##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended June 30, 2003 Commission file number 1-9645

CLEAR CHANNEL COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

|                               |  |                                                
|------------------------------ |  | -----------------------------------------------
|Texas
(State of Incorporation) |  | 74-1787539
(I.R.S. Employer Identification No.)

200 East Basse Road
San Antonio, Texas 78209
(210) 822-2828

(Address and telephone number
of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x   No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes x   No

Indicate the number of shares outstanding of each class of the issuers
classes of common stock, as of the latest practicable date.

|                             |  |                              
|---------------------------- |  | -----------------------------
|Class                        |  | Outstanding at August 1, 2003
|                             |  |                              
|Common Stock, $.10 par value |  | 614,907,066                  





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TABLE OF CONTENTS



|                                                  |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                           
|                                                  | Item 1. UNAUDITED FINANCIAL STATEMENTS                                                       
|                                                  | CONSOLIDATED BALANCE SHEETS                                                                  
|                                                  | CONSOLIDATED STATEMENTS OF OPERATIONS                                                        
|                                                  | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                        
|                                                  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                   
|                                                  | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                  | Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                  | Item 4. CONTROLS AND PROCEDURES                                                              
|Part II  OTHER INFORMATION                      
|                                                  | Item 1. LEGAL PROCEEDINGS                                                                    
|                                                  | Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                                  | Item 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|Signatures                                       
|INDEX TO EXHIBITS                                
|EX-11 Computation of Per Share Earnings          
|EX-12 Computation of Ratios                      
|EX-31.1 Certification of CEO Pursuant to Sec. 302
|EX-31.2 Certification of CFO Pursuant to Sec. 302
|EX-32.1 Certification of CEO Pursuant to Sec. 906
|EX-32.2 Certification of CFO Pursuant to Sec. 906



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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES

INDEX

|                               |                                                                                                 |                         |  |          |  | 
|------------------------------ | ----------------------------------------------------------------------------------------------- | ----------------------- |  | -------- |  | 
|                               |                                                                                                 |                         |  | Page No.
|                               |                                                                                                 |                         |  |         
|Part I  Financial Information |                                                                                                 |                         |  |         
|                               | Item 1. Unaudited Financial Statements                                                          |                         |  |          | 
|                               | Consolidated Balance Sheets at June 30, 2003 and December 31, 2002                              |                         |  | 3        | 
|                               | Consolidated Statements of Operations for the six and three months ended June 30, 2003 and 2002 |                         |  | 5        | 
|                               | Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and 2002           |                         |  | 6        | 
|                               | Notes to Consolidated Financial Statements                                                      |                         |  | 7        | 
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations   |                         |  | 15       | 
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                              |                         |  | 31       | 
|                               | Item 4. Controls and Procedures                                                                 |                         |  | 31       | 
|Part II  Other Information    |                                                                                                 |                         |  |         
|                               | Item 1. Legal Proceedings                                                                       |                         |  | 32       | 
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                     |                         |  | 32       | 
|                               | Item 6. Exhibits and reports on Form 8-K                                                        |                         |  | 32       | 
|                               |                                                                                                 | (a) Exhibits            |  |          |  | 
|                               |                                                                                                 | (b) Reports on Form 8-K |  |          |  | 
|                               | Signatures                                                                                      |                         |  | 33       | 
|                               | Index to Exhibits                                                                               |                         |  | 34       | 





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##### Table of Contents






PART I




Item 1. UNAUDITED FINANCIAL STATEMENTS




CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)

|                              |                                                                                                  |   |             |            |              |   |            |            | 
|----------------------------- | ------------------------------------------------------------------------------------------------ | - | ----------- | ---------- | ------------ | - | ---------- | ---------- | 
|                              |                                                                                                  |   | June 30,    |            | December 31,
|                              |                                                                                                  |   | 2003        |            | 2002        
|                              |                                                                                                  |   | (Unaudited) |            | (Audited)   
|                              |                                                                                                  |   |             |            |             
|Current Assets                |                                                                                                  |   |             |            |              |   |            |           
|                              | Cash and cash equivalents                                                                        |   | $           | 195,628    |              |   | $          | 170,086    | 
|                              | Accounts receivable, less allowance of $64,050 at June 30,
2003 and $67,338 at December 31, 2002 |   |             | 1,687,358  |              |   |            | 1,584,995  | 
|                              | Prepaid expenses                                                                                 |   |             | 281,087    |              |   |            | 203,578    | 
|                              | Other current assets                                                                             |   |             | 152,303    |              |   |            | 164,836    | 
|                              |                                                                                                  |   |             |            |              |   |            |           
|Total Current Assets          |                                                                                                  |   | 2,316,376   |            |              |   | 2,123,495  |           
|                              |                                                                                                  |   |             |            |              |   |            |            | 
|Property, Plant and Equipment |                                                                                                  |   |             |            |              |   |            |           
|                              | Land, buildings and improvements                                                                 |   |             | 1,550,870  |              |   |            | 1,519,845  | 
|                              | Structures and site leases                                                                       |   |             | 2,745,774  |              |   |            | 2,581,414  | 
|                              | Towers, transmitter and studio equipment                                                         |   |             | 783,159    |              |   |            | 743,463    | 
|                              | Furniture and other equipment                                                                    |   |             | 651,772    |              |   |            | 629,264    | 
|                              | Construction in progress                                                                         |   |             | 200,137    |              |   |            | 227,853    | 
|                              |                                                                                                  |   |             |            |              |   |            |           
|                              |                                                                                                  |   | 5,931,712   |            |              |   | 5,701,839  |           
|Less accumulated depreciation |                                                                                                  |   | 1,706,624   |            |              |   | 1,459,027  |           
|                              |                                                                                                  |   |             |            |              |   |            |           
|                              |                                                                                                  |   | 4,225,088   |            |              |   | 4,242,812  |           
|Intangible Assets             |                                                                                                  |   |             |            |              |   |            |           
|                              | Definite-lived intangibles, net                                                                  |   |             | 719,199    |              |   |            | 761,728    | 
|                              | Indefinite-lived intangibles  licenses                                                          |   |             | 11,767,173 |              |   |            | 11,738,947 | 
|                              | Indefinite-lived intangibles  other                                                             |   |             | 428,123    |              |   |            | 389,801    | 
|                              | Goodwill                                                                                         |   |             | 7,265,481  |              |   |            | 7,241,231  | 
|                              |                                                                                                  |   |             |            |              |   |            |            | 
|Other Assets                  |                                                                                                  |   |             |            |              |   |            |           
|                              | Notes receivable                                                                                 |   |             | 19,216     |              |   |            | 21,658     | 
|                              | Investments in, and advances to, nonconsolidated affiliates                                      |   |             | 530,042    |              |   |            | 542,214    | 
|                              | Other assets                                                                                     |   |             | 511,475    |              |   |            | 520,423    | 
|                              | Other investments                                                                                |   |             | 196,409    |              |   |            | 89,844     | 
|                              |                                                                                                  |   |             |            |              |   |            |           
|Total Assets                  |                                                                                                  | $ | 27,978,582  |            |              | $ | 27,672,153 |           
|                              |                                                                                                  |   |             |            |              |   |            |           

See Notes to Consolidated Financial Statements

-3-



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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS EQUITY
(In thousands)

|                                           |                                               |   |             |             |              |   |            |             |  
|------------------------------------------ | --------------------------------------------- | - | ----------- | ----------- | ------------ | - | ---------- | ----------- | -
|                                           |                                               |   | June 30,    |             | December 31,
|                                           |                                               |   | 2003        |             | 2002        
|                                           |                                               |   | (Unaudited) |             | (Audited)   
|                                           |                                               |   |             |             |             
|Current Liabilities                        |                                               |   |             |             |              |   |            |            
|                                           | Accounts payable                              |   | $           | 368,052     |              |   | $          | 345,093     |  
|                                           | Accrued interest                              |   |             | 120,220     |              |   |            | 71,335      |  
|                                           | Accrued expenses                              |   |             | 816,636     |              |   |            | 894,166     |  
|                                           | Accrued income taxes                          |   |             | 13,836      |              |   |            |            |  
|                                           | Current portion of long-term debt             |   |             | 898,511     |              |   |            | 1,396,532   |  
|                                           | Deferred income                               |   |             | 579,290     |              |   |            | 277,042     |  
|                                           | Other current liabilities                     |   |             | 16,039      |              |   |            | 26,471      |  
|                                           |                                               |   |             |             |              |   |            |            
|Total Current Liabilities                  |                                               |   | 2,812,584   |             |              |   | 3,010,639  |            
|                                           |                                               |   |             |             |              |   |            |             |  
|Long-term debt                             |                                               |   | 7,075,390   |             |              |   | 7,382,090  |            
|Other long-term borrowings                 |                                               |   | 149,846     |             |              |   | 64,114     |            
|Deferred income taxes                      |                                               |   | 2,677,534   |             |              |   | 2,470,458  |            
|Other long-term liabilities                |                                               |   | 537,830     |             |              |   | 488,687    |            
|                                           |                                               |   |             |             |              |   |            |             |  
|Minority interest                          |                                               |   | 52,009      |             |              |   | 46,073     |            
|                                           |                                               |   |             |             |              |   |            |             |  
|Shareholders Equity                       |                                               |   |             |             |              |   |            |            
|                                           | Common stock                                  |   |             | 61,524      |              |   |            | 61,340      |  
|                                           | Additional paid-in capital                    |   |             | 30,915,272  |              |   |            | 30,868,725  |  
|                                           | Accumulated deficit                           |   |             | (16,330,443 | )            |   |            | (16,652,789 | )
|                                           | Accumulated other comprehensive income (loss) |   |             | 49,663      |              |   |            | (47,798     | )
|                                           | Other                                         |   |             | (1,425      | )            |   |            | (3,131      | )
|                                           | Cost of shares held in treasury               |   |             | (21,202     | )            |   |            | (16,255     | )
|                                           |                                               |   |             |             |              |   |            |            
|Total Shareholders Equity                 |                                               |   | 14,673,389  |             |              |   | 14,210,092 |            
|                                           |                                               |   |             |             |              |   |            |            
|Total Liabilities and Shareholders Equity |                                               | $ | 27,978,582  |             |              | $ | 27,672,153 |            
|                                           |                                               |   |             |             |              |   |            |            

See Notes to Consolidated Financial Statements

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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands of dollars, except per share data)

|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |           |         |  
|------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | --------- | ------------------------- | ------ | --------------------------- | ----------- | --------- | ------- | ---- | --------- | --------- | ------ | - | --------- | --------- | ------- | -
|                                                                                     |                                                                                                                                                                                    |                                                                              |           | Six Months Ended June 30, |        | Three Months Ended June 30,
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                            
|                                                                                     |                                                                                                                                                                                    |                                                                              |           | 2003                      |        | 2002                        |             | 2003      |         | 2002
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |     
|Revenue                                                                              |                                                                                                                                                                                    | $                                                                            | 4,096,692 |                           |        | $                           | 3,870,897   |           |         | $    | 2,317,249 |           |        | $ | 2,172,910 |          
|Operating expenses:                                                                  |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|                                                                                     | Divisional operating expenses (excludes non-cash compensation
expenses of $1,016, $2,777, $500 and $1,317 for the six and
three months ended June 30, 2003 and 2002, respectively) |                                                                              |           | 3,002,980                 |        |                             |             | 2,795,378 |         |      |           | 1,641,905 |        |   |           | 1,506,401 |        
|                                                                                     | Non-cash compensation expense                                                                                                                                                      |                                                                              |           | 2,578                     |        |                             |             | 3,283     |         |      |           | 1,779     |        |   |           | 1,445     |        
|                                                                                     | Depreciation and amortization                                                                                                                                                      |                                                                              |           | 321,442                   |        |                             |             | 288,679   |         |      |           | 161,880   |        |   |           | 146,261   |        
|                                                                                     | Corporate expenses (excludes non-cash compensation expenses of
$1,562, $506, $1,279 and $128 for the six and three months
ended June 30, 2003 and 2002, respectively)              |                                                                              |           | 85,238                    |        |                             |             | 78,172    |         |      |           | 42,459    |        |   |           | 39,203    |        
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|Operating income                                                                     |                                                                                                                                                                                    |                                                                              | 684,454   |                           |        |                             | 705,385     |           |         |      | 469,226   |           |        |   | 479,600   |          
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |           |         |  
|Interest expense                                                                     |                                                                                                                                                                                    |                                                                              | 196,263   |                           |        |                             | 218,717     |           |         |      | 95,311    |           |        |   | 108,350   |          
|Gain (loss) on sale of assets related to mergers                                     |                                                                                                                                                                                    |                                                                              |          |                           |        |                             | 3,991       |           |         |      |          |           |        |   |          |          
|Gain (loss) on marketable securities                                                 |                                                                                                                                                                                    |                                                                              | 5,373     |                           |        |                             | 8,901       |           |         |      | 2,581     |           |        |   | 5,917     |          
|Equity in earnings of nonconsolidated affiliates                                     |                                                                                                                                                                                    |                                                                              | 9,048     |                           |        |                             | 10,713      |           |         |      | 6,713     |           |        |   | 7,500     |          
|Other income (expense)  net                                                         |                                                                                                                                                                                    |                                                                              | 39,144    |                           |        |                             | 41,601      |           |         |      | 39,142    |           |        |   | 15,394    |          
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|Income before income taxes and cumulative effect of a change in
accounting principle |                                                                                                                                                                                    |                                                                              | 541,756   |                           |        |                             | 551,874     |           |         |      | 422,351   |           |        |   | 400,061   |          
|Income tax (expense) benefit:                                                        |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|                                                                                     | Current                                                                                                                                                                            |                                                                              |           | (40,326                   | )      |                             |             | (205,758  | )       |      |           | (58,321   | )      |   |           | (212,351  | )      
|                                                                                     | Deferred                                                                                                                                                                           |                                                                              |           | (179,084                  | )      |                             |             | (17,751   | )       |      |           | (112,730  | )      |   |           | 50,326    |        
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|Income before cumulative effect of a change in accounting principle                  |                                                                                                                                                                                    |                                                                              | 322,346   |                           |        |                             | 328,365     |           |         |      | 251,300   |           |        |   | 238,036   |          
|Cumulative effect of a change in accounting principle, net of tax
of $4,324,446      |                                                                                                                                                                                    |                                                                              |          |                           |        |                             | (16,778,526 | )         |         |      |          |           |        |   |          |          
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|Net income (loss)                                                                    |                                                                                                                                                                                    |                                                                              | 322,346   |                           |        |                             | (16,450,161 | )         |         |      | 251,300   |           |        |   | 238,036   |          
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |           |         |  
|Other comprehensive income (loss), net of tax:                                       |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|                                                                                     | Foreign currency translation adjustments                                                                                                                                           |                                                                              |           | 33,981                    |        |                             |             | (6,507    | )       |      |           | 26,774    |        |   |           | 5,755     |        
|                                                                                     | Unrealized gain (loss) on securities:                                                                                                                                              |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |           |        
|                                                                                     |                                                                                                                                                                                    | Unrealized holding gain (loss)                                               |           |                           | 65,349 |                             |             |           | (78,228 | )    |           |           | 40,312 |   |           |           | (41,107 | )
|                                                                                     |                                                                                                                                                                                    | Reclassification adjustment for gains on shares held prior
to mergers        |           |                           |       |                             |             |           | (3,982  | )    |           |           |       |   |           |           | (3,982  | )
|                                                                                     |                                                                                                                                                                                    | Reclassification adjustment for (gains) losses included in
net income (loss) |           |                           | (1,869 | )                           |             |           | (2,475  | )    |           |           | (146   | ) |           |           |        |  
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|Comprehensive income (loss)                                                          |                                                                                                                                                                                    | $                                                                            | 419,807   |                           |        | $                           | (16,541,353 | )         |         | $    | 318,240   |           |        | $ | 198,702   |          
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|Per common share:                                                                    |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|                                                                                     | Income (loss) before cumulative effect of a change in
accounting principle  Basic                                                                                                 |                                                                              | $         | .53                       |        |                             | $           | .55       |         |      | $         | .41       |        |   | $         | .40       |        
|                                                                                     | Cumulative effect of a change in accounting principle  Basic                                                                                                                      |                                                                              |           |                          |        |                             |             | (27.92    | )       |      |           |          |        |   |           |          |        
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|                                                                                     | Net income (loss)  Basic                                                                                                                                                          |                                                                              | $         | .53                       |        |                             | $           | (27.37    | )       |      | $         | .41       |        |   | $         | .40       |        
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|                                                                                     | Income (loss) before cumulative effect of a change in
accounting principle  Diluted                                                                                               |                                                                              | $         | .52                       |        |                             | $           | .54       |         |      | $         | .41       |        |   | $         | .39       |        
|                                                                                     | Cumulative effect of a change in accounting principle  Diluted                                                                                                                    |                                                                              |           |                          |        |                             |             | (26.86    | )       |      |           |          |        |   |           |          |        
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          
|                                                                                     | Net income (loss)  Diluted                                                                                                                                                        |                                                                              | $         | .52                       |        |                             | $           | (26.32    | )       |      | $         | .41       |        |   | $         | .39       |        
|                                                                                     |                                                                                                                                                                                    |                                                                              |           |                           |        |                             |             |           |         |      |           |           |        |   |           |          

See Notes to Consolidated Financial Statements

-5-



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##### Table of Contents






CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands of dollars)

|                                                    |                                                                                        |   |                           |            |      |   |          |             |  
|--------------------------------------------------- | -------------------------------------------------------------------------------------- | - | ------------------------- | ---------- | ---- | - | -------- | ----------- | -
|                                                    |                                                                                        |   | Six Months Ended June 30,
|                                                    |                                                                                        |   |                          
|                                                    |                                                                                        |   | 2003                      |            | 2002
|                                                    |                                                                                        |   |                           |            |     
|Cash Flows from operating activities:               |                                                                                        |   |                           |            |      |   |          |            
|                                                    | Net income (loss)                                                                      |   | $                         | 322,346    |      |   | $        | (16,450,161 | )
|                                                    |                                                                                        |   |                           |            |      |   |          |             |  
|Reconciling Items:                                  |                                                                                        |   |                           |            |      |   |          |            
|                                                    | Cumulative effect of a change in accounting principle, net of tax                      |   |                           |           |      |   |          | 16,778,526  |  
|                                                    | Depreciation and amortization                                                          |   |                           | 321,442    |      |   |          | 288,679     |  
|                                                    | Deferred taxes                                                                         |   |                           | 179,084    |      |   |          | 17,751      |  
|                                                    | (Gain) loss on disposal of assets                                                      |   |                           | (5,317     | )    |   |          | (21,648     | )
|                                                    | (Gain) loss on sale of assets related to mergers                                       |   |                           |           |      |   |          | (3,991      | )
|                                                    | (Gain) loss on sale of other investments                                               |   |                           | (3,840     | )    |   |          |            |  
|                                                    | (Gain) loss forward exchange contract                                                  |   |                           | 9,163      |      |   |          | (21,005     | )
|                                                    | (Gain) loss on trading securities                                                      |   |                           | (10,696    | )    |   |          | 12,103      |  
|                                                    | Increase (decrease) other, net                                                         |   |                           | (45,431    | )    |   |          | (14,227     | )
|                                                    | Changes in other operating assets and liabilities, net of
effects of acquisitions      |   |                           | 176,987    |      |   |          | 263,806     |  
|                                                    |                                                                                        |   |                           |            |      |   |          |            
|Net cash provided by operating activities           |                                                                                        |   | 943,738                   |            |      |   | 849,833  |            
|                                                    |                                                                                        |   |                           |            |      |   |          |             |  
|Cash flows from investing activities:               |                                                                                        |   |                           |            |      |   |          |            
|                                                    | (Investment in) liquidation of restricted cash, net                                    |   |                           |           |      |   |          | (10,408     | )
|                                                    | Cash acquired in stock-for-stock mergers                                               |   |                           |           |      |   |          | 4,305       |  
|                                                    | Decrease (increase) in notes receivable  net                                          |   |                           | 2,442      |      |   |          | 2,997       |  
|                                                    | Decrease (increase) in investments in and advances to
nonconsolidated affiliates  net |   |                           | 7,249      |      |   |          | (2,210      | )
|                                                    | Purchases of investments                                                               |   |                           | (4,734     | )    |   |          | (250        | )
|                                                    | Proceeds from sale of investments                                                      |   |                           | 10,940     |      |   |          | 15,180      |  
|                                                    | Purchases of property, plant and equipment                                             |   |                           | (140,279   | )    |   |          | (229,909    | )
|                                                    | Proceeds from disposal of assets                                                       |   |                           | 8,164      |      |   |          | 49,324      |  
|                                                    | Proceeds from divestitures placed in restricted cash                                   |   |                           |           |      |   |          | 25,303      |  
|                                                    | Acquisition of operating assets                                                        |   |                           | (44,843    | )    |   |          | (93,810     | )
|                                                    | Acquisition of operating assets with restricted cash                                   |   |                           |           |      |   |          | (13,941     | )
|                                                    | Decrease (increase) in other-net                                                       |   |                           | (36,839    | )    |   |          | (29,922     | )
|                                                    |                                                                                        |   |                           |            |      |   |          |            
|Net cash (used in) provided by investing activities |                                                                                        |   | (197,900                  | )          |      |   | (283,341 | )          
|                                                    |                                                                                        |   |                           |            |      |   |          |             |  
|Cash flows from financing activities:               |                                                                                        |   |                           |            |      |   |          |            
|                                                    | Draws on credit facilities                                                             |   |                           | 1,567,734  |      |   |          | 724,297     |  
|                                                    | Payments on credit facilities                                                          |   |                           | (3,088,814 | )    |   |          | (922,482    | )
|                                                    | Proceeds from long-term debt                                                           |   |                           | 1,997,817  |      |   |          |            |  
|                                                    | Payments on long-term debt                                                             |   |                           | (1,310,753 | )    |   |          | (409,098    | )
|                                                    | Proceeds from forward exchange contract                                                |   |                           | 83,519     |      |   |          |            |  
|                                                    | Proceeds from exercise of stock options, stock purchase plan and
common stock warrants |   |                           | 30,201     |      |   |          | 59,223      |  
|                                                    |                                                                                        |   |                           |            |      |   |          |            
|Net cash (used in) provided by financing activities |                                                                                        |   | (720,296                  | )          |      |   | (548,060 | )          
|Net increase in cash and cash equivalents           |                                                                                        |   | 25,542                    |            |      |   | 18,432   |            
|Cash and cash equivalents at beginning of period    |                                                                                        |   | 170,086                   |            |      |   | 154,744  |            
|                                                    |                                                                                        |   |                           |            |      |   |          |            
|Cash and cash equivalents at end of period          |                                                                                        | $ | 195,628                   |            |      | $ | 173,176  |            
|                                                    |                                                                                        |   |                           |            |      |   |          |            

See Notes to Consolidated Financial Statements

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CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Preparation of Interim Financial Statements

The consolidated financial statements have been prepared by Clear Channel
Communications, Inc. (the Company) pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and, in the opinion of
management, include all adjustments (consisting of normal recurring accruals
and adjustments necessary for adoption of new accounting standards) necessary
to present fairly the results of the interim periods shown. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles in the United States have been condensed or omitted pursuant to
such SEC rules and regulations. Management believes that the disclosures
made are adequate to make the information presented not misleading. Due to
seasonality and other factors, the results for the interim periods are not
necessarily indicative of results for the full year. The financial
statements contained herein should be read in conjunction with the
consolidated financial statements and notes thereto included in the Companys
2002 Annual Report on Form 10-K.

The consolidated financial statements include the accounts of the Company and
its subsidiaries, the majority of which are wholly-owned. Investments in
companies in which the Company owns 20 percent to 50 percent of the voting
common stock or otherwise exercises significant influence over operating and
financial policies of the company are accounted for under the equity method.
All significant intercompany transactions are eliminated in the consolidation
process. Certain reclassifications have been made to the 2002 consolidated
financial statements to conform to the 2003 presentation.

Stock-Based Compensation

The Company accounts for its stock-based award plans in accordance with
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations, under which compensation
expense is recorded to the extent that the market price on the grant date of
the underlying stock exceeds the exercise price. The required pro forma net
income and pro forma earnings per share as if the stock-based awards had been
accounted for using the provisions of Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensationare as follows:

|                                                                                         |                                                  |                           |   |                             |     |      |   |         |     |  |   |         |     |  |   |         |     | 
|---------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------- | - | --------------------------- | --- | ---- | - | ------- | --- |  | - | ------- | --- |  | - | ------- | --- | 
|(In thousands, except per share data)                                                    |                                                  | Six Months Ended June 30, |   | Three Months Ended June 30,
|                                                                                         |                                                  |                           |   |                            
|                                                                                         |                                                  | 2003                      |   | 2002                        |     | 2003 |   | 2002   
|                                                                                         |                                                  |                           |   |                             |     |      |   |        
|Net income before cumulative effect of a change in
accounting principle                  |                                                  |                           |   |                             |     |      |   |         |     |  |   |         |     |  |   |        
|                                                                                         | Reported                                         |                           | $ | 322,346                     |     |      | $ | 328,365 |     |  | $ | 251,300 |     |  | $ | 238,036 |    
|                                                                                         | Pro forma stock compensation expense, net of tax |                           |   | (23,966                     | )   |      |   | (26,205 | )   |  |   | (11,729 | )   |  |   | (12,948 | )  
|                                                                                         |                                                  |                           |   |                             |     |      |   |         |     |  |   |         |     |  |   |        
|                                                                                         | Pro Forma                                        |                           | $ | 298,380                     |     |      | $ | 302,160 |     |  | $ | 239,571 |     |  | $ | 225,088 |    
|                                                                                         |                                                  |                           |   |                             |     |      |   |         |     |  |   |         |     |  |   |        
|Net income before cumulative effect of a change in
accounting principle per common share |                                                  |                           |   |                             |     |      |   |         |     |  |   |         |     |  |   |        
|                                                                                         | Basic:                                           |                           |   |                             |     |      |   |         |     |  |   |         |     |  |   |         |    
|                                                                                         |                                                  | Reported                  |   | $                           | .53 |      |   | $       | .55 |  |   | $       | .41 |  |   | $       | .40 | 
|                                                                                         |                                                  | Pro Forma                 |   | $                           | .49 |      |   | $       | .50 |  |   | $       | .39 |  |   | $       | .37 | 
|                                                                                         | Diluted:                                         |                           |   |                             |     |      |   |         |     |  |   |         |     |  |   |         |    
|                                                                                         |                                                  | Reported                  |   | $                           | .52 |      |   | $       | .54 |  |   | $       | .41 |  |   | $       | .39 | 
|                                                                                         |                                                  | Pro Forma                 |   | $                           | .48 |      |   | $       | .49 |  |   | $       | .39 |  |   | $       | .37 | 

The fair value for these options was estimated at the date of grant using a
Black-Scholes option-pricing model with the following weighted average
assumptions for 2003 and 2002:

|                        |  |      |              |      |  |  |              |  
|----------------------- |  | ---- | ------------ | ---- |  |  | ------------ | -
|                        |  | 2003 |              | 2002
|                        |  |      |              |     
|Risk-free interest rate |  |      | 2.91%  3.76 | %    |  |  | 2.85%  5.33 | %
|Dividend yield          |  |      | 0            | %    |  |  | 0            | %
|Volatility factors      |  |      | 43%  47     | %    |  |  | 36% - 49     | %
|Expected life in years  |  |      | 5.0  7.5    |      |  |  | 3.5  7.5    |  

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Recent Accounting Pronouncements

On January 1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 143, Accounting for Asset Retirement Obligations(Statement
143). Statement 143 applies to legal obligations associated with the
retirement of long-lived assets that result from acquisition, construction,
development and/or the normal operation of a long-lived asset. Adoption of
this statement did not materially impact the Companys financial position or
results of operations.

On January 1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 146, Accounting for Costs Associated with Exit or Disposal
Activities(Statement 146). Statement 146 addresses the accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition
for Certain Employee Terminations Benefits and Other Costs to Exit an
Activity. It also substantially nullifies EITF Issue No. 88-10, Costs
Associated with Lease Modification or Termination. Adoption of this
statement did not materially impact the Companys financial position or
results of operations.

On January 1, 2003, the Company adopted Financial Accounting Standards Board
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others(FIN
45). FIN 45 applies to contracts or indemnification agreements that
contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying that is related to an asset, liability, or
an equity security of the guaranteed party. FIN 45s disclosure requirements
were effective for financial statements of interim or annual periods ending
after December 15, 2002. FIN 45s initial recognition and initial
measurement provisions were applicable on a prospective basis to guarantees
issued or modified after December 31, 2002, irrespective of the guarantors
fiscal year-end. The Company adopted the disclosure requirements of this
Interpretation for its 2002 annual report. Adoption of the initial
recognition and initial measurement requirements of FIN 45 did not materially
impact the Companys financial position or results of operations.

On January 1, 2003, the Financial Accounting Standards Board issued Financial
Accounting Standards Board Interpretation No. 46, Consolidation of Variable
Interest Entities(FIN 46). FIN 46 addresses consolidation of business
enterprises of variable interest entities. FIN 46 is effective immediately for
all variable interest entities created after January 31, 2003 and for the first
fiscal year or interim period beginning after June 15, 2003 for variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. The Company has not acquired any variable
interest entities subsequent to January 31, 2003 and will therefore adopt FIN
46 for its quarterly report for the period ending September 30, 2003. The
Company has certain investments, accounted for under the equity method, that
include a put and call structure that guarantees a minimum return to the
counter party. The Company also has certain long-term contracts related to the
programming and/or sale of advertising air time for radio stations that it does
not own. The Company is currently evaluating the applicability of FIN 46 to
these arrangements, as well as other equity investments and arrangements, and
the possible impact on its future consolidated results of operation and
consolidated balance sheet.

Note 2: INTANGIBLE ASSETS AND GOODWILL

Definite-lived Intangibles
The Companys definite-lived intangible assets consist primarily of transit
and street furniture contracts and other contractual rights in the outdoor
segment, talent contracts in the radio segment, and in the Companys other
segment, representation contracts for non-affiliated television and radio
stations, all of which are amortized over the respective lives of the
agreements. Other definite-lived intangible assets are amortized over the
period of time the assets are expected to contribute directly or indirectly
to the Companys future cash flows. The following table presents the gross
carrying amount and accumulated amortization for each major class of
definite-lived intangible asset at June 30, 2003 and December 31, 2002:

|                                                                |       |               |         |                   |  |          |         |              |  |   |         |           |  |   |         |         | 
|--------------------------------------------------------------- | ----- | ------------- | ------- | ----------------- |  | -------- | ------- | ------------ |  | - | ------- | --------- |  | - | ------- | ------- | 
|(In thousands)                                                  |       | June 30, 2003 |         | December 31, 2002
|                                                                |       |               |         |                  
|                                                                |       | Gross         |         |                   |  |          |         | Gross        |  |   |         |          
|                                                                |       | Carrying      |         | Accumulated       |  | Carrying |         | Accumulated 
|                                                                |       | Amount        |         | Amortization      |  | Amount   |         | Amortization
|                                                                |       |               |         |                   |  |          |         |             
|Transit, street
furniture, and other
outdoor contractual rights |       | $             | 629,915 |                   |  | $        | 263,803 |              |  | $ | 600,221 |           |  | $ | 228,037 |        
|Talent contracts                                                |       |               | 202,161 |                   |  |          | 117,471 |              |  |   | 212,326 |           |  |   | 112,259 |        
|Representation contracts                                        |       |               | 200,164 |                   |  |          | 49,196  |              |  |   | 197,636 |           |  |   | 37,846  |        
|Other                                                           |       |               | 214,470 |                   |  |          | 97,041  |              |  |   | 219,410 |           |  |   | 89,723  |        
|                                                                |       |               |         |                   |  |          |         |              |  |   |         |           |  |   |         |        
|                                                                | Total |               | $       | 1,246,710         |  |          | $       | 527,511      |  |   | $       | 1,229,593 |  |   | $       | 467,865 | 
|                                                                |       |               |         |                   |  |          |         |              |  |   |         |           |  |   |         |        

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Total amortization expense from definite-lived intangible assets for the three
and six months ended June 30, 2003 and for the year ended December 31, 2002 was
$35.0 million, $69.9 million and $137.1 million, respectively. The following
table presents the Companys estimate of amortization expense for each of the
five succeeding fiscal years for definite-lived intangible assets:

|               |  |   |         | 
|-------------- |  | - | ------- | 
|(In thousands) |  |   |         | 
|2004           |  | $ | 121,998 | 
|2005           |  |   | 107,946 | 
|2006           |  |   | 87,569  | 
|2007           |  |   | 61,554  | 
|2008           |  |   | 52,045  | 

As acquisitions and disposition occur in the future and as purchase price
allocations are finalized, amortization expense may vary.

Indefinite-lived Intangibles
In accordance with Statement of Financial Accounting Standards Statement No.
142 (Statement 142), the Company tested its FCC licenses and billboard
permits for impairment as of January 1, 2002 by comparing their fair value to
their carrying value at that date. The test resulted in no impairment to the
Companys billboard permits. However, the Company recognized impairment on
its FCC licenses of approximately $6.0 billion, net of deferred tax of $3.7
billion, which was recorded as a component of the cumulative effect of a
change in accounting principle during the three months ended March 31, 2002.
The Company used the income approach to value FCC licenses, which involved
estimating future cash flows expected to be generated from the licenses,
discounted to their present value using a risk-adjusted discount rate.
Terminal values were also estimated and discounted to their present value.
In estimating future cash flows, the Company took into account the economic
slow down in the radio industry at the end of 2001, coupled with the economic
impact of the events of September 11th.

Goodwill
Statement 142 requires the Company to test goodwill for impairment using a
two-step process. The first step is a screen for potential impairment, while
the second step measures the amount of impairment. The Company completed the
two-step impairment test during the first quarter of 2002. As a result of
this test, the Company recognized impairment of approximately $10.8 billion,
net of deferred taxes of $659.1 million related to tax deductible goodwill,
as a component of the cumulative effect of a change in accounting principle
during the three months ended March 31, 2002. Consistent with the Companys
approach to fair valuing FCC licenses, the income approach was used to
determine the fair value of each of the Companys reporting units.
Throughout 2001, unfavorable economic conditions persisted in the industries
that the Company serves, which caused its customers to reduce the number of
advertising dollars spent on the Companys media inventory and live
entertainment events as compared to prior periods. These conditions
adversely impacted the cash flow projections used to determine the fair value
of each reporting unit, resulting in the write-off of a portion of goodwill.
The following table presents the changes in the carrying amount of goodwill
in each of the Companys reportable segments for the six-month period ended
June 30, 2003:

|                                |  |       |           |         |  |               |         |       |  |       |         |   |  |   |        |  |  |   |           |  
|------------------------------- |  | ----- | --------- | ------- |  | ------------- | ------- | ----- |  | ----- | ------- | - |  | - | ------ |  |  | - | --------- | -
|(In thousands)                  |  | Radio |           | Outdoor |  | Entertainment |         | Other |  | Total
|                                |  |       |           |         |  |               |         |       |  |      
|Balance as of December 31, 2002 |  | $     | 6,416,146 |         |  | $             | 640,966 |       |  | $     | 155,377 |   |  | $ | 28,742 |  |  | $ | 7,241,231 |  
|Acquisitions                    |  |       | 686       |         |  |               | 12,693  |       |  |       | 1,704   |   |  |   |       |  |  |   | 15,083    |  
|Foreign currency                |  |       |          |         |  |               | 17,598  |       |  |       | 3,300   |   |  |   |       |  |  |   | 20,898    |  
|Adjustments                     |  |       | (14       | )       |  |               | 6,891   |       |  |       | (18,608 | ) |  |   |       |  |  |   | (11,731   | )
|                                |  |       |           |         |  |               |         |       |  |       |         |   |  |   |        |  |  |   |           |  
|Balance as of June 30, 2003     |  | $     | 6,416,818 |         |  | $             | 678,148 |       |  | $     | 141,773 |   |  | $ | 28,742 |  |  | $ | 7,265,481 |  
|                                |  |       |           |         |  |               |         |       |  |       |         |   |  |   |        |  |  |   |           |  

Note 3: SECURED FORWARD EXCHANGE CONTRACT

On June 5, 2003, Clear Channel Investments, Inc., a wholly owned subsidiary of
the Company, entered into a five year secured forward exchange contract (the
contract) with respect to 8.3 million shares of the Companys investment in XM Satellite
Radio Holdings, Inc. (XMSR). Under the terms of the contract, the
counter-party paid the Company $83.5 million at inception of the contract,
which the Company classified in Other long-term borrowings. The contract has
a maturity value of $98.8 million, with an effective interest rate of 3.4%,
which the Company will accrete over the life of the contract using the
effective interest method.

Upon maturity of the contract, the Company is obligated to deliver to the
counter-party cash or a number of shares of XMSR equal to the cash payment, but
no more than 8.3 million XMSR shares. The Company hedged its cash flow
exposure of the forecasted sale of the XMSR shares by purchasing a put option
and selling the counter-party a call option (the collar) on the XMSR shares.
The net

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cost of the collar was $.5 million, which the Company classified in other
long-term assets. The collar effectively limits the Companys cash flow
exposure upon the forecasted sale of XMSR shares to the counter-party from
$11.86 to $15.58 per XMSR share.

During the term of the contract, the Company retains ownership of the XMSR
shares. The Companys obligation under the contract is collateralized by a
security interest in the XMSR shares.

The collar meets the requirements of Statement 133 Implementation Issue G20,
Assessing and Measuring the Effectiveness of a Purchased Option Used in a Cash
Flow Hedge. Under this guidance, complete hedging effectiveness is assumed and
the entire change in fair value of the collar is recorded in other
comprehensive income. Annual assessments are required to ensure that the
critical terms of the contract have not changed. As of June 30, 2003, the fair
value of the collar was $5.1 million, and $2.9 million was recorded in other
comprehensive income, net of tax, related to the change in fair value of the
collar for the three and six months ended June 30, 2003.

Also included in Other long-term borrowings is the Companys obligation under
its secured forward exchange contracts on its investment in American Tower
Corporation (AMT). In 2001, the Company entered into two ten-year secured
forward exchange contracts that monetized 2.9 million shares of the Companys
investment in AMT. The AMT contracts had a value of $66.1 million and $64.1
million at June 30, 2003 and December 31, 2002, respectively.

Note 4: RECENT DEVELOPMENTS

Pending Hispanic Broadcasting Merger with Univision

On June 12, 2002, Univision Communications, Inc. (Univision), a Spanish
language television group, announced that it would acquire Hispanic
Broadcasting Corporation (Hispanic), in a stock for stock merger. Pursuant
to the terms of the merger agreement, each share of Hispanic will be
exchanged for .85 shares of Univision. As the Company currently owns 26% of
Hispanic, it accounts for this investment using the equity method of
accounting. Once this merger is completed, the Company will own less than
20% of the combined company. As a result, it will no longer account for this
investment using the equity method of accounting, but instead will account
for this investment as a cost investment. Upon the consummation of this
merger, the Company will carry this investment at its fair market value.
Assuming a market price of $31.00 per Univision share on the date of this
merger, the Company would record a pre-tax gain of approximately $575
million. The merger is subject to approval by the FCC.

Recent Legal Proceedings

At the Senate Judiciary Committee hearing on July 24, 2003, the Assistant
United States Attorney General announced that the Department of Justice (the
DOJ), is pursuing two separate antitrust inquiries concerning the Company.
One inquiry is whether the Company has violated antitrust laws in one of its
radio markets. The other is whether Company has limited airplay of artists who
do not use its concert services in violation of antitrust laws. The Company is
cooperating fully with all DOJ requests.

The Company is among the defendants in a lawsuit filed on June 12, 2002 in
the United States District Court for the Southern District of Florida by
Spanish Broadcasting System. The plaintiffs allege that the Company is in
violation of Section One and Section Two of the Sherman Antitrust Act as well
as various other claims, such as unfair trade practices and defamation, among
other counts. This case was dismissed with prejudice on January 31, 2003.
The plaintiffs filed with the court for reconsideration. On
August 6, 2003, the court denied the plaintiffs motion for
reconsideration and therefore, this case is concluded in the District
Court.

Note 5: RESTRUCTURING

As a result of the Companys merger with The Ackerley Group, Inc.
(Ackerley) in June 2002, the Company recorded a $40.0 million accrual
related to the restructuring of Ackerleys operations. Of the $40.0 million,
$19.0 million is related to severance and $21.0 million is related to lease
terminations. The Ackerley corporate office closed in July 2002. Also, in
connection with the Companys mergers in 2000 with SFX and AMFM, the Company
restructured the SFX and AMFM operations. The AMFM corporate offices in
Dallas and Austin, Texas were closed on March 31, 2001 and a portion of the
SFX corporate office in New York was closed on June 30, 2001. Other
operations of AMFM have either been discontinued or integrated into existing
similar operations. As of June 30, 2003, the restructuring has resulted in
the actual termination of approximately 780 employees and the pending
termination of approximately 20 more employees. The Company has recorded a
liability in purchase accounting for Ackerley, SFX and AMFM, primarily
related to severance for terminated employees and lease terminations as
follows:

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|                                                          |                                                                         |                  |        |                   |   |   |        |         |  
|--------------------------------------------------------- | ----------------------------------------------------------------------- | ---------------- | ------ | ----------------- | - | - | ------ | ------- | -
|(In thousands)                                            |                                                                         | Six Months Ended |        | Year ended       
|                                                          |                                                                         | June 30, 2003    |        | December 31, 2002
|                                                          |                                                                         |                  |        |                   |  
|Severance and lease termination costs:                    |                                                                         |                  |        |                   |   |   |        |        
|                                                          | Accrual at January 1                                                    |                  | $      | 73,573            |   |   | $      | 53,182  |  
|                                                          | Estimated costs charged to restructuring
accrual in purchase accounting |                  |        |                  |   |   |        | 40,043  |  
|                                                          | Adjustments to restructuring accrual                                    |                  |        |                  |   |   |        | (4,162  | )
|                                                          | Payments charged against restructuring accrual                          |                  |        | (13,705           | ) |   |        | (15,490 | )
|                                                          |                                                                         |                  |        |                   |   |   |        |        
|Ending balance of severance and lease
termination accrual |                                                                         | $                | 59,868 |                   |   | $ | 73,573 |        
|                                                          |                                                                         |                  |        |                   |   |   |        |        

The remaining severance and lease accrual is comprised of $40.6 million of
severance and $19.3 million of lease termination. The severance accrual
includes amounts that will be paid over the next several years related to
deferred payments to former employees as well as other compensation. The
lease termination accrual will be paid over the next five years. During the
six months ended June 30, 2003, $4.2 million was paid and charged to the
restructuring reserve related to severance. The purchase price allocation
related to the Ackerley merger was finalized during the second quarter of
2003. All adjustments have been, and any future potential excess reserves
will be, recorded as an adjustment to the purchase price.

In addition to the restructuring described above, the Companys international
outdoor business restructured its France operations. As a result, during the
three months ended June 30, 2003, the Company recorded an $11.0 million
accrual in divisional operating expenses. Of the $11.0 million, $10.6
million is related to severance and $.4 million is related to consulting
costs. As of June 30, 2003, this accrual balance was $11.0 million. To
date, the restructuring has resulted in the actual or pending termination of
approximately 150 employees.

Note 6: CAPITAL MARKET TRANSACTIONS

On January 9, 2003, the Company completed a debt offering of $300.0 million
4.625% notes due January 15, 2008 and $500.0 million 5.75% notes due January
15, 2013. Interest is payable on January 15 and July 15 on both series of
notes. The aggregate net proceeds of approximately $791.2 million were used
to repay borrowings outstanding under the Companys bank credit facilities
and to finance the redemption of AMFM Operating, Inc.s outstanding 8.125%
senior subordinated notes due in 2007 and 8.75% senior subordinated notes due
in 2007.

On February 10, 2003, the Company redeemed all of AMFM Operating Inc.s
outstanding 8.125% senior subordinated notes due 2007, originally issued by
Chancellor Media Corporation of Los Angeles, for $379.2 million plus accrued
interest. On February 18, 2003, the Company redeemed all of AMFM Operating
Inc.s outstanding 8.75% senior subordinated notes due 2007, originally
issued by Chancellor Radio Broadcasting Company, for $193.4 million plus
accrued interest. These notes were redeemed pursuant to call provisions in
the indentures governing the notes.

On March 17, 2003, the Company completed a debt offering of $200.0 million
4.625% notes due January 15, 2008. Interest is payable on January 15 and
July 15. The aggregate net proceeds of approximately $203.4 million were
used to repay borrowings outstanding under its bank credit facilities and to
finance the redemption of all of the Companys 4.75% LYONs due 2008. As a
result of the redemption, the Company recognized a non-cash gain on the
extinguishment of debt of $41.3 million during the second quarter of 2003,
recorded in Other income (expense)  net.

On May 1, 2003, the Company completed a debt offering of $500.0 million 4.25%
notes due May 15, 2009. Interest is payable on May 15 and November 15. The
aggregate net proceeds of $497.0 million were used to repay borrowings
outstanding on the Companys $1.5 billion three-year term loan. In
conjunction with the issuance, the Company entered into an interest rate swap
agreement with a $500.0 million notional amount that effectively floats
interest at a rate based upon LIBOR.

On May 21, 2003, the Company completed a debt offering of $250.0 million
4.40% notes due May 15, 2011 and $250.0 million 4.90% notes due May 15, 2015.
Interest is payable on May 15 and November 15 on both series of notes. The
aggregate net proceeds of approximately $496.1 million were used to repay
borrowings outstanding on the Companys $1.5 billion three-year term loan.

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Note 7: COMMITMENTS AND CONTINGENCIES

Certain agreements relating to acquisitions provide for purchase price
adjustments and other future contingent payments based on the financial
performance of the acquired companies. The Company will continue to accrue
additional amounts related to such contingent payments if and when it is
determinable that the applicable financial performance targets will be met.
The aggregate of these contingent payments, if performance targets are met,
would not significantly impact the financial position or results of
operations of the Company.

There are various lawsuits and claims pending against the Company. The
Company believes that any ultimate liability resulting from those actions or
claims will not have a material adverse effect on the results of operations,
financial position or liquidity of the Company.

Note 8: GUARANTEES

As of June 30, 2003, the Company guaranteed third party debt of approximately
$85.4 million. The guarantees arose primarily in 2000 in conjunction with
the Company entering into long-term contracts with third parties. The
guarantees will terminate on the earlier of the sale of the underlying assets
or September 2004. The operating assets associated with these contracts
secure the debt that the Company has guaranteed. Only to the extent that the
assets are either sold by the third-party for less than the guaranteed amount
or the third party is unable to service the debt will the Company be required
to make a cash payment under the guarantee. As of June 30, 2003, management
does not believe that it is probable that the Company will be required to
make a payment under these guarantees. Thus, as of June 30, 2003, the
guarantees associated with long-term operating contracts are not recorded on
the Companys financial statements. These guarantees are included in the
Companys calculation of its leverage ratio covenant under the bank credit
facilities. During the six months ended June 30, 2003, the Company did not
enter into any new guarantees of third party debt.

The Company has provided a guarantee under a certain performance contract of
approximately $77.4 million that expires in 2004. As of June 30, 2003, the
remaining amount of the guarantee is $38.7 million. Under this guarantee, if
the amount collected from the third parties that receive the benefit under
the performance contract does not exceed the guarantee amount, the Company
must make payment for the shortfall. During the first six months of 2003,
the Company made payments of $4.0 million under this guarantee. As of June
30, 2003, the Company cannot reasonably estimate whether it will have to make
any future payments under this guarantee for the 2003 and 2004 contract
periods. As such, possible losses on this executory performance contract
will be appropriately recorded in the period that they are incurred. During
the six months ended June 30, 2003, the Company did not enter into any new
performance contracts.

The Company guarantees a $150.0 million five-year revolving credit facility
between its international subsidiary and a group of international banks. The
credit facility expires in 2005. The facility allows for borrowings in
various foreign currencies, which are used to hedge net assets in those
currencies and provides funds to the Companys international operations for
certain working capital needs. At June 30, 2003, the outstanding balance on
the credit facility was $49.1 million. The outstanding balance on the credit
facility is recorded in Long-term debt on the Companys financial
statements.

AMFM Operating Inc., an indirect wholly-owned subsidiary of the Company, has
guaranteed a portion of the Companys bank credit facilities including the
reducing revolving line of credit facility, the $1.5 billion five-year
multi-currency revolving credit facility and the $500.0 million three-year
term loan with outstanding balances at June 30, 2003, of $75.0 million, $1.6
million, and $500.0 million, respectively. At June 30, 2003, the contingent
liability under these guarantees was $1.0 billion. At June 30, 2003, these
outstanding balances are recorded in Long-term debt on the Companys
financial statements.

Within the Companys bank credit facilities agreements are provisions that
require the Company to reimburse lenders for any increased costs that they
may incur in an event of a change in law, rule or regulation resulting in
their reduced returns from any change in capital requirements. In addition
to not being able to estimate the potential amount of any future payment
under this provision, the Company is not able to predict if such event will
ever occur.

The Company currently has guarantees that provide protection to its
international subsidiarys banking institutions related to overdraft lines
and credit card charge-back transactions up to approximately $62.6 million.
As of June 30, 2003, no amounts were outstanding under these agreements.

As of June 30, 2003, the Company has outstanding commercial standby letters
of credit and surety bonds of $114.3 million and $41.5 million, respectively,
that primarily expire in 2003 and 2004. These letters of credit and surety
bonds relate to various

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operational matters including insurance, bid, and performance bonds as well
as other items. These letters of credit reduce the borrowing availability on
the Companys bank credit facilities, and are included in the Companys
calculation of its leverage ratio covenant under the bank credit facilities.
The surety bonds are not considered as borrowings under the Companys bank
credit facilities.

Note 9: OTHER

The results of operations for the six months ended June 30, 2002 only include
the operations of Ackerley as of June 14, 2002, as the Company acquired
Ackerley on June 14, 2002. Unaudited pro forma consolidated results of
operations for the six months ended June 30, 2002, assuming the Ackerley
acquisition had occurred on January 1, 2002 would have been as follows:

(In thousands, except per share data)

|                                                                                               |  |   |             |  
|---------------------------------------------------------------------------------------------- |  | - | ----------- | -
|Revenue                                                                                        |  | $ | 3,950,906   |  
|Income before cumulative effect of a change in
accounting principle                            |  |   | 317,300     |  
|Net loss                                                                                       |  |   | (16,461,226 | )
|Income before cumulative effect of a change in
accounting principle per common share  Basic   |  | $ | .52         |  
|Net loss per common share  Basic                                                              |  | $ | (26.91      | )
|Income before cumulative effect of a change in
accounting principle per common share  Diluted |  | $ | .51         |  
|Net loss per common share  Diluted                                                            |  | $ | (25.89      | )

The pro forma information above is presented in response to applicable
accounting rules relating to business acquisitions and is not necessarily
indicative of the actual results that would have been achieved had the merger
occurred at the beginning of 2002, nor is it indicative of future results of
operations.

Note 10: SEGMENT DATA

The Company has three reportable segments, which it believes best reflects
how the Company is currently managed  radio broadcasting, outdoor
advertising and live entertainment. The category other includes television
broadcasting, sports representation and media representation. Revenue and
expenses earned and charged between segments are recorded at fair value and
eliminated in consolidation.

|                               |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|------------------------------ |  | ------------ | ---------- | ----------- |  | ------------- | --------- | ----- |  | --------- | --------- | ------------ |  | ------------ | --------- |  |  | - | ------- | - |  | - | ------- | - |  | - | ---------- | 
|                               |  | Radio        |            | Outdoor     |  | Live          |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |  
|(In thousands)                 |  | Broadcasting |            | Advertising |  | Entertainment |           | Other |  | Corporate |           | Eliminations |  | Consolidated
|                               |  |              |            |             |  |               |           |       |  |           |           |              |  |             
|Six Months Ended
June 30, 2003 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   | 
|Revenue                        |  | $            | 1,765,599  |             |  | $             | 1,019,702 |       |  | $         | 1,113,802 |              |  | $            | 264,723   |  |  | $ |        |   |  | $ | (67,134 | ) |  | $ | 4,096,692  | 
|Divisional operating
expenses  |  |              | 1,031,992  |             |  |               | 779,043   |       |  |           | 1,040,416 |              |  |              | 218,663   |  |  |   |        |   |  |   | (67,134 | ) |  |   | 3,002,980  | 
|Non-cash compensation          |  |              | 1,016      |             |  |               |          |       |  |           |          |              |  |              |          |  |  |   | 1,562   |   |  |   |        |   |  |   | 2,578      | 
|Depreciation and
amortization  |  |              | 76,076     |             |  |               | 178,437   |       |  |           | 29,745    |              |  |              | 25,076    |  |  |   | 12,108  |   |  |   |        |   |  |   | 321,442    | 
|Corporate expenses             |  |              |           |             |  |               |          |       |  |           |          |              |  |              |          |  |  |   | 85,238  |   |  |   |        |   |  |   | 85,238     | 
|                               |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|Operating income (loss)        |  | $            | 656,515    |             |  | $             | 62,222    |       |  | $         | 43,641    |              |  | $            | 20,984    |  |  | $ | (98,908 | ) |  | $ |        |   |  | $ | 684,454    | 
|                               |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|Identifiable assets            |  | $            | 19,792,427 |             |  | $             | 4,817,252 |       |  | $         | 1,435,799 |              |  | $            | 1,450,026 |  |  | $ | 483,078 |   |  | $ |        |   |  | $ | 27,978,582 | 
|Capital expenditures           |  | $            | 20,881     |             |  | $             | 80,290    |       |  | $         | 28,596    |              |  | $            | 9,656     |  |  | $ | 856     |   |  | $ |        |   |  | $ | 140,279    | 

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|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|-------------------------------- |  | ------------ | ---------- | ----------- |  | ------------- | --------- | ----- |  | --------- | --------- | ------------ |  | ------------ | --------- |  |  | - | ------- | - |  | - | ------- | - |  | - | ---------- | 
|                                 |  | Radio        |            | Outdoor     |  | Live          |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |  
|(In thousands)                   |  | Broadcasting |            | Advertising |  | Entertainment |           | Other |  | Corporate |           | Eliminations |  | Consolidated
|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |             
|Three Months
Ended June 30, 2003 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   | 
|Revenue                          |  | $            | 970,565    |             |  | $             | 569,174   |       |  | $         | 675,920   |              |  | $            | 139,305   |  |  | $ |        |   |  | $ | (37,715 | ) |  | $ | 2,317,249  | 
|Divisional operating
expenses    |  |              | 536,888    |             |  |               | 414,334   |       |  |           | 619,280   |              |  |              | 109,118   |  |  |   |        |   |  |   | (37,715 | ) |  |   | 1,641,905  | 
|Non-cash compensation            |  |              | 500        |             |  |               |          |       |  |           |          |              |  |              |          |  |  |   | 1,279   |   |  |   |        |   |  |   | 1,779      | 
|Depreciation and
amortization    |  |              | 38,776     |             |  |               | 89,471    |       |  |           | 14,926    |              |  |              | 12,579    |  |  |   | 6,128   |   |  |   |        |   |  |   | 161,880    | 
|Corporate expenses               |  |              |           |             |  |               |          |       |  |           |          |              |  |              |          |  |  |   | 42,459  |   |  |   |        |   |  |   | 42,459     | 
|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|Operating income (loss)          |  | $            | 394,401    |             |  | $             | 65,369    |       |  | $         | 41,714    |              |  | $            | 17,608    |  |  | $ | (49,866 | ) |  | $ |        |   |  | $ | 469,226    | 
|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|Six Months Ended
June 30, 2002   |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   | 
|Revenue                          |  | $            | 1,774,105  |             |  | $             | 843,156   |       |  | $         | 1,095,011 |              |  | $            | 218,249   |  |  | $ |        |   |  | $ | (59,624 | ) |  | $ | 3,870,897  | 
|Divisional operating
expenses    |  |              | 1,029,192  |             |  |               | 624,076   |       |  |           | 1,028,417 |              |  |              | 173,317   |  |  |   |        |   |  |   | (59,624 | ) |  |   | 2,795,378  | 
|Non-cash compensation            |  |              | 2,777      |             |  |               |          |       |  |           |          |              |  |              |          |  |  |   | 506     |   |  |   |        |   |  |   | 3,283      | 
|Depreciation and
amortization    |  |              | 74,913     |             |  |               | 152,328   |       |  |           | 30,459    |              |  |              | 19,209    |  |  |   | 11,770  |   |  |   |        |   |  |   | 288,679    | 
|Corporate expenses               |  |              |           |             |  |               |          |       |  |           |          |              |  |              |          |  |  |   | 78,172  |   |  |   |        |   |  |   | 78,172     | 
|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|Operating income (loss)          |  | $            | 667,223    |             |  | $             | 66,752    |       |  | $         | 36,135    |              |  | $            | 25,723    |  |  | $ | (90,448 | ) |  | $ |        |   |  | $ | 705,385    | 
|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|Identifiable assets              |  | $            | 19,843,707 |             |  | $             | 4,517,515 |       |  | $         | 1,385,891 |              |  | $            | 1,483,646 |  |  | $ | 459,089 |   |  | $ |        |   |  | $ | 27,689,848 | 
|Capital expenditures             |  | $            | 39,895     |             |  | $             | 130,794   |       |  | $         | 32,108    |              |  | $            | 15,875    |  |  | $ | 11,237  |   |  | $ |        |   |  | $ | 229,909    | 
|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|Three Months Ended
June 30, 2002 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   | 
|Revenue                          |  | $            | 991,282    |             |  | $             | 473,991   |       |  | $         | 619,225   |              |  | $            | 116,845   |  |  | $ |        |   |  | $ | (28,433 | ) |  | $ | 2,172,910  | 
|Divisional operating
expenses    |  |              | 549,934    |             |  |               | 329,489   |       |  |           | 567,638   |              |  |              | 87,773    |  |  |   |        |   |  |   | (28,433 | ) |  |   | 1,506,401  | 
|Non-cash compensation            |  |              | 1,317      |             |  |               |          |       |  |           |          |              |  |              |          |  |  |   | 128     |   |  |   |        |   |  |   | 1,445      | 
|Depreciation and
amortization    |  |              | 38,406     |             |  |               | 77,656    |       |  |           | 14,195    |              |  |              | 10,202    |  |  |   | 5,802   |   |  |   |        |   |  |   | 146,261    | 
|Corporate expenses               |  |              |           |             |  |               |          |       |  |           |          |              |  |              |          |  |  |   | 39,203  |   |  |   |        |   |  |   | 39,203     | 
|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 
|Operating income (loss)          |  | $            | 401,625    |             |  | $             | 66,846    |       |  | $         | 37,392    |              |  | $            | 18,870    |  |  | $ | (45,133 | ) |  | $ |        |   |  | $ | 479,600    | 
|                                 |  |              |            |             |  |               |           |       |  |           |           |              |  |              |           |  |  |   |         |   |  |   |         |   |  |   |            | 

Net revenue of $850.8 million and $333.4 million for the six and three months
ended June 30, 2003, respectively, and $663.3 million and $387.4 million for
the six and three months ended June 30, 2002, respectively, and identifiable
assets of $2.4 billion and $2.0 billion as of June 30, 2003 and 2002,
respectively, are included in the data above and are derived from the Companys
foreign operations.

Note 11: SUBSEQUENT EVENT

On July 23, 2003 the Companys Board of Directors declared a quarterly cash
dividend of $0.10 per share on the Companys Common Stock. The dividend is
payable on October 15, 2003 to shareholders of record at the close of business
on September 30, 2003.

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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Managements discussion and analysis of the results of operation and
financial condition of Clear Channel Communications, Inc. and its subsidiaries
should be read in conjunction with the Consolidated Financial Statements and
related footnotes. The discussion is presented on both a consolidated and
segment basis. Our reportable operating segments are: Radio Broadcastingwhich
includes all domestic and international radio assets and radio networks;
Outdoor Advertisingwhich includes domestic and international billboards,
transit displays, street furniture and other outdoor advertising media; and
Live Entertainmentwhich includes live music, theatrical, family entertainment
and motor sports events. Included in the other segment are television
broadcasting, sports representation and our media representation business, Katz
Media.

RESULTS OF OPERATIONS

We evaluate the operating performance of our businesses using several
measures, one of them being EBITDA as Adjusted (defined as revenue less
divisional operating and corporate expenses). EBITDA as Adjusted eliminates
the uneven effect of such charges as depreciation and amortization,
non-operating gains and losses, income taxes and interest across our business
segments, as well as in comparison to other companies. While we and many in
the financial community consider EBITDA as Adjusted to be an important measure
of operating performance, it should be considered in addition to, but not as a
substitute for or superior to, other measures of financial performance prepared
in accordance with generally accepted accounting principles such as operating
income and net income. In addition, our definition of EBITDA as Adjusted is
not necessarily comparable to similarly titled measures reported by other
companies.

We measure the performance of our operating segments and managers based on
a pro forma measurement that includes adjustments to the prior period for all
current and prior year acquisitions. Adjustments are made to the prior period
to include the operating results of the acquisition for the corresponding
period of time that the acquisition was owned in the current period. In
addition, results of operations from divested assets are excluded from all
periods presented. We believe this pro forma presentation is the best
comparable measure of our operating performance as it includes the performance
of assets for the period of time we managed the assets.

Our pro forma results are presented in constant U.S. dollars by adjusting
our international functional currencies at constant exchange rates for both
periods presented allowing for comparison of operations independent of foreign
exchange movements.

The following tables set forth our consolidated and segment results of
operations on both a reported and a pro forma basis.

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Comparison of Three and Six Months Ended June 30, 2003 to Three and Six
Months Ended June 30, 2002.

Consolidated

|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |   | 
|------------------------------------------------------------------------------- | ------------------------------------------------ | --------------------------- | --------- | -------- | - | -------- | --------- | ------------------------- | - | ---- | - | -------- |  | - | --------- | -------- | - | - | ----------- | -------- | - |  | - | - | 
|(In
thousands)                                                                  |                                                  | Three Months Ended June 30, |           |          |   |          |           | Six Months Ended June 30, |   |      |   |         
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |         
|                                                                                |                                                  | 2003                        |           | 2002     |   | % Change |           | 2003                      |   | 2002 |   | % Change
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |         
|As Reported Basis:                                                              |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Revenue                                                                         |                                                  | $                           | 2,317,249 |          |   | $        | 2,172,910 |                           |   |      | 7 | %        |  | $ | 4,096,692 |          |   | $ | 3,870,897   |          |   |  | 6 | %
|Divisional Operating Expenses                                                   |                                                  |                             | 1,641,905 |          |   |          | 1,506,401 |                           |   |      | 9 | %        |  |   | 3,002,980 |          |   |   | 2,795,378   |          |   |  | 7 | %
|Corporate Expenses                                                              |                                                  |                             | 42,459    |          |   |          | 39,203    |                           |   |      | 8 | %        |  |   | 85,238    |          |   |   | 78,172      |          |   |  | 9 | %
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|EBITDA as Adjusted *                                                            |                                                  |                             | 632,885   |          |   |          | 627,306   |                           |   |      | 1 | %        |  |   | 1,008,474 |          |   |   | 997,347     |          |   |  | 1 | %
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Reconciliation to net income (loss):                                            |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|                                                                                | Non-cash compensation expense                    |                             |           | 1,779    |   |          |           | 1,445                     |   |      |   |          |  |   |           | 2,578    |   |   |             | 3,283    |   |  |   |   | 
|                                                                                | Depreciation and amortization                    |                             |           | 161,880  |   |          |           | 146,261                   |   |      |   |          |  |   |           | 321,442  |   |   |             | 288,679  |   |  |   |   | 
|                                                                                | Interest expense                                 |                             |           | 95,311   |   |          |           | 108,350                   |   |      |   |          |  |   |           | 196,263  |   |   |             | 218,717  |   |  |   |   | 
|                                                                                | Gain (loss) on sale of assets related
to mergers |                             |           |         |   |          |           |                          |   |      |   |          |  |   |           |         |   |   |             | 3,991    |   |  |   |   | 
|                                                                                | Gain (loss) on marketable securities             |                             |           | 2,581    |   |          |           | 5,917                     |   |      |   |          |  |   |           | 5,373    |   |   |             | 8,901    |   |  |   |   | 
|                                                                                | Equity in earnings of nonconsolidated
affiliates |                             |           | 6,713    |   |          |           | 7,500                     |   |      |   |          |  |   |           | 9,048    |   |   |             | 10,713   |   |  |   |   | 
|                                                                                | Other income (expense)  net                     |                             |           | 39,142   |   |          |           | 15,394                    |   |      |   |          |  |   |           | 39,144   |   |   |             | 41,601   |   |  |   |   | 
|                                                                                | Income tax benefit (expense)  current           |                             |           | (58,321  | ) |          |           | (212,351                  | ) |      |   |          |  |   |           | (40,326  | ) |   |             | (205,758 | ) |  |   |   | 
|                                                                                | Income tax benefit (expense) 
deferred          |                             |           | (112,730 | ) |          |           | 50,326                    |   |      |   |          |  |   |           | (179,084 | ) |   |             | (17,751  | ) |  |   |   | 
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Income before cumulative effect of a
change in accounting principle             |                                                  |                             | 251,300   |          |   |          | 238,036   |                           |   |      |   |          |  |   | 322,346   |          |   |   | 328,365     |          |   |  |   |  
|Cumulative effect of a change in
accounting principle, net of tax of $4,324,446 |                                                  |                             |          |          |   |          |          |                           |   |      |   |          |  |   |          |          |   |   | (16,778,526 | )        |   |  |   |  
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Net income (loss)                                                               |                                                  | $                           | 251,300   |          |   | $        | 238,036   |                           |   |      |   |          |  | $ | 322,346   |          |   | $ | (16,450,161 | )        |   |  |   |  
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|* See page 15 for cautionary disclosure                                         |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |   | 
|Other Data:                                                                     |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|                                                                                | Cash Flow from Operating Activities              |                             |           |          |   |          |           |                           |   |      |   |          |  |   | $         | 943,738  |   |   | $           | 849,833  |   |  |   |   | 
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|                                                                                | Cash Flow from Investing Activities              |                             |           |          |   |          |           |                           |   |      |   |          |  |   | $         | (197,900 | ) |   | $           | (283,341 | ) |  |   |   | 
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|                                                                                | Cash Flow from Financing Activities              |                             |           |          |   |          |           |                           |   |      |   |          |  |   | $         | (720,296 | ) |   | $           | (548,060 | ) |  |   |   | 
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Pro Forma Basis:                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Revenue                                                                         |                                                  | $                           | 2,236,244 |          |   | $        | 2,228,016 |                           |   |      | 0 | %        |  | $ | 3,965,042 |          |   | $ | 3,961,682   |          |   |  | 0 | %
|Divisional Operating Expenses                                                   |                                                  |                             | 1,570,860 |          |   |          | 1,553,256 |                           |   |      | 1 | %        |  |   | 2,883,517 |          |   |   | 2,880,252   |          |   |  | 0 | %
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |   | 
|Reconciliation of Reported Basis to Pro Forma Basis                             |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |  
|Reported Revenue                                                                |                                                  | $                           | 2,317,249 |          |   | $        | 2,172,910 |                           |   |      |   |          |  | $ | 4,096,692 |          |   | $ | 3,870,897   |          |   |  |   |  
|                                                                                | Acquisitions                                     |                             |           |         |   |          |           | 61,211                    |   |      |   |          |  |   |           |         |   |   |             | 110,406  |   |  |   |   | 
|                                                                                | Divestitures                                     |                             |           | (337     | ) |          |           | (6,105                    | ) |      |   |          |  |   |           | (345     | ) |   |             | (19,621  | ) |  |   |   | 
|                                                                                | Foreign Exchange adjustments                     |                             |           | (80,668  | ) |          |           |                          |   |      |   |          |  |   |           | (131,305 | ) |   |             |         |   |  |   |   | 
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Pro Forma Revenue                                                               |                                                  | $                           | 2,236,244 |          |   | $        | 2,228,016 |                           |   |      |   |          |  | $ | 3,965,042 |          |   | $ | 3,961,682   |          |   |  |   |  
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Reported Divisional Operating Expenses                                          |                                                  | $                           | 1,641,905 |          |   | $        | 1,506,401 |                           |   |      |   |          |  | $ | 3,002,980 |          |   | $ | 2,795,378   |          |   |  |   |  
|                                                                                | Acquisitions                                     |                             |           |         |   |          |           | 51,532                    |   |      |   |          |  |   |           |         |   |   |             | 100,415  |   |  |   |   | 
|                                                                                | Divestitures                                     |                             |           | (806     | ) |          |           | (4,677                    | ) |      |   |          |  |   |           | (891     | ) |   |             | (15,541  | ) |  |   |   | 
|                                                                                | Foreign Exchange adjustments                     |                             |           | (70,239  | ) |          |           |                          |   |      |   |          |  |   |           | (118,572 | ) |   |             |         |   |  |   |   | 
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  
|Pro Forma Divisional Operating Expenses                                         |                                                  | $                           | 1,570,860 |          |   | $        | 1,553,256 |                           |   |      |   |          |  | $ | 2,883,517 |          |   | $ | 2,880,252   |          |   |  |   |  
|                                                                                |                                                  |                             |           |          |   |          |           |                           |   |      |   |          |  |   |           |          |   |   |             |          |   |  |   |  

Consolidated Revenue and Divisional Operating Expenses

Reported basis revenue and divisional operating expenses increased
$144.3 million and $135.5 million, respectively, for the three months ended
June 30, 2003 from the same period of 2002. The increases are partially
attributable to acquisitions, the largest being Ackerley. Ackerley
contributed approximately $49.6 million to reported basis revenue and $33.9
million to reported


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basis divisional operating expenses for the three months ended June 30,
2003. Also, the devaluation of the dollar relative to our international
functional currencies contributed approximately $80.7 million to the reported
basis revenue increase and $70.2 million to the divisional operating expenses
increase for the three months ended June 30, 2003 as compared to the same
period of 2002.

Pro forma basis revenue increased $8.2 million for the three months
ended June 30, 2003 from the same period of 2002. The increase was led by
strong growth in our outdoor operating segment, which grew pro forma revenue
4% during this time period. We experienced broad based pro forma revenue
growth across our domestic outdoor markets. Strong international outdoor
markets included Italy, Sweden and Australia. Pro forma revenue in our live
entertainment operating segment increased 3% during this period, driven by
pro forma revenue increases in sponsorships, touring revenues and European
festivals. We also experienced a slight pro forma revenue increase in our
other operating segment, led by growth in our television and our national
representation businesses.

The pro forma revenue increase for the three months ended June 30, 2003
from the same period of 2002 was partially offset by a pro forma revenue
decline in our radio operating segment. Our radio operating segment
decreased pro forma revenue 3% during this period, primarily from weak local
advertising revenues as well as declines in our national syndication business
and non-traditional revenues. Retail, auto, telecom/utility, and
entertainment were the strongest national advertising categories, while the
consumer products and fast food categories were weaker during the three
months ended June 30, 2003.

Pro forma basis divisional operating expenses increased $17.6 million
for the three months ended June 30, 2003, as compared to the same period of
2002. Approximately $9.0 million (based on the average exchange rate of
2002) of the pro forma basis divisional operating expenses increase relates
to restructuring expenses in our international outdoor business in France,
where we plan to reduce employees and merge our three business units into
one. Additionally, our domestic outdoor business saw increases in
production, bonus and commission expenses associated with increased revenue,
offset by a decline in divisional operating expenses in our radio segment.

Reported basis revenue and divisional operating expenses increased
$225.8 million and $207.6 million, respectively, for the six months ended
June 30, 2003 from the same period of 2002. The increases are partially
attributable to acquisitions, the largest being Ackerley. Ackerley
contributed approximately $90.2 million to reported basis revenue and $68.1
million to reported basis divisional operating expenses for the six months
ended June 30, 2003. Also, the devaluation of the dollar relative to our
international functional currencies contributed approximately $131.3 million
to the reported basis revenue increase and $118.6 million to the reported
basis divisional operating expenses increase for the six months ended June
30, 2003 as compared to the same period of 2002.

Pro forma basis revenue increased $3.4 million for the six months ended
June 30, 2003 from the same period of 2002. The increase was primarily
driven by an increase in our outdoor operating segment, partially offset by
declines in our radio and live entertainment operating segments. The pro
forma basis revenue increase in our outdoor operating segment was driven by
increases in rates on some of our domestic advertising inventory and an
increase in our international advertising inventory. Lower local advertising
and the mix of events drove the pro forma revenue declines in our radio and
live entertainment operating segments in the current year, respectively.

Pro forma basis divisional operating expenses increased $3.3 million for
the six months ended June 30, 2003 from the same period of 2002. The
increase was driven by an increase in variable expenses in our domestic
outdoor business associated with increased revenue and from restructuring
expenses in our international outdoor business in France, where we plan to
reduce employees and merge our three business units into one. Also, our
domestic outdoor business saw increases in production expenses, bonus
expenses and commission expenses associated with increased revenue. The pro
forma basis divisional operating expenses increase in our outdoor operating
segment was offset by declines in our radio and live entertainment operating
segments. We experienced declines in bonus expenses, commission expenses and
bad debt expenses in our radio operating segment and declines in variable
expenses in our live entertainment segment associated with the mix of events
in the current year.

Corporate Expenses

Corporate expenses increased $3.3 million and $7.1 million for the three
and six months ended June 30, 2003, respectively, as compared to the same
periods of 2002. The increase for the three and six months resulted from
additional expenses related to outside legal and other consulting services as
well as increased insurance costs that we incurred during 2003.


Depreciation and Amortization

Depreciation and amortization expense increased $15.6 million and $32.8
million for the three and six months ended June 30, 2003, respectively, as
compared to the same periods of 2002. The increase is primarily related to
increases of $11.8 million and $26.1 million in our outdoor operating segment
for the three and six months ended June 30, 2003, respectively, as compared
to


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the same periods of 2002. These increases were caused by prior year
capital expenditures in our international outdoor business associated with
revenue producing assets, the devaluation of the dollar relative to our
international functional currencies and accelerated depreciation recorded on
display takedowns and abandonments in our domestic outdoor business.

Interest Expense

Interest expense decreased $13.0 million and $22.5 million for the three
and six months ended June 30, 2003, respectively, as compared to the same
periods of 2002. The decrease in interest expense resulted from lower LIBOR
rates on our floating rate debt and the refinancing of debt, which allowed us
to take advantage of the lower interest rate environment in 2003. LIBOR was
1.12% and 1.84% at June 30, 2003 and 2002, respectively. Additionally, an
overall decrease in our total debt outstanding resulted in lower interest
expense for the three and six months ended June 30, 2003 as compared to the
same periods of 2002. Outstanding debt was $8.0 billion and $9.3 billion at
June 30, 2003 and 2002, respectively.


Other Income (Expense)  Net

Other income (expense)  net increased $23.7 million and decreased $2.5
million for the three and six months ended June 30, 2003, respectively, as
compared to the same periods of 2002. The income recognized for the three
months ended June 30, 2003 related to a $41.3 million gain on the early
extinguishment of the 4.75% Liquid Yield Option Notes due 2018, partially
offset by $2.2 million of other miscellaneous expenses. The income
recognized for the three months ended June 30, 2002 related to a $11.9
million gain on the sale of contracts recorded as part of a final settlement
of a dispute with a third party representation firm, a $10.6 million gain on
the sale of assets in our live entertainment segment, partially offset by a
$7.1 million loss, which was principally a foreign exchange loss associated
with an interest payment on our foreign denominated debt.


Income Taxes

The effective income tax rate for the three and six months ended June 30,
2003 and 2002 was 40.5%


For the three and six months ended June 30, 2003 current tax expense
decreased $154.0 million and $165.4 million to $58.3 million and $40.3 million,
respectively. These decreases relate primarily to the taxable income that was
recognized in the second quarter of 2002 relating to the reversal of a deferred
tax liability that was recorded in a previous period associated with a
potential claim under a lawsuit. The lawsuit was settled during the second
quarter of 2002 for less than anticipated. In addition, in the second quarter
of 2003, current tax expense declined due to additional deductions taken on
amended tax returns.

Deferred income taxes changed from a benefit of $50.3 million for the
three months ended June 30, 2002 to expense of $112.7 million for the three
months ended June 30, 2003. For the six months ended June 30, 2003, deferred
income tax expense increased $161.3 million to $179.1 million. The changes
relate to the reversal of the deferred tax liability associated with the
settlement of a lawsuit discussed above.

Cumulative Effect of a Change in Accounting Principle

The loss recorded as a cumulative effect of a change in accounting
principle during the three months ended March 31, 2002 relates to our
adoption of FAS 142 on January 1, 2002. FAS 142 required that we test
goodwill and indefinite-lived intangibles for impairment using a fair value
approach. As a result of the goodwill test, we recorded a non-cash, net of
tax, impairment charge of approximately $10.8 billion. Also, as a result of
the indefinite-lived intangible test, we recorded a non-cash, net of tax,
impairment charge on our FCC licenses of approximately $6.0 billion.


The non-cash impairments of our goodwill and FCC licenses were generally
caused by unfavorable economic conditions, which persisted in the industries
we served throughout 2001. This weakness contributed to our customers
reducing the number of advertising dollars spent on our media inventory and
live entertainment events. These conditions adversely impacted the cash flow
projections used to determine the fair value of our licenses and each
reporting unit. These factors resulted in the non-cash impairment charge of
a portion of our licenses and goodwill.

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Segment Revenue and Divisional Operating Expenses

Radio Broadcasting

|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |    | 
|--------------------------------------------------- | ---------------------------- | --------------------------- | ------- | ---- | - | -------- | ------- | ------------------------- | - | ---- | -- | -------- |  | - | --------- | ---- | - | - | --------- | ------ | - |  | -- | -- | 
|(In
thousands)                                      |                              | Three Months Ended June 30, |         |      |   |          |         | Six Months Ended June 30, |   |      |    |         
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |         
|                                                    |                              | 2003                        |         | 2002 |   | % Change |         | 2003                      |   | 2002 |    | % Change
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |         
|As Reported Basis:                                  |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   
|Revenue                                             |                              | $                           | 970,565 |      |   | $        | 991,282 |                           |   |      | (2 | %)       |  | $ | 1,765,599 |      |   | $ | 1,774,105 |        |   |  | 0  | % 
|Divisional Operating Expenses                       |                              |                             | 536,888 |      |   |          | 549,934 |                           |   |      | (2 | %)       |  |   | 1,031,992 |      |   |   | 1,029,192 |        |   |  | 0  | % 
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   
|EBITDA as Adjusted *                                |                              | $                           | 433,677 |      |   | $        | 441,348 |                           |   |      | (2 | %)       |  | $ | 733,607   |      |   | $ | 744,913   |        |   |  | (2 | %)
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   
|* See page 15 for cautionary disclosure             |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |    | 
|Pro Forma Basis:                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   
|Revenue                                             |                              | $                           | 970,228 |      |   | $        | 995,897 |                           |   |      | (3 | %)       |  | $ | 1,765,254 |      |   | $ | 1,787,165 |        |   |  | (1 | %)
|Divisional Operating Expenses                       |                              |                             | 536,082 |      |   |          | 553,634 |                           |   |      | (3 | %)       |  |   | 1,031,101 |      |   |   | 1,041,116 |        |   |  | (1 | %)
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |    | 
|Reconciliation of Reported Basis to Pro Forma Basis |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |  
|Reported Revenue                                    |                              | $                           | 970,565 |      |   | $        | 991,282 |                           |   |      |    |          |  | $ | 1,765,599 |      |   | $ | 1,774,105 |        |   |  |    |   
|                                                    | Acquisitions                 |                             |         |     |   |          |         | 5,606                     |   |      |    |          |  |   |           |     |   |   |           | 15,093 |   |  |    |    | 
|                                                    | Divestitures                 |                             |         | (337 | ) |          |         | (991                      | ) |      |    |          |  |   |           | (345 | ) |   |           | (2,033 | ) |  |    |    | 
|                                                    | Foreign Exchange adjustments |                             |         |     |   |          |         |                          |   |      |    |          |  |   |           |     |   |   |           |       |   |  |    |    | 
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   
|Pro Forma Revenue                                   |                              | $                           | 970,228 |      |   | $        | 995,897 |                           |   |      |    |          |  | $ | 1,765,254 |      |   | $ | 1,787,165 |        |   |  |    |   
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |    | 
|Reported Divisional Operating Expenses              |                              | $                           | 536,888 |      |   | $        | 549,934 |                           |   |      |    |          |  | $ | 1,031,992 |      |   | $ | 1,029,192 |        |   |  |    |   
|                                                    | Acquisitions                 |                             |         |     |   |          |         | 4,968                     |   |      |    |          |  |   |           |     |   |   |           | 14,528 |   |  |    |    | 
|                                                    | Divestitures                 |                             |         | (806 | ) |          |         | (1,268                    | ) |      |    |          |  |   |           | (891 | ) |   |           | (2,604 | ) |  |    |    | 
|                                                    | Foreign Exchange adjustments |                             |         |     |   |          |         |                          |   |      |    |          |  |   |           |     |   |   |           |       |   |  |    |    | 
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   
|Pro Forma Divisional Operating Expenses             |                              | $                           | 536,082 |      |   | $        | 553,634 |                           |   |      |    |          |  | $ | 1,031,101 |      |   | $ | 1,041,116 |        |   |  |    |   
|                                                    |                              |                             |         |      |   |          |         |                           |   |      |    |          |  |   |           |      |   |   |           |        |   |  |    |   

Reported basis and pro forma revenue decreased 2% and 3%, respectively,
for the three months ended June 30, 2003 as compared to the same period of
2002. The revenue declines were attributable to weakness in local spot
sales, which adversely impacted our smaller Arbitron ranked markets, as well
as declines in our national syndication business and non-traditional
revenues, which include the loss of revenue resulting from our cessation of
business with independent promoters. Additionally, we experienced a decline
in revenue related to sports rights contracts, primarily from the termination
of our L.A. Dodgers contract. Retail, auto, telecom/utility, and
entertainment were the strongest national advertising categories during the
three months ended June 30, 2003, while the consumer products and fast food
categories were weaker.

Reported basis and pro forma divisional operating expenses decreased 2%
and 3%, respectively, for the three months ended June 30, 2003 as compared to
the same period of 2002. A portion of the declines relate to variable expense
declines such as lower bonus, commission and other variable expenses, which are
tied to revenue performance, as well as lower sports rights contract fees.

Reported basis and pro forma revenue was flat and decreased 1%,
respectively, for the six months ended June 30, 2003 as compared to the same
period of 2002. Consistent with the results for the three months ended June
30, 2003, the decrease was driven primarily by sluggish local advertising
revenue and its impact on our smaller Arbitron ranked markets as well as a
slight decline in our national syndication business. Our strongest national
advertising categories during the six months ended June 30, 2003 were retail,
auto, telecom/utility, and entertainment.

Reported basis divisional operating expenses were flat and pro forma
divisional operating expenses decreased 1% for the six months ended June 30,
2003 as compared to the same period of 2002. For the six months ended June 30,
2003 we experienced declines in bonus, commission, bad debt and other variable
expenses. These declines were offset by a $4.0 million increase in the first quarter
of 2003 related to promotional expenses for format changes and continued investment
spending on our brands.

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##### Table of Contents



Outdoor Advertising

|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |   | 
|--------------------------------------------------- | ---------------------------- | --------------------------- | ------- | ------- | - | -------- | ------- | ------------------------- | - | ---- | -- | -------- |  | - | --------- | ------- | - | - | ------- | ------ | - |  | -- | - | 
|(In
thousands)                                      |                              | Three Months Ended June 30, |         |         |   |          |         | Six Months Ended June 30, |   |      |    |         
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |         
|                                                    |                              | 2003                        |         | 2002    |   | % Change |         | 2003                      |   | 2002 |    | % Change
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |         
|As Reported Basis:                                  |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  
|Revenue                                             |                              | $                           | 569,174 |         |   | $        | 473,991 |                           |   |      | 20 | %        |  | $ | 1,019,702 |         |   | $ | 843,156 |        |   |  | 21 | %
|Divisional Operating Expenses                       |                              |                             | 414,334 |         |   |          | 329,489 |                           |   |      | 26 | %        |  |   | 779,043   |         |   |   | 624,076 |        |   |  | 25 | %
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  
|EBITDA as Adjusted *                                |                              | $                           | 154,840 |         |   | $        | 144,502 |                           |   |      | 7  | %        |  | $ | 240,659   |         |   | $ | 219,080 |        |   |  | 10 | %
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  
|* See page 15 for cautionary disclosure             |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |   | 
|Pro Forma Basis:                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  
|Revenue                                             |                              | $                           | 519,683 |         |   | $        | 500,405 |                           |   |      | 4  | %        |  | $ | 931,840   |         |   | $ | 883,660 |        |   |  | 5  | %
|Divisional Operating Expenses                       |                              |                             | 372,230 |         |   |          | 350,540 |                           |   |      | 6  | %        |  |   | 700,697   |         |   |   | 658,840 |        |   |  | 6  | %
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |   | 
|Reconciliation of Reported Basis to Pro Forma Basis |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |  
|Reported Revenue                                    |                              | $                           | 569,174 |         |   | $        | 473,991 |                           |   |      |    |          |  | $ | 1,019,702 |         |   | $ | 843,156 |        |   |  |    |  
|                                                    | Acquisitions                 |                             |         |        |   |          |         | 28,309                    |   |      |    |          |  |   |           |        |   |   |         | 44,156 |   |  |    |   | 
|                                                    | Divestitures                 |                             |         |        |   |          |         | (1,895                    | ) |      |    |          |  |   |           |        |   |   |         | (3,652 | ) |  |    |   | 
|                                                    | Foreign Exchange adjustments |                             |         | (49,491 | ) |          |         |                          |   |      |    |          |  |   |           | (87,862 | ) |   |         |       |   |  |    |   | 
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  
|Pro Forma Revenue                                   |                              | $                           | 519,683 |         |   | $        | 500,405 |                           |   |      |    |          |  | $ | 931,840   |         |   | $ | 883,660 |        |   |  |    |  
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |   | 
|Reported Divisional Operating Expenses              |                              | $                           | 414,334 |         |   | $        | 329,489 |                           |   |      |    |          |  | $ | 779,043   |         |   | $ | 624,076 |        |   |  |    |  
|                                                    | Acquisitions                 |                             |         |        |   |          |         | 22,931                    |   |      |    |          |  |   |           |        |   |   |         | 38,507 |   |  |    |   | 
|                                                    | Divestitures                 |                             |         |        |   |          |         | (1,880                    | ) |      |    |          |  |   |           |        |   |   |         | (3,743 | ) |  |    |   | 
|                                                    | Foreign Exchange adjustments |                             |         | (42,104 | ) |          |         |                          |   |      |    |          |  |   |           | (78,346 | ) |   |         |       |   |  |    |   | 
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  
|Pro Forma Divisional Operating Expenses             |                              | $                           | 372,230 |         |   | $        | 350,540 |                           |   |      |    |          |  | $ | 700,697   |         |   | $ | 658,840 |        |   |  |    |  
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |         |        |   |  |    |  

Reported basis revenue and divisional operating expenses increased $95.2
million and $84.8 million, respectively, for the three months ended June 30,
2003 as compared to the same period of 2002. The increase is partially
attributable to acquisitions, the largest being Ackerley, which included 3
markets. These markets contributed approximately $20.0 million to revenue
and $9.6 million to divisional operating expenses for the three months ended
June 30, 2003. Also, the devaluation of the dollar relative to our
international functional currencies contributed approximately $49.5 million
to the reported basis revenue increase and $42.1 million to the reported
basis divisional operating expenses increase for the three months ended June
30, 2003 as compared to the same period of 2002.

Pro forma basis revenue increased $19.3 million for the three months
ended June 30, 2003, as compared to the same period of 2002. Domestically,
we experienced broad based pro forma revenue increases across our markets and
our products for the three months ended June 30, 2003, as compared to the
same period of 2002. Our domestic poster, bulletin and transit pro forma
revenue showed positive growth, with occupancy flat to slightly up for the
three months ended June 30, 2003, as compared to the same period of 2002. We
also saw rate increases on our domestic inventory during this same period.
Internationally, street furniture and transit pro forma revenue grew for the
three months ended June 30, 2003 compared to the same period of 2002.
However, pro forma revenue on our international billboard inventory was down
during this period, led by pro forma revenue declines on our billboard
inventory in the United Kingdom and France. Our inventory of international
displays was flat to slightly up for the three months ended June 30, 2003
compared to the same period of 2002. Revenue per international display was
also flat to slightly up for the three months ended June 30, 2003 compared to
the same period of 2002. Italy, Sweden and Australia were all strong
performing international markets for the three months ended June 30, 2003
compared to the same period of 2002.

Pro forma basis divisional operating expenses increased $21.7 million
for the three months ended June 30, 2003, as compared to the same period of
2002. Approximately $9.0 million (based on the average exchange rate of
2002) of the pro forma basis divisional operating expenses increase relates
to restructuring expenses in France, where we plan to reduce employees and
merge our three business units into one. Domestically, we saw production,
bonus and commission expenses increase associated with increased revenue.

Reported basis revenue and divisional operating expenses increased
$176.5 million and $155.0 million, respectively, for the six months ended
June 30, 2003 as compared to the same period of 2002. The increase is
partially attributable to acquisitions, the largest being Ackerley, which
included 3 markets. These markets contributed approximately $35.4 million to
reported basis revenue and $19.3 million to reported basis divisional
operating expenses for the six months ended June 30, 2003 as compared to

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the same period of 2002. Also, the devaluation of the dollar relative
to our international functional currencies contributed approximately $87.9
million to the reported basis revenue increase and $78.3 million to the
reported basis divisional operating expenses increase for the six months
ended June 30, 2003 as compared to the same period of 2002.

Pro forma basis revenue increased $48.2 million for the six months ended
June 30, 2003, as compared to the same period of 2002. We experienced broad
based pro forma revenue increases across our domestic markets and products
for the six months ended June 30, 2003 as compared to the same period of
2002. Rates on our domestic poster, bulletin and transit inventory were up,
with occupancy flat to slightly up for the six months ended June 30, 2003, as
compared to the same period of 2002. Our inventory of international displays
was flat to slightly up for the six months ended June 30, 2003, as compared
to the same period of 2002. Revenue per international display was also flat
to slightly up for the six months ended June 30, 2003, as compared to the
same period of 2002.

Pro forma basis divisional operating expenses increased $41.9 million
for the six months ended June 30, 2003, as compared to the same period of
2002. Approximately $9.0 million (based on the average exchange rate of
2002) of the pro forma basis divisional operating expenses increase relates
to restructuring expenses in France, where we plan to reduce employees and
merge our three business units into one. Domestically, we saw production,
bonus and commission expenses increase associated with increased revenue.

Live Entertainment

|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |    | 
|--------------------------------------------------- | ---------------------------- | --------------------------- | ------- | ------- | - | -------- | ------- | ------------------------- | - | ---- | -- | -------- |  | - | --------- | ------- | - | - | --------- | ------- | - |  | -- | -- | 
|As Reported Basis:                                  |                              | Three Months Ended June 30, |         |         |   |          |         | Six Months Ended June 30, |   |      |    |         
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |         
|                                                    |                              | 2003                        |         | 2002    |   | % Change |         | 2003                      |   | 2002 |    | % Change
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |         
|Revenue                                             |                              | $                           | 675,920 |         |   | $        | 619,225 |                           |   |      | 9  | %        |  | $ | 1,113,802 |         |   | $ | 1,095,011 |         |   |  | 2  | % 
|Divisional Operating Expenses                       |                              |                             | 619,280 |         |   |          | 567,638 |                           |   |      | 9  | %        |  |   | 1,040,416 |         |   |   | 1,028,417 |         |   |  | 1  | % 
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |   
|EBITDA as Adjusted *                                |                              | $                           | 56,640  |         |   | $        | 51,587  |                           |   |      | 10 | %        |  | $ | 73,386    |         |   | $ | 66,594    |         |   |  | 10 | % 
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |   
|* See page 15 for cautionary disclosure             |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |   
|Pro Forma Basis:                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |   
|Revenue                                             |                              | $                           | 644,743 |         |   | $        | 623,690 |                           |   |      | 3  | %        |  | $ | 1,070,359 |         |   | $ | 1,092,246 |         |   |  | (2 | %)
|Divisional Operating Expenses                       |                              |                             | 591,145 |         |   |          | 572,359 |                           |   |      | 3  | %        |  |   | 1,000,190 |         |   |   | 1,027,867 |         |   |  | (3 | %)
|Reconciliation of Reported Basis to Pro Forma Basis |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |  
|Reported Revenue                                    |                              | $                           | 675,920 |         |   | $        | 619,225 |                           |   |      |    |          |  | $ | 1,113,802 |         |   | $ | 1,095,011 |         |   |  |    |   
|                                                    | Acquisitions                 |                             |         |        |   |          |         | 6,928                     |   |      |    |          |  |   |           |        |   |   |           | 9,280   |   |  |    |    | 
|                                                    | Divestitures                 |                             |         |        |   |          |         | (2,463                    | ) |      |    |          |  |   |           |        |   |   |           | (12,045 | ) |  |    |    | 
|                                                    | Foreign Exchange adjustments |                             |         | (31,177 | ) |          |         |                          |   |      |    |          |  |   |           | (43,443 | ) |   |           |        |   |  |    |    | 
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |   
|Pro Forma Revenue                                   |                              | $                           | 644,743 |         |   | $        | 623,690 |                           |   |      |    |          |  | $ | 1,070,359 |         |   | $ | 1,092,246 |         |   |  |    |   
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |   
|Reported Divisional Operating Expenses              |                              | $                           | 619,280 |         |   | $        | 567,638 |                           |   |      |    |          |  | $ | 1,040,416 |         |   | $ | 1,028,417 |         |   |  |    |   
|                                                    | Acquisitions                 |                             |         |        |   |          |         | 6,250                     |   |      |    |          |  |   |           |        |   |   |           | 8,644   |   |  |    |    | 
|                                                    | Divestitures                 |                             |         |        |   |          |         | (1,529                    | ) |      |    |          |  |   |           |        |   |   |           | (9,194  | ) |  |    |    | 
|                                                    | Foreign Exchange adjustments |                             |         | (28,135 | ) |          |         |                          |   |      |    |          |  |   |           | (40,226 | ) |   |           |        |   |  |    |    | 
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |   
|Pro Forma Divisional Operating Expenses             |                              | $                           | 591,145 |         |   | $        | 572,359 |                           |   |      |    |          |  | $ | 1,000,190 |         |   | $ | 1,027,867 |         |   |  |    |   
|                                                    |                              |                             |         |         |   |          |         |                           |   |      |    |          |  |   |           |         |   |   |           |         |   |  |    |   

Reported basis revenue and divisional operating expenses increased $56.7
million and $51.6 million, respectively, for the three months ended June 30,
2003 as compared to the same period of 2002. The increase in reported basis
revenue and divisional operating expenses is largely attributable to the
devaluation of the dollar relative to our international functional
currencies. The devaluation contributed approximately $31.2 million to the
revenue increase and $28.1 million to the divisional operating expenses
increase for the three months ended June 30, 2003 as compared to the same
period of 2002.

Pro forma basis revenue increased $21.1 million for the three months
ended June 30, 2003 as compared to the same period of 2002. The pro forma
basis revenue increase is attributable to increases in sponsorship revenues,
box and season ticket revenues, touring revenues and other event revenues,
such as European festivals. These increases were slightly offset by a
decline in ticket revenues during this period.

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##### Table of Contents



Pro forma basis divisional operating expenses increased $18.8 million
for the three months ended June 30, 2003 as compared to the same period of
2002. The increase is attributable to variable expense increases associated
with the increase in revenue, primarily driven by talent costs paid to the
artists performing at our events.

Reported basis revenue and divisional operating expenses increased $18.8
million and $12.0 million for the six months ended June 30, 2003 as compared
to the same period of 2002. The increase in reported basis revenue and
divisional operating expenses is largely attributable to the devaluation of
the dollar relative to our international functional currencies. The
devaluation contributed approximately $43.4 million to the reported basis
revenue increase and $40.2 million to the divisional operating expenses
increase for the six months ended June 30, 2003 as compared to the same
period of 2002.

Pro Forma basis revenue and divisional operating expenses decreased
$21.9 million and $27.7 million during the six months ended June 30, 2003
compared to the same time period of 2002. The mix of events in 2003 as
compared to 2002 primarily drove the decrease. During 2002, we promoted the
Crosby, Stills, Nash and Young tour, with no revenue generating tours of
comparable size in the first half of 2003. Also, we had fewer consolidated
theatrical tours during the six months ended June 30, 2003 as compared to the
same period of 2002. The divisional operating expenses declines are
partially attributable to variable expenses associated with the decrease in
revenue, decrease in talent costs from the mix of events and fewer
consolidated theatrical tours.

|                                                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|--------------------------------------------------- |  | --------------------------- | --------- | ------------------------- |  | ---- | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|Segment Reconciliations                             |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|(In thousands)                                      |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|                                                    |  | Three Months Ended June 30, |           | Six Months Ended June 30,
|                                                    |  |                             |           |                          
|                                                    |  | 2003                        |           | 2002                      |  | 2003 |           | 2002
|                                                    |  |                             |           |                           |  |      |           |     
|As Reported EBITDA as Adjusted *                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Radio Broadcasting                                  |  | $                           | 433,677   |                           |  | $    | 441,348   |      |  | $ | 733,607   |   |  | $ | 744,913   |  
|Outdoor Advertising                                 |  |                             | 154,840   |                           |  |      | 144,502   |      |  |   | 240,659   |   |  |   | 219,080   |  
|Live Entertainment                                  |  |                             | 56,640    |                           |  |      | 51,587    |      |  |   | 73,386    |   |  |   | 66,594    |  
|Other                                               |  |                             | 30,187    |                           |  |      | 29,072    |      |  |   | 46,060    |   |  |   | 44,932    |  
|Corporate                                           |  |                             | (42,459   | )                         |  |      | (39,203   | )    |  |   | (85,238   | ) |  |   | (78,172   | )
|                                                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Consolidated EBITDA as Adjusted *                   |  | $                           | 632,885   |                           |  | $    | 627,306   |      |  | $ | 1,008,474 |   |  | $ | 997,347   |  
|                                                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|* See page 15 for cautionary disclosure             |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|                                                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Pro Forma Revenue                                   |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Radio Broadcasting                                  |  | $                           | 970,228   |                           |  | $    | 995,897   |      |  | $ | 1,765,254 |   |  | $ | 1,787,165 |  
|Outdoor Advertising                                 |  |                             | 519,683   |                           |  |      | 500,405   |      |  |   | 931,840   |   |  |   | 883,660   |  
|Live Entertainment                                  |  |                             | 644,743   |                           |  |      | 623,690   |      |  |   | 1,070,359 |   |  |   | 1,092,246 |  
|Other                                               |  |                             | 139,305   |                           |  |      | 136,457   |      |  |   | 264,723   |   |  |   | 258,235   |  
|Eliminations                                        |  |                             | (37,715   | )                         |  |      | (28,433   | )    |  |   | (67,134   | ) |  |   | (59,624   | )
|                                                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Consolidated Pro Forma Revenue                      |  | $                           | 2,236,244 |                           |  | $    | 2,228,016 |      |  | $ | 3,965,042 |   |  | $ | 3,961,682 |  
|                                                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Pro Forma Divisional Operating Expenses             |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Radio Broadcasting                                  |  | $                           | 536,082   |                           |  | $    | 553,634   |      |  | $ | 1,031,101 |   |  | $ | 1,041,116 |  
|Outdoor Advertising                                 |  |                             | 372,230   |                           |  |      | 350,540   |      |  |   | 700,697   |   |  |   | 658,840   |  
|Live Entertainment                                  |  |                             | 591,145   |                           |  |      | 572,359   |      |  |   | 1,000,190 |   |  |   | 1,027,867 |  
|Other                                               |  |                             | 109,118   |                           |  |      | 105,156   |      |  |   | 218,663   |   |  |   | 212,053   |  
|Eliminations                                        |  |                             | (37,715   | )                         |  |      | (28,433   | )    |  |   | (67,134   | ) |  |   | (59,624   | )
|                                                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  
|Consolidated Pro Forma Divisional
Operating Expense |  | $                           | 1,570,860 |                           |  | $    | 1,553,256 |      |  | $ | 2,883,517 |   |  | $ | 2,880,252 |  
|                                                    |  |                             |           |                           |  |      |           |      |  |   |           |   |  |   |           |  

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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

Operating Activities:

Net cash flow from operating activities of $943.7 million for the six
months ended June 30, 2003 principally reflects a net income of $322.3
million plus depreciation and amortization of $321.4 million. Cash flow from
operations also reflects a positive change in working capital of
approximately $177.0 million primarily due to an increase in deferred income,
partially offset by increases in accounts receivable and prepaid expenses.
Net cash flow from operating activities of $849.8 million for the six months
ended June 30, 2002 principally reflects a net loss of $16.5 billion adjusted
for non-cash charges of $16.8 billion for the adoption of SFAS 142 and
depreciation and amortization of $288.7 million. Cash flow from operations
also reflects increases in deferred income, accounts payable, taxes payable
and other accrued expenses partially offset by an increase in accounts
receivables.

Investing Activities:

Net cash expenditures used in investing activities of $197.9 million for
the six months ended June 30, 2003 principally reflect capital expenditures
of $140.3 million related to purchases of property, plant and equipment and
$44.8 million related to acquisitions of operating assets. Net cash
expenditures for investing activities of $283.3 million for the six months
ended June 30, 2002 principally reflect capital expenditures of $229.9
million related to purchases of property, plant and equipment and $93.8
million primarily related to acquisitions of operating assets.

Financing Activities:

Financing activities for the six months ended June 30, 2003 principally
reflect the net reduction in debt of $834.0 million, proceeds from a secured
forward exchange contract of $83.5 million and proceeds of $30.2 million
related to the exercise of stock options. Financing activities for the six
months ended June 30, 2002 principally reflect the net reduction in debt of
$607.3 million and proceeds of $59.2 million related to the exercise of stock
options and warrants.

We expect to fund anticipated cash requirements (including payments of
principal and interest on outstanding indebtedness and commitments,
acquisitions, anticipated capital expenditures, share repurchases and
dividends) for the foreseeable future with cash flows from operations and
various externally generated funds.

SOURCES OF CAPITAL

As of June 30, 2003 and December 31, 2002 we had the following debt
outstanding:

|                                |  |          |         |              |  |   |         |    
|------------------------------- |  | -------- | ------- | ------------ |  | - | ------- | ---
|(In millions)                   |  | June 30, |         | December 31,
|                                |  | 2003     |         | 2002        
|                                |  |          |         |             
|Credit facilities  domestic    |  | $        | 576.6   |              |  | $ | 2,056.6 |    
|Credit facility  international |  |          | 49.1    |              |  |   | 95.7    |    
|Senior convertible notes        |  |          |        |              |  |   | 517.6   |    
|Liquid Yield Option Notes       |  |          |        |              |  |   | 252.1   | (a)
|Long-term bonds (b)             |  |          | 7,130.5 |              |  |   | 5,655.9 |    
|Other borrowings                |  |          | 217.7   |              |  |   | 200.7   |    
|                                |  |          |         |              |  |   |         |    
|Total Debt (c)                  |  |          | 7,973.9 |              |  |   | 8,778.6 |    
|Less: Cash and cash equivalents |  |          | 195.6   |              |  |   | 170.1   |    
|                                |  |          |         |              |  |   |         |    
|                                |  | $        | 7,778.3 |              |  | $ | 8,608.5 |    
|                                |  |          |         |              |  |   |         |    



|(a) |  | Includes $42.1 million in unamortized fair value purchase accounting
adjustment premiums related to the merger with Jacor Communications,
Inc. at December 31, 2002.                                                                                                                                                                                                           
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Includes $18.2 million and $44.6 million in unamortized fair value
purchase accounting adjustment premiums related to the merger with AMFM
Inc. at June 30, 2003 and December 31, 2002, respectively. Also
includes $108.9 million and $119.8 million related to fair value
adjustments for interest rate swap agreements at June 30, 2003 and
December 31, 2002, respectively.
|   
|(c) |  | Total face value of outstanding debt was $8.0 billion and $8.7 billion
at June 30, 2003 and December 31, 2002, respectively.                                                                                                                                                                                                                                                   

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Domestic Credit Facilities

We currently have three separate domestic credit facilities. These
provide cash for both working capital needs as well as to fund certain
acquisitions and refinancing of certain public debt securities.

The first credit facility is a reducing revolving credit facility,
originally in the amount of $2.0 billion. At June 30, 2003, $75.0 million
was outstanding and $1.1 billion was available for future borrowings. The
amount available for future borrowings under this credit facility began
reducing on September 30, 2000, with quarterly reductions to continue through
the last business day of June 2005. The reductions in amounts available for
future borrowings total $109.4 million per quarter in 2003 and 2004, $131.3
million in the first quarter of 2005 and $381.3 million in the second quarter
of 2005.

The second facility is a $1.5 billion, five-year multi-currency
revolving credit facility. At June 30, 2003, the outstanding balance was
$1.6 million and, taking into account letters of credit of $113.4 million,
$1.4 billion was available for future borrowings, with the entire balance to
be repaid on August 30, 2005.

The third facility was a $1.5 billion three-year term loan with a
maturity of August 28, 2005. On April 30, 2003, May 21, 2003 and May 30,
2003 we paid down $500.0 million, $145.0 million and $355.0 million,
respectively, all which permanently reduced this term loan to $500.0 million
at June 30, 2003.

During the six months ended June 30, 2003, we made principal payments
totaling $3.0 billion and drew down $1.5 billion on these credit facilities.
As of July 31, 2003, the credit facilities aggregate outstanding balance was
$550.4 million and, taking into account outstanding letters of credit, $2.5
billion was available for future borrowings.

International Credit Facility

We have a $150.0 million five-year revolving credit facility with a
group of international banks. This facility allows for borrowings in various
foreign currencies, which are used to hedge net assets in those currencies
and provides funds to our international operations for certain working
capital needs. At June 30, 2003, $49.1 million was outstanding. This credit
facility expires on December 8, 2005.

Liquid Yield Option Notes

We assumed 4.75% Liquid Yield Option Notes (LYONs) due 2018,
originally issued by Jacor Communications, Inc., as a part of the merger with
Jacor. Each LYON has a principal amount at maturity of $1,000 and is
convertible, at the option of the holder, at any time on or prior to
maturity, into our common stock at a conversion rate of 7.227 shares per
LYON. We could purchase the LYONs, at the option of the holder, on February
9, 2003 for a purchase price of $494.52 per LYON, representing a 4.75% yield
per annum to the holder on such date. At February 9, 2003, 9,683 LYONs were
put to us, which we purchased for an aggregate price of $4.8 million. On
April 17, 2003, we redeemed, pursuant to a call provision in the indenture
governing the LYONs, all of the outstanding 4.75% LYONs for $208.2 million.
As a result of the redemption, we recognized a non-cash gain on the
extinguishment of debt of $41.3 million during the second quarter of 2003.

Long-Term Bonds

On January 9, 2003, we completed a debt offering of $300.0 million
4.625% notes due January 15, 2008 and $500.0 million 5.75% notes due January
15, 2013. Interest is payable on January 15 and July 15 on both series of
notes. The aggregate net proceeds of approximately $791.2 million were used
to repay borrowings outstanding under our bank credit facilities and to
finance the redemption of AMFM Operating, Inc.s outstanding 8.125% senior
subordinated notes due in 2007 and 8.75% senior subordinated notes due in
2007 as described below.

On February 10, 2003, we redeemed all of AMFM Operating Inc.s
outstanding 8.125% senior subordinated notes due 2007, originally issued by
Chancellor Media Corporation of Los Angeles, for $379.2 million plus accrued
interest. On February 18, 2003, we redeemed all of AMFM Operating Inc.s
outstanding 8.75% senior subordinated notes due 2007, originally issued by
Chancellor Radio Broadcasting Company, for $193.4 million plus accrued
interest. The AMFM notes were redeemed pursuant to call provisions in the
indentures governing the notes.

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On March 17, 2003, we completed a debt offering of $200.0 million 4.625%
notes due January 15, 2008. Interest is payable on January 15 and July 15.
The aggregate net proceeds of approximately $203.4 million were used to repay
borrowings outstanding under our bank credit facilities and to finance the
redemption of all of the 4.75% LYONs due 2008.

On May 1, 2003, we completed a debt offering of $500.0 million 4.25%
notes due May 15, 2009. Interest is payable on May 15 and November 15. The
aggregate net proceeds of $497.0 million were used to repay borrowings
outstanding on the $1.5 billion three-year term loan. In conjunction with
the issuance, we entered into an interest rate swap agreement with a $500.0
million notional amount that effectively floats interest at a rate based upon
LIBOR.

On May 21, 2003, we completed a debt offering of $250.0 million 4.40%
notes due May 15, 2011 and $250.0 million 4.90% notes due May 15, 2015.
Interest is payable on May 15 and November 15 on both series of notes. The
aggregate net proceeds of approximately $496.1 million were used to repay
borrowings outstanding on the $1.5 billion three-year term loan.

Shelf Registration

On March 29, 2002, we filed a Registration Statement on Form S-3
covering a combined $3.0 billion of debt securities, junior subordinated debt
securities, preferred stock, common stock, warrants, stock purchase contracts
and stock purchase units (the shelf registration statement). The shelf
registration statement also covers preferred securities that may be issued
from time to time by our three Delaware statutory business trusts and
guarantees of such preferred securities by us. The SEC made this shelf
registration statement effective on April 2, 2002. After the debt offerings
of January 9, 2003, March 17, 2003, May 1, 2003 and May 21, 2003, $1.0
billion remains available from this shelf registration statement.

Debt Covenants

Our only significant covenants relate to leverage ratio and interest
coverage contained and defined in the credit facilities. The leverage ratio
covenant requires us to maintain a ratio of total debt to EBITDA (as defined
by the credit facilities) of less than 5.50x through June 30, 2003 and less
than 5.00x from July 1, 2003 through the maturity of the facilities. The
interest coverage covenant requires us to maintain a minimum ratio of EBITDA
(as defined by the credit facilities) to interest expense of 2.00x. In the
event that we do not meet these covenants, we are considered to be in default
on the credit facilities at which time the credit facilities may become
immediately due. At June 30, 2003, our leverage and interest coverage ratios
were 3.7x and 5.4x, respectively. Including our cash and cash equivalents
recorded at June 30, 2003, our leverage on a net debt basis was 3.6x. Our
bank credit facilities have cross-default provisions among the bank
facilities only. No other Clear Channel debt agreements have cross-default
or cross-acceleration provisions.

Additionally, the AMFM long-term bonds contain certain restrictive
covenants that limit the ability of AMFM Operating Inc., a wholly-owned
subsidiary of Clear Channel, to incur additional indebtedness, enter into
certain transactions with affiliates, pay dividends, consolidate, or effect
certain asset sales.

Our domestic credit facilities include a provision for an increase in
fees of 12.5 basis points on borrowings and 5 basis points on amounts
available for future borrowings in the event that both of our long-term debt
ratings drop below our current ratings of BBB-/Baa3. Conversely, if our
long-term debt ratings improve, we have a proportionate decrease in fees.
Our $150.0 million international credit facility includes a put option in the
event that our long-term debt ratings fall below BB+/Ba1. We believe there
are no other agreements that contain provisions that trigger an event upon a
change in long-term debt ratings that would have a material impact to our
financial statements.

At June 30, 2003, we were in compliance with all debt covenants. We
expect to remain in compliance throughout 2003.

USES OF CAPITAL

Dividends

On July 23, 2003 our Board of Directors declared a quarterly cash dividend
of $0.10 per share on our Common Stock. The dividend is payable on October 15,
2003 to shareholders of record at the close of business on September 30, 2003.

Acquisitions

During the six months ended June 30, 2003 we acquired four radio
stations for $9.6 million in cash. We also acquired approximately 600
outdoor display faces in eight domestic markets and approximately 750 display
faces in one international market

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for a total of $21.0 million in cash. Our outdoor segment also acquired
investments in nonconsolidated affiliates for a total of $4.0 million in cash
and acquired an additional 10% interest in a subsidiary for $5.1 million in
cash. Our live entertainment segment made cash payments of $1.7 million
during the six months ended June 30, 2003, primarily related to various
earn-outs and deferred purchase price consideration on prior year
acquisitions. Also, our national representation business acquired new
contacts for a total of $3.4 million in cash during the six months ended June
30, 2003. We intend to continue to acquire certain businesses that fit our
strategic goals; however, our primary focus is on reduction of debt.

Capital Expenditures

Capital expenditures in the six months ended June 30, 2003 decreased
from $229.9 million in 2002 to $140.3 million in the same period of 2003.
Overall, capital expenditures decreased due to less integration and
consolidation of our operations as well as less revenue producing capital
expenditures during the first half of 2003 as compared to the same period of
the prior year. We anticipate our total capital expenditures for 2003 will
be approximately $500 million.

|                       |  |                                                     |      |         |  |               |      |       |  |       |      |  |  |               |      |  |  |   |       | 
|---------------------- |  | --------------------------------------------------- | ---- | ------- |  | ------------- | ---- | ----- |  | ----- | ---- |  |  | ------------- | ---- |  |  | - | ----- | 
|(In millions)          |  |                                                     |      |         |  |               |      |       |  |       |      |  |  |               |      |  |  |   |       | 
|                       |  | Six Months Ended June 30, 2003 Capital Expenditures
|                       |  |                                                    
|                       |  |                                                     |      |         |  |               |      |       |  |       |      |  |  | Corporate and |      |  |  |  
|                       |  | Radio                                               |      | Outdoor |  | Entertainment |      | Other |  | Total
|                       |  |                                                     |      |         |  |               |      |       |  |      
|Recurring              |  | $                                                   | 20.3 |         |  | $             | 24.1 |       |  | $     | 9.5  |  |  | $             | 7.5  |  |  | $ | 61.4  | 
|Non-recurring projects |  |                                                     | .6   |         |  |               |     |       |  |       | .5   |  |  |               | 3.0  |  |  |   | 4.1   | 
|Revenue producing      |  |                                                     |     |         |  |               | 56.2 |       |  |       | 18.6 |  |  |               |     |  |  |   | 74.8  | 
|                       |  |                                                     |      |         |  |               |      |       |  |       |      |  |  |               |      |  |  |   |       | 
|                       |  | $                                                   | 20.9 |         |  | $             | 80.3 |       |  | $     | 28.6 |  |  | $             | 10.5 |  |  | $ | 140.3 | 
|                       |  |                                                     |      |         |  |               |      |       |  |       |      |  |  |               |      |  |  |   |       | 

Radio broadcasting capital expenditures declined $19.0 million in the six
months ended June 30, 2003 as compared to the same period of 2002 due to fewer
non-recurring project related expenditures.

Outdoor advertising capital expenditures during the six months ended June
30, 2003 decreased $50.5 million as compared to the same period of 2002
primarily due to fewer revenue producing related capital expenditures.

Live entertainment capital expenditures during the six months ended June
30, 2003 decreased $3.5 million as compared to the same period of 2002.

Capital expenditures listed under Corporate and Other declined $16.6
million during the six months ended June 30, 2003 as compared to the same
period of 2002 due to capital expenditures in 2002 related to the completion of
a new data and administrative service center which replaced leased locations.

Off-Balance Sheet Arrangements

In accordance with generally accepted accounting principles in the United
States, we do not record the following transactions on our balance sheet:

Commitments and Contingencies

We were among the defendants in a lawsuit filed on June 12, 2002 in the
United States District Court for the Southern District of Florida by Spanish
Broadcasting System. The plaintiffs alleged that we were in violation of
Section One and Section Two of the Sherman Antitrust Act as well as various
other claims, such as unfair trade practices and defamation, among other
counts. This case was dismissed with prejudice on January 31, 2003. The
plaintiffs filed with the court for reconsideration. On
August 6, 2003, the court denied the plaintiffs motion for
reconsideration and therefore, this case is concluded in the District
Court.

There are various other lawsuits and claims pending against us. We
believe that any ultimate liability resulting from those actions or claims
will not have a material adverse effect on our results of operations,
financial position or liquidity.

Certain agreements relating to acquisitions provide for purchase price
adjustments and other future contingent payments based on the financial
performance of the acquired companies generally over a one to five year
period. We will continue to accrue additional amounts related to such
contingent payments if and when it is determinable that the applicable
financial performance targets will be met. The aggregate of these contingent
payments, if performance targets are met, would not significantly impact our
financial position or results of operations.

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Guarantees

As of June 30, 2003, we guaranteed the debt of third parties of
approximately $85.4 million primarily related to long-term operating
contracts. The third parties associated operating assets secure a
substantial portion of these obligations.

We have provided a guarantee under a certain performance contract of
approximately $77.4 million that expires in 2004. As of June 30, 2003, the
remaining amount of the guarantee is $38.7 million.

Market Risk

Interest Rate Risk

At June 30, 2003, approximately 33% of our long-term debt, including
fixed rate debt on which we have entered into interest rate swap agreements,
bears interest at variable rates. Accordingly, our earnings are affected by
changes in interest rates. Assuming the current level of borrowings at
variable rates and assuming a two percentage point change in the years
average interest rate under these borrowings, it is estimated that our
interest expense would have changed by $52.3 million and that our net income
would have changed by $32.4 million during the first six months of 2003. In
the event of an adverse change in interest rates, management may take actions
to further mitigate our exposure. However, due to the uncertainty of the
actions that would be taken and their possible effects, the analysis assumes
no such actions. Further the analysis does not consider the effects of the
change in the level of overall economic activity that could exist in such an
environment.

At June 30, 2003, we had entered into interest rate swap agreements with
a $2.0 billion aggregate notional amount that effectively float interest at
rates based upon LIBOR. These agreements expire from September 2003 to May
2009. The fair value of these agreements at June 30, 2003 was an asset of
$108.9 million.

Equity Price Risk

At June 30, 2003, the carrying value of our available-for-sale and
trading equity securities was $144.3 million and $18.6 million, respectively.
These investments are affected by changes in their quoted market prices. It
is estimated that a 20% change in the market prices of these securities would
change their carrying value at June 30, 2003 by $32.6 million and would
change accumulated comprehensive income (loss) and net income (loss) by $17.9
million and $2.3 million, respectively. At June 30, 2003, we also held $33.5
million of investments that do not have a quoted market price, but are
subject to fluctuations in their value.

Foreign Currency

We have operations in countries throughout the world. Foreign
operations are measured in their local currencies except in
hyper-inflationary countries in which we operate. As a result, our financial
results could be affected by factors such as changes in foreign currency
exchange rates or weak economic conditions in the foreign markets in which we
have operations. To mitigate a portion of the exposure to risk of
international currency fluctuations, we maintain a natural hedge through
borrowings in currencies other than the U.S. dollar. This hedge position is
reviewed monthly. We currently maintain no derivative instruments to
mitigate the exposure to translation and/or transaction risk. However, this
does not preclude the adoption of specific hedging strategies in the future.
Our foreign operations reported a net loss of $25.5 million for the six
months ended June 30, 2003. It is estimated that a 10% change in the value
of the U.S. dollar to foreign currencies would change net loss for the six
months ended June 30, 2003 by $2.6 million.

Our earnings are also affected by fluctuations in the value of the U.S.
dollar as compared to foreign currencies as a result of our investments in
various countries, all of which are accounted for under the equity method.
It is estimated that the result of a 10% fluctuation in the value of the
dollar relative to these foreign currencies at June 30, 2003 would change our
equity in earnings of nonconsolidated affiliates by $.5 million and would
change our net income for the six months ended June 30, 2003 by approximately
$.3 million. This analysis does not consider the implications that such
fluctuations could have on the overall economic activity that could exist in
such an environment in the U.S. or the foreign countries or on the results of
operations of these foreign entities.

Recent Accounting Pronouncements

On January 1, 2003, we adopted Statement of Financial Accounting
Standards No. 143, Accounting for Asset Retirement Obligations(Statement
143). Statement 143 applies to legal obligations associated with the
retirement of long-lived assets that

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result from acquisition, construction, development and/or the normal
operation of a long-lived asset. Adoption of this statement did not
materially impact our financial position or results of operations.

On January 1, 2003, we adopted Statement of Financial Accounting
Standards No. 146, Accounting for Costs Associated with Exit or Disposal
Activities(Statement 146). Statement 146 addresses the accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition
for Certain Employee Terminations Benefits and Other Costs to Exit an
Activity. It also substantially nullifies EITF Issue No. 88-10, Costs
Associated with Lease Modification or Termination. Adoption of this
statement did not materially impact our financial position or results of
operations.

On January 1, 2003, we adopted Financial Accounting Standards Board
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others(FIN
45). FIN 45 applies to contracts or indemnification agreements that
contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying that is related to an asset, liability, or
an equity security of the guaranteed party. FIN 45s disclosure requirements
were effective for financial statements of interim or annual periods ending
after December 15, 2002. FIN 45s initial recognition and initial
measurement provisions were applicable on a prospective basis to guarantees
issued or modified after December 31, 2002, irrespective of the guarantors
fiscal year-end. We adopted the disclosure requirements of this
Interpretation for our 2002 annual report. Adoption of the initial
recognition and initial measurement requirements of FIN 45 did not materially
impact our financial position or results of operations.

On January 1, 2003, the Financial Accounting Standards Board issued Financial
Accounting Standards Board Interpretation No. 46, Consolidation of Variable
Interest Entities(FIN 46). FIN 46 addresses consolidation of business
enterprises of variable interest entities. FIN 46 is effective immediately for
all variable interest entities created after January 31, 2003 and for the first
fiscal year or interim period beginning after June 15, 2003 for variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. We have not acquired any variable interest
entities subsequent to January 31, 2003 and will therefore adopt FIN 46 for our
quarterly report for the period ending September 30, 2003. We have certain
investments, accounted for under the equity method, that include a put and call
structure that guarantees a minimum return to the counter party. We also have
certain long-term contracts related to the programming and/or sale of
advertising air time for radio stations that it does not own. We are currently
evaluating the applicability of FIN 46 to these arrangements, as well as other
equity investments and arrangements, and the possible impact on its future
consolidated results of operation and consolidated balance sheet.

Critical Accounting Policies

The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
estimates, judgments and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of expenses during the
reporting period. On an ongoing basis, we evaluate our estimates that are
based on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. The result of these
evaluations forms the basis for making judgments about the carrying values of
assets and liabilities and the reported amount of expenses that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions. The following accounting policies require
significant management judgments and estimates.

Allowance for Doubtful Accounts

We evaluate the collectibility of our accounts receivable based on a
combination of factors. In circumstances where we are aware of a specific
customers inability to meet its financial obligations, we record a specific
reserve to reduce the amounts recorded to what we believe will be collected.
For all other customers, we recognize reserves for bad debt based on historical
experience of bad debts as a percent of revenues for each business unit,
adjusted for relative improvements or deteriorations in the agings and changes
in current economic conditions.

Revenue Recognition

Radio broadcasting revenue is recognized as advertisements or programs are
broadcast and is generally billed monthly. Outdoor advertising provides
services under the terms of contracts covering periods up to three years, which
are generally billed monthly. Revenue for outdoor advertising space rental is
recognized ratably over the term of the contract. Advertising revenue is
reported net of agency commissions. Agency commissions are calculated based on
a stated percentage applied to gross billing revenue for our broadcasting and
outdoor operations. Clients remit the gross billing amount to the agency and
the agency remits gross billings less their commission to us. Payments
received in advance of being earned are recorded as deferred income.

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Entertainment revenue from the presentation and production of an event is
recognized on the date of the performance. Revenue collected in advance of the
event is recorded as deferred income until the event occurs. Entertainment
revenue collected from advertising and other revenue, which is not related to
any single event, is classified as deferred revenue and generally amortized
over the operating season or the term of the contract.

Purchase Accounting

We account for our business acquisitions under the purchase method of
accounting. The total cost of acquisitions is allocated to the underlying net
assets, based on their respective estimated fair values. The excess of the
purchase price over the estimated fair values of the net assets acquired is
recorded as goodwill. Determining the fair value of assets acquired and
liabilities assumed requires managements judgment and often involves the use
of significant estimates and assumptions, including assumptions with respect to
future cash inflows and outflows, discount rates, asset lives and market
multiples, among other items. In addition, reserves have been established on
our balance sheet related to acquired liabilities and qualifying restructuring
costs based on assumptions made at the time of acquisition. We evaluate these
reserves on a regular basis to determine the adequacies of the amounts.

Long-Lived Assets

We record impairment losses when events and circumstances indicate that
depreciable and amortizable long-lived assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amount of those assets. When specific assets are determined to be
unrecoverable, the cost basis of these assets are reduced to reflect their
current fair market value. We use various assumptions in determining the
current fair market value of these assets, including future expected cash flows
and discount rates, as well as future salvage values.

In the first quarter of 2002, we adopted Statement 142, Goodwill and Other
Intangible Assets. In accordance with Statement 142, we tested our FCC
licenses for impairment as of January 1, 2002 by comparing their fair value to
their carrying value at that date. We recorded an impairment charge of our FCC
licenses of approximately $6.0 billion, net of deferred tax of $3.7 billion.
We used an income approach to value the FCC licenses. We also recorded an
impairment charge of our goodwill of approximately $10.8 billion, net of
deferred taxes of $659.1 million. Similar to our test for impairment of FCC
licenses, we used the income approach to determine the fair value of our
reporting units. The fair value of our reporting units was used to apply value
to the net assets of each reporting unit. To the extent that the net assets
exceeded the fair value, an impairment charge was recorded. The income
approach used for valuing goodwill and FCC licenses involved estimating future
cash flows expected to be generated from the related assets, discounted to
their present value using a risk-adjusted discount rate. Terminal values were
also estimated and discounted to their present value. The fair values
calculated were significantly impacted by the assumptions made, which impacted
our impairment charge. We may incur additional impairment charges in future
periods under Statement 142 to the extent we do not achieve our expected cash
flow growth rates, and to the extent that market values and long-term interest
rates in general decrease and increase, respectively.

Accounting for Investments

At June 30, 2003, we had $196.4 million recorded as other investments.
Other investments are composed primarily of equity securities. These
securities are classified as available-for-sale or trading and are carried at
fair value based on quoted market prices. Securities are carried at historical
value when quoted market prices are unavailable. The net unrealized gains or
losses on available-for-sale securities, net of tax, are reported as a separate
component of shareholders equity. The net unrealized gains or losses on
trading securities are reported in the statement of operations. In addition,
we hold investments that do not have quoted market prices. We review the value
of these investments and record an impairment charge in the statement of
operations for any decline in value that is determined to be
other-than-temporary. For the six months ended June 30, 2003 and 2002, we
recorded no impairment charges related to other-than-temporary declines in the
value of our investments. In addition, at June 30, 2003, we had $530.0 million
recorded as investments accounted for under the equity method. We review the
value of these investments and record an impairment charge in the statement of
operations for any decline in value that is determined to be
other-than-temporary.

Tax Accruals

The Internal Revenue Service and other taxing authorities routinely
examine our tax returns. From time to time, the IRS challenges certain of our
tax positions. We believe our tax positions comply with applicable tax law and
we would vigorously defend these positions if challenged. The final
disposition of any positions challenged by the IRS could require us to make
additional tax payments. We believe that we have adequately accrued for any
foreseeable payments resulting from tax examinations and consequently do not
anticipate any material impact upon their ultimate resolution.

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Litigation Accruals

We are currently involved in certain legal proceedings and, as required,
have accrued our estimate of the probable costs for the resolution of these
claims. These estimates have been developed in consultation with counsel and
are based upon an analysis of potential results, assuming a combination of
litigation and settlement strategies. It is possible, however, that future
results of operations for any particular period could be materially affected by
changes in our assumptions or the effectiveness of our strategies related to
these proceedings.

Inflation

Inflation has affected our performance in terms of higher costs for
wages, salaries and equipment. Although the exact impact of inflation is
indeterminable, we believe we have offset these higher costs in various
manners.

Ratio of Earnings to Fixed Charges

The ratio of earnings to fixed charges is as follows:

|                 |      |                         |  |      |      |      |  |      |      |      |  |      |   |  |  |  |      |  |  |  |      |  |  |  |      | 
|---------------- | ---- | ----------------------- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | - |  |  |  | ---- |  |  |  | ---- |  |  |  | ---- | 
|Six Months ended |      |                         |  |      |      |      |  |      |      |      |  |      |   |  |  |  |      |  |  | 
|June 30,         |      | Year Ended December 31,
|                 |      |                        
|2003             |      | 2002                    |  | 2002 |      | 2001 |  | 2000 |      | 1999 |  | 1998
|                 |      |                         |  |      |      |      |  |      |      |      |  |     
|                 | 2.49 |                         |  |      | 2.49 |      |  |      | 2.62 |      |  |      | * |  |  |  | 2.20 |  |  |  | 2.04 |  |  |  | 1.83 | 

* For the year ended December 31, 2001, fixed charges exceeded earnings
before income taxes and fixed charges by $1.3 billion.

The ratio of earnings to fixed charges was computed on a total
enterprise basis. Earnings represent income from continuing operations
before income taxes less equity in undistributed net income (loss) of
unconsolidated affiliates plus fixed charges. Fixed charges represent
interest, amortization of debt discount and expense, and the estimated
interest portion of rental charges. We had no preferred stock outstanding
for any period presented.

Regulatory Matters

On June 2, 2003, the FCC adopted a decision modifying a number of its
rules governing the ownership of radio stations and other media outlets in
local and national markets. Among other changes, the modified rules establish
a new methodology for defining local radio markets and counting stations within
those markets, treat radio joint sales agreements as ownership interests of the
selling party in certain circumstances, allow for increased ownership of TV
stations at the local and national level, and permit additional local
cross-ownership of daily newspapers, television stations, and radio stations.

We expect some parties to petition the FCC for reconsideration of the new
regulations. In addition, we expect that certain aspects of the new rules will
be challenged in Court and Congress is also currently reviewing the new
regulations. Given these contingencies, it is unclear at this time whether the
new FCC regulations will be fully implemented in their current form.

Risks Regarding Forward Looking Statements

Except for the historical information, this report contains various
forward-looking statements that represent our expectations or beliefs
concerning future events, including the future levels of cash flow from
operations. Management believes that all statements that express
expectations and projections with respect to future matters, including the
strategic fit of radio assets; expansion of market share; our ability to
capitalize on synergies between the live entertainment and radio broadcasting
businesses; the availability of capital resources; and expected changes in
advertising revenues are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. We caution that these
forward-looking statements involve a number of risks and uncertainties and
are subject to many variables that could have an adverse effect upon our
financial performance. These statements are made on the basis of managements
views and assumptions, as of the time the statements are made, regarding
future events and business performance. There can be no assurance, however,
that managements expectations will necessarily come to pass.

A wide range of factors could materially affect future developments and
performance, including:



| |  |  | the impact of general economic conditions in the U.S. and in other countries in which we currently do business;
| | - |  | ---------------------------------------------------------------------------------------------------------------

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| |  |  | the impact of the geopolitical environment;                                                                                       
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to integrate the operations of recently acquired companies;                                                           
|
| |  |  | shifts in population and other demographics;                                                                                      
|
| |  |  | industry conditions, including competition;                                                                                       
|
| |  |  | fluctuations in operating costs;                                                                                                  
|
| |  |  | technological changes and innovations;                                                                                            
|
| |  |  | changes in labor conditions;                                                                                                      
|
| |  |  | fluctuations in exchange rates and currency values;                                                                               
|
| |  |  | capital expenditure requirements;                                                                                                 
|
| |  |  | litigation settlements;                                                                                                           
|
| |  |  | legislative or regulatory requirements;                                                                                           
|
| |  |  | interest rates;                                                                                                                   
|
| |  |  | the effect of leverage on our financial position and earnings;                                                                    
|
| |  |  | taxes;                                                                                                                            
|
| |  |  | access to capital markets; and                                                                                                    
|
| |  |  | certain other factors set forth in our SEC filings, including our
Annual Report on Form 10-K for the year ended December 31, 2002.

This list of factors that may affect future performance and the accuracy
of forward-looking statements is illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.




Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Required information is within Item 2




Item 4. CONTROLS AND PROCEDURES

Our principal executive and financial officers have concluded, based on
their evaluation as of the end of the period covered by this Form 10-Q, that
our disclosure controls and procedures, as defined under Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, are effective to ensure
that information we are required to disclose in the reports we file or
submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms, and
include controls and procedures designed to ensure that information we are
required to disclose in such reports is accumulated and communicated to
management, including our principal executive and financial officers, as
appropriate to allow timely decisions regarding required disclosure.

Subsequent to our evaluation, there were no significant changes in
internal controls or other factors that could significantly affect these
internal controls.

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Part II  OTHER INFORMATION




Item 1. LEGAL PROCEEDINGS

See Notes to the Financial Statements




Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

An annual meeting of shareholders of the Company was held on April 23, 2003.
Alan D. Feld, Thomas O. Hicks, Perry J. Lewis, L. Lowry Mays, Mark P. Mays,
Randall T. Mays, B. J. McCombs, Phyllis B. Riggins, Theodore H. Strauss J. C.
Watts and John H. Williams were elected as directors of the Company, each to
hold office until the next annual meeting of shareholders or until his
successor has been elected and qualified, subject to earlier resignation and
removal. The shareholders also approved the selection of Ernst & Young LLP as
independent auditors for the year ending December 31, 2003.

The results of voting at the annual meeting of the shareholders were as
follows:

Proposal No. 1
(Election of Directors)

|                    |  |     |             |          |  |  |             | 
|------------------- |  | --- | ----------- | -------- |  |  | ----------- | 
|Nominee             |  | For |             | Withheld
|                    |  |     |             |         
|Alan D. Feld        |  |     | 398,505,686 |          |  |  | 110,334,759 | 
|Thomas O. Hicks     |  |     | 503,311,772 |          |  |  | 5,528,673   | 
|Perry J. Lewis      |  |     | 500,882,933 |          |  |  | 7,957,512   | 
|L. Lowry Mays       |  |     | 496,723,842 |          |  |  | 12,116,603  | 
|Mark P. Mays        |  |     | 499,259,835 |          |  |  | 9,580,610   | 
|Randall T. Mays     |  |     | 498,682,085 |          |  |  | 10,158,360  | 
|B.J. McCombs        |  |     | 398,607,717 |          |  |  | 110,232,728 | 
|Phyllis B. Riggins  |  |     | 500,952,590 |          |  |  | 7,887,855   | 
|Theodore H. Strauss |  |     | 501,302,032 |          |  |  | 7,538,413   | 
|J.C. Watts          |  |     | 503,391,514 |          |  |  | 5,448,931   | 
|John H. Williams    |  |     | 500,956,079 |          |  |  | 7,884,366   | 

Proposal No. 2
(Selection of Ernst & Young LLP as Independent Auditors for the year ending December 31, 2003

|    |             |                  |  |                    |            |  |  |  |           | 
|--- | ----------- | ---------------- |  | ------------------ | ---------- |  |  |  | --------- | 
|For |             | Withhold/Against |  | Exceptions/Abstain
|    |             |                  |  |                   
|    | 493,743,459 |                  |  |                    | 12,285,319 |  |  |  | 2,811,667 | 




Item 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits. See Exhibit Index on Page 34
| | --- |  | --------------------------------------
|
| | (b) |  | Reports on Form 8-K                   

|       |  |         |  |                 |  |                              
|------ |  | ------- |  | --------------- |  | -----------------------------
|Filing |  | Date    |  | Items Reported  |  | Financial Statements Reported
|       |  |         |  |                 |  |                              
|8-K    |  | 4/30/03 |  | Item 12  Other |  | None                         
|8-K    |  | 5/02/03 |  | Item 5  Other  |  | None                         
|8-K    |  | 5/22/03 |  | Item 5  Other  |  | None                         

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|               |  |                                                                        
|-------------- |  | -----------------------------------------------------------------------
|               |  | CLEAR CHANNEL COMMUNICATIONS, INC.                                     
|               |  |                                                                        
|August 6, 2003 |  | /s/ Randall T. Mays                                                    
|               |  |                                                                        
|               |  | Randall T. Mays
Executive Vice President and
Chief Financial Officer   
|               |  |                                                                        
|August 6, 2003 |  | /s/ Herbert W. Hill, Jr.                                               
|               |  |                                                                        
|               |  | Herbert W. Hill, Jr.
Senior Vice President and
Chief Accounting Officer

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INDEX TO EXHIBITS

|        |  |                                                                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                       
|Number  |  | Description                                                                                                                                                                                                                                                                                           
|       
|2.1     |  | Agreement and Plan of Merger dated as of
October 5, 2001, by and among Clear
Channel, CCMM Sub, Inc. and The Ackerley
Group, Inc. (incorporated by reference to
the exhibits of Clear Channels Current
Report on Form 8-K filed October 9,
2001).                                                    
|       
|3.1     |  | Current Articles of Incorporation of the
Company (incorporated by reference to the
exhibits of the Companys Registration
Statement on Form S-3 (Reg. No.
333-33371) dated September 9, 1997).                                                                                                        
|       
|3.2     |  | Third Amended and Restated Bylaws of the
Company (incorporated by reference to the
exhibits of the Companys Registration
Statement on Form S-4 (Reg. No.
333-74196) dated November 29, 2001).                                                                                                        
|       
|3.3     |  | Amendment to the Companys Articles of
Incorporation (incorporated by reference
to the exhibits to the Companys
Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998).                                                                                                             
|       
|3.4     |  | Second Amendment to Clear Channels
Articles of Incorporation (incorporated
by reference to the exhibits to Clear
Channels Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999).                                                                                                      
|       
|3.5     |  | Third Amendment to Clear Channels
Articles of Incorporation (incorporated
by reference to the exhibits to Clear
Channels Quarterly Report on Form 10-Q
for the quarter ended May 31, 2000).                                                                                                         
|       
|4.1     |  | Agreement Concerning Buy-Sell Agreement
by and between Clear Channel
Communications, Inc., L. Lowry Mays, B.J.
McCombs, John M. Schaefer and John W.
Barger, dated August 3, 1998
(incorporated by reference to the
exhibits to Clear Channels Schedule
13-D/A, dated October 10, 2002).             
|       
|4.2     |  | Waiver and Second Agreement Concerning
Buy-Sell Agreement by and between Clear
Channel Communications, Inc., L. Lowry
Mays and B.J. McCombs, dated August 17,
1998 (incorporated by reference to the
exhibits to Clear Channels Schedule
13-D/A, dated October 10, 2002).                            
|       
|4.3     |  | Waiver and Third Agreement Concerning
Buy-Sell Agreement by and between Clear
Channel Communications, Inc., L. Lowry
Mays and B.J. McCombs, dated July 26,
2002 (incorporated by reference to the
exhibits to Clear Channels Schedule
13-D/A, dated October 10, 2002).                               
|       
|4.4     |  | Waiver and Fourth Agreement Concerning
Buy-Sell Agreement by and between Clear
Channel Communications, Inc., L. Lowry
Mays and B.J. McCombs, dated September
27, 2002 (incorporated by reference to
the exhibits to Clear Channels Schedule
13-D/A, dated October 10, 2002).                         
|       
|4.5     |  | Buy-Sell Agreement by and between Clear
Channel Communications, Inc., L. Lowry
Mays, B. J. McCombs, John M. Schaefer and
John W. Barger, dated May 31, 1977
(incorporated by reference to the
exhibits of the Companys Registration
Statement on Form S-1 (Reg. No.
33-289161) dated April 19, 1984).
|       
|4.6     |  | Senior Indenture dated October 1, 1997,
by and between Clear Channel
Communications, Inc. and The Bank of New
York as Trustee (incorporated by
reference to exhibit 4.2 of the Companys
Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997).                                     
|       
|4.7     |  | First Supplemental Indenture dated March
30, 1998 to Senior Indenture dated
October 1, 1997, by and between the
Company and The Bank of New York, as
Trustee (incorporated by reference to the
exhibits to the Companys Quarterly
Report on Form 10-Q for the quarter ended
March 31, 1998).         
|       
|4.8     |  | Second Supplemental Indenture dated June
16, 1998 to Senior Indenture dated
October 1, 1997, by and between Clear
Channel Communications, Inc. and the Bank
of New York, as Trustee (incorporated by
reference to the exhibits to the
Companys Current Report on Form 8-K
dated August 27, 1998).    

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|        |  |                                                                                                                                                                                                                                                                                                                                 
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                 
|Number  |  | Description                                                                                                                                                                                                                                                                                                                     
|       
|4.9     |  | Third Supplemental Indenture dated June
16, 1998 to Senior Indenture dated
October 1, 1997, by and between Clear
Channel Communications, Inc. and the Bank
of New York, as Trustee (incorporated by
reference to the exhibits to the
Companys Current Report on Form 8-K
dated August 27, 1998).                               
|       
|4.10    |  | Fourth Supplement Indenture dated
November 24, 1999 to Senior Indenture
dated October 1, 1997, by and between
Clear Channel and The Bank of New York as
Trustee (incorporated by reference to the
exhibits of the Companys Annual Report
on Form 10-K for the year ended December
31, 1999).                                   
|       
|4.11    |  | Fifth Supplemental Indenture dated June
21, 2000, to Senior Indenture dated
October 1, 1997, by and between Clear
Channel Communications, Inc. and The Bank
of New York, as Trustee (incorporated by
reference to the exhibits of Clear
Channels registration statement on Form
S-3 (Reg. No. 333-42028) dated July 21,
2000). 
|       
|4.12    |  | Sixth Supplemental Indenture dated June
21, 2000, to Senior Indenture dated
October 1, 1997, by and between Clear
Channel Communications, Inc. and The Bank
of New York, as Trustee (incorporated by
reference to the exhibits of Clear
Channels registration statement on Form
S-3 (Reg. No. 333-42028) dated July 21,
2000). 
|       
|4.13    |  | Seventh Supplemental Indenture dated July
7, 2000, to Senior Indenture dated
October 1, 1997, by and between Clear
Channel Communications, Inc. and The Bank
of New York, as Trustee (incorporated by
reference to the exhibits of Clear
Channels registration statement on Form
S-3 (Reg. No. 333-42028) dated July 21,
2000).
|       
|4.14    |  | Eighth Supplemental Indenture dated
September 12, 2000, to Senior Indenture
dated October 1, 1997, by and between
Clear Channel Communications, Inc. and
The Bank of New York, as Trustee
(incorporated by reference to the
exhibits to Clear Channels Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2000).
|       
|4.15    |  | Ninth Supplemental Indenture dated
September 12, 2000, to Senior Indenture
dated October 1, 1997, by and between
Clear Channel Communications, Inc. and
The Bank of New York, as Trustee
(incorporated by reference to the
exhibits to Clear Channels Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2000). 
|       
|4.16    |  | Tenth Supplemental Indenture dated
October 26, 2001, to Senior Indenture
dated October 1, 1997, by and between
Clear Channel Communications, Inc. and
The Bank of New York, as Trustee
(incorporated by reference to the
exhibits to Clear Channels Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2001).   
|       
|4.17    |  | Eleventh Supplemental Indenture dated
January 9, 2003, to Senior Indenture
dated October 1, 1997, by and between
Clear Channel Communications, Inc. and
The Bank of New York, as Trustee
(incorporated by reference to the
exhibits to Clear Channels Annual Report
on Form 10-K for the year ended December
31, 2002).        
|       
|4.18    |  | Twelfth Supplemental Indenture dated
March 17, 2003, to Senior Indenture dated
October 1, 1997, by and between Clear
Channel Communications, Inc. and The Bank
of New York, as Trustee (incorporated by
reference to the exhibits to Clear
Channels Current Report on Form 8-K
dated March 18, 2003).                          
|       
|4.19    |  | Thirteenth Supplemental Indenture dated
May 1, 2003, to Senior Indenture dated
October 1, 1997, by and between Clear
Channel Communications, Inc. and The Bank
of New York, as Trustee (incorporated by
reference to the exhibits to Clear
Channels Current Report on Form 8-K
dated May 2, 2003).                             

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|        |  |                                                                                                                                                                                                                                                                                                      
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                      
|Number  |  | Description                                                                                                                                                                                                                                                                                          
|       
|4.20    |  | Fourteenth Supplemental Indenture dated May 21, 2003, to Senior
Indenture dated October 1, 1997, by and between Clear Channel
Communications, Inc. and The Bank of New York, as Trustee
(incorporated by reference to the exhibits to Clear Channels
Current Report on Form 8-K dated May 22, 2003).
|       
|11      |  | Statement re: Computation of Per Share Earnings.                                                                                                                                                                                                                                                     
|       
|12      |  | Statement re: Computation of Ratios.                                                                                                                                                                                                                                                                 
|       
|31.1    |  | Certification of Chief Executive Officer Pursuant to Rules
13a-14(a) and 15d-14(a) under the Securities Exchange Act of
1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.                                                                                                  
|       
|31.2    |  | Certification of Chief Financial Officer Pursuant to Rules
13a-14(a) and 15d-14(a) under the Securities Exchange Act of
1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.                                                                                                  
|       
|32.1    |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                   
|       
|32.2    |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                   

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