishment, fines, the grant of renewal terms of less than eight
years, the grant of a license with conditions or, for particularly egregious
violations, the denial of a license renewal application, the revocation of an
FCC license or the denial of FCC consent to acquire additional broadcast
properties.

Congress and the FCC have had under consideration, and may in the future
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could, directly or indirectly, affect the operation, ownership
and profitability of SBS's radio stations, result in the loss of audience share
and advertising revenue for our radio broadcast stations or affect our ability
to acquire additional radio broadcast stations or finance these acquisitions.
Such matters may include:

- changes to the license authorization and renewal process;

- proposals to impose spectrum use or other fees on FCC licensees;

- auction of new broadcast licenses;

- changes to the FCC's equal employment opportunity regulations and other
matters relating to involvement of minorities and women in the
broadcasting industry;

- proposals to change rules relating to political broadcasting including
proposals to grant free air time to candidates, and other changes
regarding program content;

- proposals to restrict or prohibit the advertising of beer, wine and other
alcoholic beverages;

- technical and frequency allocation matters, including creation of a new
low power radio broadcast service;

- the implementation of digital audio broadcasting on both a satellite and
terrestrial basis;

- changes in broadcast cross-interest, multiple ownership, foreign
ownership, cross-ownership and ownership attribution policies;

- proposals to allow telephone companies to deliver audio and video
programming to homes in their service areas; and

- proposals to alter provisions of the tax laws affecting broadcast
operations and acquisitions.

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

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FCC LICENSES

The Communications Act provides that a broadcast station license may be
granted to any 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. The FCC grants radio broadcast station licenses for
specific periods of time and, upon application, may renew them for additional
terms. Under the Communications Act, radio broadcast station licenses may be
granted for a maximum term of eight years.

Generally, the FCC renews radio broadcast licenses without a hearing upon a
finding that:

- the radio station has served the public interest, convenience and
necessity;

- there have been no serious violations by the licensee of the
Communications Act or FCC rules and regulations; and

- there have been no other violations by the licensee of the Communications
Act or FCC rules and regulations which, taken together, indicate a
pattern of abuse.

After considering these factors, the FCC may grant the license renewal
application with or without conditions, including renewal for a term less than
the maximum term otherwise permitted by law, or hold an evidentiary hearing.

In addition, the Communications Act authorizes the filing of petitions to
deny a license renewal application during specific periods of time after a
renewal application has been filed. Interested parties, including members of the
public, may use these petitions to raise issues concerning a renewal applicant's
qualifications. If a substantial and material question of fact concerning a
renewal application is raised by the FCC or other interested parties, or if for
any reason the FCC cannot determine that granting a renewal application would
serve the public interest, convenience and necessity, the FCC will hold an
evidentiary hearing on the application. If as a result of an evidentiary hearing
the FCC determines that the licensee has failed to meet the requirements
specified above and that no mitigating factors justify the imposition of a
lesser sanction, then the FCC may deny a license renewal application.
Historically, our licenses have been renewed without any conditions or sanctions
being imposed, but we cannot assure you that the licenses of each of our
stations will continue to be renewed or will continue to be renewed without
conditions or sanctions.

The FCC classifies each AM and FM radio station. An AM radio station
operates on either a clear channel, regional channel or local channel. A clear
channel is one on which AM radio stations are assigned to serve wide areas,
particularly at night.

The minimum and maximum facilities requirements for an FM radio station are
determined by its class. Possible FM class designations depend upon the
geographic zone in which the transmitter of the FM radio station is located. In
general, commercial FM radio stations are classified as follows, in order of
increasing power and antenna height: Class A, B1, C3, B, C2, C1 or C radio
stations. The FCC recently has proposed to divide Class C stations into two
subclasses based on antenna height. Stations not meeting the minimum height
requirement within a three-year transition period would be downgraded
automatically to the new Class C0 category.

Ownership Matters. The Communications Act requires prior approval of the
FCC for the assignment of a broadcast license or the transfer of control of a
corporation or other entity

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holding a license. In determining whether to approve an assignment of a radio
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 assignee or
transferee, including compliance with FCC restrictions on non-U.S.
citizen or entity ownership and control;

- compliance with FCC rules limiting the common ownership of attributable
interests in broadcast and newspaper properties;

- the history of compliance with FCC operating rules; and

- the character qualifications of the transferee or assignee and the
individuals or entities holding attributable interests in them.

Applications to the FCC for assignments and transfers are subject to petitions
in favor of denying the assignment and transfer by interested parties.

To obtain the FCC's prior consent to assign or transfer a broadcast
license, appropriate applications must be filed with the FCC. The application
must be placed on public notice for a period of 30 days during which petitions
to deny the application may be filed by interested parties, including members of
the public. Informal objections may be filed any time up until the FCC acts upon
the application. If the FCC grants an assignment or transfer application,
interested parties have 30 days from public notice of the grant to seek
reconsideration of that grant. The FCC usually has an additional ten days to set
aside such grant on its own motion. When ruling on an assignment or transfer
application, the FCC is prohibited from considering whether the public interest
might be served by an assignment or transfer to any party other than the
assignee or transferee specified in the application.

Under the Communications Act, a broadcast license may not be granted to or
held by any corporation that has more than 20% of its capital stock owned or
voted by non-U.S. citizens or entities or their representatives, by foreign
governments or their representatives, or by non-U.S. corporations. Furthermore,
the Communications Act provides that no FCC broadcast license may be granted to
or held by any corporation directly or indirectly controlled by any other
corporation of which more than 25% of its capital stock is owned of record or
voted by non-U.S. citizens or entities or their representatives, or foreign
governments or their representatives or by non-U.S. corporations, if the FCC
finds the public interest will be served by the refusal or revocation of such
license. These restrictions apply in modified form to other forms of business
organizations, including partnerships and limited liability companies. Thus, the
licenses for our stations could be revoked if more than 25% of our outstanding
capital stock is issued to or for the benefit of non-U.S. citizens.

The FCC generally applies its other broadcast ownership limits to
"attributable" interests held by an individual, corporation, partnership or
other association or entity, including limited liability companies. In the case
of a corporation 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 stock of a licensee corporation are generally deemed
attributable interests, as are positions as an officer or director of a
corporate parent of a broadcasting licensee. The FCC treats all partnership
interests as attributable, except for those limited partnership interests that
under FCC policies are considered insulated from material involvement in the
management or operation of the media-related activities of the partnership. The
FCC currently treats limited liability companies like limited partnerships for
purposes of attribution. Stock interests held by insurance companies, mutual
funds, bank trust departments and certain other passive investors

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that hold stock for investment purposes only become attributable with the
ownership of ten percent or more of the voting stock of the corporation holding
broadcast licenses.

To assess whether a voting stock interest in a direct or an indirect parent
corporation of a broadcast licensee is attributable, the FCC uses a "multiplier"
analysis in which non-controlling voting stock interests are deemed
proportionally reduced at each non-controlling link in a multi-corporation
ownership chain. A time brokerage agreement with another radio station in the
same market creates an attributable interest in the brokered radio station as
well for purposes of the FCC's local radio station ownership rules, if the
agreement affects more than 15% of the brokered radio station's weekly broadcast
hours.

Debt instruments, non-voting stock, options and warrants for voting stock
that have not yet been exercised, insulated limited partnership interests where
the limited partner is not materially involved in the media-related activities
of the partnership, and minority voting stock interests in corporations where
there is a single holder of more than 50% of the outstanding voting stock whose
vote is sufficient to affirmatively direct the affairs of the corporation,
generally do not subject their holders to attribution. However, the FCC's rules
also specify other exceptions to these general principles for attribution. The
FCC is currently evaluating whether to:

- raise the benchmark for voting stock from five to ten percent;

- raise the benchmark for passive investors holding voting stock from ten
to twenty percent;

- continue the single 50% stockholder exception; and/or

- attribute non-voting stock or perhaps only when combined with other
rights such as voting shares or contractual relationships.

More recently, the FCC has solicited comment on proposed rules that would:

- treat an otherwise non-attributable ownership equity or debt interest in
a licensee as an attributable interest where the interest holder is a
program supplier or the owner of a broadcast station in the same market
and the equity and/or debt holding is greater than a specified benchmark,
and

- in some circumstances, treat the licensee of a broadcast station that
sells advertising time of another station in the same market pursuant to
a joint sales agreement as having an attributable interest in the station
whose advertising is being sold.

Communications Act and FCC rules generally restrict ownership, operation or
control of, or the common holding of attributable interests in:

- radio broadcast stations above certain limits servicing the same local
market;

- a radio broadcast station and a television broadcast station servicing
the same local market; and

- a radio broadcast station and a daily newspaper serving the same local
market.

These rules include specific signal contour overlap standards to determine
compliance, and the FCC defined market will not necessarily be the same market
used by Arbitron or other surveys, or for purposes of the HSR Act. Under these
"cross-ownership" rules, we, absent waivers, would not be permitted to own a
radio broadcast station and acquire an attributable interest in any daily
newspaper or television broadcast station, other than a low-powered television
station, in the same market where we then owned any radio broadcast station. Our
stockholders, officers or

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directors, absent a waiver, may not hold an attributable interest in a daily
newspaper or television broadcast station in those same markets.

The FCC is currently reviewing the ban on common ownership of a radio
station and a daily newspaper in the same market. The FCC's rules provide for
the liberal grant of a waiver of the rule prohibiting common ownership of radio
and television stations in the same geographic market in the top 25 television
markets if specific conditions are satisfied, and the FCC will consider waivers
in other markets under more restrictive standards. The FCC is reviewing its ban
on the common ownership of a radio station and a television station or newspaper
including extending the policy of liberal waivers of common ownership of radio
and television stations to the top 50 television markets.

Although current FCC nationwide radio broadcast ownership rules allow one
entity to own, control or hold attributable interests in an unlimited number of
FM radio stations and AM radio stations nationwide, the Communications Act and
the FCC's rules limit the number of radio broadcast stations in local markets in
which a single entity may own an attributable interest as follows:

- In a radio market with 45 or more commercial radio stations, a party may
own, operate or control up to eight commercial radio stations, not more
than five of which are in the same service (AM or FM).

- In a radio market with between 30 and 44 (inclusive) commercial radio
stations, a party may own, operate or control up to seven commercial
radio stations, not more than four of which are in the same service (AM
or FM).

- In a radio market with between 15 and 29 (inclusive) commercial radio
stations, a party may own, operate or control up to six commercial radio
stations, not more than four of which are in the same service (AM or FM).

- In a radio market with 14 or fewer commercial radio stations, a party may
own, operate or control up to five commercial radio stations, not more
than three of which are in the same service (AM or FM), except that a
party may not own, operate, or control more than 50 percent of the radio
stations in such market.

Because of these multiple and cross-ownership rules, if a stockholder,
officer or director of SBS holds an attributable interest in SBS, such
stockholder, officer or director may violate the FCC's rules if such person or
entity also holds or acquires an attributable interest in other television,
radio stations or daily newspapers, depending on their number and location. If
an attributable stockholder, officer or director of SBS violates any of these
ownership rules, we may be unable to obtain from the FCC one or more
authorizations needed to conduct our radio station business and may be unable to
obtain FCC consents for future acquisitions. As long as one person or entity
holds more than 50% of the voting power of the common stock of SBS where the
vote of such person or entity is sufficient to affirmatively direct the affairs
of SBS, another stockholder, unless serving as an officer and/or director,
generally would not hold an attributable interest in SBS. However, as described
above, the FCC is currently evaluating whether to continue the exception for a
single majority stockholder of more than 50% of a licensee's voting stock. As of
June 27, 1999, Raul Alarcon, Jr. held more than 50% of the total voting power of
our common stock.

Under its cross-interest policy, the FCC considers meaningful relationships
among competing media outlets that serve substantially the same area, even if
the ownership rules do not specifically prohibit the relationship. Under this
policy, the FCC may consider whether to

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prohibit one party from holding an attributable interest and a substantial
non-attributable interest (including non-voting stock, limited partnership and
limited liability company interests) in a media outlet in the same market, or
from entering into a joint venture or having common key employees with
competitors. The cross-interest policy does not necessarily prohibit all of
these interests, but requires that the FCC consider whether, in a particular
market, the meaningful relationships between competitors could have a
significant adverse effect upon economic competition and program diversity. In a
rule making proceeding concerning the attribution rules, the FCC has sought
comment on, among other things, (1) whether the cross-interest policy should be
applied only in smaller markets, and (2) whether non-equity financial
relationships, such as debt, when combined with multiple business relationships,
such as local marketing agreements or joint sales arrangements, raise concerns
under the cross-interest policy.

Programming and Operations. The Communications Act requires broadcasters
to serve the public interest. A broadcast licensee is required to present
programming in response to community problems, needs and interests and to
maintain certain records demonstrating its responsiveness. The FCC will consider
complaints from listeners about a broadcast station's programming when it
evaluates the licensee's renewal application, but listeners' complaints also may
be filed and considered at any time. Stations also must pay regulatory and
application fees, and follow various FCC rules that regulate, among other
things, political advertising, the broadcast of obscene or indecent programming,
sponsorship identification, the broadcast of contests and lotteries and
technical operation.

The FCC requires that licensees not discriminate in hiring practices,
develop and implement programs designed to promote equal employment
opportunities and submit reports to the FCC on these matters annually and in
connection with each license renewal application.

The FCC rules also prohibit a broadcast licensee from simulcasting more
than 25% of its programming on another radio station in the same broadcast
service (that is, AM/AM or FM/FM). The simulcasting restriction applies if the
licensee owns both radio broadcast stations or owns one and programs the other
through a local marketing agreement, provided that the contours of the radio
stations overlap in a certain manner.

Local Marketing Agreements. Often radio stations enter into LMAs or time
brokerage agreements. These agreements take various forms. Separately owned and
licensed radio stations may agree to function cooperatively in programming,
advertising sales and other matters, subject to compliance with the antitrust
laws and the FCC's rules and policies, including the requirement that the
licensee of each radio station maintain independent control over the programming
and other operations of its own radio station.

Joint Sales Agreements. Over the past few years, a number of radio
stations have entered into cooperative arrangements commonly known as joint
sales agreements or JSAs. The FCC has determined that issues of joint
advertising sales should be left to enforcement by antitrust authorities, and
therefore does not generally regulate joint sales practices between stations.
Currently, stations for which another licensee sells time under a JSA are not
deemed by the FCC to be an attributable interest of that licensee. However, in
connection with its ongoing rulemaking proceedings concerning the attribution
rules, the FCC is considering whether JSAs should be considered attributable
interests or within the scope of the FCC's cross-interest policy, particularly
when JSAs contain provisions for the supply of programming services and/or other
elements typically associated with local marketing agreements.

RF Radiation. In 1985, the FCC adopted rules based on a 1982 American
National Standards Institute (ANSI) standard regarding human exposure to levels
of radio frequency
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(RF) radiation. These rules require applicants for renewal of broadcast licenses
or modification of existing licenses to inform the FCC at the time of filing
such applications whether an existing broadcast facility would expose people to
RF radiation in excess of certain limits. In 1992, ANSI adopted a new standard
for RF exposure that, in some respects, was more restrictive in the amount of
environmental RF exposure permitted. The FCC has since adopted more restrictive
radiation limits which became effective October 15, 1997, and which are based in
part on the revised ANSI standard.

Digital Audio Radio Service. The FCC has allocated spectrum to a new
technology, digital audio radio service (DARS), to deliver satellite-based audio
programming to a national or regional audience and issued regulations for a DARS
service in early 1997. The nationwide reach of satellite DARS could allow niche
programming aimed at diverse communities that SBS is targeting. Two companies
that hold licenses for authority to offer multiple channels of digital,
satellite-delivered S-Band aural services could compete with conventional
terrestrial radio broadcasting. The licensees will be permitted to sell
advertising and lease channels in these media. The FCC's rules require that
these licensees launch and begin operating at least one space station by 2001
and be fully operational by 2003.

Low Power Radio Broadcast Service. The FCC recently adopted a Notice of
Proposed Rulemaking seeking public comment on a proposal to establish two
classes of a low power radio service both of which would operate in the existing
FM radio band: a primary class with a maximum operating power of 1 kW and a
secondary class with a maximum power of 100 watts. These proposed low power
radio stations would have limited service areas of 8.8 miles and 3.5 miles,
respectively. Implementation of a low power radio service or microbroadcasting
would provide an additional audio programming service that could compete with
SBS's radio stations for listeners, but we cannot predict the effect upon SBS.

PROPERTIES

Our corporate headquarters is located in Miami, Florida. The types of
properties required to support each of our radio stations include offices,
broadcasting studios and antenna towers where broadcasting transmitters and
antenna equipment are located. We own the building housing the office and
studios in New York for WSKQ-FM and WPAT-FM, and in Los Angeles for KLAX-FM.
Additionally, we still own a building in Los Angeles that we previously used as
the office for our Los Angeles operations. We own the auxiliary transmitter site
for KLAX-FM in Long Beach, California and lease our other transmitter sites,
with lease terms that expire between 1999 and 2035, assuming all renewal options
are exercised. The studios and offices of our Miami and South Florida stations
are currently located in leased facilities with lease terms that respectively
expire in 2000 and 2012. See "Certain Relationships and Related Transactions."
We lease the office and studio facilities for our stations in Chicago, San
Antonio and Puerto Rico.

The transmitter sites for our stations are material to our overall
operations. Management believes that our properties are in good condition and
are suitable for our operations; however, we continually seek opportunities to
upgrade our properties. We own substantially all of the equipment used in our
radio broadcasting business.

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LEGAL PROCEEDINGS

From time to time we are involved in litigation incidental to the conduct
of our business, such as contract matters and employee-related matters. We are
not currently a party to litigation which, in the opinion of management, is
likely to have a material adverse effect on our business.

ENVIRONMENTAL MATTERS

We assigned the lease of the transmitter for WXLX-AM in Lyndhurst, New
Jersey, to the purchaser of the station. The transmitter is located on a former
landfill which ceased operations in the late 1960's. Although WXLX-AM has been
sold, we retain potential exposure relating to possible environmental
liabilities relating to the transmitter site. Because the lessee of the property
is under a long-term lease, we may become liable for costs associated with
remediation of the site. We are unable to assess the likelihood that any claim
for remediation of this site will arise and no amounts have been accrued in the
consolidated financial statements relating to this contingent liability.

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MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth the names, ages and positions of the
directors, executive officers and certain key employees of SBS upon completion
of this offering. Each of our directors serves until his successor is elected
and qualifies. We are in the process of selecting additional directors of which
at least two will be independent directors.

<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION WITH SBS
- ---- --- -------------------------
<S> <C> <C>
Pablo Raul Alarcon, Sr............... 73 Chairman of the Board of Directors
Raul Alarcon, Jr..................... 43 Chief Executive Officer and President, Director
Jose Grimalt......................... 70 Secretary, Director
Joseph A. Garcia..................... 53 Executive Vice President, Chief Financial Officer and
Assistant Secretary
Luis Diaz-Albertini.................. 47 Vice President of Sales
Jesus Salas.......................... 23 Vice President of Programming
</TABLE>

PABLO RAUL ALARCON, SR. has been Chairman of the Board of Directors since
June 1994 and a director since 1983. He also serves as the Chairman of the Board
of Directors of SBS-NJ, and those of SBS's other subsidiaries that own and
operate SBS's radio stations. Mr. Alarcon, Sr. has been involved in
Spanish-language radio broadcasting for much of his life. He started his
broadcasting career in Cuba in the early 1950's when he established a radio
station chain in Camaguey, Cuba. Upon his arrival in the United States, Mr. Raul
Alarcon, Sr. continued his career in radio broadcasting and was an on-air
personality in a New York radio station before being promoted to programming
director. Mr. Raul Alarcon, Sr. subsequently owned and operated a recording
studio and an advertising agency. In 1983, he purchased our first radio station.

RAUL ALARCON, JR. has been Chief Executive Officer and President since June
1994 and a director since 1989. He also serves as the President and a Director
of Spanish Broadcasting System, Inc., a New Jersey corporation that is
wholly-owned by SBS, and President or Vice President of those of SBS's other
subsidiaries that own and operate our radio stations. Mr. Alarcon, Jr. joined
SBS-NJ as a sales manager in 1983 and became a director and the Chief Executive
Officer and President of SBS-NJ in 1986. Mr. Alarcon Jr. is responsible for our
long-range strategic planning and was instrumental in the acquisition and
financing of each of our radio stations. Mr. Alarcon, Jr. is the son of Mr.
Alarcon, Sr. and the son-in-law of Mr. Grimalt.

JOSE GRIMALT has been Secretary and a director since June 1994. He also
serves as a director and the Secretary of SBS-NJ and those of SBS's subsidiaries
that own and operate SBS's radio stations. From 1969 to 1986, Mr. Grimalt owned
and operated Spanish-language station WLVH-FM in Hartford, Connecticut. In 1984,
Mr. Grimalt became a stockholder and the President of SBS's California
subsidiary which operated KXMG-AM in Los Angeles. Mr. Grimalt is Mr. Alarcon,
Jr.'s father-in-law.

JOSEPH A. GARCIA has been Chief Financial Officer since June 1994. He was
appointed Executive Vice President in March 1996. He joined SBS-NJ in 1984 and
since then has served as the Chief Financial Officer of SBS-NJ and those of
SBS's subsidiaries that own and operate SBS's radio stations. Before joining
SBS-NJ, Mr. Garcia spent thirteen years in financial

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positions with Philip Morris and Revlon, where he was Manager of Financial
Planning for Revlon-Latin America.

JESUS SALAS has been the Vice President of Programming since April 1998. He
joined SBS in March 1997 as the Programming Director for the Miami stations.
Prior to joining SBS he worked for New Age Broadcasting, Inc., where he began
his career in November 1993 as a disc jockey and was eventually promoted to
programming director.

LUIS DIAZ-ALBERTINI has been the Vice President of Sales since September
1998. He began his employment with SBS as the General Manager of WLEY-FM in
Chicago in March 1997. Prior to joining SBS, Mr. Diaz-Albertini's experience
included being VP/General Manager of the four stations located in Miami for
Hispanic Broadcasting Corporation (formerly Heftel Broadcasting Corporation).
Mr. Diaz-Albertini has worked in the broadcasting industry for 26 years.

COMMITTEES OF THE BOARD OF DIRECTORS

The board of directors intends to establish an Audit Committee whose
members will be the independent directors of our board of directors.

The board of directors also maintains a Compensation Committee, whose
members will consist of Mr. Alarcon, Jr. and two independent directors. Mr.
Alarcon, Jr. is our Chief Executive Officer and President. The Compensation
Committee has not met in fiscal year 1999. Compensation for our executive
officers for fiscal 1999 was determined by Mr. Alarcon, Jr. See "Certain
Relationships and Related Transactions."

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EXECUTIVE COMPENSATION

The following sets forth all compensation awarded to, earned by or paid for
services rendered to SBS and its subsidiaries in all capacities during the
fiscal years 1998, 1997 and 1996 by our Chief Executive Officer and President
and our next four highest paid executive officers at September 27, 1998, whose
annual salary and bonus exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
OTHER ANNUAL
NAME PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ---- ----------------------------- ---- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Raul Alarcon, Jr............. Chief Executive Officer and 1998 $1,633,743(1) $215,000 $63,624 (2)
President 1997 1,361,647 -- 86,774 (2)
1996 746,584 237,000 $78,036 (2)
Pablo Raul Alarcon, Sr....... Chairman of the Board of 1998 492,577 25,000 50,745 (2)
Directors 1997 474,000 200,000 (3)
1996 464,000 112,000 (3)
Jose Grimalt................. Secretary and Director 1998 250,000 25,000 (3)
1997 310,184 -- (3)
1996 250,000 12,000 (3)
Joseph A. Garcia............. Executive Vice President and 1998 266,346 27,500 (3)
Chief Financial Officer 1997 244,671 53,000 (3)
1996 214,659 5,000 (3)
Luis Diaz-Albertini.......... Vice President of Sales 1998 200,000 25,000 (3)
General Manager, Chicago 1997 69,231 -- (3)
Operations
</TABLE>

- ---------------
(1) Excludes amounts paid by us in connection with our lease of an apartment in
Manhattan owned by Mr. Alarcon, Jr. which is used primarily by Mr. Alarcon,
Jr. while on SBS business in New York. See "Certain Relationships and
Related Transactions." Excludes relocation expenses made in connection with
relocation of our headquarters.

(2) Messrs. Alarcon, Jr. and Alarcon, Sr. receive personal benefits in addition
to their salaries and bonuses, including use of automobiles. We paid $23,400
in each of 1998, 1997, and 1996 for an automobile used primarily by Mr.
Alarcon, Jr. We paid $30,170, $54,253 and $54,636 in each of 1998, 1997 and
1996, respectively, for use of a limousine (including driver's salary) used
primarily by Mr. Alarcon, Jr. We paid $39,569 in 1998 for an automobile
(including driver's salary) used primarily by Mr. Alarcon, Sr.

(3) Excludes perquisites and other personal benefits, securities or property
which aggregate the lesser of $50,000 or 10% of the total of annual salary
and bonus.

DIRECTOR COMPENSATION

Directors who are officers do not receive any additional compensation for
serving on our board of directors. All directors are reimbursed for their
out-of-pocket expenses incurred in connection with their service as directors.
We also maintain a directors' and officers' liability insurance policy for our
directors. See "Management -- Committees of the Board of Directors."

EMPLOYMENT AGREEMENTS AND ARRANGEMENTS

In March 1997, we entered into a five-year employment agreement with Raul
Alarcon, Jr. pursuant to which Mr. Alarcon, Jr. serves as our Chief Executive
Officer and President. The

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<PAGE> 67

agreement provides for a base salary of not less than $1.3 million, which may be
increased by the board of directors in its sole discretion. Under the terms of
the agreement, Mr. Alarcon, Jr. is paid a cash bonus equal to the sum of: (1)
2.5% of the dollar increase in same station revenue in the aggregate for any
fiscal year and (2) 5.0% of the dollar increase in same station broadcast cash
flow for any fiscal year. If Mr. Alarcon, Jr.'s employment is terminated by SBS,
he will be entitled to receive all accrued salary and bonuses to the date of
termination plus his salary and bonuses for the remainder of the term of his
employment agreement. Mr. Alarcon, Jr. also receives benefits, including use of
automobiles and an apartment in Manhattan. Pursuant to Mr. Alarcon, Jr.'s
employment agreement, SBS declared and paid a dividend to Mr. Alarcon Jr. in
1998 of $3.1 million.

OPTION PLAN

We intend to adopt an option plan designed to incentivize our present and
future executive, managerial and other key employees, directors and consultants
and subsidiaries through equity ownership. The option plan will provide for the
granting to participants of stock options and restricted stock awards as the
compensation committee of the board of directors, or such other committee of the
board of directors as the board of directors may designate, deems to be
consistent with the purposes of the option plan. An aggregate of
shares of Class A Common Stock have been reserved for issuance
under the option plan. The option plan will afford SBS latitude in tailoring
incentive compensation for the retention of key personnel, to support corporate
and business objectives, and to anticipate and respond to a changing business
environment and competitive compensation practices.

The compensation committee has exclusive discretion to select the
participants, to determine the type, size and terms of each award, to modify the
terms of awards, to determine when awards will be granted and paid, and to make
all other determinations which it deems necessary or desirable in the
interpretation and administration of the option plan. The option plan terminates
ten years from the date that it was approved and adopted by the stockholders of
SBS. Generally, a participant's rights and interest under the option plan are
not transferable except by will or by the laws of descent and distribution.

Options, which include non-qualified stock options and incentive stock
options, are rights to purchase a specified number of shares of Class A Common
Stock at a price fixed by the compensation committee. The option price may be
less than, equal to or greater than the fair market value of the underlying
shares of Class A Common Stock, but in no event will the exercise price of an
incentive stock option be less than the fair market value on the date of grant.

Options will expire no later than ten years after the date on which they
are granted. Options will become exercisable at such times and in such
installments as the compensation committee shall determine. Upon termination of
a participant's employment with SBS, options that are not exercisable will be
forfeited immediately and options that are exercisable will be forfeited on the
thirtieth day following such termination unless exercised by the participant.
Payment of the option price must be made in full at the time of exercise in such
form (including, but not limited to, cash or common stock of SBS) as the
compensation committee may determine.

Stock awards are grants of restricted Class A Common Stock at no cost to
participants and are generally subject to vesting provisions as determined by
the compensation committee. Upon termination of a participant's employment with
SBS, awards that are not vested will be forfeited immediately.

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<PAGE> 68

In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution of assets,
or any other change in the corporate structure of shares of SBS, the
compensation committee will make any adjustments it deems appropriate in the
number and kind of shares reserved for issuance upon the exercise of options and
vesting of grants under the option plan and in the exercise price of outstanding
options.

LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY

Our second amended and restated certificate of incorporation has a
provision which limits the liability of directors to us to the maximum extent
permitted by Delaware law. The second amended and restated certificate of
incorporation specifies that our directors will not be personally liable for
monetary damages for breach of fiduciary duty as a director. This limitation
does not apply to: (a) any breach of the director's duty of loyalty to us or our
stockholders; (b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (c) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law; or (d) any transaction from which
the director denied an improper personal benefit.

Additionally, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of SBS pursuant to this prospectus, we have been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.

Our by-laws provide for mandatory indemnification of directors and
authorize indemnification for officers (and others) in the manner, under the
circumstances and to the fullest extent permitted by the Delaware General
Corporation Law. This generally authorizes indemnification as to all expenses
incurred or imposed as a result of actions, suits or proceedings if the
indemnified parties act in good faith and in a manner they reasonably believe to
be in or not opposed to the best interests of SBS. We believe that these
provisions are necessary or useful to attract and retain qualified persons as
directors and officers.

We intend to acquire insurance for the benefit of our directors and
officers.

There is no pending litigation or proceeding involving a director or
officer as to which indemnification is being sought.

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<PAGE> 69

PRINCIPAL STOCKHOLDERS

The following table sets forth information concerning the beneficial
ownership of our Class B Common Stock after giving effect to this offering, but
without giving effect to the exercise of the underwriters' overallotment option
by:

- each person known to us to own beneficially more than 5% of any class of
common stock;

- each director and each named executive officer; and

- the selling stockholders.

All shares are owned with sole voting and investment power. After
completion of this offering, none of the principal stockholders will own any
shares of Class A Common Stock.

<TABLE>
<CAPTION>
PERCENT OF
PERCENT OF TOTAL PERCENT OF
CLASS B CLASS B ECONOMIC TOTAL VOTING
NAME AND ADDRESS(1) SHARES(2) SHARES INTEREST POWER
- ------------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Pablo Raul Alarcon Sr........................... % % %
Raul Alarcon Jr................................. % % %
Jose Grimalt.................................... % % %
Joseph A. Garcia................................ -- *
Luis Diaz-Albertini............................. % % %
All executive officers and directors as a
group......................................... % % %
</TABLE>

- ---------------
* Indicates less than 1%.

(1) The address of all directors and executive officers in this table, unless
otherwise specified, is c/o Spanish Broadcasting System, Inc., 3191 Coral
Way, Miami, Florida 33145.

(2) As used in this table, "beneficial ownership" means the sole or shared power
to vote or direct the voting of a security, or the sole or shared 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 the person has
the right to acquire within 60 days after that date. For purposes of
computing the percentage of outstanding shares held by each person named
above, any security that the 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.

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<PAGE> 70

SELLING STOCKHOLDERS

The following table sets forth with respect to each of the selling
stockholders (1) the number of shares of Class A and Class B Common Stock held
by that selling stockholder prior to this offering, (2) the number of shares of
Class A and Class B Common Stock to be sold by that selling stockholder in this
offering, (3) the amount of Class A and Class B Common Stock that selling
stockholder will hold after completion of this offering, (4) the percentage of
the outstanding Class A and Class B Common Stock that selling stockholder will
hold after completion of the offering, and (5) the percentage of total voting
power that selling stockholder will hold after completion of this offering,
without giving effect to the exercise of the Underwriters' over-allotment
option.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF SHARES PERCENTAGE OF
SHARES OF SHARES OF OF COMMON COMMON STOCK PERCENTAGE
COMMON STOCK COMMON STOCK STOCK HELD AFTER HELD AFTER OF TOTAL
NAME OF SELLING HELD PRIOR TO THIS TO BE SOLD IN THIS COMPLETION OF COMPLETION OF VOTING
STOCKHOLDER OFFERING OFFERING THIS OFFERING THIS OFFERING POWER
- --------------- ------------------ ------------------ ---------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Raul Alarcon, Sr.(1)......... A shares A shares A shares % of A shares %
B shares B shares B shares % of B shares
Raul Alarcon, Jr.(2)......... A shares A shares A shares % of A shares %
B shares B shares B shares % of B shares
Jose Grimalt(3).............. A shares A shares A shares % of A shares %
B shares B shares B shares % of B shares
[Former Warrantholders](4)...
Total..............
</TABLE>

- ---------------
(1) Pablo Raul Alarcon, Sr. is the Chairman of our Board of Directors.

(2) Raul Alarcon, Jr. is our Chief Executive Officer and President.

(3) Jose Grimalt is our Secretary and a member of our board of directors.

(4) The former warrantholders have the benefit of registration and take-along
rights. See "Description of Capital Stock."

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<PAGE> 71

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "Committees of the Board of Directors."

We lease a two-bedroom furnished condominium apartment in midtown Manhattan
from Mr. Alarcon, Jr. for a monthly rent of $9,000. The lease commenced in
August 1987 and will expire in August 2007. During fiscal years 1999 and 1998,
we renovated the apartment and incurred approximately $0.2 million in renovation
expenses. Generally, the apartment is used by Mr. Alarcon, Jr. while on SBS
business in New York. We believe that the lease for this apartment is at the
market rate.

For the year ended September 27, 1998, SBS paid operating expenses
aggregating $0.1 million for a boat owned by CMQ Radio, an entity owned equally
by Messrs. Alarcon, Sr. and Alarcon, Jr. The boat is used by SBS for business
entertainment. For the year ended September 27, 1998, the amount paid by SBS for
our use of the boat owned by CMQ Radio was comparable to amounts we would have
paid had we leased the boat from an unaffiliated party. In connection with this
offering, we intend to discontinue our arrangement with respect to this boat.

In connection with Mr. Alarcon, Jr.'s relocation from the New York
metropolitan area to the Miami metropolitan area, SBS advanced to Mr. Alarcon,
Jr. an aggregate of $1.1 million to pay for various expenses. On July 16, 1997,
Mr. Alarcon, Jr. executed a promissory note to SBS for the principal amount of
$1.1 million to evidence these advances. The note was payable on demand and bore
interest at a rate of 7% per annum. SBS declared and paid a dividend in 1998 and
applied some of the proceeds of such dividend, which were otherwise payable to
Mr. Alarcon, Jr., to the repayment in full of this promissory note.

Effective July 1993, Messrs. Alarcon, Sr. and Alarcon, Jr. executed
promissory notes to SBS for the principal amounts of $0.5 million and $1.6
million, respectively. These promissory notes evidenced loans made by SBS to
Messrs. Alarcon, Sr. and Alarcon, Jr. over several prior years. The notes were
to mature in 2001 and bore interest at the rate of 6% percent per annum until
July 19, 1994 and after that at the lesser of 9% percent per annum or the prime
rate charged by the Chase Manhattan Bank, N.A. Interest on the unpaid principal
amount of the notes was payable annually. In December 1995, SBS exchanged these
promissory notes for amended and restated notes in the principal amounts of $0.6
million and $1.9 million due from Messrs. Alarcon, Sr. and Alarcon, Jr.,
respectively. The amended and restated notes bear interest at the rate of 6.36%
per annum, and mature on December 30, 2025, and the interest is payable in 30
equal annual installments of $43,570 and $143,158, respectively, on December
30th of each year starting December 30, 1996. As of June 27, 1999, $0.6 million
and $1.9 million, plus accrued and unpaid interest of $0.1 million and $0.4
million to date, was outstanding, respectively, on these promissory notes. In
connection with this offering, Messrs. Alarcon, Sr. and Alarcon, Jr. intend to
pay all remaining amounts outstanding under these notes using the proceeds they
receive as selling stockholders in this offering.

In 1992, Messrs. Alarcon, Sr. and Alarcon, Jr. acquired a building in Coral
Gables, Florida, for the purpose of housing the studios of WCMQ-AM and WCMQ-FM.
In June 1992, SBS-Florida, a subsidiary of SBS, entered into a 20-year net lease
with Messrs. Alarcon, Sr. and Alarcon, Jr. for the Coral Gables building which
provides for a base monthly rent of $9,000. Effective June 1, 1998, the lease on
this building was assigned to SBS Realty Corp., a realty management company
owned by Messrs. Alarcon Sr. and Alarcon, Jr. This building currently houses the
offices and studios of all of the Miami stations. The lease on the stations'
previous studios expired in October 1993, was for less than half the space of
the stations' present studios

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<PAGE> 72

and had a monthly rental of approximately $7,500. Based upon our prior lease for
studio space, we believe that the lease for the current studio is at market
rates.

In 1992, Mr. Alarcon, Jr. organized Nuestra Telefonica, Inc., a New York
corporation, to operate long distance telephone service in Spanish aimed at the
Hispanic population in the markets served by our radio stations. In February
1993, Nuestra Telefonica entered into an access agreement with a common carrier
and commenced operations. Nuestra Telefonica advertised its Spanish-language
long distance telephone service on our radio stations in Los Angeles and New
York and purchased this air time at standard station rates. Since early 1994,
Nuestra Telefonica has not utilized any air time on our radio stations. As of
September 28, 1997 and September 27, 1998, Nuestra Telefonica owed SBS $0.4
million related to unpaid air time and $0.3 million related to certain expenses
paid by SBS on Nuestra Telefonica's behalf. The amounts due are recorded on our
books as a receivable and due from related party asset, respectively. Mr.
Alarcon, Jr. has personally guaranteed the payment of $0.5 million of Nuestra
Telefonica's obligations to SBS. Mr. Alarcon, Jr. is Nuestra Telefonica's
Chairman and majority shareholder. Joseph A. Garcia is Nuestra Telefonica's
President and a minority shareholder. Nuestra Telefonica is no longer an
operating entity and, therefore, upon the completion of this offering we will
forgive the loans and cancel the guarantees described above.

Mr. Grimalt's son is employed by SBS as an operations manager. He was paid
$128,345 and a bonus of $5,000 for the fiscal year ended September 27, 1998. Mr.
Alarcon Jr.'s uncle is currently employed by us as an operations manager and his
salary is $76,200.

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<PAGE> 73

DESCRIPTION OF CAPITAL STOCK

Set forth below is a summary of the material provisions of our capital
stock as set forth in our second amended and restated certificate of
incorporation which will be filed with The Secretary of State of the State of
Delaware prior to the completion of this offering. This summary does not purport
to be complete. For a more detailed description, see our second amended and
restated certificate of incorporation and by-laws, copies of which we have filed
as exhibits to the registration statement, and the applicable provisions of
Delaware law.

Our second amended and restated certificate of incorporation provides for
authorized capital stock of shares of Class A Common Stock, par
value $.01 per share and shares of Class B Common Stock, par
value $.01 per share. All of the shares of Class A Common Stock being issued
pursuant to this offering will be fully paid and non-assessable.

We currently have outstanding 229,526 shares of preferred stock, par value
$.01 per share, and all of which will be redeemed with the proceeds from this
offering.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

General. The holders of Class A Common Stock and Class B Common Stock have
identical rights except with respect to voting, conversion and transfer.

Voting Rights. Holders of our Class A Common Stock are entitled to one
vote per share on all matters to be voted on by stockholders, while holders of
Class B Common Stock are entitled to ten votes per share. Holders of shares of
Class A Common Stock and Class B Common Stock are not entitled to cumulate their
votes in the election of directors. Generally, all matters to be voted on by
stockholders must be approved by a majority of the votes entitled to be cast by
all holders of Class A Common Stock and Class B Common Stock present in person
or represented by proxy, voting together as a single class, subject to any
voting rights granted to holders of any preferred stock. Except as otherwise
provided by law or in our second amended and restated certificate of
incorporation, and subject to any voting rights granted to holders of any
outstanding preferred stock, amendments to our second amended and restated
certificate of incorporation must be approved by a majority of the votes
entitled to be cast by all holders of Class A Common Stock and Class B Common
Stock present in person or represented by proxy, voting together as a single
class. However, amendments to our second amended and restated certificate of
incorporation that would alter or change the powers, preferences or special
rights of the Class A Common Stock so as to affect them adversely also must be
approved by a majority of the votes entitled to be cast by the holders of the
Class A Common Stock, voting as a separate class. Any amendment to our second
amended and restated certificate of incorporation to increase the authorized
shares of any class requires the approval only of a majority of the votes
entitled to be cast by all holders of Class A Common Stock and Class B Common
Stock present in person or represented by proxy, voting together as a single
class, subject to the rights set forth in any series of preferred stock created
as described below.

Dividends. Holders of our Class A Common Stock and Class B Common Stock
will share equally on a per share basis in any dividend declared by the board of
directors, subject to any preferential rights of any outstanding preferred
stock. Dividends consisting of shares of Class A Common Stock and Class B Common
Stock may be paid only as follows: (1) shares of Class A Common Stock may be
paid only to holders of Class A Common Stock, and shares of Class B Common Stock
may be paid only to holders of Class B Common Stock; and (2) the number of

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<PAGE> 74

shares so paid will be equal on a per share basis with respect to each
outstanding share of Class A Common Stock and Class B Common Stock.

We may not reclassify, subdivide or combine shares of either class of
common stock without at the same time proportionally reclassifying, subdividing
or combining shares of the other class.

Other Provisions. The holders of each class of common stock will share
equally on a per share basis, upon liquidation or dissolution all of the assets
available for distribution to common stockholders. The holders of common stock
have no preemptive or other subscription rights, and there are no redemption or
sinking fund provisions with respect to these shares.

Merger or Consolidation. In the event of a merger or consolidation, the
holders of Class A Common Stock and Class B Common Stock will be entitled to
receive the same per share consideration, if any, except that if the
consideration includes voting securities (or the right to acquire voting
securities or securities exchangeable for, or convertible into, voting
securities), we may (but are not required to) provide for the holders of Class B
Common Stock to receive consideration entitling them to ten times the number of
votes per share as the consideration being received by holders of the common
stock.

Conversion of Class B Common Stock. Our Class B Common Stock will be
convertible into Class A Common Stock on a share-for-share basis at the option
of the holder at any time, or automatically upon transfer to a person or entity
which is not a permitted transferee. In general, permitted transferees will
include us, Messrs. Alarcon Sr., Alarcon Jr. and Grimalt, and any of their
family members, estates, heirs, guardians, trusts, accounts and controlled
entities.

Blank-check Preferred Stock. Our board of directors is empowered, without
approval of the stockholders, to cause shares of preferred stock to be issued
from time to time in one or more series, and the board of directors may fix the
number of shares of each series and the designation, powers, privileges,
preferences and rights and the qualifications, limitations and restrictions of
the shares of each series.

The specific matters that our board of directors may determine include the
following:

- the designation of each series;

- the number of shares of each series;

- the rate of any dividends;

- whether any dividends shall be cumulative or non-cumulative;

- the terms of any redemption;

- the amount payable in the event of any voluntary liquidation, dissolution
or winding up of the affairs of our company;

- rights and terms of any conversion or exchange;

- restrictions on the issuance of shares of the same series or any other
series; and

- any voting rights.

Although no shares of preferred stock will be outstanding at the time of
this offering (other than our 14 1/4% preferred stock which will be redeemed
with the proceeds from this offering) and although we have no current plans to
issue additional preferred stock, the issuance of shares of preferred stock, or
the issuance of rights to purchase shares of preferred stock, could be used to
discourage an unsolicited acquisition proposal. For example, a business
combination could be impeded by issuing a series of preferred stock containing
class voting rights that would enable the holder or holders of this series to
block the transaction. Alternatively, a business combination

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<PAGE> 75

could be facilitated by issuing a series of preferred stock having sufficient
voting rights to provide a required percentage vote of the stockholders. In
addition, under certain circumstances, the issuance of preferred stock could
adversely affect the voting power and other rights of the holders of the common
stock. Although our board of directors is required to make any determination to
issue any preferred stock based on its judgement as to the best interests of our
stockholders, it could act in a manner that would discourage an acquisition
attempt or other transaction that some, or a majority, of the stockholders might
believe to be in their best interests or in which stockholders might receive a
premium for their stock over prevailing market prices of the stock. Our board of
directors does not at present intend to seek stockholder approval prior to any
issuance of currently authorized stock, unless otherwise required by law or
applicable stock exchange requirements.

LIMITATION ON LIABILITY OF DIRECTORS

Our second amended and restated certificate of incorporation provides, as
authorized by Section 102(b)(7) of the Delaware General Corporation Law
("DGCL"), that our directors will not be personally liable to us or our
stockholders for any monetary damages for breach of fiduciary duty as a
director, except for liability imposed by law, as in effect from time to time,
for the following:

- any breach of the director's duty of loyalty to our company or our
stockholders;

- any act or omission not in good faith or which involved intentional
misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the DGCL; and

- any transaction from which the director derived an improper personal
benefit.

The inclusion of this provision in our second amended and restated
certificate of incorporation may have the effect of reducing the likelihood of
derivative litigation against our directors, and may discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duty of care, even though those actions, if successful, might otherwise
have benefitted our company and our stockholders.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

We are a Delaware corporation and subject to Section 203 of the DGCL.
Generally, Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the time a stockholder became an interested
stockholder unless, as described below, certain conditions are satisfied. Thus,
it may make acquisition of control of our company more difficult. The
prohibitions in Section 203 of the DGCL do not apply if the following occur:

- prior to the time the stockholder became an interested stockholder, our
board of directors approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder;

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<PAGE> 76

- upon the closing of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of our company outstanding at the time the
transaction commenced; and

- at or subsequent to the time the stockholder became an interested
stockholder, the business combination is approved by our board of
directors and authorized by the affirmative vote of at least 66 2/3% of
the outstanding voting stock that is not owned by the interested
stockholder.

Under Section 203 of the DGCL, a "business combination" includes the
following:

- any merger or consolidation of our company with the interested
stockholder;

- any sale, lease, exchange or other disposition, except proportionately as
a stockholder of our company, to or with the interested stockholder, of
assets of our company having an aggregate market value equal to 10% or
more of either the aggregate market value of all the assets of our
company or the aggregate market value of all the outstanding stock of our
company;

- transactions resulting in the issuance or transfer by our company of our
stock to the interested stockholder;

- transactions involving our company which have the effect of increasing
the proportionate share of the stock of any class or series of our
company which is owned by the interested stockholder; and

- transactions in which the interested stockholder received financial
benefits provided by us.

Under Section 203 of the DGCL, an "interested stockholder" generally is one
of the following:

- any person that owns 15% or more of the outstanding voting stock of our
company;

- any person that is an affiliate or associate of our company and was the
owner of 15% or more of the outstanding voting stock of our company at
any time within the three-year period prior to the date on which it is
sought to be determined whether that person is an interested stockholder;
and

- the affiliates or associates of that person.

Because Mr. Alarcon, Jr. will own more than 15% of our voting stock both
prior to and after the completion of this offering, Section 203 of the DGCL by
its terms is currently not applicable to business combinations with Mr. Alarcon,
Jr. even though Mr. Alarcon, Jr. owns 15% or more of our outstanding stock.
However, if any other person acquires 15% or more of our outstanding stock
following this offering, that person will be subject to the provisions of
Section 203 of the DGCL.

LISTING

We will apply to have our shares of Class A Common Stock quoted on The
Nasdaq National Market under the symbol " ."

TRANSFER AGENT

Our transfer agent and registrar for our common stock is First Union
National Bank.

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<PAGE> 77

REGISTRATION RIGHTS

1994 Warrants. We are a party to a Common Stock Registration Rights and
Stockholders Agreement dated June 29, 1994 pursuant to which holders of at least
25% of the shares of Class B Common Stock issued upon the exercise of the 1994
warrants are entitled to require SBS to effect up to two registrations of their
shares under the Securities Act. Upon receiving a demand for registration, we
are required to prepare, file and cause to be effective within 180 days of the
demand, a registration statement in respect of all of these shares of Class B
Common Stock, provided that, in lieu of filing the registration statement, we
may make an offer to repurchase all of these shares of Class B Common Stock at a
price per share equal to the fair market value per share of common stock,
without any discount for lack of liquidity, the amount of common stock proposed
to be sold or the fact the shares of common stock may represent a minority
interest in a private company. The fair market value of these shares is to be
determined by a nationally recognized investment banking firm selected by SBS.

1997 Warrants. We are also a party to a Common Stock Registration Rights
and Stockholders Agreement dated March 15, 1997, pursuant to which holders of at
least 25% of the shares of Class B Common Stock issued upon the exercise of the
1997 warrants are entitled to require SBS to effect up to two registrations of
their shares under the Securities Act. Upon receiving a demand for registration,
we are required to prepare, file and cause to be effective within 180 days of
the demand, a registration statement in respect of all of these shares of Class
B Common Stock, provided that, in lieu of filing the registration statement we
may make an offer to repurchase all these shares at a price per share equal to
the fair market value per share of Class B Common Stock, without any discount
for lack of liquidity, the amount of Class B Common Stock proposed to be sold or
the fact that the shares of Class B Common Stock may represent a minority
interest in a private company. The fair market value of these shares is to be
determined by a nationally recognized investment banking firm selected by SBS.

Holders of shares of Class B Common Stock issued upon the exercise of the
1994 and the 1997 warrants also have the right to include the shares in any
registration statement under the Securities Act filed by us for our own account
or for the account of any of our securityholders for sale on the same terms and
conditions. This right does not apply to a registration statement on Form S-4 or
S-8, a registration statement filed in connection with an offer of securities
solely to existing securityholders, or a demand registration by other
securityholders who have demand rights. If the holders exercise their right to
be included in a registration statement, the number of shares requested to be
included is subject to reduction to the extent that SBS is advised by the
managing underwriter that the total number of shares proposed to be included
would materially and adversely affect the success of the offering.

TAKE-ALONG RIGHTS

Pursuant to each of the Common Stock Registration Rights and Stockholders
Agreements described in the section above, the holders of the shares of Class B
Common Stock issued upon exercise of either the 1994 warrants or 1997 warrants
have certain "take-along" rights. These take-along rights require Messrs.
Alarcon Sr., Alarcon Jr. and Grimalt and certain of their transferees to offer
the holders of shares issued upon exercise of either the 1994 or 1997 warrants
to participate on a pro rata basis in any transfer made by Messrs. Alarcon Sr.,
Alarcon Jr., Grimalt and certain of their transferees if such transfer is (1) of
shares consisting of more than 15% of the shares of Class B Common Stock
collectively owned by Messrs. Alarcon Sr., Alarcon Jr., Grimalt and certain of
their transferees, (2) not being made as part of a bona fide public distribution
pursuant to an effective registration statement under the Securities Act of
1933, and
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<PAGE> 78

(3) not a transfer among Messrs. Alarcon Sr., Alarcon Jr., Grimalt and certain
of their transferees.

ALIEN OWNERSHIP

Our second amended and restated certificate of incorporation restricts the
ownership and voting of our capital stock, including our Class A Common Stock
and Class B Common Stock, in accordance with the Communications Act and the
rules of the FCC to prohibit direct ownership of more than 25% of our
outstanding capital stock (or beneficial ownership of more than 25% of our
capital stock through others) by or for the account of aliens, foreign
governments, or non-U.S. corporations or corporations otherwise subject to
control by those persons or entities. Our second amended and restated
certificate of incorporation also prohibits any transfer of our capital stock
which would cause SBS to violate this prohibition. In addition, our second
amended and restated certificate of incorporation authorizes our board of
directors to adopt other provisions that it deems necessary to enforce these
prohibitions. See "Business -- FCC Licenses -- Ownership Matters."

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DESCRIPTION OF INDEBTEDNESS

Concurrently with this offering of our Class A Common Stock, we are
offering approximately $235.0 million aggregate principal amount of %
senior subordinated notes due 2009 by means of a separate prospectus. Upon
completion of this offering and the senior subordinated notes offering, we
intend to enter into a senior credit facility with Lehman Commercial Paper Inc.,
an affiliate of Lehman Brothers Inc. Our senior subordinated notes offering is
conditioned upon the completion of this offering.

SENIOR CREDIT FACILITY

The senior credit facility, which is conditioned upon the completion of
this offering and the senior subordinated notes offering, will be underwritten
by Lehman Commercial Paper Inc., an affiliate of Lehman Brothers Inc., and will
consist of a (1) $ million six-year revolving credit facility
maturing in 2005, and (2) $ million six-year delayed draw (
months to draw) term loan facility maturing in 2005. The senior credit facility
will be available to refinance existing debt, finance working capital, issue
letters of credit, make permitted acquisitions and for other approved general
corporate purposes. The senior credit facility will contain customary covenants
which, among other things will require us to maintain specified financial ratios
such as debt to EBITDA, senior debt to EBITDA, minimum interest coverage,
minimum fixed interest coverage and limits on capital expenditures. Subject to
certain exceptions, we will be required to repay some or all of the amount
outstanding under the senior credit facility upon our issuance of debt or
equity, asset sales and certain excess cash flow. The senior credit facility
will be secured by our assets and those of our subsidiaries, other than those
subsidiaries owning FCC licenses, and the stock of our subsidiaries owning FCC
licenses. Our obligations under the senior credit facility will be guaranteed by
our direct and indirect subsidiaries.

__% SENIOR SUBORDINATED NOTES DUE 2009

The following summary of our % senior subordinated notes due 2009 does
not purport to be complete and is subject to the terms of the indenture
governing the senior subordinated notes.

The senior subordinated notes offering is conditioned upon the completion
of this offering. See "Summary -- Concurrent Senior Subordinated Notes Offering
and Financing Plan." The senior subordinated notes will be governed by an
indenture to be entered into by us, the guarantors named in the indenture, which
are certain of our subsidiaries, and , as trustee.

The senior subordinated notes will bear cash interest at a rate of % per
annum on their principal amount of maturity. The senior subordinated notes will
be general unsecured obligations, ranking pari passu in right of payment to all
of our subordinated debt, but subordinated in right of payment to all of our
existing and future senior debt, including the senior credit facility. The
senior subordinated notes will be unconditionally guaranteed, on a senior basis,
as to the payment of principal, premium, if any, and interest, jointly and
severally, by certain of our subsidiaries.

The senior subordinated notes are redeemable as follows: (1) before
2002, we may, subject to certain conditions, on any one or more
occasions, redeem up to 35% of the aggregate principal amount of the senior
subordinated notes at a redemption price of % of the principal amount of the
senior subordinated notes, plus accrued and unpaid interest, if any, to the
redemption date, with the net cash proceeds of an offering of our common equity,
and (2) after

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, 2004, we may redeem all or a part of the senior subordinated notes at the
redemption prices specified in the indenture, expressed as percentages of
principal amount plus accrued and unpaid interest, if any, on the senior
subordinated notes to the applicable redemption date, if redeemed during the
twelve-month period.

In the event of a change of control, as defined in the indenture, we were
required to make an offer to purchase all of the outstanding senior subordinated
notes at a purchase price equal to 101% of the principal amount of the senior
subordinated notes, plus accrued and unpaid interest.

The indenture governing the senior subordinated notes restricts, among
other things, our incurrence of additional indebtedness, the payment of
dividends and distributions, the creation of liens, asset sales, sale and
leaseback transactions, transactions with affiliates, sales of capital stock of
our subsidiaries and mergers and consolidations.

12 1/2% NOTES

The following summary of our 12 1/2% notes does not purport to be complete
and is subject to the terms of the indenture governing the 12 1/2% notes.

In June 1994, we issued approximately $107.1 million of 12 1/2% notes due
2002 ($93.9 million of which are outstanding as of June 27, 1999), under the
Indenture dated as of June 29, 1994 among SBS, the guarantors named in the
indenture, which were the subsidiaries of SBS, and IBJ Whitehall Bank & Trust
Company, as trustee. The 12 1/2% notes bear cash interest at a rate of 12 1/2%
per annum on their principal amount until maturity. The 12 1/2% notes are senior
unsecured obligations of SBS. The 12 1/2% notes rank senior to all future
subordinated indebtedness of SBS. The 12 1/2% notes are unconditionally
guaranteed, on a senior basis, as to the payment of principal, premium, if any,
and interest, jointly and severally, by all of the active direct and indirect
subsidiaries of SBS. The 12 1/2% notes are not redeemable. There are no
mandatory redemption requirements with respect to the 12 1/2% notes.

In the event of a change of control of SBS, as defined in the indenture
governing the 12 1/2% notes, we are required to make an offer to purchase all of
the outstanding 12 1/2% notes at a purchase price equal to 101% of the principal
amount of the 12 1/2% notes, plus accrued and unpaid interest. The 12 1/2% notes
indenture restricts, among other things, the incurrence of additional
indebtedness, the payment of dividends and distributions, the creation of liens,
the issuance of stock of subsidiaries, transactions with affiliates, the making
of certain investments, asset sales, merger or consolidation of SBS and its
subsidiaries or the transfer of their assets, subject to certain exceptions.

11% NOTES

The following summary of the 11% notes does not purport to be complete and
is subject to the terms of the indenture governing the 11% notes.

In March 1997, we issued $75.0 million of 11% notes due 2004 under the
Indenture dated as of March 15, 1997 among SBS, the guarantors named in the
indenture, which were the subsidiaries of SBS, and IBJ Whitehall Bank & Trust
Company, as trustee. The 11% notes bear cash interest at a rate of 11% per annum
on their principal amount until maturity. The 11% notes are senior unsecured
obligations of SBS. The 11% notes rank senior to all future subordinated
indebtedness of SBS. The 11% notes are unconditionally guaranteed, on a senior
basis, as to the payment of principal, premium, if any, and interest, jointly
and severally, by all of the active direct and indirect subsidiaries of SBS. The
11% notes are redeemable at our option as

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<PAGE> 81

follows: (1) any time on or after March 15, 2001 we may redeem the 11% notes at
105.50% of their principal amount; (2) from and after March 15, 2002 we may
redeem the 11% notes at 102.75% of their principal amount; and (3) from and
after March 15, 2003 we may redeem the 11% notes at 100% of their principal
amount plus, in each case, accrued and unpaid interest. There are no mandatory
redemption requirements with respect to the 11% notes.

In the event of a change of control, as defined in the indenture governing
the 11% notes, we are required to make an offer to purchase all of the
outstanding 11% notes at a purchase price equal to 101% of the principal amount
of the 11% notes, plus accrued and unpaid interest. The 11% notes indenture
restricts, among other things, the incurrence of additional indebtedness, the
payment of dividends and distributions, the creation of liens, the issuance of
stock of subsidiaries, transactions with affiliates, the making of certain
investments, asset sales, merger or consolidation of SBS and its subsidiaries or
the transfer of their assets, subject to certain exceptions.

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SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of our Class A Common Stock in the public
market following the offering could adversely affect the market price of the
Class A Common Stock and could impair our ability to raise capital.

Upon completion of this offering, we will have outstanding
million shares of Class A Common Stock (assuming no exercise of the
Underwriters' over-allotment option). The million shares sold in
this offering will be freely tradable in the public market, unless the shares
are held by "affiliates" as that term is defined in Rule 144 under the
Securities Act. For purposes of Rule 144, an "affiliate" of an issuer is a
person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by or is under common control with, the issuer. The
remaining million shares of Class A Common Stock are "restricted
securities" as defined under Rule 144. Restricted securities may be sold in the
public market only if registered or upon the expiration of certain holding
periods under Rule 144, subject to the volume, manner of sale and other
limitations of Rule 144.

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated), including an affiliate, who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period beginning 90 days after the date of the completion of the
offering, a number of shares that does not exceed the greater of (a) 1% of the
then outstanding shares of common stock (approximately shares
immediately after the offering) or (b) the average weekly trading volume in the
common stock during the four calendar weeks preceding the date on which notice
of the sale is filed. In addition, a person who is not an affiliate at any time
during the 90 days preceding a sale and who has beneficially owned the shares
proposed to be sold for at least two years is entitled to sell all those shares
under Rule 144(k) without regard to the volume limitations, manner of sale
provisions or public information requirements. To the extent that shares are
acquired from one of our affiliates in a privately negotiated transaction, the
holding period under Rule 144 of the person acquiring the shares being sold by
our affiliate commences on the date of transfer from the affiliate.

We and our directors, officers and the selling stockholders holding an
aggregate of million shares of Class A Common Stock and
million shares of Class B Common Stock have agreed not to offer
to sell, sell or otherwise dispose of, directly or indirectly, any shares of
common stock during the 180-day period following the date of the prospectus
without the prior written consent of Lehman Brothers Inc. As a result of these
restrictions, notwithstanding possible earlier eligibility for sale under the
provisions of Rules 144 of 144(k), shares subject to these "lock-up" agreements
will not be salable until the agreement expires.

Following the offering, holders of million shares of our
outstanding Class B Common Stock will have demand and piggyback registration
rights with respect to their shares of Class B common stock to require us to
register their shares of Class B Common Stock under the Securities Act, and
rights to participate in any future registration of securities by us. If those
holders, by exercising their registration rights, cause a large number of shares
of Class B Common Stock to be registered and sold in the public market, these
shares could have an adverse effect on the market price for the Class A Common
Stock. See "Description of Capital Stock -- Registration Rights."

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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

GENERAL

The following discussion summarizes the material U.S. federal income tax
considerations generally applicable to purchasers of Class A Common Stock. The
U.S. federal income tax considerations described below are based upon (1)
currently existing provisions of the Internal Revenue Code of 1986 (the "Code"),
(2) applicable permanent, temporary and proposed Treasury regulations, (3)
judicial authority, and (4) current administrative rulings and pronouncements of
the Internal Revenue Service ("IRS"). There can be no assurance that the IRS
will not take a contrary view to, and no ruling from the IRS has been, or will
be, sought on the issues discussed herein. Legislative, judicial or
administrative changes or interpretations may be adopted that could alter or
modify the statements and conclusions described in this section of this
Prospectus. Any of those changes or interpretations may or may not be
retroactive and could affect the tax consequences discussed below.

This summary is not a complete analysis or description of all potential
U.S. federal income tax considerations that may be relevant to, or of the actual
tax effect that any of the matters described in this section will have on
particular purchasers. This summary does not address foreign, state, local or
other tax consequences and it does not address the concerns of special classes
of taxpayers (such as S corporations, mutual funds, insurance companies,
financial institutions, small business investment companies, regulated
investment companies, broker-dealers and tax-exempt organizations) who are
subject to special treatment under the U.S. federal income tax laws or persons
whose functional currency (within the meaning of Section 985 of the Code) is not
the U.S. dollar. Furthermore, estate and gift tax consequences are not discussed
in this section of the prospectus. No opinion of legal counsel will be requested
with respect to any of the matters discussed in this section of the prospectus.
Our discussion assumes that Class A Common Stock will be held as a capital asset
within the meaning of section 1221 of the Code.

As used in this summary, the term "U.S. Holder" means (1) a citizen or
resident of the United States for U.S. federal income tax purposes, (2) a
corporation or partnership (or other entity treated as a corporation or
partnership for, created or organized under the laws of the United States or any
of its political subdivisions), (3) an estate, the income of which is includible
in gross income for U.S. federal income tax purposes regardless of its source,
or (4) a trust if (a) a U.S. court can exercise primary supervision over the
administration of such trust and (b) one or more U.S. fiduciaries has the
authority to control all of the substantial decisions of such trust (a "U.S.
Holder"). As used in this summary, the term "Non-U.S. Holder" means a beneficial
holder of common stock that is not a U.S. Holder.

Because individual circumstances may differ, each prospective purchaser of
the Class A Common Stock is strongly urged to consult his or her own tax advisor
with respect to his or her particular tax situation and as to any U.S. federal,
foreign, state, local or other tax considerations (including any possible
changes in tax law) affecting the purchase, holding and disposition of the Class
A Common Stock.

U.S. HOLDERS OF CLASS A COMMON STOCK

This section describes certain U.S. federal income tax considerations
applicable to U.S. Holders. Non-U.S. Holders should see the discussion below
under the heading "Non-U.S. Holders of Common Stock" for a discussion of certain
tax considerations applicable to them.

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<PAGE> 84

Dividends. Dividends paid on the Class A Common Stock will be taxable to
you as ordinary income, to the extent paid out of our current or accumulated
earnings and profits. Dividend distributions in excess of such earnings and
profits will be treated first as a nontaxable return of capital to the extent of
your basis in the Class A Common Stock and then as gain from the sale or
exchange of Class A Common Stock. Subject to restrictions, if you are a
corporate holder, dividends received by you generally will be eligible for a
deduction equal to 70% of the dividends received. In addition, special rules may
apply upon the receipt of any "extraordinary dividends" with respect to the
Class A Common Stock.

Sale or Exchange of Class A Common Stock. If you sell or otherwise dispose
of your common stock in a taxable transaction, you will recognize capital gain
or loss equal to the difference between the cash and the fair market value of
any property received in such sale or exchange and your tax basis in the Class A
Common Stock. Your gain or loss will be long term gain or loss if your stock was
has been held more than one year.

Redemption of Class A Common Stock. A redemption by us of some or all of
your Class A Common Stock will be treated as a dividend taxable to you as
ordinary income to the extent of our current and accumulated earnings and
profits, unless the redemption meets specified requirements under section 302(b)
of the Code. If the requirements under section 302(b) of the Code are satisfied,
the redemption will be treated as an exchange giving rise to capital gain or
loss as described above, except to the extent of declared but unpaid dividends.
You are advised to consult your tax advisors as to the application of section
302(b) of the Code to your particular circumstances.

Backup Withholding. Under section 3406 of the Code and applicable Treasury
regulations, a noncorporate holder of the Class A Common Stock may be subject to
backup withholding at the rate of 31% with respect to "reportable payments,"
which include dividends paid on, or, in certain cases, the proceeds of a sale,
exchange or redemption of, the Class A Common Stock. The payor will be required
to deduct and withhold the prescribed amounts if (1) the payee fails to furnish
a taxpayer identification number to the payor in the manner required, (2) the
IRS notifies the payor that the taxpayer identification number furnished by the
payee is incorrect, (3) there has been a "notified payee underreporting"
described in section 3406(c) of the Code, or (4) there has been a failure of the
payee to certify under penalty of perjury that the payee is not subject to
withholding under section 3406(a)(1)(C) of the Code. Amounts paid as backup
withholding do not constitute an additional tax and will be refunded (or
credited against the holder's U.S. federal income tax liability, if any), so
long as the required information is provided to the IRS. We will report to you
and to the IRS the amount of any "reportable payments" for each calendar year
and the amount of tax withheld, if any, with respect to payment on the Class A
Common Stock.

NON-U.S. HOLDERS OF CLASS A COMMON STOCK

The following information describes certain U.S. federal income tax
considerations applicable to "Non-U.S. Holders." This section does not cover the
U.S. federal tax rules that apply to Non-U.S. Holders whose income or gain from
the Class A Common Stock is effectively connected with the conduct of a U.S.
trade or business, as defined by applicable U.S. tax rules.

Sale or other Disposition of the Class A Common Stock. You will generally
not be subject to U.S. federal income tax or withholding tax on gain recognized
on a sale, exchange, redemption, retirement, or other disposition of the Class A
Common Stock. You may, however, be subject to tax on such gain if: (1) you are a
nonresident alien individual who was present in the United States for 183 days
or more in the taxable year of the disposition; (2) you are an
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individual who is a former citizen or resident of the United States subject to
certain U.S. tax rules relevant to that status, (3) the common stock constitutes
U.S. real property interests by reason of our status as a "U.S. real property
holding company" for U.S. federal income tax purposes at any time within the
shorter of the five-year period preceding such disposition or your holding
period for the common stock. We do not believe that we are or we will become a
"U.S. real property holding company" for U.S. federal income tax purposes.

Dividends on Class A Common Stock. Dividends paid that are not effectively
connected with the conduct by you of a trade or business within the United
States will be subject to U.S. federal income tax, which generally will be
withheld at a rate of 30% of the gross amount of the dividends, unless the rate
is reduced by an applicable income tax treaty. Under the currently applicable
Treasury regulations, dividends paid to an address in a country other than the
United States are presumed to be paid to a resident of such country for purposes
of the withholding discussed above (unless the payor has knowledge to the
contrary) and for purposes of determining the applicability of a tax treaty
rate. However, under new Treasury regulations, effective for payments made after
December 31, 2000, if you wish to claim the benefit of an applicable treaty
rate, you will be required to satisfy certain certification and other
requirements.

Backup Withholding and Information Reporting. If you receive payments in
respect of common stock directly from us or through the U.S. office of a
custodian, nominee, agent or broker, there is a possibility that you will be
subject to both backup withholding at a rate of 31% and information reporting.
Non U.S. Holders are generally exempt from information reporting and backup
withholding, but may be required to provide a properly completed Form W-8 or
otherwise comply with applicable certification and identification procedures in
order to prove their exemption. Any amounts withheld under the backup
withholding rules may be refunded or credited against the Non-U.S. Holder's U.S.
federal income tax liability, if any, provided that the required information is
furnished to the IRS.

New Treasury Regulations. New Treasury regulations relating to withholding
tax or income paid to non-U.S. persons will generally be effective for payments
made after December 31, 2000. The new Treasury regulations modify the way in
which you establish your status as a non-U.S. "beneficial owner" eligible for
withholding exemptions including a reduced treaty rate or an exemption from
backup withholding. You may be required to provide certifications that comply
with the provisions of the new Treasury regulations, where required, not later
than December 31, 2000, if you remain as a holder of the common stock on such
date. If you are a Non-U.S. Holder claiming benefit under an income tax treaty
you should be aware that you may be required to obtain a taxpayer identification
number and to certify your eligibility under the applicable treaty's limitations
on benefits article in order to comply with the new Treasury regulations'
certification requirements. The new Treasury regulations are complex and this
summary does not completely describe them. Please consult your tax advisor to
determine how the new Treasury regulations will affect your particular
circumstances.

This summary is included in this section of the prospectus for general
information only and does not discuss all aspects of U.S. federal income
taxation that may be relevant to a particular holder of common stock in light of
his or her particular circumstances and income tax situation. Prospective
investors are urged to consult their own tax advisors as to any tax consequences
to them from the purchase, ownership, and disposition of Class A Common Stock,
including the application and effect of state, local, foreign, and other tax
laws.

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UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, the underwriters of the offering in the United States and
Canada named below (the "U.S. Underwriters"), for whom Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and CIBC World Markets Corp.
are acting as representatives (the "U.S. Representatives") and the underwriters
of the concurrent offering outside the United States and Canada named below (the
"International Managers," and together with the U.S. Underwriters, the
"Underwriters"), for whom Lehman Brothers International (Europe), Merrill Lynch
International and CIBC World Markets Corp. are acting as representatives (the
"Lead Managers," and together with the U.S. Representatives, the
"Representatives"), have severally agreed to purchase, and we and the selling
stockholders have agreed to sell to the Underwriters, the number of shares of
Class A Common Stock set forth opposite the name of each underwriter.

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- ---------
<S> <C>
U.S. UNDERWRITERS:
Lehman Brothers Inc.......................................
------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................
------
CIBC World Markets Corp. .................................
------
Subtotal..................................................
======
INTERNATIONAL MANAGERS:
Lehman Brothers International (Europe)....................
------
Merrill Lynch International...............................
------
CIBC World Markets Corp. .................................
------
Subtotal..................................................
------
Total..................................................
======
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in the offering are subject to
approval of legal matters by counsel as well as to other conditions. The U.S.
Underwriters are obligated to purchase all the shares (other than those covered
by the over-allotment option described below) if they purchase any of the
shares. The offering price and underwriting discounts and commissions per share
for the U.S. offering and the international offering are identical. The closing
of the U.S. offering is a condition to the closing of the international offering
and the closing of the international offering is a condition to the closing of
the U.S. offering.

The Underwriters propose to offer some of the shares directly to the public
at the public offering price set forth on the cover page of this prospectus and
some of the shares to certain dealers at the public offering price less a
concession not in excess of $ per share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share on
sales to certain other dealers. If all of the shares are not sold at the initial
offering price, the Representatives may change the public offering price and the
other selling terms.

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The following table summarizes the compensation and estimated expenses we
and the selling stockholders will pay.

<TABLE>
<CAPTION>
TOTAL
--------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions paid by us.....

Underwriting discounts and commissions paid by the
Selling Stockholders................................
</TABLE>

We and the selling stockholders estimate that our share of the total
expenses of the offering, excluding underwriting discounts and commissions, will
be approximately $ and $ , respectively.

We and the selling stockholders have granted to the U.S. Underwriters and
the International Managers an option, exercisable for 30 days from the date of
this prospectus, to purchase up to and
additional shares, respectively, of our Class A Common Stock at the public
offering price less the underwriting discount. The U.S. Underwriters and the
International Managers may exercise this option solely for the purpose of
covering over-allotments, if any, in connection with the offering. To the extent
this option is exercised, each U.S. Underwriter or International Manager, as the
case may be, will be obligated, subject to various conditions, to purchase a
number of additional shares approximately proportionate to its initial purchase
commitment.

We, our executive officers and directors, the selling stockholders and,
with certain limited exceptions, all of our other existing shareholders have
agreed not to do any of the following, whether any transaction described in
clause (1), (2) or (3) below is to be settled by delivery of Class A Common
Stock or other securities, in cash or otherwise, in each case without the prior
written consent of Lehman Brothers Inc., on behalf of the Underwriters, for a
period of 180 days after the date of this prospectus:

(1) offer, sell, pledge, or otherwise dispose of, or enter into any
transactions or device which is designed or could be expected to, result in
the disposition by any person at any time in the future of, any shares of
Class A Common Stock or securities convertible into or exchangeable for
Class A Common Stock or substantially similar securities, other than any of
the following:

- the Class A Common Stock sold under this prospectus and
- shares of Class A Common Stock we issue pursuant to employee benefit
plans, qualified stock option plans or other employee compensation
plans existing on the date of this prospectus or pursuant to currently
outstanding options, warrants or rights;

(2) sell or grant options, rights or warrants with respect to any
shares of our Class A Common Stock or securities convertible into or
exchangeable for our Class A Common Stock or substantially similar
securities, other than the grant of options pursuant to option plans
existing on the date of this prospectus; and

(3) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or
risks or ownership of shares of Class A Common Stock or securities
convertible into or exchangeable for our Class A Common Stock.

82
<PAGE> 88

These lock up arrangements will be subject to transfers of common stock for
estate planning purposes; in each case, provided that the transferees agree to
be bound by the restrictions described above.

The U.S. Underwriters and the International Managers have entered into an
agreement among U.S. Underwriters and International Managers, pursuant to which
each U.S. Underwriter has agreed that, as part of the distribution of the shares
of Class A Common Stock offered in the U.S. offering,

- it is not purchasing any of these shares for the account of anyone other
than a U.S. Person (as defined below), and
- it has not offered or sold, will not offer, sell, resell or deliver,
directly or indirectly, any of these shares or distribute any prospectus
relating to the U.S. offering to anyone other than a U.S. Person.

In addition, pursuant to the agreement, each International Manager has
agreed that, as part of the distribution of the shares of Class A Common Stock
offered in the international offering,

- it is not purchasing any such shares for the account of a U.S. Person,
and
- it has not offered or sold, and will not offer, sell, resell, or deliver,
directly or indirectly, any of these shares or distribute any prospectus
relating to the international offering to any U.S. Person.

The limitations described above do not apply to stabilization transactions
or to certain other transactions specified in the underwriting agreement and the
agreement among U.S. Underwriters and International Managers, including,

- certain purchases and sales between U.S. Underwriters and the
International Managers,
- certain offers, sales, resales, deliveries or distributions to or through
investment advisors or other persons exercising investment discretion,
- purchases, offers or sales by a U.S. Underwriter who is also acting as an
International Manager or by an International Manager who is also acting
as a U.S. Underwriter and
- other transactions specifically approved by the U.S. Representatives and
the Lead Managers.

As used in this section, the term "U.S. 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 United States or
Canadian federal income taxation regardless of the source, the term "United
States" means the United States of America (including the District of Columbia)
and its territories, its possessions and other areas subject to its
jurisdiction, and the term "Canada" means Canada, its provinces, its
territories, its possessions and other areas subject to its jurisdiction.

Pursuant to the agreement among the U.S. Underwriters and International
Managers, sales may be made between the U.S. Underwriters and the International
Managers of the number of shares of Class A Common Stock as may be mutually
agreed. The price of any shares so sold shall be the public offering prices as
then in effect for the shares of Class A Common Stock being sold by the U.S.
Underwriters and the International Managers less an amount equal to the selling
concession allocable to those shares of Class A Common Stock, unless otherwise
determined by mutual agreement. To the extent that there are sales between the
U.S. Underwriters and the International Managers pursuant to the agreement among
the U.S. Underwriters and the International Managers, the number of shares of
Class A Common Stock

83
<PAGE> 89

available for sale by the U.S. Underwriters or by the International Managers may
be more or less than the amount specified on the cover page of this prospectus.

Prior to the offering, there has been no public market for the shares of
Class A Common Stock. The initial public offering price will be negotiated
between the Representatives and us. In determining the initial public offering
price of the Class A Common Stock, the Representatives will consider, among
other things and in addition to prevailing market conditions, our historical
performance and capital structure, estimates of our business potential and
earnings prospects, an overall assessment of our management and the
consideration of the above factors in relation to market valuation of companies
in related businesses.

We will apply to have our shares of Class A Common Stock quoted on The
Nasdaq National Market under the symbol " ."

Any offer of the shares of Class A Common Stock in Canada will be made only
pursuant to an exemption from the prospectus filing requirement and an exemption
from the dealer registration requirement (where such an exemption is not
available, offers shall be made only by a registered dealer) in the relevant
Canadian jurisdiction where any such offer is made.

Each International Manager has represented and agreed that:

- it has not offered or sold and, prior to the date six months after the
date of issue of the shares of Class A Common Stock, will not offer to
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 have
not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995;

- it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 and the Regulation with respect to anything
done by it in relation to then shares of common stock in, from or
otherwise involving the United Kingdom; and

- it has only issued or passed on, and will only issue or pass on, to any
person in the United Kingdom any document received by it in connection
with the issue of the shares of common stock if that person is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise be issued or passed upon.

Under the agreement between the U.S. Underwriters and the International
Managers, each International Manager has further represented that is has not
offered or sold, and has agreed not to offer or sell, directly or indirectly, in
Japan or to or for the account of any resident of Japan, any of the shares of
Class A Common Stock in connection with the distribution contemplated by this
prospectus, except for offers and sales to Japanese international underwriters
or dealers and except pursuant to any exemption from the registration
requirements of the Securities and Exchange Law and otherwise in compliance with
applicable provisions of Japanese law. Each International Manager has further
agreed to send to any dealer who purchases from it any of the shares of Class A
Common Stock a notice stating in substance that, by purchasing these shares, the
dealer represents and agrees that it has not offered or sold, and will not offer
or sell, any of such shares, directly or indirectly, in Japan or to or for the
account of any resident of Japan except for offers or sales to Japanese
international underwriters or dealers and except pursuant to any exemption from
the registration requirements of the Securities and Exchange Law and otherwise
in compliance with applicable provisions of Japanese law, and that the dealer
will send

84
<PAGE> 90

to any other dealers to whom it sells any of these shares a notice containing
substantially the same statements as set forth in this sentence.

In connection with the offering, the Representatives may purchase and sell
shares of our Class A Common Stock in the open market. These transactions may
include over-allotment, syndicate covering transactions and stabilizing
transactions. Over-allotment involves syndicate sales of Class A Common Stock in
excess of the number of shares to be purchased by the Underwriters in the
offering, which creates a syndicate short position. Syndicate covering
transactions involve purchases of our Class A Common Stock in the open market
after the distribution has been completed in order to cover syndicate short
positions. Stabilizing transactions consist of certain bids or purchases of our
Class A Common Stock made for the purpose of preventing or retarding a decline
in the market price of our Class A Common Stock while the offering is in
progress.

The Representatives also may impose a penalty bid. Penalty bids permit the
Representatives to reclaim a selling concession from an Underwriter when the
Representatives, in covering syndicate short positions or making stabilizing
purchases, repurchase shares originally sold by that Underwriter.

Any of these activities may cause the price of our Class A Common Stock to
be higher than the price that otherwise would exist in the open market in the
absence of such transactions. These transactions may be affected in the
over-the-counter market or otherwise and, if commenced, may be discontinued at
any time.

Purchasers of the shares of Class A Common Stock offered in this prospectus
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 of this prospectus.

At our request, the Underwriters have reserved for sale, at the initial
public offering price, up to shares of Class A Common Stock for
employees, directors and certain other persons associated with us who have
expressed an interest in purchasing Class A Common Stock in this offering. The
number of shares available for sale to the general public in this offering will
be reduced to the extent such persons purchase such reserved shares. Any
reserved shares not so purchased will be offered by the Underwriters to the
general public on the same terms as the other shares. We have agreed to
indemnify the Underwriters against certain liabilities and expenses, including
liabilities under the Securities Act, in connection with such sales.

We and the selling stockholders have agreed to indemnify the Underwriters
against liabilities, including liabilities under the Securities Act of 1933 or
to contribute to payments the underwriters may be required to make in respect of
any of those liabilities.

Lehman Brothers Inc. and CIBC World Markets Corp. will act as Underwriters
in connection with our concurrent senior subordinated notes offering, for which
they will receive customary fees and commissions. An affiliate of Lehman
Brothers Inc., Lehman Commercial Paper Inc., will act as a arranger in
connection with the senior credit facility, for which it will receive customary
fees. Each of Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and CIBC World Markets Corp. has from time to time provided, and in
the future may provide, certain investment banking services to us and our
affiliates, for which they have received, and in the future would receive,
customary fees.

85
<PAGE> 91

LEGAL MATTERS

The validity of the Class A Common Stock being offered by this prospectus
and legal matters regarding FCC issues will be passed upon for us by Kaye,
Scholer, Fierman, Hays & Handler, LLP, New York, New York. Rogers & Wells LLP,
New York, New York will pass upon the validity of the Class A Common Stock being
offered by this prospectus for the underwriters.

EXPERTS

The consolidated financial statements and schedule of SBS and its
subsidiaries as of September 28, 1997 and September 27, 1998, and for each of
the fiscal years in the three-year period ended September 27, 1998, have been
included herein and in the registration statement in reliance upon the report of
KPMG LLP, independent certified public accountants, appearing elsewhere herein
and upon the authority of said firm as experts in accounting and auditing.

86
<PAGE> 92

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Exchange Act. The file number for our SEC
filings is 33-82114. You may read and copy any document we file at the following
SEC public reference rooms:

<TABLE>
<S> <C> <C>
Judiciary Plaza 500 West Madison Street 7 World Trade Center
450 Fifth Street, N.W. 14th Floor Suite 1300
Room 1024 Chicago, Illinois 60661 New York, New York 10048
Washington, D.C. 20549
</TABLE>

You may obtain information on the operation of the public reference room in
Washington, D.C. by calling the SEC at 1-800-SEC-0330.

We file information electronically with the SEC. Our SEC filings also are
available from the SEC's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding
issuers that file electronically. Our Class A Common Stock will be listed on The
Nasdaq National Market.

You will also be able to read and copy our SEC filings and other
information at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.

This prospectus is part of a Form S-1 registration statement we are filing
with the SEC. The SEC allows us to incorporate by reference any exhibits
referred to in this prospectus.

We will provide a copy of the exhibits we incorporate by reference, at no
cost, to any person who receives this prospectus, including any beneficial owner
of our common stock. To request a copy of any or all of these exhibits, you
should write or telephone us at the following address and telephone number:

Spanish Broadcasting System, Inc.
3191 Coral Way
Miami, FL 33145
Telephone: (305) 441-6901
Attention: Joseph A. Garcia

87
<PAGE> 93

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES:
Report of KPMG LLP, independent auditors.................... F-2
Consolidated Balance Sheets as of September 27, 1997 and
September 27, 1998 and June 27, 1999 (unaudited).......... F-3
Consolidated Statements of Operations for each of the fiscal
years in the three-year period ended September 27, 1998
and the nine months ended June 28, 1998 (unaudited) and
June 27, 1999 (unaudited)................................. F-5
Consolidated Statements of Changes in Stockholders'
Deficiency for each of the fiscal years in the three-year
period ended September 27, 1998 and the nine months ended
June 27, 1999 (unaudited)................................. F-6
Consolidated Statements of Cash Flows for each of the fiscal
years in the three-year period ended September 27, 1998
and the nine months ended June 28, 1998 (unaudited) and
June 27, 1999 (unaudited)................................. F-7
Notes to Consolidated Financial Statements.................. F-9
Financial Statement Schedule -- Valuation and Qualifying
Accounts.................................................. F-29
</TABLE>

F-1
<PAGE> 94

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Spanish Broadcasting System, Inc.:

We have audited the consolidated financial statements of Spanish
Broadcasting System, Inc. and subsidiaries as listed in the accompanying index.
In connection with our audits, we also have audited the financial statement
schedule as listed in the accompanying index. These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Spanish
Broadcasting System, Inc. and subsidiaries as of September 28, 1997 and
September 27, 1998, and the results of their operations and their cash flows for
each of the fiscal years in the three-year period ended September 27, 1998, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.

/s/ KPMG LLP
--------------------------------------

Miami, Florida
December 11, 1998

F-2
<PAGE> 95

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 28, 1997, SEPTEMBER 27, 1998 AND JUNE 27, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
SEPTEMBER 28, SEPTEMBER 27, JUNE 27,
1997 1998 1999
------------- ------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 12,287,764 $ 37,642,227 $ 20,895,220
Receivables:
Trade............................................... 17,226,345 20,777,151 24,462,861
Barter.............................................. 3,290,728 3,582,751 4,844,060
------------ ------------ ------------
20,517,073 24,359,902 29,306,921
Less allowance for doubtful accounts................... 5,405,095 7,770,060 8,815,790
------------ ------------ ------------
Net receivables................................ 15,111,978 16,589,842 20,491,131
Other current assets................................... 1,409,906 1,822,584 2,675,530
------------ ------------ ------------
Total current assets........................... 28,809,648 56,054,653 44,061,881
Property and equipment, net.............................. 18,409,415 14,942,933 14,838,400
Intangible assets, net of accumulated amortization of
$22,048,929 in 1997, $27,563,051 in 1998 and
$33,347,195 in 1999 (unaudited)........................ 273,631,766 272,261,440 293,656,711
Deferred financing costs, net of accumulated amortization
of $3,038,202 in 1997, $4,257,074 in 1998 and
$5,377,349 in 1999 (unaudited)......................... 9,262,314 7,275,980 6,064,968
Due from related party................................... 289,869 289,869 289,869
Deferred income taxes.................................... 3,674,287 -- --
Deferred offering costs.................................. -- -- 403,334
Other assets............................................. 289,784 209,301 185,666
------------ ------------ ------------
$334,367,083 $351,034,176 $359,500,829
============ ============ ============
</TABLE>

F-3
<PAGE> 96

<TABLE>
<CAPTION>
SEPTEMBER 28, SEPTEMBER 27, JUNE 27,
1997 1998 1999
------------- ------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current portion of Senior unsecured notes.............. $ 15,000,000 $ -- $ --
Current portion of other long-term debt................ 44,644 47,496 1,049,791
Accounts payable....................................... 1,367,572 2,612,952 1,195,949
Accrued expenses....................................... 3,722,777 5,838,808 7,339,362
Accrued interest....................................... 4,536,627 3,941,088 3,069,431
Deferred commitment fee................................ 1,551,255 2,141,456 2,533,310
Dividends payable...................................... 960,761 1,124,360 9,640,271
------------ ------------ ------------
Total current liabilities...................... 27,183,636 15,706,160 24,828,114
12 1/2% Senior unsecured notes due 2002, net of
unamortized discount of $3,238,037 in 1997, $2,224,535
in 1998 and $1,779,173 in 1999 (unaudited)............. 88,820,963 91,668,465 92,113,827
11% Senior unsecured notes due 2004...................... 75,000,000 75,000,000 75,000,000
Other long-term debt, less current portion............... 4,147,676 4,410,505 4,603,251
Deferred income taxes.................................... -- 9,074,596 12,002,078
Redeemable Preferred Stock:
14 1/4% Series A Senior Exchangeable Preferred Stock,
$.01 par value. Authorized 413,930 shares, issued
and outstanding 186,706 shares (liquidation value
$186,706,000) in 1997, 214,260 shares (liquidation
value $214,260,000) in 1998 and 229,526 shares
(liquidation value $229,526,000) in 1999
(unaudited)......................................... 171,261,919 201,367,927 218,850,691
Stockholders' deficiency
Class A common stock, $.01 par value. Authorized
5,000,000 shares; issued and outstanding 558,135
shares in 1997, 606,668 in 1998 and 788,971 in 1999
(unaudited)......................................... 5,581 6,066 7,889
Class B common stock, $.01 par value. Authorized
200,000 shares; issued and outstanding 48,533 shares
in 1997............................................. 485 -- --
Additional paid-in capital............................. 6,590,473 6,864,301 6,865,297
Accumulated deficit.................................... (35,119,184) (50,604,436) (72,310,910)
------------ ------------ ------------
(28,522,645) (43,734,069) (65,437,724)
Less loans receivable from stockholders.................. (3,524,466) (2,459,408) (2,459,408)
------------ ------------ ------------
Total stockholders' deficiency................. (32,047,111) (46,193,477) (67,897,132)
Commitments and contingencies (notes 10 and 12)
------------ ------------ ------------
$334,367,083 $351,034,176 $359,500,829
============ ============ ============
</TABLE>

See accompanying notes to consolidated financial statements.
F-4
<PAGE> 97

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED SEPTEMBER 29, 1996, SEPTEMBER 28, 1997,
SEPTEMBER 27, 1998 AND NINE MONTHS ENDED JUNE 28, 1998 (UNAUDITED) AND JUNE 27,
1999 (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED --------------------------
------------------------------------------ JUNE 28, JUNE 27,
1996 1997 1998 1998 1999
------------ ------------ ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross revenues................. $ 55,337,720 $ 67,981,407 $ 86,766,158 $62,098,840 $ 80,437,296
Less agency commissions........ 6,702,302 7,971,827 10,623,062 7,508,229 10,082,341
------------ ------------ ------------ ----------- ------------
Net revenues.............. 48,635,418 60,009,580 76,143,096 54,590,611 70,354,955
------------ ------------ ------------ ----------- ------------
Operating expenses:
Engineering.................. 1,773,027 2,099,116 1,924,744 1,380,656 1,547,904
Programming.................. 5,864,066 7,081,521 8,462,258 5,996,108 7,435,754
Selling...................... 13,864,695 14,980,035 18,574,529 13,108,606 16,055,795
General and administrative... 6,374,622 6,879,443 10,558,965 7,811,811 6,742,324
Corporate expenses........... 3,747,714 5,595,403 6,892,705 5,122,297 7,658,456
Depreciation and
amortization.............. 4,555,978 7,618,921 8,876,876 6,866,961 7,222,573
------------ ------------ ------------ ----------- ------------
36,180,102 44,254,439 55,290,077 40,286,439 46,662,806
------------ ------------ ------------ ----------- ------------
Operating income.......... 12,455,316 15,755,141 20,853,019 14,304,172 23,692,149
Other income (expense):
Interest expense, net........ (16,533,278) (22,201,114) (20,860,210) (16,002,451) (15,735,550)
Other, net................... (1,574,320) (790,548) (213,239) -- (485,018)
Gain on sale of AM
stations.................. -- -- 36,241,947 36,246,947 --
------------ ------------ ------------ ----------- ------------
Income (loss) before
income taxes and
extraordinary item...... (5,652,282) (7,236,521) 36,021,517 34,548,668 7,471,581
Income tax expense (benefit)... (1,165,800) (2,714,411) 15,624,032 13,819,467 3,177,482
------------ ------------ ------------ ----------- ------------
Income (loss) before
extraordinary item........... (4,486,482) (4,522,110) 20,397,485 20,729,201 4,294,099
Extraordinary item-loss on
extinguishment of debt, net
of income taxes of $1,097,836
in 1997, $1,075,149 in
1998......................... -- (1,646,753) (1,612,723) (1,612,723) --
------------ ------------ ------------ ----------- ------------
Net income (loss)......... $ (4,486,482) $ (6,168,863) $ 18,784,762 $19,116,478 $ 4,294,099
============ ============ ============ =========== ============
Net loss applicable to common
stockholders [note 2(n)]..... $ (7,480,808) $(23,212,494) $(11,484,845) $(3,274,875) $(21,706,474)
============ ============ ============ =========== ============
Basic and Diluted Loss Per
Common Share:
Net loss per common share
before extraordinary
item...................... $ (12.33) $ (35.55) $ (16.27) $ (2.74) $ (34.31)
Net loss per common share for
extraordinary item........ -- $ (2.71) $ (2.66) $ (2.66) --
Net loss per common share.... $ (12.33) $ (38.26) $ (18.93) $ (5.40) $ (34.31)
Weighted average common
shares outstanding (basic
and diluted).............. 606,668 606,668 606,668 606,668 632,598
</TABLE>

See accompanying notes to consolidated financial statements.
F-5
<PAGE> 98

SPANISH BROADCASTING SYSTEM, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FISCAL YEARS ENDED SEPTEMBER 29, 1996, SEPTEMBER 28, 1997
AND SEPTEMBER 27, 1998 AND THE NINE MONTHS ENDED JUNE 27, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK TOTAL PAR LESS: LOANS
---------------- --------------- VALUE ADDITIONAL RECEIVABLE
NO. OF PAR NO. OF PAR COMMON PAID-IN ACCUMULATED FROM
SHARES VALUE SHARES VALUE STOCK CAPITAL DEFICIT STOCKHOLDERS
------- ------ ------- ----- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 24, 1995.... 558,135 $5,581 48,533 $ 485 $6,066 $ 5,690,934 $(4,425,882) $(2,421,272)
Increase in loans receivable from
stockholders................... -- -- -- -- -- -- -- (52,964)
Costs associated with issuance of
Redeemable Series A Preferred
Stock.......................... -- -- -- -- -- (1,718,437) -- --
Issuance of warrants............. -- -- -- -- -- 6,833,507 -- --
Accretion of preferred stock..... -- -- -- -- -- -- (541,416) --
Preferred stock dividends........ -- -- -- -- -- -- (2,452,910) --
Net loss......................... -- -- -- -- -- -- (4,486,482) --
------- ------ ------- ----- ------ ------------ ------------ -----------
Balance at September 29, 1996.... 558,135 5,581 48,533 485 6,066 10,806,004 (11,906,690) (2,474,236)
Retirement of preferred stock and
warrants....................... -- -- -- -- -- (11,887,981) -- --
Issuance of warrants............. -- -- -- -- -- 16,625,000 -- --
Accretion of preferred stock..... -- -- -- -- -- -- (1,659,695) --
Preferred stock dividends........ -- -- -- -- -- -- (15,383,936) --
Issuance costs for preferred
stock.......................... -- -- -- -- -- (8,952,550) -- --
Increase in loans receivable from
stockholders................... -- -- -- -- -- -- -- (1,050,230)
Net loss......................... -- -- -- -- -- -- (6,168,863) --
------- ------ ------- ----- ------ ------------ ------------ -----------
Balance at September 28, 1997.... 558,135 5,581 48,533 485 6,066 6,590,473 (35,119,184) (3,524,466)
Preferred stock dividends........ -- -- -- -- -- -- (27,717,142) --
Accretion of preferred stock..... -- -- -- -- -- -- (2,552,465) --
Decrease in loans receivable from
stockholders................... -- -- -- -- -- -- -- 14,827
Cash dividends on common stock... -- -- -- -- -- -- (3,726,579) 1,050,231
Issuance of warrants as
dividends...................... -- -- -- -- -- 273,828 (273,828) --
Conversion of common stock....... 48,533 485 (48,533) (485) -- -- -- --
Net income....................... -- -- -- -- -- -- 18,784,762 --
------- ------ ------- ----- ------ ------------ ------------ -----------
Balance at September 27, 1998.... 606,668 6,066 -- -- 6,066 6,864,301 (50,604,436) (2,459,408)
Preferred stock dividends........ -- -- -- -- -- -- (23,776,120) --
Accretion of preferred stock..... -- -- -- -- -- -- (2,224,453) --
Exercised warrants for comon
stock.......................... 182,303 1,823 -- -- 1,823 996 -- --
Net income....................... -- -- -- -- -- -- 4,294,099 --
------- ------ ------- ----- ------ ------------ ------------ -----------
Balance at June 27, 1999
(unaudited).................... 788,971 $7,889 -- $ -- $7,889 $ 6,865,297 $(72,310,910) $(2,459,408)
======= ====== ======= ===== ====== ============ ============ ===========

TOTAL
STOCKHOLDERS'
DEFICIENCY
--------------
<S> <C>
Balance at September 24, 1995.... $ (1,150,154)
Increase in loans receivable from
stockholders................... (52,964)
Costs associated with issuance of
Redeemable Series A Preferred
Stock.......................... (1,718,437)
Issuance of warrants............. 6,833,507
Accretion of preferred stock..... (541,416)
Preferred stock dividends........ (2,452,910)
Net loss......................... (4,486,482)
------------
Balance at September 29, 1996.... (3,568,856)
Retirement of preferred stock and
warrants....................... (11,887,981)
Issuance of warrants............. 16,625,000
Accretion of preferred stock..... (1,659,695)
Preferred stock dividends........ (15,383,936)
Issuance costs for preferred
stock.......................... (8,952,550)
Increase in loans receivable from
stockholders................... (1,050,230)
Net loss......................... (6,168,863)
------------
Balance at September 28, 1997.... (32,047,111)
Preferred stock dividends........ (27,717,142)
Accretion of preferred stock..... (2,552,465)
Decrease in loans receivable from
stockholders................... 14,827
Cash dividends on common stock... (2,676,348)
Issuance of warrants as
dividends...................... --
Conversion of common stock....... --
Net income....................... 18,784,762
------------
Balance at September 27, 1998.... (46,193,477)
Preferred stock dividends........ (23,776,120)
Accretion of preferred stock..... (2,224,453)
Exercised warrants for comon
stock.......................... 2,819
Net income....................... 4,294,099
------------
Balance at June 27, 1999
(unaudited).................... $(67,897,132)
============
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 99

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED SEPTEMBER 29, 1996,
SEPTEMBER 28, 1997, SEPTEMBER 27, 1998 AND NINE MONTHS ENDED
JUNE 28, 1998 (UNAUDITED) AND JUNE 27, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED ---------------------------
------------------------------------------- JUNE 28, JUNE 27,
1996 1997 1998 1998 1999
------------ ------------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................... $ (4,486,482) $ (6,168,863) $ 18,784,762 $ 19,116,478 $ 4,294,099
------------ ------------- ------------ ------------ ------------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Loss on extinguishment of debt....... -- 2,744,589 2,687,872 2,687,872 --
Gain on sale of AM stations.......... -- -- (36,241,947) (36,246,947) --
Depreciation and amortization........ 4,555,978 7,618,921 8,876,876 6,866,961 7,222,573
Provision for doubtful accounts...... (674,123) 894,332 2,364,965 2,779,443 1,045,730
Amortization of debt discount........ 5,591,004 4,772,539 658,297 477,029 445,362
Interest satisfied through issuance
of notes.......................... 2,199,121 1,185,722 -- -- --
Amortization of deferred financing
costs............................. 984,001 1,390,736 1,555,016 1,013,387 1,211,012
Write down of fixed assets........... 697,741 487,973 -- -- 451,048
Accretion of interest to principal on
long-term debt.................... -- 161,523 307,200 230,400 230,400
Deferred income taxes................ (1,357,722) (4,062,247) 12,748,883 11,245,578 2,927,482
Changes in operating assets and
liabilities:
Decrease (increase) in
receivables..................... 1,043,961 (5,176,284) (3,842,829) (3,493,803) (4,947,019)
Increase in other current
assets.......................... (762,897) (294,574) (412,678) (973,270) (852,946)
Decrease (increase) in other
assets.......................... 148,272 (158,490) 80,483 72,724 23,635
Increase (decrease) in accounts
payable......................... 310,374 (196,443) 1,245,380 314,751 (1,417,003)
Increase in accrued expenses...... 292,468 368,585 2,116,031 2,119,491 1,500,554
Increase (decrease) in accrued
interest........................ 52,702 2,142,006 (595,539) (1,467,195) (871,656)
Increase in unearned revenue...... 218,381 675,999 590,201 254,610 391,854
------------ ------------- ------------ ------------ ------------
Total adjustments............... 13,299,261 12,554,887 (7,861,789) (14,118,969) 7,361,026
------------ ------------- ------------ ------------ ------------
Net cash provided by operating
activities.................... 8,812,779 6,386,024 10,922,973 4,997,509 11,655,125
------------ ------------- ------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of AM stations, net
of disposal costs of $838,167........ -- -- 43,161,833 43,165,854 --
Additions to property and equipment.... (3,811,436) (2,022,344) (1,644,533) (1,290,128) (1,684,292)
Acquisition of radio licenses.......... (86,383,942) (142,335,513) (9,327,713) (9,327,713) (26,280,067)
------------ ------------- ------------ ------------ ------------
Net cash provided by (used in)
investing activities.......... (90,195,378) (144,357,857) 32,189,587 32,548,013 (27,964,359)
------------ ------------- ------------ ------------ ------------
</TABLE>

F-7
<PAGE> 100

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED ---------------------------
------------------------------------------- JUNE 28, JUNE 27,
1996 1997 1998 1998 1999
------------ ------------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Dividends on common stock.............. $ -- $ -- $ (2,676,348) $ (2,676,348) $ --
Purchase of Senior unsecured notes..... -- -- (15,055,055) (15,000,055) --
Retirement of Senior secured notes..... -- (38,414,562) -- -- --
Retirement of Series A preferred
stock................................ -- (42,699,590) -- -- --
Redemption of warrants................. -- (8,323,000) -- -- --
Exercise of warrants................... -- -- -- -- 2,819
Repayments of debt, including accrued
interest............................. (120,691) (56,143) (41,521) (37,654) (37,258)
Proceeds from senior notes, net of
financing costs of $1,605,426 in 1996
and $5,712,407 in 1997............... 33,394,574 69,287,593 -- -- --
Proceeds from Redeemable Series A
Preferred stock and warrants, net of
issuance cost of $1,718,437 in 1996
and $8,952,550 in 1997............... 35,781,563 166,047,450 -- -- --
Decrease in deferred financing costs... 33,999 -- -- -- --
Increase in deferred offering costs.... -- -- -- -- (403,334)
Decrease (increase) in loans receivable
from stockholders.................... (52,964) (1,050,230) 14,827 14,827 --
Advances to related party.............. (2,922) -- -- -- --
------------ ------------- ------------ ------------ ------------
Net cash provided by (used in)
financing activities.......... 69,033,559 144,791,518 (17,758,097) (17,699,230) (437,773)
------------ ------------- ------------ ------------ ------------
Net (decrease) increase in cash
and cash equivalents.......... (12,349,040) 6,819,685 25,354,463 19,846,292 (16,747,007)
Cash and cash equivalents at beginning of
period................................. 17,817,119 5,468,079 12,287,764 12,287,764 37,642,227
------------ ------------- ------------ ------------ ------------
Cash and cash equivalents at end of
period................................. $ 5,468,079 $ 12,287,764 $ 37,642,227 $ 32,134,056 $ 20,895,220
============ ============= ============ ============ ============
Supplemental cash flow information:
Interest paid during the period........ $ 8,254,402 $ 13,175,308 $ 20,561,613 $ 15,913,831 $ 15,861,624
============ ============= ============ ============ ============
Income taxes paid during the period.... $ 632,990 $ 294,262 $ 1,787,191 $ 1,693,335 $ 1,253,915
============ ============= ============ ============ ============
Noncash investing and financing
activities:
Issuance of notes as payment for
interest............................. $ 2,199,122 $ 1,185,722 $ -- $ -- $ --
============ ============= ============ ============ ============
Dividends declared on preferred
stock................................ $ 2,452,910 $ 15,383,936 $ 27,717,142 $ 20,507,976 $ 23,776,120
============ ============= ============ ============ ============
Issuance of preferred stock as payment
of preferred stock dividends......... $ (2,452,910) $ (13,030,211) $(27,553,543) $(13,302,857) $(15,266,047)
============ ============= ============ ============ ============
Issuance of warrants as payment of
dividends............................ $ -- $ -- $ 273,828 $ 273,828 $ --
============ ============= ============ ============ ============
Issuance of note as payment towards
purchase price of radio station...... $ -- $ 3,000,000 $ -- $ -- $ 1,000,000
============ ============= ============ ============ ============
Repayment of stockholder loan and
accrued interest through dividend
withholding.......................... $ -- $ -- $ 1,098,368 $ 1,098,368 $ --
============ ============= ============ ============ ============
</TABLE>

See accompanying notes to consolidated financial statements.
F-8
<PAGE> 101

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

(1) ORGANIZATION AND NATURE OF BUSINESS

Spanish Broadcasting System, Inc., a Delaware corporation and subsidiaries
(the "Company") owns and operates thirteen Spanish-language radio stations
serving the New York, Puerto Rico, Miami, Chicago, San Antonio and Los Angeles
markets through its subsidiaries, SBS of Greater New York, Inc., Spanish
Broadcasting System of Florida, Inc., Spanish Broadcasting System of California,
Inc., Spanish Broadcasting System of Greater Miami, Inc., Spanish Broadcasting
System of San Antonio, Inc. and Spanish Broadcasting System of Illinois, Inc.
Additionally, the Company's other subsidiaries include Spanish Broadcasting
System, Inc., a New Jersey corporation, Spanish Broadcasting System of Puerto
Rico, Inc., a Delaware corporation, Alarcon Holdings, Inc. ("Alarcon"), Spanish
Broadcasting System Network, Inc. ("SBS Network") and SBS Promotions, Inc. ("SBS
Promotions"). Alarcon owns and operates the building where the Company's New
York offices are located. SBS Network and SBS Promotions are currently dormant.
SBS Network was formerly the Company's exclusive agency representative for
national advertising sales. SBS Promotions formerly performed promotional
services for the Company's radio stations.

The domestic broadcasting industry is subject to extensive federal
regulation which, among other things, requires approval by the Federal
Communications Commission ("FCC") for the issuance, renewal, transfer and
assignment of broadcasting station operating licenses and limits the number of
broadcasting properties the Company may acquire. The Company operates in the
domestic radio broadcasting industry which is subject to extensive and changing
regulation by the FCC.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS

(a) Basis of Presentation

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.

The Company's subsidiaries (hereinafter referred to in this paragraph
collectively as "Subsidiary Guarantors") are fully, unconditionally, and jointly
and severally liable for the Company's senior unsecured notes referred to in
note 6. The Company has not included separate financial statements of the
Subsidiary Guarantors because (i) the Subsidiary Guarantors are wholly owned and
constitute all of the Company's direct or indirect subsidiaries, and (ii) the
Company is a holding company with no independent assets or operations other than
its investments in the Subsidiary Guarantors.

The Company's fiscal year is the 52-week period which ends on the last
Sunday of September and the nine month interim is a 39 week period which ends on
the last Sunday of June.

F-9
<PAGE> 102
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

INTERIM INFORMATION

The accompanying unaudited condensed consolidated financial statements as
of June 27, 1999 and the nine months ended June 28, 1998 and June 27, 1999
reflect, in the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to fairly state the financial position
and the results of operations for the periods presented and the disclosures
herein are adequate to make the information presented not misleading. Operating
results for the interim periods presented are not indicative of the results that
can be expected for a full year.

(b) Revenue Recognition

Revenues are recognized when advertisements are aired.

Property and equipment are stated at cost. The Company depreciates the cost
of its property and equipment using the straight-line method over the respective
estimated useful lives. Leasehold improvements are amortized on a straight-line
basis over the shorter of the remaining life of the lease or the useful life of
the improvements.

(d) Long-Lived Assets

The Company follows the provisions of Statement of Financial Accounting
Standards No. 121, (Statement 121) "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." Statement 121 requires that
long-lived assets and certain identifiable intangibles to be held and used or
disposed of by an entity be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. See note 5 for impairment losses related to fixed assets.

(e) Intangible Assets

Intangible assets represent the portion of the purchase price of station
acquisitions allocated to FCC licenses of those stations and are amortized on a
straight-line basis over 40 years, based on the industry practice of renewing
FCC licenses periodically. The Company assesses the recoverability of this
intangible asset by determining whether the amortization of the intangible asset
balance over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired station. The assessment of the
recoverability of the intangible asset will be impacted if estimated future
operating cash flows are not achieved.

(f) Deferred Financing Costs

Deferred financing costs relate to the refinancing of the Company's debt
and additional debt financing obtained in connection with Company's acquisition
of WXDJ-FM and WRMA-FM in Miami and WLEY-FM in Chicago (see note 6).

F-10
<PAGE> 103
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

Deferred financing costs are being amortized using a method which
approximates the effective interest method over the respective lives of the
related indebtedness.

(g) Barter Transactions

Barter transactions represent advertising time exchanged for promotional
items, advertising, supplies, equipment and services. Revenues from barter
transactions are recognized as income when advertisements are broadcast.
Expenses are recognized when goods or services are received or used. The Company
records barter transactions at the fair value of goods or services received.

(h) Cash Equivalents

Cash equivalents, consisting primarily of interest-bearing money market
accounts and certificates of deposits which have an original maturity date of
less than three months, totaled $12.3 million, $37.6 million and $20.9 million
at September 28, 1997, September 27, 1998 and June 27, 1999 (unaudited),
respectively.

(i) Income Taxes

The Company files a consolidated Federal income tax return with its
subsidiaries. The Company accounts for income taxes under the asset and
liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

(j) Advertising Costs

The Company incurs various marketing and promotional costs to add and
maintain listenership. These costs are charged to expense in the period
incurred.

(k) Deferred Commitment Fee

On December 30, 1996 the Company entered into an agreement with a national
advertising agency (the "Agency") whereby the Agency would serve as the
Company's exclusive sales representative for all national sales for a seven-year
period. Pursuant to this agreement, the Agency agreed to pay a commitment fee of
$5.1 million to the Company, of which $1.0 million was paid upon execution of
the agreement and $4.1 million is to be remitted on a monthly basis over a
three-year period. The commitment fee is recognized on a straight-line basis
over the seven-year contractual term of the arrangement as a reduction of Agency
commissions. Deferred commitment fee represents the excess of payments received
from the Agency over the amount recognized.

F-11
<PAGE> 104
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

(l) 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.

(m) Concentration of Risk

All of the Company's business is conducted in the New York, Miami, Los
Angeles, Chicago, San Antonio and Puerto Rico markets. Net revenue earned from
radio stations in these markets as a percentage of total revenue for the fiscal
years ended September 29, 1996, September 28, 1997, and September 27, 1998 and
nine months ended June 27, 1999 (unaudited) is as follows:

<TABLE>
<CAPTION>
1996 1997 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
New York................................................. 51% 49% 44% 45%
Miami.................................................... 17% 22% 28% 25%
Los Angeles.............................................. 32% 28% 17% 16%
Chicago.................................................. -- 1% 11% 11%
San Antonio.............................................. -- -- -- 2%
Puerto Rico.............................................. -- -- -- 1%
--- --- --- ---
100% 100% 100% 100%
=== === === ===
</TABLE>

The increase in market concentration risk in Miami and Chicago in fiscal
1997 and 1998 results from the acquisitions of WRMA-FM and WXDJ-FM in Miami and
WYSY-FM in Chicago as discussed in note 3.

(n) Basic and Diluted Net Loss Per Common Share

The Company has presented net loss per common share pursuant to SFAS No.
128, Earnings Per Share and the Securities and Exchange Commission Staff
Accounting Bulletin No. 98.

In accordance with Securities and Exchange Commission ("SEC") Staff
Accounting Bulletin No. 98, certain common stock and common stock equivalents
issued for nominal consideration prior to the initial filing of a registration
statement relating to an initial public offering are treated as outstanding for
the entire period. The Company had no nominal issuances during this period.

Basic net loss per common share was computed by dividing net loss by the
weighted average number of shares of common stock outstanding for each period
presented. Diluted net loss per common share is computed by giving effect to
common stock equivalents as if they were

F-12
<PAGE> 105
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

outstanding for the entire period. Common stock equivalents were not considered
for the years presented since their effect would be antidilutive.

<TABLE>
<CAPTION>
1996 1997 1998 6/28/98 6/27/99
----------- ------------ ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income (loss) before
extraordinary item......... $(4,486,482) $ (4,522,110) $ 20,397,485 $20,729,201 $ 4,294,099
Less accretion of preferred
stock...................... 541,416 1,659,695 2,552,465 1,883,377 2,224,453
Less dividends on preferred
stock...................... 2,452,910 15,383,936 27,717,142 20,507,976 23,776,120
----------- ------------ ------------ ----------- ------------
Loss before extraordinary
item....................... (7,480,808) (21,565,741) (9,872,122) (1,662,152) (21,706,474)
Extraordinary item........... -- (1,646,753) (1,612,723) (1,612,723) --
----------- ------------ ------------ ----------- ------------
Net loss applicable to common
stockholders............... $(7,480,808) $(23,212,494) $(11,484,845) $(3,274,875) $(21,706,474)
=========== ============ ============ =========== ============
Weighted average common
shares outstanding (basic
and diluted)............... 606,668 606,668 606,668 606,668 632,598
=========== ============ ============ =========== ============
BASIC AND DILUTED LOSS PER
COMMON SHARE
Net loss per common share
before extraordinary
item....................... $ (12.33) $ (35.55) $ (16.27) $ (2.74) $ (34.31)
Net loss per common share for
extraordinary item......... -- (2.71) (2.66) (2.66) --
----------- ------------ ------------ ----------- ------------
Net loss per common share.... $ (12.33) $ (38.26) $ (18.93) $ (5.40) $ (34.31)
=========== ============ ============ =========== ============
</TABLE>

(o) Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosure of fair value of
certain financial instruments. Cash and cash equivalents, receivables, other
current assets and due from related party, as well as accounts payable, accrued
expenses and other current liabilities, as reflected in the consolidated
financial statements, approximate fair value because of the short-term maturity
of these instruments. The estimated fair value of the Company's other long-term
debt instruments approximate the carrying amount as the interest rates
approximates the Company's current borrowing rate for similar debt instruments
of comparable maturity.

Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

F-13
<PAGE> 106
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

The estimated fair value of the Company's unsecured notes and preferred
stock is as follows (in millions):

<TABLE>
<CAPTION>
JUNE 27, 1999
1997 1998 (UNAUDITED)
----------------- ----------------- -----------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
-------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
12 1/2% Senior unsecured notes............... $103.8 $103.8 $ 91.6 $ 91.6 $ 92.1 $102.2
11% Senior unsecured notes................... 75.0 75.0 75.0 75.0 75.0 81.0
14 1/4% Series A senior exchangeable
preferred stock............................ 171.2 171.2 201.3 201.3 218.8 236.9
</TABLE>

The fair value estimates of the unsecured notes and preferred stock were
based upon quotes from major financial institutions taking into consideration
current rates offered to the Company for debt instruments of the same remaining
maturities.

(p) Redeemable Preferred Stock

Redeemable preferred stock is stated at redemption value less the
unamortized discount. The discount is accreted into the carrying value of the
preferred stock through the date at which the preferred stock is mandatorily
redeemable with a charge to accumulated deficit using the effective interest
method.

(q) Reclassification

Certain prior year amounts have been reclassified to conform with the
current year presentation.

(3) ACQUISITIONS

On March 25, 1996, the Company acquired the FCC broadcast license and
substantially all of the assets used or useful in the operation of radio station
WPAT-FM for $84.6 million, plus financing and closing costs of $1.8 million. The
Company assumed operational responsibility of WPAT-FM on January 26, 1996 under
an interim agreement, at which time the Company changed the musical format of
WPAT-FM to Spanish language adult contemporary. The Company financed the
acquisition of WPAT-FM through the issuance of senior notes and preferred stock
in March 1996 (see note 6).

On March 27, 1997, the Company acquired the FCC broadcast licenses and
substantially all of the assets used or useful in the operation of WYSY-FM in
Chicago for $33.0 million plus financing and closing costs of $0.2 million.

On March 27, 1997, the Company acquired the FCC broadcast licenses and
substantially all of the assets used or useful in the operation of WRMA-FM and
WXDJ-FM in Miami for $111.0 million plus financing and closing costs of $1.1
million.

The Company financed the purchases of WYSY-FM, WRMA-FM and WXDJ-FM with
proceeds from a combination of issuances consisting of 175,000 shares of the
Company's 14 1/4% Series A Senior Exchangeable Preferred Stock (see note 6) and
warrants to purchase 74,900

F-14
<PAGE> 107
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

shares of the Company's Class A common stock (par value $.01 per share) and $75
million aggregate principal amount of the Company's 11% Senior Notes due 2004
(see note 6), plus a note payable to the seller of WLEY-FM (formerly WYSY-FM)
for $3.0 million.

The following unaudited proforma summary presents the consolidated results
of operations as if the acquisitions of WPAT-FM, WRMA-FM and WXDJ-FM had
occurred as of the beginning of fiscal 1997 after giving effect to certain
adjustments, including amortization of intangible assets and interest expense on
the acquisition debt. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of what would have occurred
had the acquisitions been made as of that date or of results which may occur in
the future. The results of WYSY-FM prior to its respective acquisition date has
not been included in the proforma summary as this acquisition was not considered
material.

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 28, 1997
------------------
(UNAUDITED)
<S> <C>
Net revenues................................................ $66,762,000
Loss before extraordinary item.............................. (3,498,000)
Net loss.................................................... (5,145,000)
</TABLE>

On May 13, 1998, the Company acquired the FCC broadcast license and
substantially all of the assets used or useful in the operation of radio station
KRIO-FM serving the San Antonio area for $9.2 million, plus closing costs of
$0.1 million. The Company financed this purchase from cash on hand and from
operations. The Company subsequently changed the call letters to KLEY-FM.

The acquisition in fiscal 1998 was not considered material.

The Company's consolidated results of operations include the results of
WPAT-FM, WYSY-FM, WRMA-FM, WXDJ-FM and KRIO-FM from the respective dates of
acquisition. These acquisitions have been accounted for under the purchase
method of accounting. The purchase price has been allocated to the assets
acquired, principally FCC licenses.

See note 15 for acquisitions subsequent to September 27, 1998.

(4) SALE OF AM STATIONS

On July 2, 1997, the Company entered into a definitive agreement (as
amended, the "One-on-One Agreement") with One-on-One Sports, Inc. ("One-on-One")
for the sale of the assets and FCC licenses of radio stations WXLX-AM, serving
the New York metropolitan area, KXMG-AM, serving the Los Angeles metropolitan
area, and WCMQ-AM, serving the Miami metropolitan area. The One-on-One Agreement
contained customary representations, warranties and conditions, including
receipt of FCC approval to the transfer of the FCC licenses. Pursuant to the
One-on-One Agreement, on September 29, 1997, the Company sold the assets and FCC
licenses of WXLX-AM and WCMQ-AM to One-on-One for a sales price of $26.0 million
and recorded a gain of $18.6 million. On December 2, 1997, the Company
consummated the sale of

F-15
<PAGE> 108
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

the assets and FCC license of KXMG-AM to One-on-One for a sales price of $18.0
million and recorded a gain of $17.6 million. These transactions are classified
under other income as Gain on sale of AM stations.

Pursuant to the 1994 12 1/2% Senior Notes due 2002 (the "12 1/2% Notes")
(see note 6) the Company is required to use the greater of $25.0 million or 50%
of the net proceeds from any disposition of certain asset sales including the
FCC broadcast licenses of the aforementioned AM stations to make offers to
purchase the 12 1/2% Notes at 110% of the principal value thereof.

On October 17, 1997, the Company made a tender offer to purchase for cash
any and all of the 12 1/2% Notes up to $22.7 million plus accrued interest up
to, but not including the payment date. The amount payable by the Company was
110% of the principal amount of the 12 1/2% Notes. The Company paid $6.3 million
to the noteholders who responded to the tender offer and purchased $5.5 million
in principal amount of 12 1/2% Notes for $6.0 million plus accrued interest of
$0.3 million in November 1997. The Company also repurchased $7.7 million in
principal amount of 12 1/2% Notes for $9.0 million plus accrued interest of $0.4
million in November 1997. The Company recognized a loss on the tender offer and
repurchased notes of $1.6 million, net of income tax benefit of $1.1 million,
due to the premium paid for the 12 1/2% Notes and the subsequent write-off of
the deferred financing costs and original issue discounts related to the 12 1/2%
Notes purchased. This amount has been classified as an extraordinary item in the
accompanying Consolidated Statement of Operations.

Prior to the sale of the assets of WCMQ-AM, the Station operated on the
frequency of 1210 kHz. As part of the sale of WCMQ-AM, the Company entered into
a five-year local marketing agreement ("LMA") with One-on-One in November 1997.
Under the terms of the LMA, the Company began programming and selling
advertising on WCMQ-AM using a newly-authorized frequency of 1700 kHz. The 1700
kHz transmitter is co-located at the 1210 kHz transmitter/antenna site which was
part of the aforementioned asset sale.

F-16
<PAGE> 109
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

(5) PROPERTY AND EQUIPMENT

Property and equipment consist of the following at September 28, 1997,
September 27, 1998 and June 27, 1999:

<TABLE>
<CAPTION>
ESTIMATED
1997 1998 1999 USEFUL LIVES
----------- ----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Land................................... $ 1,413,287 $ 1,368,407 $ 1,000,000 --
Building and building leasehold
improvements......................... 15,324,227 11,250,742 10,898,370 20 years
Tower and antenna systems.............. 6,709,991 2,138,824 2,221,399 7-15 years
Studio and technical equipment......... 4,874,321 5,135,586 5,504,547 10 years
Furniture and fixtures................. 1,549,749 1,685,745 1,905,024 3-10 years
Transmitter equipment.................. 1,266,747 931,750 1,216,890 7-10 years
Leasehold improvements................. 1,135,176 1,405,759 1,757,377 5-13 years
Computer equipment..................... 1,378,908 1,333,888 1,657,184 5 years
Other.................................. 205,276 520,369 592,567 5 years
----------- ----------- -----------
33,857,682 25,771,070 26,753,358
Less accumulated depreciation and
amortization......................... 15,448,267 10,828,137 11,914,958
----------- ----------- -----------
$18,409,415 $14,942,933 $14,838,400
=========== =========== ===========
</TABLE>

During fiscal 1996 and 1997, and the nine months ended June 27, 1999
(unaudited), the Company wrote down the value of one of its properties in Los
Angeles (which was part of the assets acquired in the purchase of the Los
Angeles AM radio station) by $0.7 million, $0.4 million, and $0.5 million
respectively. The write downs were based on current market values of real estate
in the Los Angeles area. This amount is included in other, net in the
accompanying consolidated statements of operations.

(6) SENIOR NOTES AND PREFERRED STOCK

12 1/2% Senior Unsecured Notes

On June 29, 1994, the Company, through a private placement offering (the
"Offering") completed the sale of 107,059 units (the "Units"), each consisting
of $1,000 principal amount of 12 1/2% Senior Notes (the "12 1/2% Notes") due
2002 and warrants to purchase 107,059 shares of Class A Common Stock. The
12 1/2% Notes and warrants are separately transferable. The 12 1/2% Notes were
issued at a discount and generated proceeds to the Company of $87.8 million, net
of financing costs of $6.2 million. Of the $94.0 million of gross proceeds,
$88.6 million was allocated to the 12 1/2% Notes and $5.4 million was determined
to be the value of the warrants.

The 12 1/2% Notes bear interest at a rate of 12 1/2% per annum until
maturity on June 15, 2002. Interest is payable semiannually on June 15 and
December 15. The 12 1/2% Notes are not

F-17
<PAGE> 110
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

redeemable at the option of the Company. The 12 1/2% Notes are senior unsecured
obligations of the Company and are unconditionally guaranteed, on a senior
unsecured basis, as to payment of principal, premium, if any, and interest,
jointly and severally, by each subsidiary of the Company. In the event of a
change of control, as defined in the offering, the Company will be required to
make an offer to purchase all of the outstanding 12 1/2% Notes at a purchase
price equal to 101% of the principal amount thereof, in each case plus accrued
and unpaid interest to the date of purchase. The indenture pursuant to which the
12 1/2% Notes are issued contains covenants restricting the insurance of
additional indebtedness, the payment of dividends and distributions, the
creation of liens, asset sales, mergers or consolidations, among other things.
The 12 1/2% Notes are registered with the Securities and Exchange Commission.
The discount on the 12 1/2% Notes is being amortized over their term to result
in an effective interest rate of 12 1/2% per annum.

Redeemable Series A Preferred Stock and 12 1/4% Senior Secured Notes due 2001

On March 25, 1996 the Company financed the purchase of radio station
WPAT-FM with a combination of the proceeds from the sale in a private placement
of 37,500 shares of the Company's Redeemable Series A Preferred Stock and $35.0
million of the Company's 12 1/4% Senior Secured Notes due 2001 together with
cash on hand.

On March 27, 1997, these financial instruments were redeemed and retired
with a portion of the proceeds from issuance of the Series A Preferred Stock and
11% Senior Unsecured Notes described below. The Company realized a loss on the
extinguishment of the 12 1/4% Senior Secured Notes which has been classified as
an extraordinary item in the accompanying fiscal 1997 consolidated statement of
operations.

14 1/4% Series A Senior Exchangeable Preferred Stock and 11% Senior Unsecured
Notes

On March 27, 1997, the Company financed the purchase of radio stations
WYSY-FM (renamed WLEY-FM by the Company), WRMA-FM and WXDJ-FM with proceeds from
the sale through a private placement of 175,000 shares of the Company's 14 1/4%
Series A Senior Exchangeable Preferred Stock ("Series A Preferred Stock") and
warrants to purchase 74,900 shares of the Company's Class A Common Stock. The
Series A Preferred Stock and the warrants are separately transferable. The gross
proceeds from the issuance of the Series A Preferred Stock and warrants,
amounted to $175.0 million. The value of the warrants was determined to be $16.6
million. The Company also issued $75.0 million aggregate principal amount of the
Company's 11% Senior Unsecured Notes (the "11% Senior Notes") due 2004. In
connection with this transaction, the Company capitalized financing costs of
$5.7 million related to the 11% Senior Notes and charged issuance costs of $9.0
million related to the Series A Preferred Stock and warrants to paid-in-capital.

The 11% Senior Notes are secured by the FCC licenses of radio stations
WLEY-FM, WRMA-FM and WXDJ-FM and are guaranteed by each of the Company's
subsidiaries. The 11% Senior Notes are senior obligations of the Company that
rank senior in right of payment to all subordinated indebtedness of the Company
and are equally ranked with all existing and future

F-18
<PAGE> 111
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

senior indebtedness of the Company including the 12 1/2% Notes. The 11% Senior
Notes are due on March 15, 2004 and bear interest at a rate of 11% per annum
payable on each March 15 and September 15.

The 11% Senior Notes will be redeemable at the option of the Company, in
whole or in part at any time, at the following redemption (expressed as a
percentage of liquidation preference) if redeemed during the twelve month period
commencing March 15, in the applicable year set forth below plus, without
duplication, an amount in cash equal to all accumulated and unpaid dividends to
the redemption date:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001........................................................ 105.50 %
2002........................................................ 102.75 %
2003........................................................ 100.00 %
</TABLE>

In addition, the Company, at its option, may redeem in the aggregate up to 25%
of the original principal amount of 11% Senior Notes at any time prior to March
15, 2000, at a redemption price equal to 110% of the principal amount plus
accrued and unpaid interest to the redemption date.

Convenants under the indebentures governing the 11% Senior Notes and Series
A Preferred Stock are substantially identical to the covenants of the 12 1/2%
Notes.

The Series A Preferred Stock is entitled to dividends at the rate of
14 1/4% per annum payable semi-annually beginning September 15, 1997. The
Company, at its option, may pay dividends on any dividend payment date occurring
on or before March 15, 2002 either in cash or by the issuance of additional
shares of Series A Preferred Stock. The Company has elected to satisfy all or
some portion of the dividends due through the issurance of additional preferred
shares for the fiscal years 1997 and 1998 and the nine month period June 27,
1999 of 11,706, 27,554 and 15,266 (unaudited) shares, respectively.

The Series A Preferred Stock is exchangeable at the option of the Company,
on any dividend payment date for the Company's 14 1/4% Exchange Debentures
("Exchange Debentures") due March 15, 2005. Once issued the 14 1/4% Exchange
Debentures are redeemable, at the option of the Company, at any time, on or
prior to March 15, 2000 at a redemption price equal to 105% of the aggregate
principal amount thereof, plus accrued interest to the date of redemption. After
March 15, 2000 and prior to March 15, 2002 the 14 1/4% Exchange Debentures are
not redeemable. On or after March 15, 2002, the 14 1/4% Exchange Debentures are
redeemable at the option of the Company.

The 14 1/4% Exchange Debentures are issuable in an aggregate principal
amount equal to the liquidation preference of the Series A Preferred Stock so
exchanged, plus accumulated and unpaid dividends to the date fixed for the
exchange thereof, plus any additional 14 1/4% Exchange debentures issued from
time to time in lieu of cash interest. The maturity date is March 15, 2005. The
Company has not exercised its option to exchange the Series A Preferred Stock
for the 14 1/4% Exchange Debentures.

F-19
<PAGE> 112
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

The Series A Preferred Stock is redeemable, at the option of the Company,
in whole or in part, at any time on or prior to March 15, 2000 at the redemption
price equal to 105% of the liquidation preference thereof, plus accumulated and
unpaid dividends to the date of redemption. After March 15, 2000 and prior to
March 15, 2002, the Series A Preferred Stock is not redeemable. On or after
March 2002, the Series A Preferred Stock will be redeemable, at the option of
the Company, in whole or in part at any time, at the following redemption prices
(expressed as a percentage of liquidation preference) if redeemed during the
twelve-month period commencing March 15, of the applicable year set forth below
plus, without duplication, an amount in cash equal to all accumulated and unpaid
dividends to the redemption date:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2002........................................................ 107%
2003........................................................ 105%
2004 and thereafter......................................... 100%
</TABLE>

The Company is required, subject to certain conditions, to redeem all of
the Series A Preferred Stock outstanding on March 15, 2005 at a redemption price
equal to 100% of the liquidation preference thereof, plus accumulated and unpaid
dividends to the date of the redemption.

(7) WARRANTS

Warrants consist of the following:

<TABLE>
<CAPTION>
NUMBER OF CLASS A COMMON SHARES REPRESENTED
BY OUTSTANDING WARRANTS
----------------------------------------------
JUNE 27,
1996 1997 1998 1999
-------- -------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Issued in connection with:
12 1/2% Senior Notes(a)............................... 107,059 107,059 49,399 --
Redeemable Series A Preferred Stock and 12 1/4% Senior
Secured Notes(b).................................... 42,823 -- -- --
14 1/4% Series A Senior Exchangeable Preferred
Stock(c)............................................ -- 74,900 74,900 15
Replacement warrants(a)............................... -- -- 58,209 190
------- ------- ------- ---
Total....................................... 149,882 181,957 182,508 205
======= ======= ======= ===
</TABLE>

- ---------------
(a) In 1994, in conjunction with the issuance of 12 1/2% Senior Notes, the
Company issued warrants exercisable for 107,059 shares of Class A Common
Stock at an exercise price of $.01 per warrant share which are subject to
adjustment upon the occurrence of certain events, as defined in the warrant
agreement. In connection with the declaration of a cash dividend on common
stock, in March 1998, holders of these warrants were given the option to
participate in such dividends in lieu of maintaining their anti-dilution
rights with respect to such dividends. Holders of warrants representing
58,209 shares of Class A Common Stock exercised this option and received
cash dividends of $0.326 million and replacement

F-20
<PAGE> 113
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

warrants representing 58,209 shares of Class A Common Stock which have an
exercise price of $.01 per share. The remaining warrant holders had their
underlying shares adjusted upward resulting in an increase to additional
paid in capital and a charge to accumulated deficit of $0.274 million. The
remaining warrant holders exercised the warrants during the nine month
period ended June 27, 1999 (unaudited). During the nine month period ended
June 27, 1999 replacement warrants were exercised for 58,019 shares of
Class A Common Stock (unaudited). The remaining replacement warrants
expired on June 30, 1999 representing 190 shares of common stock
(unaudited).

(b) In 1996, in conjunction with the issuance of Redeemable Series A Preferred
Stock and 12 1/4% Senior Secured Notes, the Company issued warrants
exercisable for 6% at the Company's Class A Common Stock on a fully diluted
basis. In 1997 these warrants were redeemed with proceeds from the Company's
14 1/4% Series A Exchangeable Preferred Stock.

(c) In 1997, in conjunction with the issuance of the 14 1/4% Series A Senior
Exchangeable Preferred Stock, the Company issued warrants that entitle the
holder to acquire .428 shares of Class A Common Stock or 74,900 shares at a
price equal to $0.01 per .428 shares, subject to adjustment from time to
time upon to occurrence of certain changes of common stock, certain common
stock distributions, certain issuances of options or convertible securities,
certain dividends and distributions and certain other increases in the
number of shares or common stock. During the nine month period ended June
27, 1999 warrants were exercised for 74,885 shares of Class A Common Stock
(unaudited). The remaining warrants expired on June 30, 1999 representing 15
shares of common stock (unaudited).

(8) OTHER LONG-TERM DEBT

Other long-term debt consists of the following at September 28, 1997,
September 27, 1998 and June 27, 1999 (unaudited):

<TABLE>
<CAPTION>
1997 1998 1999
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Obligation under capital lease with related party
payable in monthly installments of $9,000, including
interest at 6.25%, commencing June 1992 (see note
10)................................................. $1,030,797 $ 989,278 $ 953,920
Note payable due on March 27, 2003 including interest
which accrues at an annual rate of three month LIBOR
plus 450 basis points............................... 3,161,523 3,468,723 3,699,122
Note payable due on April 26, 2000 including interest
which accrues at an annual rate of 6%............... -- 1,000,000
---------- ---------- ----------
4,192,320 4,458,001 5,653,042
Less current portion.................................. 44,644 47,496 1,049,791
---------- ---------- ----------
$4,147,676 $4,410,505 $4,603,251
========== ========== ==========
</TABLE>

F-21
<PAGE> 114
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

The scheduled maturities of other long-term debt are as follows at
September 27, 1998:

<TABLE>
<CAPTION>
FISCAL YEAR ENDING SEPTEMBER
- ----------------------------
<S> <C>
1999...................................................... $ 47,496
2000...................................................... 50,572
2001...................................................... 53,825
2002...................................................... 57,287
2003...................................................... 60,972
Thereafter................................................ 4,187,849
----------
$4,458,001
==========
</TABLE>

(9) LOANS RECEIVABLE FROM STOCKHOLDERS AND RELATED PARTY TRANSACTIONS

Loans receivable from stockholders are comprised of loans receivable from
the Company's Chief Executive Officer (CEO) and Chairman of the Board of
Directors (Chairman), and consist of notes which bear interest at 6.36% per
annum, mature on December 30, 2025 and are payable in 30 equal annual
installments of $0.2 million. Loans receivable have been classified as an
increase in stockholders' deficiency in the accompanying consolidated balance
sheets. Interest receivable of $0.2 million at September 28, 1997 and September
27, 1998 and $0.4 million at June 27, 1999(unaudited) is included in other
current assets.

At September 28, 1997, September 27, 1998 and June 27, 1999 (unaudited),
the Company has advances totaling $0.3 million due from a party related through
common ownership. Payment of this balance is guaranteed by the CEO.
Additionally, at September 28, 1997, September 27, 1998, and June 27,
1999(unaudited), the Company had trade receivables totaling $0.4 million due
from this related party which have been fully reserved as being uncollectible.

The Company pays the operating expenses for a boat owned by a party related
through common ownership which is used by the Company for business entertainment
purposes. Such expenses approximated $0.1 million for each of the fiscal years
ended September 29, 1996, September 28, 1997 and September 27, 1998 and for the
nine months ended June 27, 1999(unaudited).

The Company leases an apartment from its CEO for annual rentals of $0.1
million through August 2007. Certain renovation expenses were paid for by the
Company totaling $0.2 million during 1998 and 1999. Additionally, the Company
occupies a building under a capital lease agreement with certain stockholders
(see note 12). The building lease expires in 2012 and calls for an annual base
rent of approximately $0.1 million.

In connection with the relocation of offices from the New York metropolitan
area to the Miami metropolitan area, the Company advanced the CEO an aggregate
of $1.1 million to pay for various expenses. On July 16, 1997, the CEO executed
a promissory note to the Company for the principal amount of $1.1 million to
evidence these advances. The note was payable on demand and bore interest at a
rate of 7% per annum. The Company declared and paid a

F-22
<PAGE> 115
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

dividend in 1998 and applied a portion of the proceeds of such dividend which
were otherwise payable to the CEO to the repayment in full of this promissory
note.

(10) STOCK OPTION PLAN

The Company maintains a stock option plan pursuant to which the Company has
reserved up to 26,750 shares of Class A Common Stock for issuance upon the
exercise of options granted under the plan. The plan covers all regular salaried
employees of the Company and its subsidiaries. No options have been granted
under this plan to date.

(11) CAPITAL STOCK

The rights of the holders of shares of Class A Common Stock and Class B
Common Stock are identical except for voting rights and conversion provisions.
The Class A common stock is entitled to one vote per share and the Class B
common stock is entitled to eight votes per share. Holders of each class of
common stock are entitled to receive dividends and upon liquidation or
dissolution are entitled to receive all assets available for distribution to
stockholders. The holders of each class have no preemptive or other subscription
rights and there are no redemption or sinking fund provisions with respect to
such shares. Each class of common stock is subordinate to the Series A Preferred
Stock with respect to dividend rights and rights on liquidation, winding up and
dissolution of the Company. See note 15.

(12) COMMITMENTS AND CONTINGENCIES

Commitments

The Company occupies a building under a capital lease agreement with
certain stockholders of the Company expiring in June 2012. The amount
capitalized under this lease agreement and included in property and equipment at
September 27, 1997, September 27, 1998 and June 27, 1999 (unaudited) is as
follows:

<TABLE>
<CAPTION>
1997 1998 1999
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Building under capital lease.......................... $1,230,440 $1,230,440 $1,230,440
Less: Accumulated depreciation........................ (328,011) (389,533) (430,548)
---------- ---------- ----------
$ 902,429 $ 840,907 $ 799,892
========== ========== ==========
</TABLE>

The Company leases office space and facilities and certain equipment under
operating leases, one of which is with a related party (see note 9), that expire
at various dates through 2035. Certain leases provide for base rental payments
plus escalation charges for real estate taxes and operating expenses.

F-23
<PAGE> 116
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

At September 27, 1998, future minimum lease payments under such leases are
as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
FISCAL YEAR LEASE LEASES
- ----------- ---------- ----------
<S> <C> <C>
1999...................................................... $ 149,000 $ 945,300
2000...................................................... 149,000 737,300
2001...................................................... 149,000 538,600
2002...................................................... 149,000 370,600
2003...................................................... 149,000 324,400
Thereafter.................................................. 1,291,333 3,765,400
---------- ----------
Total minimum lease payments................................ 2,036,333 $6,681,600
==========
Less executory costs........................................ 560,333
----------
1,476,000
Less interest at 6.25%...................................... (486,722)
----------
Present value of minimum lease payments..................... $ 989,278
==========
</TABLE>

Total rent expense for the fiscal years ended September 29, 1996, September
28, 1997 and September 27, 1998 and the nine months ended June 27, 1999
(unaudited) amounted to $1.1 million, $1.6 million, $1.1 million and $0.9
million, respectively.

The Company has agreements to sublease its radio frequencies and portions
of its tower sites. Such agreements provide for payments through 2002. The
future minimum rental income to be received under these agreements as of
September 27, 1998 is as follows:

<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
- ----------- ----------
<S> <C>
1999...................................................... $ 666,741
2000...................................................... 320,674
2001...................................................... 259,893
2002...................................................... 109,330
----------
$1,356,638
==========
</TABLE>

At September 27, 1998, the Company is committed to employment contracts for
certain executives, on-air talent and general managers expiring through 2003.
Future payments under such contracts are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
- ----------- ----------
<S> <C>
1999...................................................... $2,806,033
2000...................................................... 2,247,950
2001...................................................... 1,886,433
2002...................................................... 1,282,917
2003...................................................... 62,500
----------
$8,285,833
==========
</TABLE>

F-24
<PAGE> 117
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

Included in the future payments schedule above is a five-year employment
agreement with the CEO. The agreement provides for a base salary of not less
than $1.3 million, which may be increased by the board of directors in its sole
discretion. Under the terms of the agreement, the CEO is paid a cash bonus equal
to the sum of (a) 2.5% of the dollar increase in same station revenue in the
aggregate for any fiscal year and (b) 5.0% of the dollar increase in same
station broadcast cash flow for any fiscal year.

Certain employees' contracts provide for additional amounts to be paid if
station ratings or cash flow targets are met.

Contingencies

In connection with the sale of the AM stations (see note 4), the Company
assigned a lease for a transmitter site which is located on a former landfill
which ceased operations in the late 1960s. As part of the sales agreement, the
Company retained potential exposure relating to possible environmental
liabilities relating to this site. Management is unable to assess the likelihood
that any claim for remediation of this site will arise and no amounts have been
accrued in the consolidated financial statements relating to this contingent
liability.

(13) INCOME TAXES

Income tax expense (benefit) for the fiscal years ended September 29, 1996,
September 28, 1997 and September 27, 1998 and the nine months ended June 27,
1999 (unaudited) consists of the following and were allocated as follows:

<TABLE>
<CAPTION>
1996
--------------------------------------------------
CURRENT-
STATE AND CURRENT DEFERRED
LOCAL FEDERAL FEDERAL TOTAL
--------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Loss from operations......................... $191,922 $-- $(1,357,722) $(1,165,800)
======== == =========== ===========
</TABLE>

<TABLE>
<CAPTION>
1997
--------------------------------------------------
CURRENT-
STATE AND CURRENT DEFERRED
LOCAL FEDERAL FEDERAL TOTAL
--------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Loss from operations......................... $250,000 $-- $(2,964,411) $(2,714,411)
Extraordinary item -- loss on extinguishment
of debt.................................... -- -- (1,097,836) (1,097,836)
-------- -- ----------- -----------
$250,000 $-- $(4,062,247) $(3,812,247)
======== == =========== ===========
</TABLE>

F-25
<PAGE> 118
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

<TABLE>
<CAPTION>
1998
---------------------------------------------------
CURRENT-
STATE AND CURRENT DEFERRED
LOCAL FEDERAL FEDERAL TOTAL
--------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Income from operations..................... $950,000 $850,000 $13,824,032 $15,624,032
Extraordinary item -- loss on
extinguishment of debt................... -- -- (1,075,149) (1,075,149)
-------- -------- ----------- -----------
$950,000 $850,000 $12,748,883 $14,548,883
======== ======== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
1999 (UNAUDITED)
------------------------------------------------
CURRENT-
STATE AND CURRENT DEFERRED
LOCAL FEDERAL FEDERAL TOTAL
--------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Income from operations........................ $200,000 $50,000 $2,927,482 $3,177,482
======== ======= ========== ==========
</TABLE>

During fiscal 1996, 1997 and 1998 and the nine months ended June 27, 1999
(unaudited), the Company utilized net operating loss carryforwards of
approximately $0.8 million, $0.7 million, $38.8 million and $1.4 million,
respectively.

The tax effect of temporary differences and carryforwards that give rise to
deferred tax assets and deferred tax liabilities at September 28, 1997,
September 27, 1998 and June 27, 1999 (unaudited) is as follows:

<TABLE>
<CAPTION>
1997 1998 1999
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................. $32,955,490 $ 16,919,249 $ 16,366,440
Deferred interest................................. 5,717,617 6,080,278 6,358,461
Allowance for doubtful accounts................... 2,162,038 3,108,024 3,376,640
Fixed assets...................................... 474,286 474,286 474,286
Unearned revenue.................................. -- 856,582 1,091,856
AMT credit........................................ -- 850,000 850,000
----------- ------------ ------------
Total gross deferred tax assets................ 41,309,431 28,288,419 28,517,683
Less valuation allowance....................... (17,396,470) (17,396,470) (17,396,470)
Total net deferred tax assets.................. 23,912,961 10,891,949 11,121,213
----------- ------------ ------------
Deferred tax liabilities:
Depreciation and amortization..................... 11,776,023 14,463,595 17,620,341
Intangible assets................................. 8,382,950 5,502,950 5,502,950
Unearned revenue.................................. 79,701 -- --
----------- ------------ ------------
Total gross deferred tax liabilities........... 20,238,674 19,966,545 23,123,291
----------- ------------ ------------
Net deferred tax asset (liability)............. $ 3,674,287 $ (9,074,596) $(12,002,078)
=========== ============ ============
</TABLE>

F-26
<PAGE> 119
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

Total income tax expense (benefit) differed from the amounts computed by
applying the U.S. Federal income tax rate of 35% for fiscal years 1996, 1997 and
1998 and the nine months ended June 27, 1999 (unaudited) as a result of the
following:

<TABLE>
<CAPTION>
JUNE 27,
1996 1997 1998 1999
----- ----- ---- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Computed "expected" tax expense (benefit)................ (35.0)% (35.0)% 35.0% 35.0%
State Income taxes, net of federal income tax benefit.... 2.2% (2.8)% 6.5% 6.4%
Non-deductible expenses.................................. 9.0% 1.4% 0.4% 1.2%
Other.................................................... 3.2% (1.8)% 1.8% 0.1%
----- ----- ---- ----
20.6% 38.2% 43.7% 42.7%
</TABLE>

The valuation allowance for deferred tax assets as of September 28, 1997,
September 27, 1998 and June 27, 1999 (unaudited) was $17,396,430. In assessing
the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment.

Based upon the level of historical taxable income and projections for
future taxable income over the periods which the deferred tax assets are
deductible, management believes it is more likely than not the Company will
realize the benefits of these deductible differences, net of the existing
valuation allowances. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced.

At September 27, 1998, the Company has net operating loss carryforwards
available to offset future taxable income expiring as follows:

<TABLE>
<CAPTION>
NET
OPERATING
LOSS
EXPIRING IN SEPTEMBER CARRYFORWARDS
- --------------------- --------------
<S> <C>
2007...................................................... $ 5,772,000
2008...................................................... 12,213,000
2009...................................................... 11,445,000
2010...................................................... 12,868,000
-----------
$42,298,000
===========
</TABLE>

(14) LITIGATION

The Company is the defendant in a number of lawsuits and claims incidental
in its ordinary course of business, certain of which have been brought by former
employees. The litigation

F-27
<PAGE> 120
SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INTERIM INFORMATION AS OF JUNE 27, 1999 AND THE
NINE MONTHS ENDED JUNE 28, 1998 AND JUNE 27, 1999 IS UNAUDITED

which is probable to result in an unfavorable outcome and can be reasonably
estimated amounts to $0.3 million which the Company has accrued. The Company
does not believe the outcome of any litigation, current or pending, would have a
material adverse impact on the financial position on the results of operations
of the Company.

(15) SUBSEQUENT EVENTS -- UNAUDITED

Acquisitions

On December 1, 1998, the Company acquired from Pan Caribbean Broadcasting
Corporation the FCC broadcast license and substantially all of the assets of
WDOY-FM in Puerto Rico for $8.3 million. The acquisition of WDOY-FM was financed
from cash on hand and cash from operations.

On April 30, 1999, the Company acquired the FCC broadcast licenses and
substantially all of the assets used or useful in the operation of WMEG-FM and
WEGM-FM, in Puerto Rico for $16.0 million. The Company financed this purchase
from cash on hand and cash from operations.

On April 26, 1999, the Company acquired eighty percent of the issued and
outstanding capital stock of JuJu Media, Inc., the owner and operator of
LaMusica.com, an Internet web site and "portal" targeting the U.S. Hispanic
market, for $2.0 million in cash and the issuance of a promissory note for $1.0
million.

The aforementioned acquisitions are not deemed material in fiscal 1999 for
financial pro forma presentation purposes.

Planned Initial Public Offering

The Company intends to conduct an initial public offering (IPO) for a yet
to be determined number of shares of Class A Common Stock. Concurrently with
this offering the Company plans to offer $235 million aggregate principal amount
of senior subordinated notes due 2009. There is no assurance that these
offerings will occur.

In connection with the IPO, the Company also intends to conduct a stock
split of the common stock outstanding and to reclass all outstanding shares of
Class A Common Stock to shares of Class B Common Stock prior to the IPO. Class A
Common Stock will entitle holders to one vote per share while the holders of
Class B Common Stock will be entitled to ten votes per share. The holders of
each class will share equally on a per share basis in dividends or upon
liquidation or dissolution of all assets available for distribution to common
stockholders.

F-28
<PAGE> 121

SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS ENDED SEPTEMBER 29, 1996,
SEPTEMBER 28, 1997 AND SEPTEMBER 27, 1998
AND NINE MONTHS ENDED JUNE 27, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
COLUMN C ADDITIONS
COLUMN B ----------------------- COLUMN E
BALANCE CHARGED TO CHARGED TO BALANCE AT
COLUMN A BEGINNING COST AND OTHER COLUMN D END
DESCRIPTION OF PERIOD EXPENSE ACCOUNTS DEDUCTIONS(1) OF PERIOD
- ----------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Fiscal year 1996:
Allowance for doubtful accounts.... $5,184,886 $4,908,699 -- $5,582,822 $4,510,763
Fiscal year 1997:
Allowance for doubtful accounts.... $4,510,763 $3,530,259 -- $2,635,927 $5,405,095
Fiscal year 1998:
Allowance for doubtful accounts.... $5,405,095 $2,634,509 -- $ 269,544 $7,770,060
Nine month ended June 27, 1999:
Allowance for doubtful accounts.... $7,770,060 $1,743,705 -- $ 697,975 $8,815,790
</TABLE>

- ---------------
(1) Write-offs, net of recoveries.

F-29
<PAGE> 122

[Spanish Broadcasting System, Inc. LOGO]

SPANISH BROADCASTING SYSTEM, INC.

Class A Common Stock

----------------------------
PROSPECTUS
, 1999
----------------------------

LEHMAN BROTHERS

MERRILL LYNCH & CO.

CIBC WORLD MARKETS
<PAGE> 123

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is an itemized statement of estimated expenses in connection
with the issuance and sale of the securities being registered by this
registration statement.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $
Printing....................................................
Accounting fees and expenses................................
Legal fees and expenses.....................................
Blue sky fees and expenses..................................
Miscellaneous...............................................
Total............................................. $
===
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law ("DGCL") provides that
a corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or complete action, suit or
proceeding whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, against expenses actually and
reasonably incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation 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 DGCL (relating to
unlawful payment of dividends and
II-1
<PAGE> 124

unlawful stock purchase and redemption) or (iv) for any transaction from which
the director derived an improper personal benefit.

Our certificate of incorporation provides that our directors shall not be
liable to SBS or its stockholders for monetary damages for breach of fiduciary
duty as a director except to the extent that exculpation from liabilities is not
permitted under the DGCL as in effect at the time the liability is determined.
Our certificate further provides that we shall indemnify our directors and
officers to the fullest extent permitted by the DGCL.

The directors and officers of SBS are covered under directors' and
officers' liability insurance policies maintained by SBS.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On March 25, 1996 we sold 37,500 shares of our redeemable series A
preferred stock and $35.0 million of our 12 1/4% senior secured notes due 2001,
in a transaction not registered under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act. We also issued to the
holders of the preferred stock and notes warrants to purchase, in the aggregate,
6% of our common stock on a fully diluted basis which are exercisable no later
than June 29, 1998. We received gross proceeds of $72.5 million from this
offering. The securities were sold to certain qualified institutional buyers
through CIBC Wood Gundy Securities Corp., as exclusive placement agent.

In June 1996, September 1996 and December 1996, we elected to satisfy
interest due on the notes through the issuance of $3,384,843 additional notes
issued at face value. In June 1996, September 1996 and December 1996, we elected
to satisfy the dividends due of $3,773,000 through the issuance of 3,773
additional shares of preferred stock. On March 27, 1997, the notes, the
preferred stock and the warrants were repurchased or redeemed by SBS.

In lieu of paying dividends on the senior preferred stock, we paid
dividends in the form of shares of senior preferred stock on each of September
15, 1997, March 15, 1998 and September 15, 1998 of 11,706, 13,303 and 14,251,
respectively.

On March 27, 1997, we sold 175,000 units comprised of 175,000 shares of our
series A senior exchangeable preferred stock, liquidation preference $1,000 per
share, and warrants to purchase 74,900 shares of our Class B Common Stock, par
value $.01 per share and (b) $75.0 million aggregate principal amount of our 11%
notes due 2004 in transactions not registered under the Securities Act, in
reliance upon the exemption provided in Section 4(2) of the Act. We received
gross proceeds of $250,000,000 from these offerings. The securities were sold to
certain qualified institutional buyers through CIBC Wood Gundy Securities Corp.,
as exclusive placement agent.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS

<TABLE>
<S> <C>
1.1 Underwriting Agreement with Lehman Brothers Inc., Merrill
Lynch & Co. and CIBC World Markets Corp., dated ,
, 1999.*
</TABLE>

- ---------------
* To be filed by amendment.
II-2
<PAGE> 125
<TABLE>
<S> <C>
1.2 Financial Advisory Agreement dated March 4, 1997 between the
Company and CIBC Wood Gundy Securities Corp., as financial
advisor (incorporated by reference to the Company's Current
Report on Form 8-K dated March 27, 1997 (Commission File No.
33-82114)(the "Current Report")).
3.1 Second Amended and Restated Certificate of Incorporation of
the Company, dated , 1999.*
3.2 By-Laws of the Company (incorporated by reference to Exhibit
3.1.2 of the Company's Registration Statement on Form S-4
(Commission File No. 33-82114) (the "1994 Registration
Statement")).
3.3 Certificate of Designation of Senior Exchangeable Preferred
Stock, Series A, filed March 27, 1997 (incorporated by
reference to the Current Report).
4.1 Article V of the Second Amended and Restated Certificate of
Incorporation of the Company, dated , 1999.*
4.2 Indenture dated June 29, 1994 among the Company, IBJ
Schroder Bank & Trust Company, as Trustee, the Guarantors
named therein and the Purchasers named therein (incorporated
by reference to Exhibit 4.1 of the 1994 Registration
Statement).
4.3 Second Supplemental Indenture dated as of March 21, 1997 to
Indenture dated as of June 29, 1994 among the Company, the
Guarantors named therein and IBJ Schroder Bank & Trust
Company, as Trustee (incorporated by reference to the
Current Report).
4.4 Indenture dated as of March 15, 1997, among the Company, the
Guarantors named therein, IBJ Schroder Bank & Trust Company,
as Trustee, and CIBC Wood Gundy Securities Corp., as Initial
Purchaser (incorporated by reference to the Current Report).
4.5 Exchange Debenture Indenture dated as of March 15, 1997,
among the Company, the Guarantors named therein, U.S. Trust
Company of New York, as Trustee, and CIBC Wood Gundy
Securities Corp., as Initial Purchaser (incorporated by
reference to the Current Report).
4.6 Indenture with respect to % Senior Subordinated Notes
due 2009 with , as Trustee, dated
.*
5.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP
regarding legality.*
10.1 Securities Purchase Agreement dated as of March 24, 1997
among the Company, the Guarantors named therein and CIBC
Wood Gundy Securities Corp., as Initial Purchaser
(incorporated by reference to the Current Report).
10.2 Unit Agreement dated as of March 15, 1997 among the Company,
the Guarantors and IBJ Schroder Bank & Trust Company, as
Trustee (incorporated by reference to the Current Report).
10.3 Warrant Agreement dated as of March 15, 1997 among the
Company and IBJ Schroder Bank & Trust Company, as Warrant
Agent (incorporated by reference to the Current Report).
10.4 Common Stock Registration Rights and Stockholders Agreement
dated as of March 15, 1997 among the Company, certain
Management Stockholders named therein and CIBC Wood Gundy
Securities Corp., as Initial Purchaser (incorporated by
reference to the Current Report).
</TABLE>

- ---------------
* To be filed by amendment.
II-3
<PAGE> 126
<TABLE>
<S> <C>
10.5 Notes Registration Rights Agreement dated as of March 15,
1997 among the Company, the Guarantors named therein and
CIBC Wood Gundy Securities Corp., as Initial Purchaser
(incorporated by reference to the Current Report).
10.6 Preferred Stock Registration Rights Agreement dated as of
March 15, 1997 among the Company, the Guarantors named
therein and CIBC Wood Gundy Securities Corp., as Initial
Purchaser (incorporated by reference to the Current Report).
10.7 National Radio Sales Representation Agreement dated as of
February 3, 1997 between Caballero Spanish Media, L.L.C. and
the Company (incorporated by reference to the Current
Report).
10.8 Employment Agreement dated as of March 4, 1997 between Raul
Alarcon, Jr. and the Company (incorporated by reference to
the Current Report).
10.9 Employment Agreement dated February 5, 1997 between Carey
Davis and the Company.*
10.10 Letter Agreement dated January 13, 1997 between the Company
and Caballero Spanish Media, LLC (incorporated by reference
to the Current Report).
10.11 1994 Stock Option Plan of the Company (incorporated by
reference to Exhibit 10.4 of the 1994 Registration
Statement).
10.12 Ground Lease dated December 18, 1995 between Louis Viola
Company and SBS-NJ (incorporated by reference to the 1996
Current Report).
10.13 Ground Lease dated December 18, 1995 between Frank F. Viola
and Estate of Thomas C. Viola and SBS-NJ (incorporated by
reference to the 1996 Current Report).
10.14 Lease and License Agreement dated February 1, 1991 between
Empire State Building Company, as landlord, and SBS-NY, as
tenant (incorporated by reference to Exhibit 10.15.1 of the
1994 Registration Statement).
10.15 Modification of Lease and License dated June 30, 1992
between Empire State Building Company and SBS-NY related to
WSKQ-FM (incorporated by reference to Exhibit 10.15.2 of the
1994 Registration Statement).
10.16 Lease and License Modification and Extension Agreement dated
as of June 30, 1992 between Empire State Building Company,
as landlord, and SBS-NY as tenant (incorporated by reference
to Exhibit 10.15.3 of the 1994 Registration Statement).
10.17 Promissory Note, dated as of December 31, 1995 of Raul
Alarcon, Sr. to SBS-NJ in the principal amount of $577,323
(incorporated by reference to Exhibit 10.26 to the Company's
1995 Annual Report on Form 10-K).
10.18 Promissory Note, dated as of December 31, 1995 of Raul
Alarcon, Jr. to SBS-NJ in the principal amount of $1,896,913
(incorporated by reference to Exhibit 10.27 to the Company's
1995 Annual Report on Form 10-K).
10.19 Lease Agreement dated June 1, 1992 among Raul Alarcon, Sr.,
Raul Alarcon, Jr., and SBS-Fla (incorporated by reference to
Exhibit 10.30 of the 1994 Registration Statement).
10.20 Indenture dated October 12, 1988 between Alarcon Holdings,
Inc. and SBS-NJ related to the studio located at 26 West
56th Street, NY, NY (incorporated by reference to Exhibit
10.32 of the 1994 Registration Statement).
</TABLE>

- ---------------
* To be filed by amendment.
II-4
<PAGE> 127

<TABLE>
<S> <C>
10.21 Agreement of Lease dated as of March 1, 1996. No. WT-1744-A119 1067 between The Port Authority of New
Jersey and SBS-GNY as assignee of Park Radio (incorporated by reference to the 1996 Current Report).
10.22 Asset Purchase Agreement dated as of July 2, 1997, by and between Spanish Broadcasting System, Inc. (New
Jersey), Spanish Broadcasting System of California, Inc., Spanish Broadcasting System of Florida, Inc.,
Spanish Broadcasting System, Inc., and One-on-One Sports, Inc. (incorporated by reference to Exhibit 10.62
of the Company's Registration Statement on Form S-4 (Commission File No. 333-26295)).
10.23 Amendment No. 1 dated as of September 29, 1997 to the Asset Purchase Agreement dated as of July 2, 1997,
by and between Spanish Broadcasting System, Inc. (New Jersey), Spanish Broadcasting System of California,
Inc., Spanish Broadcasting System of Florida, Inc., Spanish Broadcasting System, Inc., and One-on-One
Sports, Inc. (incorporated by referent to the Company's Registration Statement on Form S-1, dated January
21, 1999).
10.24 Promissory Note dated July 16, 1997 of Raul Alarcon, Jr. to the Company in the principal amount of
$1,050,229.63 (incorporated by reference to Exhibit 10.63 of the Company's Registration Statement on Form
S-4 (Commission File No. 333-26295)).
10.25 Asset Purchase Agreement dated January 28, 1998 by and between Spanish Broadcasting System of San Antonio,
Inc. and Radio KRIO, Ltd. (incorporated by reference to the Company's Form 10-Q dated February 12, 1998).
10.26 Asset Purchase Agreement dated June 16, 1998 by and between Spanish Broadcasting System of Puerto Rico,
Inc. and Pan Caribbean Broadcasting Corporation (incorporated by reference to the Company's Form 10-Q
dated July 12, 1998).
10.27 Extension of lease of a Condominium Unit (Metropolitan Tower Condominium) between Raul Alarcon, Jr.
("Landlord") and Spanish Broadcasting System, Inc. ("Tenant") (incorporated by reference to the Company's
1998 Annual Report on Form 10-K).
10.28 Asset Purchase Agreement dated January 8, 1999 by and between Spanish Broadcasting System of Puerto Rico,
Inc. and Guayama Broadcasting Company, Inc. and LaMega Estacion, Inc. (incorporated by reference to the
Company's Registration Statement on Form S-1, dated January 21, 1999).
10.29 Stock Purchase Agreement among JuJu Media Inc., each of the individual sellers, and Spanish Broadcasting
System, Inc., dated April 26, 1999.*
13.1 Annual Report of the Company (incorporated by reference to the Company's 1998 Annual Report on Form 10-K).
21.1 List of Subsidiaries of the Company (incorporated by reference to the Company's Registration Statement on
Form S-1, dated January 21, 1999).
23.1 Consent of KPMG LLP.
23.2 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included herein).
</TABLE>

- ---------------
* To be filed by amendment.
II-5
<PAGE> 128

(b) FINANCIAL STATEMENT SCHEDULES

The financial statement schedule -- "Valuation and Qualifying
Accounts" -- appears on page F-29. All other schedules are omitted because they
either are not applicable or the required information is included in the
financial statements or corresponding notes appearing elsewhere in this
registration statement.

ITEM 17. UNDERTAKINGS.

(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
SBS pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by SBS of
expenses incurred or paid by a director, officer or controlling person of SBS in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final adjudication of
such issue.

(b) We hereby undertake:

(1) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved in the
transaction, that was not the subject of and included in the registration
statement when it became effective.

(2) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

- To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

- To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;

- To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

(3) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement
II-6
<PAGE> 129

relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

II-7
<PAGE> 130

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, SBS has duly
caused this Form S-1 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on the 18th day of
August, 1999.

SPANISH BROADCASTING
SYSTEM, INC.

By: /s/ RAUL ALARCON, JR.
------------------------------------
Name: Raul Alarcon, Jr.
Title: Chief Executive Officer and
President

Pursuant to the requirements of the Securities Act of 1933, this Form S-1
has been signed below by the following persons in the capacities indicated on
the 18th day of August, 1999. Each person whose signature appears below hereby
authorizes Raul Alarcon, Jr. and Joseph A. Garcia, and each of them, as
attorney-in-fact, to sign and file in his behalf, individually and in each
capacity stated below, all amendments and post-effective amendments to this
registration statement.

<TABLE>
<CAPTION>
SIGNATURE
---------
<C> <S>

/s/ RAUL ALARCON, JR. Chief Executive Officer, President and a
- --------------------------------------------------- Director (principal executive officer)
Raul Alarcon, Jr.

/s/ JOSEPH A. GARCIA Executive Vice President, Chief Financial
- --------------------------------------------------- Officer, and Assistant Secretary
Joseph A. Garcia (principal financial and accounting
officer)

/s/ PABLO RAUL ALARCON, SR. Chairman of the Board of Directors
- ---------------------------------------------------
Pablo Raul Alarcon, Sr.

/s/ JOSE GRIMALT Secretary and a Director
- ---------------------------------------------------
Jose Grimalt
</TABLE>

II-8
<PAGE> 131

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<S> <C>
1.1 Underwriting Agreement with Lehman Brothers Inc., Merrill
Lynch & Co. and CIBC World Markets Corp., dated
, 1999.*
1.2 Financial Advisory Agreement dated March 4, 1997 between the
Company and CIBC Wood Gundy Securities Corp., as financial
advisor (incorporated by reference to the Company's Current
Report on Form 8-K dated March 27, 1997 (Commission File No.
33-82114)(the "Current Report")).
3.1 Second Amended and Restated Certificate of Incorporation of
the Company, dated , 1999.*
3.2 By-Laws of the Company (incorporated by reference to Exhibit
3.1.2 of the Company's Registration Statement on Form S-4
(Commission File No. 33-82114) (the "1994 Registration
Statement")).
3.3 Certificate of Designation of Senior Exchangeable Preferred
Stock, Series A, filed March 27, 1997 (incorporated by
reference to the Current Report).
4.1 Article V of the Second Amended and Restated Certificate of
Incorporation of the Company, dated , 1999.*
4.2 Indenture dated June 29, 1994 among the Company, IBJ
Schroder Bank & Trust Company, as Trustee, the Guarantors
named therein and the Purchasers named therein (incorporated
by reference to Exhibit 4.1 of the 1994 Registration
Statement).
4.3 Second Supplemental Indenture dated as of March 21, 1997 to
Indenture dated as of June 29, 1994 among the Company, the
Guarantors named therein and IBJ Schroder Bank & Trust
Company, as Trustee (incorporated by reference to the
Current Report).
4.4 Indenture dated as of March 15, 1997, among the Company, the
Guarantors named therein, IBJ Schroder Bank & Trust Company,
as Trustee, and CIBC Wood Gundy Securities Corp., as Initial
Purchaser (incorporated by reference to the Current Report).
4.5 Exchange Debenture Indenture dated as of March 15, 1997,
among the Company, the Guarantors named therein, U.S. Trust
Company of New York, as Trustee, and CIBC Wood Gundy
Securities Corp., as Initial Purchaser (incorporated by
reference to the Current Report).
4.6 Indenture with respect to % Senior Subordinated Notes
due 2009 with , as Trustee, dated .*
5.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP
regarding legality.*
10.1 Securities Purchase Agreement dated as of March 24, 1997
among the Company, the Guarantors named therein and CIBC
Wood Gundy Securities Corp., as Initial Purchaser
(incorporated by reference to the Current Report).
10.2 Unit Agreement dated as of March 15, 1997 among the Company,
the Guarantors and IBJ Schroder Bank & Trust Company, as
Trustee (incorporated by reference to the Current Report).
10.3 Warrant Agreement dated as of March 15, 1997 among the
Company and IBJ Schroder Bank & Trust Company, as Warrant
Agent (incorporated by reference to the Current Report).
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10.4 Common Stock Registration Rights and Stockholders Agreement
dated as of March 15, 1997 among the Company, certain
Management Stockholders named therein and CIBC Wood Gundy
Securities Corp., as Initial Purchaser (incorporated by
reference to the Current Report).
10.5 Notes Registration Rights Agreement dated as of March 15,
1997 among the Company, the Guarantors named therein and
CIBC Wood Gundy Securities Corp., as Initial Purchaser
(incorporated by reference to the Current Report).
10.6 Preferred Stock Registration Rights Agreement dated as of
March 15, 1997 among the Company, the Guarantors named
therein and CIBC Wood Gundy Securities Corp., as Initial
Purchaser (incorporated by reference to the Current Report).
10.7 National Radio Sales Representation Agreement dated as of
February 3, 1997 between Caballero Spanish Media, L.L.C. and
the Company (incorporated by reference to the Current
Report).
10.8 Employment Agreement dated as of March 4, 1997 between Raul
Alarcon, Jr. and the Company (incorporated by reference to
the Current Report).
10.9 Employment Agreement dated February 5, 1997 between Carey
Davis and the Company.*
10.10 Letter Agreement dated January 13, 1997 between the Company
and Caballero Spanish Media, LLC (incorporated by reference
to the Current Report).
10.11 1994 Stock Option Plan of the Company (incorporated by
reference to Exhibit 10.4 of the 1994 Registration
Statement).
10.12 Ground Lease dated December 18, 1995 between Louis Viola
Company and SBS-NJ (incorporated by reference to the 1996
Current Report).
10.13 Ground Lease dated December 18, 1995 between Frank F. Viola
and Estate of Thomas C. Viola and SBS-NJ (incorporated by
reference to the 1996 Current Report).
10.14 Lease and License Agreement dated February 1, 1991 between
Empire State Building Company, as landlord, and SBS-NY, as
tenant (incorporated by reference to Exhibit 10.15.1 of the
1994 Registration Statement).
10.15 Modification of Lease and License dated June 30, 1992
between Empire State Building Company and SBS-NY related to
WSKQ-FM (incorporated by reference to Exhibit 10.15.2 of the
1994 Registration Statement).
10.16 Lease and License Modification and Extension Agreement dated
as of June 30, 1992 between Empire State Building Company,
as landlord, and SBS-NY as tenant (incorporated by reference
to Exhibit 10.15.3 of the 1994 Registration Statement).
10.17 Promissory Note, dated as of December 31, 1995 of Raul
Alarcon, Sr. to SBS-NJ in the principal amount of $577,323
(incorporated by reference to Exhibit 10.26 to the Company's
1995 Annual Report on Form 10-K).
10.18 Promissory Note, dated as of December 31, 1995 of Raul
Alarcon, Jr. to SBS-NJ in the principal amount of $1,896,913
(incorporated by reference to Exhibit 10.27 to the Company's
1995 Annual Report on Form 10-K.
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10.19 Lease Agreement dated June 1, 1992 among Raul Alarcon, Sr.,
Raul Alarcon, Jr., and SBS-Fla (incorporated by reference to
Exhibit 10.30 of the 1994 Registration Statement).
10.20 Indenture dated October 12, 1988 between Alarcon Holdings,
Inc. and SBS-NJ related to the studio located at 26 West
56th Street, NY, NY (incorporated by reference to Exhibit
10.32 of the 1994 Registration Statement).
10.21 Agreement of Lease dated as of March 1, 1996. No.
WT-1744-A119 1067 between The Port Authority of New Jersey
and SBS-GNY as assignee of Park Radio (incorporated by
reference to the 1996 Current Report).
10.22 Asset Purchase Agreement dated as of July 2, 1997, by and
between Spanish Broadcasting System, Inc. (New Jersey),
Spanish Broadcasting System of California, Inc., Spanish
Broadcasting System of Florida, Inc., Spanish Broadcasting
System, Inc., and One-on-One Sports, Inc. (incorporated by
reference to Exhibit 10.62 of the Company's Registration
Statement on Form S-4 (Commission File No. 333-26295)).
10.23 Amendment No. 1 dated as of September 29, 1997 to the Asset
Purchase Agreement dated as of July 2, 1997, by and between
Spanish Broadcasting System, Inc. (New Jersey), Spanish
Broadcasting System of California, Inc., Spanish
Broadcasting System of Florida, Inc., Spanish Broadcasting
System, Inc., and One-on-One Sports, Inc. (incorporated by
reference to the Company's Form S-1 dated January 21, 1999).
10.24 Promissory Note dated July 14, 1997 of Raul Alarcon, Jr. to
the Company in the principal amount of $1,050,229.63
(incorporated by reference to Exhibit 10.63 of the Company's
Registration Statement on Form S-4 (Commission File No.
333-26295)).
10.25 Asset Purchase Agreement dated January 28, 1998 by and
between Spanish Broadcasting System of San Antonio, Inc. and
Radio KRIO, Ltd. (incorporated by reference to the Company's
Form 10-Q dated February 12, 1998).
10.26 Asset Purchase Agreement dated June 16, 1998 by and between
Spanish Broadcasting System of Puerto Rico, Inc. and Pan
Caribbean Broadcasting Corporation (incorporated by
reference to the Company's Form 10-Q dated July 12, 1998).
10.27 Extension of lease of a Condominium Unit (Metropolitan Tower
Condominium) between Raul Alarcon, Jr. ("Landlord") and
Spanish Broadcasting System, Inc. ("Tenant") (incorporated
by reference to the Company's 1998 Annual Report on Form
10-K).
10.28 Asset Purchase Agreement dated January 8, 1999 by and
between Spanish Broadcasting System of Puerto Rico, Inc. and
Guayama Broadcasting Company, Inc. and LaMega Estacion, Inc.
(incorporated by reference to the Company's Registration
Statement on Form S-1 dated January 21, 1999).
10.29 Stock Purchase Agreement among JuJu Media Inc., each of the
individual sellers, and Spanish Broadcasting System, Inc.,
dated April 26, 1999.*
13.1 Annual Report of the Company (incorporated by reference to
the Company's 1998 Annual Report on Form 10-K).
21.1 List of Subsidiaries of the Company (incorporated by
reference to the Company's Registration Statement on Form
S-1, dated January 21, 1999).
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23.1 Consent of KPMG LLP.
23.2 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP
(included in Exhibit 5.1).
24.1 Power of Attorney (included herein).
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EXHIBIT 23.1

The Board of Directors and Stockholders
Spanish Broadcasting System, Inc.

We consent to the use of our report included herein and to the reference to
our firm under the headings "Summary Historical and Pro Forma Consolidated
Financial Information", "Selected Historical Consolidated Financial Information"
and "Experts" in the prospectus.

Miami, Florida
August 18, 1999