<PAGE>   1
 
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
                                   FORM 10-Q
 
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998
 
<TABLE>
<S>                                            <C>
         COMMISSION FILE NO. 0-21570                   COMMISSION FILE NO. 333-32259
        CHANCELLOR MEDIA CORPORATION            CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
          (Exact Name of Registrant                      (Exact Name of Registrant
        as Specified in its Charter)                   as Specified in its Charter)
                  DELAWARE                                       DELAWARE
       (State or other jurisdiction of                (State or other jurisdiction of
       incorporation or organization)                 incorporation or organization)
                 75-2247099                                     75-2451687
   (I.R.S. Employer Identification Number)        (I.R.S. Employer Identification Number)
</TABLE>
 
               300 CRESCENT COURT, SUITE 600, DALLAS, TEXAS 75201
          (Address of principal executive offices, including zip code)
 
                                 (214) 922-8700
              (Registrants' telephone number, including area code)
 
     Indicate by check mark whether Chancellor Media Corporation and Chancellor
Media Corporation of Los Angeles (1) have 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 registrants were
required to file such reports), and (2) have been subject to such filing
requirements for the past 90 days.
 
<TABLE>
<S>                                                   <C>
Chancellor Media Corporation                          Yes [X] No [ ]
Chancellor Media Corporation of Los Angeles           Yes [X] No [ ]
</TABLE>
 
     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As of October 31, 1998,
142,614,039 shares of Common Stock of Chancellor Media Corporation were
outstanding and 1,040 shares of Common Stock of Chancellor Media Corporation of
Los Angeles were outstanding.
 
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<PAGE>   2
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       NO.
                                                                       ----
<S>      <C>                                                           <C>
                       PART I. FINANCIAL INFORMATION
 
Item 1.  Financial Statements........................................    3
         CHANCELLOR MEDIA CORPORATION
         Consolidated Balance Sheets (unaudited).....................    3
         Consolidated Statements of Operations (unaudited)...........    4
         Consolidated Statements of Cash Flows (unaudited)...........    5
         Notes to Consolidated Financial Statements (unaudited)......    6
         CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
         Consolidated Balance Sheets (unaudited).....................   17
         Consolidated Statements of Operations (unaudited)...........   18
         Consolidated Statements of Cash Flows (unaudited)...........   19
         Notes to Consolidated Financial Statements (unaudited)......   20
Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations...................................   31
 
                        PART II. OTHER INFORMATION
 
Item 1.  Legal Proceedings...........................................   37
Item 6.  Exhibits and Reports on Form 8-K............................   38
</TABLE>
 
                                        2
<PAGE>   3
 
                                     PART I
 
ITEM 1. FINANCIAL STATEMENTS
 
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                 (DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  1997           1998
                                                              ------------   -------------
                                                                              (UNAUDITED)
<S>                                                           <C>            <C>
Current assets:
  Cash and cash equivalents.................................   $   16,584     $   13,063
  Accounts receivable, less allowance for doubtful accounts
     of $12,651 in 1997 and $13,002 in 1998.................      239,869        321,391
  Other current assets......................................       27,208         42,343
                                                               ----------     ----------
          Total current assets..............................      283,661        376,797
Note receivable from affiliate..............................           --        150,000
Property and equipment, net.................................      159,797        299,906
Intangible assets, net......................................    4,404,443      4,916,533
Other assets, net...........................................      113,576        162,142
                                                               ----------     ----------
                                                               $4,961,477     $5,905,378
                                                               ==========     ==========
 
                           LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
  Accounts payable and accrued expenses.....................   $  171,017     $  177,472
Long-term debt..............................................    2,573,000      3,018,000
Deferred tax liabilities....................................      361,640        312,731
Other liabilities...........................................       44,405         60,403
                                                               ----------     ----------
          Total liabilities.................................    3,150,062      3,568,606
                                                               ----------     ----------
Redeemable preferred stock:
  Redeemable senior cumulative exchangeable preferred stock
     of subsidiary, par value $.01 per share; 1,000,000
     shares authorized, issued and outstanding; liquidation
     preference of $121,274 in 1997.........................      119,445             --
  Redeemable cumulative exchangeable preferred stock of
     subsidiary, par value $.01 per share; 3,600,000 shares
     authorized and 2,117,629 shares issued and outstanding;
     liquidation preference of $223,519 in 1997.............      211,763             --
Stockholders' equity:
  Preferred stock, $.01 par value. 2,200,000 shares of 7%
     convertible preferred stock authorized, issued and
     outstanding............................................      110,000        110,000
  Preferred stock, $.01 par value. 6,000,000 shares
     authorized; 5,990,000 shares of $3.00 convertible
     exchangeable preferred stock issued and outstanding....      299,500        299,500
  Common stock, $.01 par value. Authorized 200,000,000
     shares; issued and outstanding 119,921,814 shares in
     1997 and 142,392,516 in 1998...........................        1,199          1,424
Paid-in capital.............................................    1,226,930      2,243,350
Accumulated deficit.........................................     (157,422)      (317,502)
                                                               ----------     ----------
          Total stockholders' equity........................    1,480,207      2,336,772
                                                               ----------     ----------
                                                               $4,961,477     $5,905,378
                                                               ==========     ==========
</TABLE>
 
          See accompanying notes to consolidated financial statements
 
                                        3
<PAGE>   4
 
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
               (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED               NINE MONTHS ENDED
                                                -----------------------------   -----------------------------
                                                SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,
                                                    1997            1998            1997            1998
                                                -------------   -------------   -------------   -------------
<S>                                             <C>             <C>             <C>             <C>
Gross revenues................................    $166,817        $389,551        $382,994       $1,015,562
  Less agency commissions.....................     (21,795)        (45,722)        (49,711)        (116,466)
                                                  --------        --------        --------       ----------
          Net revenues........................     145,022         343,829         333,283          899,096
Operating expenses:
  Operating expenses, excluding depreciation
     and amortization.........................      73,551         175,062         184,713          491,924
  Depreciation and amortization...............      50,474         118,584         104,386          311,644
  Corporate general and administrative........       5,995          10,109          11,646           25,188
  Executive severance charge..................          --              --              --           59,475
                                                  --------        --------        --------       ----------
          Operating expenses..................     130,020         303,755         300,745          888,231
                                                  --------        --------        --------       ----------
          Operating income....................      15,002          40,074          32,538           10,865
                                                  --------        --------        --------       ----------
Other (income) expense:
  Interest expense, net.......................      22,295          48,624          45,036          135,709
  Gain on disposition of representation
     contracts................................          --         (18,497)             --          (29,767)
  Other income................................      (5,057)             --         (18,380)          (3,559)
                                                  --------        --------        --------       ----------
          Other (income) expense..............      17,238          30,127          26,656          102,383
                                                  --------        --------        --------       ----------
          Income (loss) before income taxes
            and extraordinary item............      (2,236)          9,947           5,882          (91,518)
Income tax expense (benefit)..................         985           1,548           5,244          (15,380)
Dividends on preferred stock of subsidiary....       2,779             899           2,779           17,601
                                                  --------        --------        --------       ----------
          Income (loss) before extraordinary
            item..............................      (6,000)          7,500          (2,141)         (93,739)
Extraordinary loss, net of income tax
  benefit.....................................          --          15,224           4,350           47,089
                                                  --------        --------        --------       ----------
          Net loss............................      (6,000)         (7,724)         (6,491)        (140,828)
Preferred stock dividends.....................       5,049           6,417           5,748           19,252
                                                  --------        --------        --------       ----------
          Net loss attributable to common
            stockholders......................    $(11,049)       $(14,141)       $(12,239)      $ (160,080)
                                                  ========        ========        ========       ==========
Basic and diluted loss per common share:
  Before extraordinary item...................    $  (0.12)       $   0.01        $  (0.09)      $    (0.83)
  Extraordinary item..........................          --           (0.11)          (0.05)           (0.34)
                                                  --------        --------        --------       ----------
          Net loss............................    $  (0.12)       $  (0.10)       $  (0.14)      $    (1.17)
                                                  ========        ========        ========       ==========
Weighted average common shares outstanding....      94,166         142,345          87,690          136,427
                                                  ========        ========        ========       ==========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                        4
<PAGE>   5
 
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                    NINE MONTHS ENDED
                                                              -----------------------------
                                                              SEPTEMBER 30,   SEPTEMBER 30,
                                                                  1997            1998
                                                              -------------   -------------
<S>                                                           <C>             <C>
Cash flows from operating activities:
  Net loss..................................................   $    (6,491)    $  (140,828)
  Adjustments to reconcile net loss to net cash provided by
     operating activities:
     Depreciation...........................................         9,091          18,632
     Amortization of goodwill, intangible assets and other
      assets................................................        95,295         293,012
     Executive severance charge -- stock option
      compensation..........................................            --          16,000
     Provisions for doubtful accounts.......................         3,409           4,573
     Deferred income tax expense (benefit)..................         5,244         (15,380)
     Gain on disposition of representation contracts........            --         (29,767)
     Dividends on preferred stock of subsidiary.............         2,779          17,601
     Gain on disposition of assets..........................       (18,380)             --
     Loss on extinguishment of debt.........................         4,350          47,089
     Other..................................................            --          (1,893)
     Changes in certain assets and liabilities, net of
      effects of acquisitions:
       Accounts receivable..................................       (15,171)        (73,528)
       Other current assets.................................         4,481         (10,283)
       Accounts payable and accrued expenses................         8,445          12,737
       Other assets.........................................            54          (4,114)
       Other liabilities....................................           197          12,608
                                                               -----------     -----------
          Net cash provided by operating activities.........        93,303         146,459
                                                               -----------     -----------
Cash flows from investing activities:
  Acquisitions, net of cash acquired........................    (2,083,701)       (905,264)
  Escrow deposits on pending acquisitions...................       (10,005)             --
  Payments made on purchases of representation contracts....            --         (25,724)
  Proceeds from sale of representation contracts............            --          20,283
  Proceeds from sale of assets..............................       269,250              --
  Issuance of note receivable from affiliate................            --        (150,000)
  Capital expenditures......................................        (6,436)        (21,684)
  Other.....................................................       (20,914)        (39,750)
                                                               -----------     -----------
          Net cash used by investing activities.............    (1,851,806)     (1,122,139)
                                                               -----------     -----------
Cash flows from financing activities:
  Proceeds from issuance of long-term debt..................     2,105,000       1,973,000
  Principal payments on long-term debt......................      (606,000)     (1,528,000)
  Proceeds from issuance of common stock and preferred
     stock..................................................       288,898       1,000,645
  Repurchase of 12% and 12 1/4% Exchange Debentures.........            --        (403,213)
  Dividends on preferred stock..............................        (5,748)        (50,436)
  Payments for debt issuance costs..........................       (10,567)        (19,837)
  Other.....................................................          (158)             --
                                                               -----------     -----------
          Net cash provided by financing activities.........     1,771,425         972,159
                                                               -----------     -----------
Increase (decrease) in cash and cash equivalents............        12,922          (3,521)
Cash and cash equivalents at beginning of period............         3,060          16,584
                                                               -----------     -----------
Cash and cash equivalents at end of period..................   $    15,982     $    13,063
                                                               ===========     ===========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                        5
<PAGE>   6
 
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
               (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
 
1. BASIS OF PRESENTATION
 
     In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position, results of operations and
cash flows of Chancellor Media Corporation and its subsidiaries (collectively,
"the Company" or "Chancellor Media") for the periods presented.
 
     Interim periods are not necessarily indicative of results to be expected
for the year. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997.
 
     The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly-owned. All significant
intercompany balances and transactions have been eliminated in consolidation.
 
     On December 18, 1997, the Company declared a two-for-one stock split
effected in the form of a stock dividend payable on January 12, 1998 to
shareholders of record at the close of business on December 29, 1997. All share
and per share data (other than authorized share data) contained in the
accompanying financial statements have been retroactively adjusted to give
effect to the stock dividend.
 
     Loss per common share is based on the weighted average number of common
shares outstanding during the periods after giving retroactive effect to the
stock split. Stock options, the $3.00 Convertible Exchangeable Preferred Stock
(the "$3.00 Convertible Preferred Stock") and the 7% Convertible Preferred Stock
(the "7% Convertible Preferred Stock") are not included in the calculation as
their effect would be antidilutive.
 
     The Company adopted SFAS No. 130, Reporting Comprehensive Income, effective
January 1, 1998. This statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The Company has no items of comprehensive income for
any period presented and therefore is not required to report comprehensive
income.
 
2. ACQUISITIONS AND DISPOSITIONS
 
  1997 Completed Transactions
 
     On January 31, 1997, the Company acquired WWWW-FM and WDFN-AM in Detroit
from affiliates of Chancellor Broadcasting Company ("Chancellor") for $30,000 in
cash plus various other direct acquisition costs. The Company had previously
provided certain sales and promotional functions to WWWW-FM and WDFN-AM under a
joint sales agreement since February 14, 1996 and subsequently operated the
stations under a time brokerage agreement since April 1, 1996.
 
     On January 31, 1997, the Company acquired KKSF-FM and KDFC-FM/AM in San
Francisco from affiliates of the Brown Organization for $115,000 in cash plus
various other direct acquisition costs. The Company had previously been
operating KKSF-FM and KDFC-FM/AM under a time brokerage agreement since November
1, 1996. On July 21, 1997, the Company sold KDFC-FM to Bonneville International
Corporation ("Bonneville") for $50,000 in cash. The assets of KDFC-FM were
classified as assets held for sale in connection with the purchase price
allocation of the acquisition of KKSF-FM and KDFC-FM/AM and no gain or loss was
recognized by the Company upon consummation of the sale.
 
     On April 1, 1997, the Company acquired WJLB-FM and WMXD-FM in Detroit from
Secret Communications Limited Partnership ("Secret") for $168,000 in cash plus
various other direct acquisition
 
                                        6
<PAGE>   7
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
costs. The Company had previously been operating WJLB-FM and WMXD-FM under time
brokerage agreements since September 1, 1996.
 
     On April 3, 1997, the Company exchanged WQRS-FM in Detroit (which the
Company acquired on April 3, 1997 from Secret for $32,000 in cash plus various
other direct acquisition costs), to affiliates of Greater Media Radio, Inc.
("Greater Media") in return for WWRC-AM in Washington, D.C. (now known as
WTEM-AM) and $9,500 in cash. The exchange was accounted for as a like-kind
exchange and no gain or loss was recognized upon consummation of the
transaction. The net purchase price to the Company of WWRC-AM was therefore
$22,500. The Company had previously been operating WWRC-AM under a time
brokerage agreement since June 17, 1996.
 
     On May 1, 1997, the Company acquired WDAS-FM/AM in Philadelphia from
affiliates of Beasley FM Acquisition Corporation for $103,000 in cash plus
various other direct acquisition costs.
 
     On May 15, 1997, the Company exchanged five of its six stations in
Charlotte, North Carolina (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM) for two FM
stations in Philadelphia (WIOQ-FM and WUSL-FM) owned by EZ Communications, Inc.
("EZ") in Philadelphia (the "Charlotte Exchange"), and also sold the Company's
sixth radio station in Charlotte, WNKS-FM, to EZ for $10,000 in cash and
recognized a gain of $3,536. The Charlotte Exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction.
 
     On May 30, 1997, the Company acquired WPNT-FM in Chicago from affiliates of
Century Broadcasting Company for $75,740 in cash (including $1,990 for the
purchase of the station's accounts receivable) plus various other direct
acquisition costs. On June 19, 1997, the Company sold WPNT-FM in Chicago to
Bonneville for $75,000 in cash and recognized a gain of $529.
 
     On June 3, 1997, the Company sold WEJM-FM in Chicago to affiliates of
Crawford Broadcasting for $14,750 in cash and recognized a gain of $9,258.
 
     On July 2, 1997, the Company acquired WLTW-FM and WAXQ-FM in New York and
WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in Washington, D.C. from Viacom
International, Inc. ("Viacom") for approximately $612,388 in cash including
various other direct acquisition costs (the "Viacom Acquisition"). The Viacom
Acquisition was financed with (i) bank borrowings under the Senior Credit
Facility (as defined) of $552,559; (ii) $53,750 in escrow funds paid by the
Company on February 19, 1997 and (iii) $6,079 financed through working capital.
In June 1997, the Company issued 5,990,000 shares of $3.00 Convertible Preferred
Stock for net proceeds of $287,808 which were used to repay borrowings under the
Senior Credit Facility and subsequently were reborrowed on July 2, 1997 as part
of the financing of the Viacom Acquisition. On July 7, 1997, the Company sold
WJZW-FM in Washington, D.C. to affiliates of Capital Cities/ABC Radio for
$68,000 in cash. The assets of WJZW-FM, as well as the assets of WZHF-AM and
WBZS-AM, which were also sold on August 13, 1997, were accounted for as assets
held for sale in connection with the purchase price allocation of the Viacom
Acquisition and no gain or loss was recognized by the Company upon consummation
of the sales.
 
     On July 7, 1997, the Company sold the Federal Communications Commission
("FCC") authorizations and certain transmission equipment previously used in the
operation of KYLD-FM in San Francisco to Susquehanna Radio Corporation
("Susquehanna") for $44,000 in cash and recognized a gain of $1,726.
Simultaneously therewith, Chancellor sold the call letters "KSAN-FM" (which
Chancellor previously used in San Francisco) to Susquehanna. On July 7, 1997,
the Company and Chancellor entered into a time brokerage agreement to enable the
Company to operate KYLD-FM on the frequency previously assigned to KSAN-FM, and
on July 7, 1997, Chancellor changed the call letters of KSAN-FM to KYLD-FM. Upon
the consummation of the Chancellor Merger (as defined herein), the Company
changed the format of the new KYLD-FM to the format previously operated on the
old KYLD-FM.
 
                                        7
<PAGE>   8
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     On July 14, 1997, the Company completed the disposition of WLUP-FM in
Chicago to Bonneville for net proceeds of $80,000 which were held by a qualified
intermediary pending the completion of the deferred exchange of WLUP-FM for
KZPS-FM and KDGE-FM in Dallas. On October 7, 1997, the Company applied the net
proceeds from the disposition of WLUP-FM of $80,000 in cash, plus an additional
$3,500 and various other direct acquisition costs, in a deferred exchange of
WLUP-FM for KZPS-FM and KDGE-FM in Dallas. The exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction. The Company had previously operated KZPS-FM and KDGE-FM under time
brokerage agreements effective August 1, 1997.
 
     On July 21, 1997, the Company entered into a time brokerage agreement with
Chancellor whereby the Company began managing certain limited functions of
Chancellor's stations KBGG-FM, KNEW-AM and KABL-FM in San Francisco pending the
consummation of the Chancellor Merger (as defined herein), which occurred on
September 5, 1997.
 
     On August 13, 1997, the Company sold WBZS-AM and WZHF-AM in Washington,
D.C. (acquired as part of the Viacom Acquisition) and KDFC-AM in San Francisco
to affiliates of Douglas Broadcasting ("Douglas") for $18,000 in the form of a
promissory note. The promissory note, as amended on May 1, 1998, bears interest
at 7 3/4% from the closing date through February 28, 1998 and at 10.0% from
March 1, 1998 through the remainder of the term of the note, with a balloon
principal payment due four years after closing. At closing, Douglas posted a
$1,000 letter of credit for the benefit of the Company that will remain
outstanding until all amounts due under the promissory note are paid.
 
     On August 27, 1997, the Company sold WEJM-AM in Chicago to Douglas for
$7,500 in cash and recognized a gain of $3,331.
 
     On September 5, 1997, pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of February 19, 1997 and amended and restated on July
31, 1997 (the "Chancellor Merger Agreement"), among Chancellor, Chancellor Radio
Broadcasting Company ("CRBC"), Evergreen Media Corporation ("Evergreen"),
Evergreen Mezzanine Holdings Corporation ("EMHC") and Evergreen Media
Corporation of Los Angeles ("EMCLA"), (i) Chancellor was merged with and into
EMHC, a direct, wholly-owned subsidiary of Evergreen, with EMHC remaining as the
surviving corporation and (ii) CRBC was merged with and into EMCLA, a direct,
wholly-owned subsidiary of EMHC, with EMCLA remaining as the surviving
corporation (collectively, the "Chancellor Merger"). Upon consummation of the
Chancellor Merger, the Company was renamed Chancellor Media Corporation, EMHC
was renamed Chancellor Mezzanine Holdings Corporation ("CMHC") and EMCLA was
renamed Chancellor Media Corporation of Los Angeles ("CMCLA"). Consummation of
the Chancellor Merger added 52 radio stations (36 FM and 16 AM) to the Company's
portfolio of stations, including 13 stations in markets in which the Company
previously operated. The total purchase price allocated to net assets acquired
was approximately $1,998,383 which included (i) the conversion of each
outstanding share of Chancellor Common Stock into 0.9091 shares of the Company's
Common Stock, resulting in the issuance of 34,617,460 shares of the Company's
Common Stock at $15.50 per share, (ii) the assumption of long-term debt of CRBC
of $949,000 which included $549,000 of borrowings outstanding under the CRBC
senior credit facility, $200,000 of CRBC's 9 3/8% Senior Subordinated Notes due
2004 and $200,000 of CRBC's 8 3/4% Senior Subordinated Notes due 2007, (iii) the
issuance of 2,117,629 shares of CMCLA's 12% Exchangeable Preferred Stock in
exchange for CRBC's substantially identical securities with a fair value of
$215,570 including accrued and unpaid dividends of $3,807, (iv) the issuance of
1,000,000 shares of CMCLA's 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock in exchange for CRBC's substantially identical securities with a
fair value of $120,217 including accrued and unpaid dividends of $772, (v) the
issuance of 2,200,000 shares of the Company's 7% Convertible Preferred Stock in
exchange for Chancellor's substantially identical securities with a fair value
of $111,048 including accrued and unpaid dividends of $1,048, (vi) the
assumption of stock options issued to Chancellor stock option holders with a
fair value of $34,977 and (vii) estimated acquisition costs of $31,000.
 
                                        8
<PAGE>   9
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     On October 28, 1997, the Company acquired Katz Media Group, Inc. ("KMG"), a
full-service media representation firm, in a tender offer transaction for a
total purchase price of approximately $379,101 (the "Katz Acquisition") which
included (i) the conversion of each outstanding share of KMG Common Stock into
the right to receive $11.00 in cash, resulting in total cash payments of
$149,601, (ii) the assumption of long-term debt of KMG and its subsidiaries of
$222,000 which included $122,000 of borrowings outstanding under the KMG senior
credit facility and $100,000 of 10 1/2% Senior Subordinated Notes due 2007 of
Katz Media Corporation (a subsidiary of KMG) and (iii) estimated acquisition
costs of $7,500.
 
     On December 29, 1997, the Company acquired five radio stations from Pacific
and Southern Company, Inc., a subsidiary of Gannett Co., Inc., consisting of
WGCI-FM/AM in Chicago for $140,000, KKBQ-FM/AM in Houston for $110,000 and
KHKS-FM in Dallas for $90,000, for an aggregate purchase price of $340,000 in
cash plus various other direct acquisition costs.
 
  1998 Completed Transactions
 
     On January 30, 1998, the Company acquired KXPK-FM in Denver from Ever Green
Wireless LLC (which is unrelated to the Company) for $26,000 in cash plus
various other direct acquisition costs, of which $1,650 was previously paid by
Chancellor as escrow funds and are classified as other assets at December 31,
1997. The Company had previously operated KXPK-FM under a time brokerage
agreement since September 1, 1997.
 
     On April 3, 1998, the Company exchanged WTOP-AM in Washington, KZLA-FM in
Los Angeles and WGMS-FM in Washington plus $63,000 in cash (including $3,000
paid by the Company in escrow and classified as other assets at December 31,
1997) to Bonneville for WBIX-FM in New York, KLDE-FM in Houston and KBIG-FM in
Los Angeles (the "Bonneville Exchange"). The Company had previously operated
KLDE-FM and KBIG-FM under time brokerage agreements since October 1, 1997 and
WBIX-FM since October 10, 1997, and had sold substantially all of the broadcast
time of WTOP-AM, KZLA-FM and WGMS-FM to Bonneville since October 1, 1997.
 
     On April 13, 1998, the Company and Secret entered into a settlement
agreement regarding WFLN-FM in Philadelphia. Previously in August 1996, the
Company and Secret had entered into an agreement under which the Company would
acquire WFLN-FM from Secret for $37,750 in cash. In April 1997, the Company
entered into an agreement to sell WFLN-FM to Greater Media for $41,800 in cash.
On July 16, 1997, Secret purported to terminate the sale of WFLN-FM to the
Company. The Company subsequently brought suit against Secret to enforce its
rights to acquire WFLN-FM. Pursuant to a court settlement entered in August 1997
and the settlement agreement between the Company and Secret entered on April 13,
1998, (i) Secret sold WFLN-FM directly to Greater Media for $37,750, (ii)
Greater Media deposited $4,050 (the difference between the Company's proposed
acquisition price for WFLN-FM from Secret and the Company's proposed sale price
for WFLN-FM to Greater Media) with the court and (iii) the Company received
$3,500 of such amount deposited by Greater Media with the court, plus interest
earned during the period which the court held such amounts (the "WFLN
Settlement"), and Secret received the balance of such amounts.
 
     On May 29, 1998, as part of the Capstar/SFX Transaction (defined below),
the Company exchanged WAPE-FM and WFYV-FM in Jacksonville (valued for purposes
of the Capstar/SFX Transaction at $53,000) plus $90,250 in cash to Capstar
Broadcasting Corporation (together with its subsidiaries, "Capstar") in return
for KODA-FM in Houston (the "Houston Exchange"). Furthermore, on May 29, 1998,
Capstar sold KKPN-FM in Houston (acquired by Capstar as part of Capstar's
acquisition (the "SFX Acquisition") of SFX Broadcasting, Inc. ("SFX")) due to
the attributable ownership of Hicks, Muse, Tate & Furst, Incorporated ("Hicks
Muse") in both Capstar and the Company in order to comply with the FCC's
multiple ownership limits. In connection with Capstar's sale of KKPN-FM, the
Company received a commission from Capstar of $1,730. On May 29, 1998, the
Company also provided a loan to Capstar in the principal amount of $150,000 as
part of the Capstar/SFX Transaction (the "Capstar Loan"). The Capstar Loan bears
interest at
                                        9
<PAGE>   10
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
the rate of 12% per annum (subject to increase in certain circumstances), and is
secured by a senior pledge of common stock of Capstar's direct subsidiary. A
portion of the Capstar Loan will be prepaid by Capstar in connection with the
Company's acquisition of, and the proceeds of such prepayment would be used by
the Company as a portion of the purchase price for, each Capstar/SFX Station.
Hicks Muse, which is a substantial shareholder of the Company, controls Capstar,
and certain officers and directors of the Company are directors and/or executive
officers of Capstar and/or Hicks Muse.
 
     On June 1, 1998, the Company acquired WWDC-FM/AM in Washington, D.C. from
Capitol Broadcasting Company and its affiliates for $74,062 in cash (including
$2,062 for the purchase of the stations' accounts receivable) plus various other
direct acquisition costs, of which $4,000 was previously paid by the Company as
escrow funds and are classified as other assets at December 31, 1997 (the
"Capitol Broadcasting Acquisition").
 
     On May 1, 1998, the Company formed a new marketing group division, in an
effort to enhance the revenues the Company derives from its sales promotion
activities. On June 1, 1998, the Company acquired Global Sales Development,
Inc., a consulting firm based in Richmond, Virginia, for $675 in cash plus
various other direct acquisition costs to lead its marketing efforts for this
new division.
 
     On June 15, 1998, the Company's national radio network, The AMFM Radio
Networks, acquired the syndicated programming shows of Global Satellite Network
for $14,000 in cash plus various other direct acquisition costs. The syndicated
programming shows acquired include "Rockline", "Modern Rock Live", "Reelin' in
the Years" and the concert series "Live from the Pit".
 
     On July 31, 1998, the Company acquired Martin Media, L.P. and certain
affiliated companies ("Martin Media"), an outdoor advertising company with over
14,500 billboards and outdoor displays in 12 states serving 23 markets, for
$591,674 in cash plus working capital of $19,443 subject to certain adjustments
and various other direct acquisition costs of approximately $10,000.
 
     On August 28, 1998, the Company acquired various syndicated programming
shows of Casey Kasem and the related programming libraries for $7,150 in cash
and $7,000 in the form of a note due August 2000.
 
     In September 1998, the Company acquired approximately 325 billboards and
outdoor displays in various markets for approximately $10,166 in cash.
 
     On October 9, 1998, the Company acquired approximately a 22.4% non-voting
equity interest in Z-Spanish Media Corporation ("Z Spanish Media") for
approximately $25,000 in cash (the "Z Spanish Acquisition"). Z Spanish Media,
which is headquartered in Sacramento, California, is the owner and operator of
22 Hispanic format radio stations in California, Texas, Arizona and Illinois.
 
     On October 23, 1998, the Company acquired Primedia Broadcast Group, Inc.
and certain of its affiliates, which own and operate eight FM stations in Puerto
Rico, for approximately $76,050 in cash less working capital deficit of $1,280
plus various other direct acquisition costs (the "Primedia Acquisition").
 
     In November 1998, the Company acquired approximately 290 billboards and
outdoor displays in various markets for approximately $12,978 in cash.
 
  Pending Transactions
 
     On July 31, 1997, Martin Media paid $6,025 to Kunz & Company for an option
to purchase approximately 1,000 display faces of its Kunz Outdoor Advertising
division for $33,289 in cash plus various other direct acquisition costs (the
"Kunz Option"). Although there can be no assurance, the Company expects that the
exercise of the Kunz Option will be consummated in the fourth quarter of 1998.
 
                                       10
<PAGE>   11
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     On February 20, 1998, the Company entered into an agreement to acquire from
Capstar KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and KQUE-AM in
Houston, KPLN-FM and KYXY-FM in San Diego and WDRV-FM, WJJJ-FM, WXDX-FM and
WDVE-FM in Pittsburgh (collectively, the "Capstar/SFX Stations") for an
aggregate purchase price of approximately $637,500 in a series of purchases and
exchanges over a period of three years (the "Capstar/SFX Transaction"). The
Capstar/SFX stations were acquired by Capstar as part of Capstar's acquisition
of SFX on May 29, 1998. On May 29, 1998, the Company completed the Houston
Exchange (defined above) and began operating the remaining ten Capstar/SFX
Stations under time brokerage agreements. The Company is currently assessing
whether the terms of the Capstar/SFX Transaction will be modified upon the
consummation of the Capstar Merger.
 
     On April 8, 1998, the Company entered into an agreement to acquire Petry
Media Corporation, a leading independent television representation firm (the
"Petry Acquisition"). The agreement currently provides for a purchase price of
$129.5 million in cash. On June 3, 1998, the Antitrust Division of the United
States Department of Justice (the "DOJ") issued a second request for additional
information under the HSR Act in connection with the Petry Acquisition to which
the Company has responded. The Company and Petry are still negotiating with the
DOJ regarding this transaction and have agreed to extend the waiting period
under the HSR Act pending completion of these discussions. Accordingly at this
time, the Company cannot be sure of the terms on which this transaction will be
completed, if at all.
 
     On July 7, 1998, the Company entered into an agreement whereby the ultimate
parent of LIN Television Corporation ("LIN") will merge into the Company (the
"LIN Merger"). Pursuant to this agreement, the Company will issue .0300 shares
of Chancellor Media Common Stock for each share of LIN's Common Stock resulting
in the issuance of approximately 17,700,000 shares (comprised of approximately
16,200,000 newly issued shares, the assumption of LIN phantom stock units
representing approximately 425,000 shares and the assumption of LIN options
representing the right to purchase approximately 1,075,000 shares). Upon
consummation of the LIN Merger, it is expected that LIN will own or operate 12
television stations in eight markets in the United States. Although there can be
no assurance, the Company expects that the LIN Merger will be consummated in the
first quarter of 1999.
 
     On August 11, 1998, the Company entered into agreements to acquire four FM
and two AM radio stations in Cleveland for an aggregate purchase price of
approximately $275,000 in cash plus various other direct acquisition costs (the
"Cleveland Acquisitions"). The Cleveland Acquisitions consist of the purchase by
the Company of (i) WDOK-FM and WRMR-AM from Independent Group Limited
Partnership, (ii) WZAK-FM from Zapis Communications, (iii) Zebra Broadcasting
Corporation which owns WZJM-FM and WJMO-AM and (v) Wincom Broadcasting
Corporation which owns WQAL-FM (the "Wincom Acquisition"). The consummation of
each of the Cleveland Acquisitions (other than the Wincom Acquisition) is
contingent upon the consummation of each of the other Cleveland Acquisitions
(other than the Wincom Acquisition). The Company began operating WQAL-FM under a
time brokerage agreement effective October 1, 1998. Although there can be no
assurance, the Company expects that the Cleveland Acquisitions will be
consummated in the first quarter of 1999.
 
     On August 20, 1998, the Company entered into an agreement to sell WMVP-AM
in Chicago to ABC, Inc. for $21,000 in cash (the "Chicago Disposition"). The
Company entered into a time brokerage agreement to sell substantially all of the
broadcast time of WMVP-AM effective September 10, 1998. Although there can be no
assurance, the Company expects that the Chicago Disposition will be consummated
in the fourth quarter of 1998.
 
     On August 26, 1998, the Company and Capstar entered into an agreement to
merge in a stock-for-stock transaction that will create the nation's largest
radio broadcasting entity. Pursuant to this agreement, the Company will acquire
Capstar in a reverse merger in which Capstar will be renamed Chancellor Media
Corporation. Each share of Chancellor Media Common Stock will represent one
share in the combined entity. Each share of Capstar Common Stock will represent
0.480 shares of Common Stock in the combined entity,
                                       11
<PAGE>   12
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
subject to an upward adjustment not to exceed 0.025 shares to the extent that
Capstar's 1998 cash flow from specified assets exceeds certain specified
targets. Capstar owns and operates more than 355 radio stations serving 83
mid-sized markets nationwide. Although there can be no assurance, the Company
expects that the Capstar Merger will be consummated in the second quarter of
1999.
 
     On August 31, 1998, the Company entered into an agreement to acquire the
assets of the Outdoor Advertising Division of Whiteco Industries, Inc., an
outdoor advertising company with over 21,800 billboards and outdoor displays in
34 states, for $930,000 in cash plus working capital and various other direct
acquisition costs (the "Whiteco Acquisition"). The DOJ has requested that the
Company and Whiteco submit certain additional information on a voluntary basis
in connection with the DOJ's review of the Whiteco Acquisition. The Company and
Whiteco have responded to this request and are currently in discussions with the
DOJ regarding the terms on which this transaction may be completed. Although
there can be no assurance, the Company expects that the Whiteco Acquisition will
be consummated in the fourth quarter of 1998.
 
     On September 3, 1998, the Company entered into an agreement to acquire
Pegasus, a television broadcasting company which owns a television station in
Puerto Rico, for approximately $69,600 in cash (the "Pegasus Acquisition").
Although there can be no assurance, the Company expects that the Pegasus
Acquisition will be consummated in the first quarter of 1999. In connection with
the LIN Merger, the Company may assign its rights under its agreement with
Pegasus to LIN.
 
     On September 15, 1998, the Company entered into an agreement to acquire
KKFR-FM and KFYI-AM in Phoenix from The Broadcast Group, Inc. for $90,000 in
cash (the "Phoenix Acquisition"). The Company began operating KKFR-FM and
KFYI-AM under a time brokerage agreement effective November 5, 1998. Although
there can be no assurance, the Company expects that the Phoenix Acquisition will
be consummated in the second quarter of 1999.
 
     The foregoing are collectively referred to herein as the "Pending
Transactions." Consummation of each of the Pending Transactions discussed above
is subject to various conditions, including, in certain cases, approval from the
FCC and the expiration or early termination of any waiting period required under
the HSR Act. Except as described above, the Company believes that such
conditions will be satisfied in the ordinary course, but there can be no
assurance that this will be the case.
 
     Escrow funds of $6,025 related to the Kunz Option are classified as other
assets in the accompanying balance sheet at September 30, 1998. Escrow funds of
$4,650 paid by the Company in connection with the Bonneville Exchange and the
Capitol Broadcasting Acquisition were classified as other assets in the
accompanying balance sheet at December 31, 1997.
 
  Other Transactions
 
     On July 10, 1998, the Company entered into an agreement to acquire a 50%
economic interest in Grupo Radio Centro, S.A. de C.V. ("GRC"), an owner and
operator of radio stations in Mexico, for approximately $120.5 million in cash
and $116.5 million in Chancellor Media Common Stock. On October 15, 1998, the
Company announced that it had provided notice to GRC that it was terminating the
acquisition agreement in accordance with its terms.
 
  Summary of Net Assets Acquired
 
     The completed acquisitions discussed above were accounted for as purchases.
Accordingly, the accompanying consolidated financial statements include the
results of operations of the acquired entities from the dates of acquisition.
 
                                       12
<PAGE>   13
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     A summary of the net assets acquired follows:
 
<TABLE>
<CAPTION>
                                                          YEAR        NINE MONTHS
                                                         ENDED           ENDED
                                                      DECEMBER 31,   SEPTEMBER 30,
                                                          1997           1998
                                                      ------------   -------------
<S>                                                   <C>            <C>
Working capital, including cash of $9,724 in 1997
  and $6,505 in 1998................................   $   66,805      $ 19,223
Property and equipment..............................      118,371       137,060
Assets held for sale................................      131,000            --
Intangible assets...................................    3,823,746       751,808
Other assets........................................       26,742         6,025
Deferred tax liability..............................     (279,371)           --
Other liabilities...................................      (39,681)         (697)
                                                       ----------      --------
                                                       $3,847,612      $913,419
                                                       ==========      ========
</TABLE>
 
     The pro forma consolidated condensed results of operations data for the
nine months ended September 30, 1997 and 1998, as if the 1997 Completed
Transactions and the 1998 Completed Transactions discussed above, the 8 1/8%
Notes Offering, the amendment and restatement of the Senior Credit Facility and
the 1998 Financing Transactions (as defined herein) occurred at January 1, 1997,
follow:
 
<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED
                                                    ------------------------------
                                                    SEPTEMBER 30,    SEPTEMBER 30,
                                                         1997            1998
                                                    --------------   -------------
<S>                                                 <C>              <C>
Net revenues......................................    $ 826,026        $ 963,063
Net loss..........................................     (143,303)        (119,198)
Basic and diluted loss per common share...........    $   (1.01)       $   (0.84)
</TABLE>
 
     The pro forma results are not necessarily indicative of what would have
occurred if the acquisitions had been in effect for the entire periods
presented.
 
3. FINANCING TRANSACTIONS
 
  1998 Completed Financing Transactions
 
     On March 13, 1998, the Company completed an offering of 21,850,000 shares
of its Common Stock (the "1998 Equity Offering"). The net proceeds from the 1998
Equity Offering of approximately $994,642 were used to reduce bank borrowings
under the revolving credit portion of the Senior Credit Facility (as defined)
and the excess proceeds were initially invested in short-term investment grade
securities. The Company subsequently used the excess proceeds for general
corporate purposes, including the financing of the Bonneville Exchange, the
Capstar Loan and a portion of the Houston Exchange.
 
     On May 8, 1998, CMCLA completed a consent solicitation (the "12% Preferred
Stock Consent Solicitation") to modify certain timing restrictions on its
ability to exchange all shares of its 12% Exchangeable Preferred Stock (the "12%
Preferred Stock") for its 12% Subordinated Exchange Debentures due 2009 (the
"12% Debentures"). Consenting holders of 12% Preferred Stock received payments
of $0.05 per share of 12% Preferred Stock. On May 13, 1998, CMCLA exchanged the
shares of 12% Preferred Stock for 12% Debentures (the "12% Exchange"). In
connection with the 12% Preferred Stock Consent Solicitation and 12% Exchange,
CMCLA incurred approximately $270 in transaction costs which were recorded as
deferred debt issuance costs.
 
     On June 10, 1998, CMCLA completed a cash tender offer (the "12% Debentures
Tender Offer") for all of its 12% Debentures for an aggregate repurchase cost of
$262,495 which included (i) the principal amount
 
                                       13
<PAGE>   14
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
of the 12% Debentures of $211,763, (ii) premiums on the repurchase of the 12%
Debentures of $47,798, (iii) accrued and unpaid interest on the 12% Debentures
from May 14, 1998 through June 10, 1998 of $1,976 and (iv) estimated transaction
costs of $958. In connection with the 12% Debentures Tender Offer, the Company
recorded an extraordinary charge of $31,865 (net of a tax benefit of $17,158)
consisting of the premiums, estimated transaction costs and the write-off of the
unamortized balance of deferred debt issuance costs.
 
     On July 20, 1998, CMCLA completed a consent solicitation (the "12 1/4%
Preferred Stock Consent Solicitation") to modify certain timing restrictions on
its ability to exchange all shares of its 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock (the "12 1/4% Preferred Stock") for its 12 1/4%
Subordinated Exchange Debentures due 2008 (the "12 1/4% Debentures"). Consenting
holders of 12 1/4% Preferred Stock received payments of $0.05 per share of
12 1/4% Preferred Stock. On July 23, 1998, CMCLA exchanged the shares of 12 1/4%
Preferred Stock for 12 1/4% Debentures (the "12 1/4% Exchange"). In connection
with the 12 1/4% Preferred Stock Consent Solicitation and 12 1/4% Exchange,
CMCLA incurred approximately $170 in transaction costs which were recorded as
deferred debt issuance costs.
 
     On August 19, 1998, CMCLA completed a cash tender offer (the "12 1/4%
Debentures Tender Offer") for all of its 12 1/4% Debentures for an aggregate
repurchase cost of $144,527 which included (i) the principal amount of the
12 1/4% Debentures of $119,445, (ii) premiums on the repurchase of the 12 1/4%
Debentures of $22,683, (iii) accrued and unpaid interest on the 12 1/4%
Debentures from August 16, 1998 through August 19, 1998 of $1,829 and (iv)
estimated transaction costs of $570. In connection with the 12 1/4% Debentures
Tender Offer, CMCLA recorded an extraordinary charge of $15,224 (net of a tax
benefit of $8,199) consisting of the premiums, estimated transaction costs and
the write-off of the unamortized balance of deferred debt issuance costs.
 
     On September 30, 1998, CMCLA issued $750,000 aggregate principal amount of
9% Senior Subordinated Notes due 2008 (the "9% Notes") for net proceeds of
approximately $730,000 (the "9% Notes Offering"). The net proceeds from the 9%
Notes Offering will be used to finance a portion of the Company's Pending
Transactions. Prior to consummation of the Pending Transactions, the Company
used the net proceeds to temporarily reduce borrowings outstanding under the
revolving credit portion of the Senior Credit Facility.
 
  1998 Pending Financing Transactions
 
     On November 12, 1998, CMCLA signed a definitive purchase agreement that
provides for the issuance of $750,000 of 8% Senior Notes due 2008 (the "8%
Senior Notes Offering"). The net proceeds from the 8% Senior Notes Offering will
be used to reduce bank borrowings under the revolving credit portion of the
Senior Credit Facility and any excess proceeds will be invested in short-term
investment grade securities, pending use for general corporate purposes.
Although there can be no assurance CMCLA expects that the 8% Senior Notes
Offering will be consummated on November 17, 1998.
 
                                       14
<PAGE>   15
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4. LONG-TERM DEBT
 
     Long-term debt consists of the following at December 31, 1997 and September
30, 1998:
 
<TABLE>
<CAPTION>
                                                      DECEMBER 31,   SEPTEMBER 30,
                                                          1997           1998
                                                      ------------   -------------
<S>                                                   <C>            <C>
Senior Credit Facility(a)...........................   $1,573,000    $   1,268,000
9 3/8% Notes(b).....................................      200,000          200,000
8 3/4% Notes(b).....................................      200,000          200,000
10 1/2% Notes(b)....................................      100,000          100,000
8 1/8% Notes(b).....................................      500,000          500,000
9% Notes(b).........................................           --          750,000
                                                       ----------    -------------
          Total long-term debt......................   $2,573,000    $   3,018,000
                                                       ==========    =============
</TABLE>
 
  (a) Senior Credit Facility
 
     On April 25, 1997, the Company entered into a loan agreement which amended
and restated its prior senior credit facility. Under the amended and restated
agreement, as amended on June 26, 1997, August 7, 1997, October 28, 1997,
February 10, 1998, May 1, 1998, July 31, 1998 and November 9, 1998 (as amended,
the "Senior Credit Facility"), the Company established a $1,250,000 revolving
facility (the "Revolving Loan Facility") and a $500,000 term loan facility (the
"Term Loan Facility"). Upon consummation of the Chancellor Merger, the aggregate
commitments under the Revolving Loan Facility and the Term Loan Facility were
increased to $1,600,000 and $900,000, respectively. In connection with the
amendment and restatement of the Senior Credit Facility, the Company wrote off
the unamortized balance of deferred debt issuance costs of $4,350 (net of a tax
benefit of $2,343) as an extraordinary charge.
 
     Borrowings under the Senior Credit Facility bear interest at a rate based,
at the option of the Company, on the participating banks' prime rate or
Eurodollar rate, plus an incremental rate. Without giving effect to the interest
rate swap and cap agreements described below, the interest rate on the $900,000
outstanding under the Term Loan Facility at September 30, 1998 was 6.25% on a
blended basis, based on Eurodollar rates, and the interest rate on advances of
$355,000 and $13,000 outstanding under the Revolving Loan Facility were 6.25%
and 8.50%, respectively, at September 30, 1998, based on the Eurodollar and
prime rates, respectively. The Company pays fees ranging from 0.25% to 0.375%
per annum on the aggregate unused portion of the loan commitment based upon the
leverage ratio for the most recent quarter end, in addition to an annual agent's
fee. Pursuant to the Senior Credit Facility, the Company is required to enter
into interest hedging agreements that result in the fixing or placing a cap on
the Company's floating rate debt so that not less than 50% of the principal
amount of total debt outstanding has a fixed or capped rate.
 
     The Term Loan Facility is payable in quarterly installments commencing on
September 30, 2000 and ending June 20, 2005. The Revolving Loan Facility
requires scheduled annual reductions of the commitment amount, payable in
quarterly installments commencing on September 30, 2000 and ending on June 30,
2005. At October 31, 1998, the Company had drawn $900,000 of the Term Loan
Facility and $433,000 of the Revolving Loan Facility. The capital stock of the
Company's subsidiaries is pledged to secure the performance of the Company's
obligations under the Senior Credit Facility, and each of the Company's domestic
subsidiaries have guaranteed those obligations.
 
  (b) Senior Subordinated Notes
 
     Upon consummation of the Chancellor Merger, on September 5, 1997, the
Company assumed all of the obligations under CRBC's $200,000 aggregate principal
amount 9 3/8% Senior Subordinated Notes due 2004 (the "9 3/8% Notes") and the
indenture governing such securities, and assumed all of the obligations under
CRBC's $200,000 aggregate principal amount 8 3/4% Senior Subordinated Notes due
2007 (the "8 3/4% Notes")
 
                                       15
<PAGE>   16
                 CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
and the indenture governing such securities. Upon consummation of the Katz
Acquisition, on October 28, 1997, the Company assumed all of the obligations
under Katz Media Corporation's $100,000 aggregate principal amount of 10 1/2%
Senior Subordinated Notes due 2007 (the "10 1/2% Notes") and the amended and
restated indenture governing such securities. On December 22, 1997, CMCLA issued
$500,000 aggregate principal amount of 8 1/8 Senior Subordinated Notes due 2007
(the "8 1/8% Notes") for net proceeds of approximately $485,000. On September
30, 1998, CMCLA issued $750,000 aggregate principal amount of 9% Notes for net
proceeds of approximately $730,000.
 
  (c) Other
 
     The 9 3/8% Notes, the 8 3/4% Notes, the 10 1/2% Notes, the 8 1/8% Notes and
the 9% Notes (collectively, the "Notes") are unsecured obligations of the
Company, subordinated in right of payment to all existing and any future senior
indebtedness of the Company. The Notes are fully and unconditionally guaranteed,
on a joint and several basis, by all of the Company's direct and indirect
subsidiaries other than certain inconsequential subsidiaries (the "Subsidiary
Guarantors"). The Subsidiary Guarantors are wholly-owned subsidiaries of the
Company.
 
     The Senior Credit Facility and the indentures governing the Notes contain
customary restrictive covenants, which, among other things and with certain
exceptions, limit the ability of the Company and its subsidiaries to incur
additional indebtedness and liens in connection therewith, enter into certain
transactions with affiliates, pay dividends, consolidate, merge or effect
certain asset sales, issue additional stock, effect an asset swap and make
acquisitions. The Company is required under the Senior Credit Facility to
maintain specified financial ratios, including leverage, cash flow and debt
service coverage ratios (as defined).
 
5. OTHER INCOME
 
     Other income consists of the following for the nine months ended September
30, 1997 and 1998:
 
<TABLE>
<CAPTION>
                                                           NINE MONTHS ENDED
                                                     -----------------------------
                                                     SEPTEMBER 30,   SEPTEMBER 30,
                                                         1997            1998
                                                     -------------   -------------
<S>                                                  <C>             <C>
Gain on disposition of assets(a)...................     $18,380         $   --
WFLN Settlement(b).................................          --          3,559
                                                        -------         ------
                                                        $18,380         $3,559
                                                        =======         ======
</TABLE>
 
---------------
 
(a)  For the nine months ended September 30, 1997, the Company recorded a gain
     on disposition of assets of $18,380 related to the dispositions of WNKS-FM
     in Charlotte on May 15, 1997 ($3,536), WPNT-FM in Chicago on May 30, 1997
     ($529), WEJM-FM in Chicago on June 3, 1997 ($9,258), the FCC authorizations
     and certain transmission equipment previously used in the operation of
     KYLD-FM in San Francisco on July 2, 1997 ($1,726) and WEJM-AM in Chicago on
     August 27, 1997 ($3,331).
 
(b)  For the nine months ended September 30, 1998, the Company recorded a gain
     from the WFLN Settlement (defined above) of $3,559.
 
6. CONTINGENCIES
 
     The Company is involved in several lawsuits that are incidental to its
business. A discussion of certain of these lawsuits is contained in Part II,
Item 1, "Legal Proceedings", of this Form 10-Q. The Company believes that the
ultimate resolution of the lawsuits will not have a material effect on its
financial position or results of operations.
 
                                       16
<PAGE>   17
 
                                     PART I
 
ITEM 1. FINANCIAL STATEMENTS
 
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                 (DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  1997           1998
                                                              ------------   -------------
                                                                              (UNAUDITED)
<S>                                                           <C>            <C>
Current assets:
  Cash and cash equivalents.................................   $   16,584     $   13,063
  Accounts receivable, less allowance for doubtful accounts
     of $12,651 in 1997 and $13,002 in 1998.................      239,869        321,391
  Other current assets......................................       27,208         42,343
                                                               ----------     ----------
          Total current assets..............................      283,661        376,797
Note receivable from affiliate..............................           --        150,000
Property and equipment, net.................................      159,797        299,906
Intangible assets, net......................................    4,404,443      4,916,533
Other assets, net...........................................      113,576        162,142
                                                               ----------     ----------
                                                               $4,961,477     $5,905,378
                                                               ==========     ==========
 
                           LIABILITIES AND STOCKHOLDER'S EQUITY
 
Current liabilities:
  Accounts payable and accrued expenses.....................   $  171,017     $  177,472
Long-term debt..............................................    2,573,000      3,018,000
Deferred tax liabilities....................................      361,640        312,731
Other liabilities...........................................       44,405         60,403
                                                               ----------     ----------
          Total liabilities.................................    3,150,062      3,568,606
                                                               ----------     ----------
Redeemable preferred stock:
  Redeemable senior cumulative exchangeable preferred stock
     of subsidiary, par value $.01 per share; 1,000,000
     shares authorized, issued and outstanding; liquidation
     preference of $121,274 in 1997.........................      119,445             --
  Redeemable cumulative exchangeable preferred stock of
     subsidiary, par value $.01 per share; 3,600,000 shares
     authorized and 2,117,629 shares issued and outstanding;
     liquidation preference of $223,519 in 1997.............      211,763             --
Stockholder's equity:
  Common stock, $.01 par value, 1,040 shares authorized,
     issued and outstanding.................................            1              1
Paid-in capital.............................................    1,637,628      2,654,273
Accumulated deficit.........................................     (157,422)      (317,502)
                                                               ----------     ----------
          Total stockholder's equity........................    1,480,207      2,336,772
                                                               ----------     ----------
                                                               $4,961,477     $5,905,378
                                                               ==========     ==========
</TABLE>
 
          See accompanying notes to consolidated financial statements
 
                                       17
<PAGE>   18
 
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
               (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED               NINE MONTHS ENDED
                                                    -----------------------------   -----------------------------
                                                    SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,   SEPTEMBER 30,
                                                        1997            1998            1997            1998
                                                    -------------   -------------   -------------   -------------
<S>                                                 <C>             <C>             <C>             <C>
Gross revenues....................................    $166,817        $389,551        $382,994       $1,015,562
  Less agency commissions.........................     (21,795)        (45,722)        (49,711)        (116,466)
                                                      --------        --------        --------       ----------
          Net revenues............................     145,022         343,829         333,283          899,096
Operating expenses:
  Operating expenses, excluding depreciation and
     amortization.................................      73,551         175,062         184,713          491,924
  Depreciation and amortization...................      50,474         118,584         104,386          311,644
  Corporate general and administrative............       5,995          10,109          11,646           25,188
  Executive severance charge......................          --              --              --           59,475
                                                      --------        --------        --------       ----------
          Operating expenses......................     130,020         303,755         300,745          888,231
                                                      --------        --------        --------       ----------
          Operating income........................      15,002          40,074          32,538           10,865
                                                      --------        --------        --------       ----------
Other (income) expense:
  Interest expense, net...........................      22,295          48,624          45,036          135,709
  Gain on disposition of representation
     contracts....................................          --         (18,497)             --          (29,767)
  Other income....................................      (5,057)             --         (18,380)          (3,559)
                                                      --------        --------        --------       ----------
          Other (income) expense..................      17,238          30,127          26,656          102,383
                                                      --------        --------        --------       ----------
          Income (loss) before income taxes and
            extraordinary item....................      (2,236)          9,947           5,882          (91,518)
Income tax expense (benefit)......................         985           1,548           5,244          (15,380)
                                                      --------        --------        --------       ----------
          Income (loss) before extraordinary
            item..................................      (3,221)          8,399             638          (76,138)
Extraordinary loss, net of income tax benefit.....          --          15,224           4,350           47,089
                                                      --------        --------        --------       ----------
          Net loss................................      (3,221)         (6,825)         (3,712)        (123,227)
Preferred stock dividends.........................       2,779             899           2,779           17,601
                                                      --------        --------        --------       ----------
          Net loss attributable to common stock...    $ (6,000)       $ (7,724)       $ (6,491)      $ (140,828)
                                                      ========        ========        ========       ==========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       18
<PAGE>   19
 
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                    NINE MONTHS ENDED
                                                              -----------------------------
                                                              SEPTEMBER 30,   SEPTEMBER 30,
                                                                  1997            1998
                                                              -------------   -------------
<S>                                                           <C>             <C>
Cash flows from operating activities:
  Net loss..................................................   $    (3,712)    $  (123,227)
  Adjustments to reconcile net loss to net cash provided by
     operating activities:
     Depreciation...........................................         9,091          18,632
     Amortization of goodwill, intangible assets and other
      assets................................................        95,295         293,012
     Executive severance charge -- stock option
      compensation..........................................            --          16,000
     Provisions for doubtful accounts.......................         3,409           4,573
     Deferred income tax expense (benefit)..................         5,244         (15,380)
     Gain on disposition of representation contracts........            --         (29,767)
     Gain on disposition of assets..........................       (18,380)             --
     Loss on extinguishment of debt.........................         4,350          47,089
     Other..................................................            --          (1,893)
     Changes in certain assets and liabilities, net of
      effects of acquisitions:
       Accounts receivable..................................       (15,171)        (73,528)
       Other current assets.................................         4,481         (10,283)
       Accounts payable and accrued expenses................         8,445          12,737
       Other assets.........................................            54          (4,114)
       Other liabilities....................................           197          12,608
                                                               -----------     -----------
          Net cash provided by operating activities.........        93,303         146,459
                                                               -----------     -----------
Cash flows from investing activities:
  Acquisitions, net of cash acquired........................    (2,083,701)       (905,264)
  Escrow deposits on pending acquisitions...................       (10,005)             --
  Payments made on purchases of representation contracts....            --         (25,724)
  Proceeds from sale of representation contracts............            --          20,283
  Proceeds from sale of assets..............................       269,250              --
  Issuance of note receivable from affiliate................            --        (150,000)
  Capital expenditures......................................        (6,436)        (21,684)
  Other.....................................................       (20,914)        (39,750)
                                                               -----------     -----------
          Net cash used by investing activities.............    (1,851,806)     (1,122,139)
                                                               -----------     -----------
Cash flows from financing activities:
  Proceeds from issuance of long-term debt..................     2,105,000       1,973,000
  Principal payments on long-term debt......................      (606,000)     (1,528,000)
  Cash contributed by parent................................       288,898       1,000,645
  Repurchase of 12% and 12 1/4% Exchange Debentures.........            --        (403,213)
  Dividends on preferred stock..............................            --         (31,183)
  Dividend to parent........................................        (5,748)        (19,253)
  Payments for debt issuance costs..........................       (10,567)        (19,837)
  Other.....................................................          (158)             --
                                                               -----------     -----------
          Net cash provided by financing activities.........     1,771,425         972,159
                                                               -----------     -----------
Increase (decrease) in cash and cash equivalents............        12,922          (3,521)
Cash and cash equivalents at beginning of period............         3,060          16,584
                                                               -----------     -----------
Cash and cash equivalents at end of period..................   $    15,982     $    13,063
                                                               ===========     ===========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       19
<PAGE>   20
 
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
               (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
 
1. BASIS OF PRESENTATION
 
     In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position, results of operations and
cash flows of Chancellor Media Corporation of Los Angeles and its subsidiaries
(collectively, "CMCLA") for the periods presented. Chancellor Media Corporation
of Los Angeles is an indirect, wholly owned subsidiary of Chancellor Media
Corporation ("Chancellor Media").
 
     Interim periods are not necessarily indicative of results to be expected
for the year. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in CMCLA's Annual Report on Form 10-K for the year ended December 31,
1997.
 
     The consolidated financial statements include the accounts of CMCLA and its
subsidiaries, all of which are wholly-owned. All significant intercompany
balances and transactions have been eliminated in consolidation.
 
     CMCLA adopted SFAS No. 130, Reporting Comprehensive Income, effective
January 1, 1998. This statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. CMCLA has no items of comprehensive income for any
period presented and therefore is not required to report comprehensive income.
 
2. ACQUISITIONS AND DISPOSITIONS
 
  1997 Completed Transactions
 
     On January 31, 1997, CMCLA acquired WWWW-FM and WDFN-AM in Detroit from
affiliates of Chancellor Radio Broadcasting Company ("CRBC") for $30,000 in cash
plus various other direct acquisition costs. The Company had previously provided
certain sales and promotional functions to WWWW-FM and WDFN-AM under a joint
sales agreement since February 14, 1996 and subsequently operated the stations
under a time brokerage agreement since April 1, 1996.
 
     On January 31, 1997, CMCLA acquired KKSF-FM and KDFC-FM/AM in San Francisco
from affiliates of the Brown Organization for $115,000 in cash plus various
other direct acquisition costs. CMCLA had previously been operating KKSF-FM and
KDFC-FM/AM under a time brokerage agreement since November 1, 1996. On July 21,
1997, CMCLA sold KDFC-FM to Bonneville International Corporation ("Bonneville")
for $50,000 in cash. The assets of KDFC-FM were classified as assets held for
sale in connection with the purchase price allocation of the acquisition of
KKSF-FM and KDFC-FM/AM and no gain or loss was recognized by CMCLA upon
consummation of the sale.
 
     On April 1, 1997, CMCLA acquired WJLB-FM and WMXD-FM in Detroit from Secret
Communications Limited Partnership ("Secret") for $168,000 in cash plus various
other direct acquisition costs. CMCLA had previously been operating WJLB-FM and
WMXD-FM under time brokerage agreements since September 1, 1996.
 
     On April 3, 1997, CMCLA exchanged WQRS-FM in Detroit (which CMCLA acquired
on April 3, 1997 from Secret for $32,000 in cash plus various other direct
acquisition costs), to affiliates of Greater Media Radio, Inc. ("Greater Media")
in return for WWRC-AM in Washington, D.C. (now known as WTEM-AM) and $9,500 in
cash. The exchange was accounted for as a like-kind exchange and no gain or loss
was recognized upon consummation of the transaction. The net purchase price to
CMCLA of WWRC-AM was therefore $22,500. CMCLA had previously been operating
WWRC-AM under a time brokerage agreement since June 17, 1996.
 
                                       20
<PAGE>   21
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     On May 1, 1997, CMCLA acquired WDAS-FM/AM in Philadelphia from affiliates
of Beasley FM Acquisition Corporation for $103,000 in cash plus various other
direct acquisition costs.
 
     On May 15, 1997, CMCLA exchanged five of its six stations in Charlotte,
North Carolina (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM) for two FM stations in
Philadelphia (WIOQ-FM and WUSL-FM) owned by EZ Communications, Inc. ("EZ") in
Philadelphia (the "Charlotte Exchange"), and also sold CMCLA's sixth radio
station in Charlotte, WNKS-FM, to EZ for $10,000 in cash and recognized a gain
of $3,536. The Charlotte Exchange was accounted for as a like-kind exchange and
no gain or loss was recognized upon consummation of the transaction.
 
     On May 30, 1997, CMCLA acquired WPNT-FM in Chicago from affiliates of
Century Broadcasting Company for $75,740 in cash (including $1,990 for the
purchase of the station's accounts receivable) plus various other direct
acquisition costs. On June 19, 1997, CMCLA sold WPNT-FM in Chicago to Bonneville
for $75,000 in cash and recognized a gain of $529.
 
     On June 3, 1997, CMCLA sold WEJM-FM in Chicago to affiliates of Crawford
Broadcasting for $14,750 in cash and recognized a gain of $9,258.
 
     On July 2, 1997, CMCLA acquired WLTW-FM and WAXQ-FM in New York and
WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in Washington, D.C. from Viacom
International, Inc. ("Viacom") for approximately $612,388 in cash including
various other direct acquisition costs (the "Viacom Acquisition"). The Viacom
Acquisition was financed with (i) bank borrowings under the Senior Credit
Facility (as defined) of $552,559; (ii) $53,750 in escrow funds paid by CMCLA on
February 19, 1997 and (iii) $6,079 financed through working capital. In June
1997, Chancellor Media issued 5,990,000 shares of $3.00 Convertible Preferred
Stock for net proceeds of $287,808 which were contributed to CMCLA and used to
repay borrowings under the Senior Credit Facility and subsequently were
reborrowed on July 2, 1997 as part of the financing of the Viacom Acquisition.
On July 7, 1997, CMCLA sold WJZW-FM in Washington, D.C. to affiliates of Capital
Cities/ABC Radio for $68,000 in cash. The assets of WJZW-FM, as well as the
assets of WZHF-AM and WBZS-AM, which were also sold on August 13, 1997, were
accounted for as assets held for sale in connection with the purchase price
allocation of the Viacom Acquisition and no gain or loss was recognized by CMCLA
upon consummation of the sales.
 
     On July 7, 1997, CMCLA sold the Federal Communications Commission ("FCC")
authorizations and certain transmission equipment previously used in the
operation of KYLD-FM in San Francisco to Susquehanna Radio Corporation
("Susquehanna") for $44,000 in cash and recognized a gain of $1,726.
Simultaneously therewith, CRBC sold the call letters "KSAN-FM" (which CRBC
previously used in San Francisco) to Susquehanna. On July 7, 1997, CMCLA and
CRBC entered into a time brokerage agreement to enable CMCLA to operate KYLD-FM
on the frequency previously assigned to KSAN-FM, and on July 7, 1997, CRBC
changed the call letters of KSAN-FM to KYLD-FM. Upon the consummation of the
Chancellor Merger (as defined herein), CMCLA changed the format of the new
KYLD-FM to the format previously operated on the old KYLD-FM.
 
     On July 14, 1997, CMCLA completed the disposition of WLUP-FM in Chicago to
Bonneville for net proceeds of $80,000 which were held by a qualified
intermediary pending the completion of the deferred exchange of WLUP-FM for
KZPS-FM and KDGE-FM in Dallas. On October 7, 1997, CMCLA applied the net
proceeds from the disposition of WLUP-FM of $80,000 in cash, plus an additional
$3,500 and various other direct acquisition costs, in a deferred exchange of
WLUP-FM for KZPS-FM and KDGE-FM in Dallas. The exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction. CMCLA had previously operated KZPS-FM and KDGE-FM under time
brokerage agreements effective August 1, 1997.
 
     On July 21, 1997, CMCLA entered into a time brokerage agreement with CRBC
whereby CMCLA began managing certain limited functions of CRBC's stations
KBGG-FM, KNEW-AM and KABL-FM in
                                       21
<PAGE>   22
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
San Francisco pending the consummation of the Chancellor Merger (as defined
herein), which occurred on September 5, 1997.
 
     On August 13, 1997, CMCLA sold WBZS-AM and WZHF-AM in Washington, D.C.
(acquired as part of the Viacom Acquisition) and KDFC-AM in San Francisco to
affiliates of Douglas Broadcasting ("Douglas") for $18,000 in the form of a
promissory note. The promissory note, as amended on May 1, 1998, bears interest
at 7 3/4% from the closing date through February 28, 1998 and at 10.0% from
March 1, 1998 through the remainder of the term of the note, with a balloon
principal payment due four years after closing. At closing, Douglas posted a
$1,000 letter of credit for the benefit of CMCLA that will remain outstanding
until all amounts due under the promissory note are paid.
 
     On August 27, 1997, CMCLA sold WEJM-AM in Chicago to Douglas for $7,500 in
cash and recognized a gain of $3,331.
 
     On September 5, 1997, pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of February 19, 1997 and amended and restated on July
31, 1997 (the "Chancellor Merger Agreement"), among Chancellor Broadcasting
Company ("Chancellor"), CRBC, Evergreen Media Corporation ("Evergreen"),
Evergreen Mezzanine Holdings Corporation ("EMHC") and Evergreen Media
Corporation of Los Angeles ("EMCLA"), (i) Chancellor was merged with and into
EMHC, a direct, wholly-owned subsidiary of Evergreen, with EMHC remaining as the
surviving corporation and (ii) CRBC was merged with and into EMCLA, a direct,
wholly-owned subsidiary of EMHC, with EMCLA remaining as the surviving
corporation (collectively, the "Chancellor Merger"). Upon consummation of the
Chancellor Merger, Evergreen was renamed Chancellor Media Corporation, EMHC was
renamed Chancellor Mezzanine Holdings Corporation ("CMHC") and EMCLA was renamed
Chancellor Media Corporation of Los Angeles ("CMCLA"). Consummation of the
Chancellor Merger added 52 radio stations (36 FM and 16 AM) to CMCLA's portfolio
of stations, including 13 stations in markets in which CMCLA previously
operated. The total purchase price allocated to net assets acquired was
approximately $1,998,383 which included (i) the conversion of each outstanding
share of Chancellor Common Stock into 0.9091 shares of Chancellor Media's Common
Stock, resulting in the issuance of 34,617,460 shares of Chancellor Media's
Common Stock at $15.50 per share, (ii) the assumption of long-term debt of CRBC
of $949,000 which included $549,000 of borrowings outstanding under the CRBC
senior credit facility, $200,000 of CRBC's 9 3/8% Senior Subordinated Notes due
2004 and $200,000 of CRBC's 8 3/4% Senior Subordinated Notes due 2007, (iii) the
issuance of 2,117,629 shares of CMCLA's 12% Exchangeable Preferred Stock in
exchange for CRBC's substantially identical securities with a fair value of
$215,570 including accrued and unpaid dividends of $3,807, (iv) the issuance of
1,000,000 shares of CMCLA's 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock in exchange for CRBC's substantially identical securities with a
fair value of $120,217 including accrued and unpaid dividends of $772, (v) the
issuance of 2,200,000 shares of Chancellor Media's 7% Convertible Preferred
Stock in exchange for Chancellor's substantially identical securities with a
fair value of $111,048 including accrued and unpaid dividends of $1,048, (vi)
the assumption of stock options issued to Chancellor stock option holders with a
fair value of $34,977 and (vii) estimated acquisition costs of $31,000.
 
     On October 28, 1997, Chancellor Media and CMCLA acquired Katz Media Group,
Inc. ("KMG"), a full-service media representation firm, in a tender offer
transaction for a total purchase price of approximately $379,101 (the "Katz
Acquisition") which included (i) the conversion of each outstanding share of KMG
Common Stock into the right to receive $11.00 in cash, resulting in total cash
payments of $149,601, (ii) the assumption of long-term debt of KMG and its
subsidiaries of $222,000 which included $122,000 of borrowings outstanding under
the KMG senior credit facility and $100,000 of 10 1/2% Senior Subordinated Notes
due 2007 of Katz Media Corporation (a subsidiary of KMG) and (iii) estimated
acquisition costs of $7,500.
 
     On December 29, 1997, CMCLA acquired five radio stations from Pacific and
Southern Company, Inc., a subsidiary of Gannett Co., Inc., consisting of
WGCI-FM/AM in Chicago for $140,000, KKBQ-FM/AM in
 
                                       22
<PAGE>   23
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
Houston for $110,000 and KHKS-FM in Dallas for $90,000, for an aggregate
purchase price of $340,000 in cash plus various other direct acquisition costs.
 
  1998 Completed Transactions
 
     On January 30, 1998, CMCLA acquired KXPK-FM in Denver from Ever Green
Wireless LLC (which is unrelated to the Company) for $26,000 in cash plus
various other direct acquisition costs, of which $1,650 was previously paid by
CRBC as escrow funds and are classified as other assets at December 31, 1997.
CMCLA had previously operated KXPK-FM under a time brokerage agreement since
September 1, 1997.
 
     On April 3, 1998, CMCLA exchanged WTOP-AM in Washington, KZLA-FM in Los
Angeles and WGMS-FM in Washington plus $63,000 in cash (including $3,000 paid by
CMCLA in escrow and classified as other assets at December 31, 1997) to
Bonneville for WBIX-FM in New York, KLDE-FM in Houston and KBIG-FM in Los
Angeles (the "Bonneville Exchange"). CMCLA had previously operated KLDE-FM and
KBIG-FM under time brokerage agreements since October 1, 1997 and WBIX-FM since
October 10, 1997, and had sold substantially all of the broadcast time of
WTOP-AM, KZLA-FM and WGMS-FM to Bonneville since October 1, 1997.
 
     On April 13, 1998, CMCLA and Secret entered into a settlement agreement
regarding WFLN-FM in Philadelphia. Previously in August 1996, CMCLA and Secret
had entered into an agreement under which CMCLA would acquire WFLN-FM from
Secret for $37,750 in cash. In April 1997, CMCLA entered into an agreement to
sell WFLN-FM to Greater Media for $41,800 in cash. On July 16, 1997, Secret
purported to terminate the sale of WFLN-FM to CMCLA. CMCLA subsequently brought
suit against Secret to enforce its rights to acquire WFLN-FM. Pursuant to a
court settlement entered in August 1997 and the settlement agreement between
CMCLA and Secret entered on April 13, 1998, (i) Secret sold WFLN-FM directly to
Greater Media for $37,750, (ii) Greater Media deposited $4,050 (the difference
between CMCLA's proposed acquisition price for WFLN-FM from Secret and CMCLA's
proposed sale price for WFLN-FM to Greater Media) with the court and (iii) CMCLA
received $3,500 of such amount deposited by Greater Media with the court, plus
interest earned during the period which the court held such amounts (the "WFLN
Settlement"), and Secret received the balance of such amounts.
 
     On May 29, 1998, as part of the Capstar/SFX Transaction (defined below),
CMCLA exchanged WAPE-FM and WFYV-FM in Jacksonville (valued for purposes of the
Capstar/SFX Transaction at $53,000) plus $90,250 in cash to Capstar Broadcasting
Corporation (together with its subsidiaries, "Capstar") in return for KODA-FM in
Houston (the "Houston Exchange"). Furthermore, on May 29, 1998, Capstar sold
KKPN-FM in Houston (acquired by Capstar as part of Capstar's acquisition (the
"SFX Acquisition") of SFX Broadcasting, Inc. ("SFX")) due to the attributable
ownership of Hicks, Muse, Tate & Furst, Incorporated ("Hicks Muse") in both
Capstar and CMCLA in order to comply with the FCC's multiple ownership limits.
In connection with Capstar's sale of KKPN-FM, CMCLA received a commission from
Capstar of $1,730. On May 29, 1998, CMCLA also provided a loan to Capstar in the
principal amount of $150,000 as part of the Capstar/SFX Transaction (the
"Capstar Loan"). The Capstar Loan bears interest at the rate of 12% per annum
(subject to increase in certain circumstances), and is secured by a senior
pledge of common stock of Capstar's direct subsidiary. A portion of the Capstar
Loan will be prepaid by Capstar in connection with CMCLA's acquisition of, and
the proceeds of such prepayment would be used by CMCLA as a portion of the
purchase price for, each Capstar/SFX Station. Hicks Muse, which is a substantial
shareholder of Chancellor Media, controls Capstar, and certain officers and
directors of Chancellor Media and CMCLA are directors and/or executive officers
of Capstar and/or Hicks Muse.
 
     On June 1, 1998, CMCLA acquired WWDC-FM/AM in Washington, D.C. from Capitol
Broadcasting Company and its affiliates for $74,062 in cash (including $2,062
for the purchase of the stations' accounts receivable) plus various other direct
acquisition costs, of which $4,000 was previously paid by CMCLA as
 
                                       23
<PAGE>   24
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
escrow funds and are classified as other assets at December 31, 1997 (the
"Capitol Broadcasting Acquisition").
 
     On May 1, 1998, CMCLA formed a new marketing group division, in an effort
to enhance the revenues the Company derives from its sales promotion activities.
On June 1, 1998, CMCLA acquired Global Sales Development, Inc., a consulting
firm based in Richmond, Virginia, for $675 in cash plus various other direct
acquisition costs to lead its marketing efforts for this new division.
 
     On June 15, 1998, CMCLA's national radio network, The AMFM Radio Networks,
acquired the syndicated programming shows of Global Satellite Network for
$14,000 in cash plus various other direct acquisition costs. The syndicated
programming shows acquired include "Rockline", "Modern Rock Live", "Reelin' in
the Years" and the concert series "Live from the Pit".
 
     On July 31, 1998, CMCLA acquired Martin Media, L.P. and certain affiliated
companies ("Martin Media"), an outdoor advertising company with over 14,500
billboards and outdoor displays in 12 states serving 23 markets, for $591,674 in
cash plus working capital of $19,443 subject to certain adjustments and various
other direct acquisition costs of approximately $10,000.
 
     On August 28, 1998, CMCLA acquired various syndicated programming shows of
Casey Kasem and the related programming libraries for $7,150 in cash and $7,000
in the form of a note due August 2000.
 
     In September 1998, CMCLA acquired approximately 325 billboards and outdoor
displays in various markets for approximately $10,166 in cash.
 
     On October 9, 1998, CMCLA acquired approximately a 22.4% non-voting equity
interest in Z-Spanish Media Corporation ("Z Spanish Media") for approximately
$25,000 in cash (the "Z Spanish Acquisition"). Z Spanish Media, which is
headquartered in Sacramento, California, is the owner and operator of 22
Hispanic format radio stations in California, Texas, Arizona and Illinois.
 
     On October 23, 1998, CMCLA acquired Primedia Broadcast Group, Inc. and
certain of its affiliates, which own and operate eight FM stations in Puerto
Rico, for approximately $76,050 in cash less working capital deficit of $1,280
plus various other direct acquisition costs (the "Primedia Acquisition").
 
     In November 1998, CMCLA acquired approximately 290 billboards and outdoor
displays in various markets for approximately $12,978 in cash.
 
  Pending Transactions
 
     On July 31, 1997, Martin Media paid $6,025 to Kunz & Company for an option
to purchase approximately 1,000 display faces of its Kunz Outdoor Advertising
division for $33,289 in cash plus various other direct acquisition costs (the
"Kunz Option"). Although there can be no assurance, CMCLA expects that the
exercise of the Kunz Option will be consummated in the fourth quarter of 1998.
 
     On February 20, 1998, CMCLA entered into an agreement to acquire from
Capstar KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and KQUE-AM in
Houston, KPLN-FM and KYXY-FM in San Diego and WDRV-FM, WJJJ-FM, WXDX-FM and
WDVE-FM in Pittsburgh (collectively, the "Capstar/SFX Stations") for an
aggregate purchase price of approximately $637,500 in a series of purchases and
exchanges over a period of three years (the "Capstar/SFX Transaction"). The
Capstar/SFX stations were acquired by Capstar as part of Capstar's acquisition
of SFX on May 29, 1998. On May 29, 1998, CMCLA completed the Houston Exchange
(defined above) and began operating the remaining ten Capstar/ SFX Stations
under time brokerage agreements. CMCLA is currently assessing whether the terms
of the Capstar/SFX Transaction will be modified upon the consummation of the
Capstar Merger.
 
     On April 8, 1998, CMCLA entered into an agreement to acquire Petry Media
Corporation, a leading independent television representation firm (the "Petry
Acquisition"). The agreement currently provides for a
                                       24
<PAGE>   25
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
purchase price of $129.5 million in cash. On June 3, 1998, the Antitrust
Division of the United States Department of Justice (the "DOJ") issued a second
request for additional information under the HSR Act in connection with the
Petry Acquisition to which CMCLA has responded. CMCLA and Petry are still
negotiating with the DOJ regarding this transaction and have agreed to extend
the waiting period under the HSR Act pending completion of these discussions.
Accordingly at this time, CMCLA cannot be sure of the terms on which this
transaction will be completed, if at all.
 
     On July 7, 1998, Chancellor Media entered into an agreement whereby the
ultimate parent of LIN Television Corporation ("LIN") will merge into Chancellor
Media (the "LIN Merger"). Pursuant to this agreement, Chancellor Media will
issue .0300 shares of Chancellor Media Common Stock for each share of LIN's
Common Stock resulting in the issuance of approximately 17,700,000 shares
(comprised of approximately 16,200,000 newly issued shares, the assumption of
LIN phantom stock units representing approximately 425,000 shares and the
assumption of LIN options representing the right to purchase approximately
1,075,000 shares). Upon consummation of the LIN Merger, it is expected that LIN
will own or operate 12 television stations in eight markets in the United
States. Although there can be no assurance, Chancellor Media expects that the
LIN Merger will be consummated in the first quarter of 1999.
 
     On August 11, 1998, CMCLA entered into agreements to acquire four FM and
two AM radio stations in Cleveland for an aggregate purchase price of
approximately $275,000 in cash plus various other direct acquisition costs (the
"Cleveland Acquisitions"). The Cleveland Acquisitions consist of the purchase by
the Company of (i) WDOK-FM and WRMR-AM from Independent Group Limited
Partnership, (ii) WZAK-FM from Zapis Communications, (iii) Zebra Broadcasting
Corporation which owns WZJM-FM and WJMO-AM and (v) Wincom Broadcasting
Corporation which owns WQAL-FM (the "Wincom Acquisition"). The consummation of
each of the Cleveland Acquisitions (other than the Wincom Acquisition) is
contingent upon the consummation of each of the other Cleveland Acquisitions
(other than the Wincom Acquisition). CMCLA began operating WQAL-FM under a time
brokerage agreement effective October 1, 1998. Although there can be no
assurance, CMCLA expects that the Cleveland Acquisitions will be consummated in
the first quarter of 1999.
 
     On August 20, 1998, CMCLA entered into an agreement to sell WMVP-AM in
Chicago to ABC, Inc. for $21,000 in cash (the "Chicago Disposition"). CMCLA
entered into a time brokerage agreement to sell substantially all of the
broadcast time of WMVP-AM effective September 10, 1998. Although there can be no
assurance, CMCLA expects that the Chicago Disposition will be consummated in the
fourth quarter of 1998.
 
     On August 26, 1998, Chancellor Media and Capstar entered into an agreement
to merge in a stock-for-stock transaction that will create the nation's largest
radio broadcasting entity. Pursuant to this agreement, Chancellor Media will
acquire Capstar in a reverse merger in which Capstar will be renamed Chancellor
Media Corporation. Each share of Chancellor Media Common Stock will represent
one share in the combined entity. Each share of Capstar Common Stock will
represent 0.480 shares of Common Stock in the combined entity, subject to an
upward adjustment not to exceed 0.025 shares to the extent that Capstar's 1998
cash flow from specified assets exceeds certain specified targets. Capstar owns
and operates more than 355 radio stations serving 83 mid-sized markets
nationwide. Although there can be no assurance, Chancellor Media expects that
the Capstar Merger will be consummated in the second quarter of 1999.
 
     On August 31, 1998, CMCLA entered into an agreement to acquire the assets
of the Outdoor Advertising Division of Whiteco Industries, Inc., an outdoor
advertising company with over 21,800 billboards and outdoor displays in 34
states, for $930,000 in cash plus working capital and various other direct
acquisition costs (the "Whiteco Acquisition"). The DOJ has requested that CMCLA
and Whiteco submit certain additional information on a voluntary basis in
connection with the DOJ's review of the Whiteco Acquisition. CMCLA and Whiteco
have responded to this request and are currently in discussions with the DOJ
regarding the terms on which this transaction may be completed. Although there
can be no assurance, CMCLA expects that the Whiteco Acquisition will be
consummated in the fourth quarter of 1998.
                                       25
<PAGE>   26
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     On September 3, 1998, CMCLA entered into an agreement to acquire Pegasus, a
television broadcasting company which owns a television station in Puerto Rico,
for approximately $69,600 in cash (the "Pegasus Acquisition"). Although there
can be no assurance, CMCLA expects that the Pegasus Acquisition will be
consummated in the first quarter of 1999. In connection with the LIN Merger,
CMCLA may assign its rights under its agreement with Pegasus to LIN.
 
     On September 15, 1998, CMCLA entered into an agreement to acquire KKFR-FM
and KFYI-AM in Phoenix from The Broadcast Group, Inc. for $90,000 in cash (the
"Phoenix Acquisition"). CMCLA began operating KKFR-FM and KFYI-AM under a time
brokerage agreement effective November 5, 1998. Although there can be no
assurance, CMCLA expects that the Phoenix Acquisition will be consummated in the
second quarter of 1999.
 
     The foregoing are collectively referred to herein as the "Pending
Transactions." Consummation of each of the Pending Transactions discussed above
is subject to various conditions, including, in certain cases, approval from the
FCC and the expiration or early termination of any waiting period required under
the HSR Act. Except as described above, CMCLA believes that such conditions will
be satisfied in the ordinary course, but there can be no assurance that this
will be the case.
 
     Escrow funds of $6,025 related to the Kunz Option are classified as other
assets in the accompanying balance sheet at September 30, 1998. Escrow funds of
$4,650 paid by CMCLA in connection with the Bonneville Exchange and the Capitol
Broadcasting Acquisition were classified as other assets in the accompanying
balance sheet at December 31, 1997.
 
  Other Transactions
 
     On July 10, 1998, Chancellor Media entered into an agreement to acquire a
50% economic interest in Grupo Radio Centro, S.A. de C.V. ("GRC"), an owner and
operator of radio stations in Mexico, for approximately $120.5 million in cash
and $116.5 million in Chancellor Media Common Stock. On October 15, 1998,
Chancellor Media announced that it had provided notice to GRC that it was
terminating the acquisition agreement in accordance with its terms.
 
  Summary of Net Assets Acquired
 
     The completed acquisitions discussed above were accounted for as purchases.
Accordingly, the accompanying consolidated financial statements include the
results of operations of the acquired entities from the dates of acquisition.
 
     A summary of the net assets acquired follows:
 
<TABLE>
<CAPTION>
                                                          YEAR        NINE MONTHS
                                                         ENDED           ENDED
                                                      DECEMBER 31,   SEPTEMBER 30,
                                                          1997           1998
                                                      ------------   -------------
<S>                                                   <C>            <C>
Working capital, including cash of $9,724 in 1997
  and $6,505 in 1998................................   $   66,805      $ 19,223
Property and equipment..............................      118,371       137,060
Assets held for sale................................      131,000            --
Intangible assets...................................    3,823,746       751,808
Other assets........................................       26,742         6,025
Deferred tax liability..............................     (279,371)           --
Other liabilities...................................      (39,681)         (697)
                                                       ----------      --------
                                                       $3,847,612      $913,419
                                                       ==========      ========
</TABLE>
 
                                       26
<PAGE>   27
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The pro forma consolidated condensed results of operations data for the
nine months ended September 30, 1997 and 1998, as if the 1997 Completed
Transactions and the 1998 Completed Transactions discussed above, the 8 1/8%
Notes Offering, the amendment and restatement of the Senior Credit Facility and
the 1998 Financing Transactions (as defined herein) occurred at January 1, 1997,
follow:
 
<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED
                                                    ------------------------------
                                                    SEPTEMBER 30,    SEPTEMBER 30,
                                                         1997            1998
                                                    --------------   -------------
<S>                                                 <C>              <C>
Net revenues......................................    $ 826,026        $ 963,063
Net loss..........................................     (143,303)        (119,198)
</TABLE>
 
     The pro forma results are not necessarily indicative of what would have
occurred if the acquisitions had been in effect for the entire periods
presented.
 
3. FINANCING TRANSACTIONS
 
  1998 Completed Financing Transactions
 
     On March 13, 1998, Chancellor Media completed an offering of 21,850,000
shares of its Common Stock (the "1998 Equity Offering"). The net proceeds from
the 1998 Equity Offering of approximately $994,642 were contributed to CMCLA and
were used to reduce bank borrowings under the revolving credit portion of the
Senior Credit Facility (as defined) and the excess proceeds were initially
invested in short-term investment grade securities. The Company subsequently
used the excess proceeds for general corporate purposes, including the financing
of the Bonneville Exchange, the Capstar Loan and a portion of the Houston
Exchange.
 
     On May 8, 1998, CMCLA completed a consent solicitation (the "12% Preferred
Stock Consent Solicitation") to modify certain timing restrictions on its
ability to exchange all shares of its 12% Exchangeable Preferred Stock (the "12%
Preferred Stock") for its 12% Subordinated Exchange Debentures due 2009 (the
"12% Debentures"). Consenting holders of 12% Preferred Stock received payments
of $0.05 per share of 12% Preferred Stock. On May 13, 1998, CMCLA exchanged the
shares of 12% Preferred Stock for 12% Debentures (the "12% Exchange"). In
connection with the 12% Preferred Stock Consent Solicitation and 12% Exchange,
CMCLA incurred approximately $270 in transaction costs which were recorded as
deferred debt issuance costs.
 
     On June 10, 1998, CMCLA completed a cash tender offer (the "12% Debentures
Tender Offer") for all of its 12% Debentures for an aggregate repurchase cost of
$262,495 which included (i) the principal amount of the 12% Debentures of
$211,763, (ii) premiums on the repurchase of the 12% Debentures of $47,798,
(iii) accrued and unpaid interest on the 12% Debentures from May 14, 1998
through June 10, 1998 of $1,976 and (iv) estimated transaction costs of $958. In
connection with the 12% Debentures Tender Offer, CMCLA recorded an extraordinary
charge of $31,865 (net of a tax benefit of $17,158) consisting of the premiums,
estimated transaction costs and the write-off of the unamortized balance of
deferred debt issuance costs.
 
     On July 20, 1998, CMCLA completed a consent solicitation (the "12 1/4%
Preferred Stock Consent Solicitation") to modify certain timing restrictions on
its ability to exchange all shares of its 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock (the "12 1/4% Preferred Stock") for its 12 1/4%
Subordinated Exchange Debentures due 2008 (the "12 1/4% Debentures"). Consenting
holders of 12 1/4% Preferred Stock received payments of $0.05 per share of
12 1/4% Preferred Stock. On July 23, 1998, CMCLA exchanged the shares of 12 1/4%
Preferred Stock for 12 1/4% Debentures (the "12 1/4% Exchange"). In connection
with the 12 1/4% Preferred Stock Consent Solicitation and 12 1/4% Exchange,
CMCLA incurred approximately $170 in transaction costs which were recorded as
deferred debt issuance costs.
 
                                       27
<PAGE>   28
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     On August 19, 1998, CMCLA completed a cash tender offer (the "12 1/4%
Debentures Tender Offer") for all of its 12 1/4% Debentures for an aggregate
repurchase cost of $144,527 which included (i) the principal amount of the
12 1/4% Debentures of $119,445, (ii) premiums on the repurchase of the 12 1/4%
Debentures of $22,683, (iii) accrued and unpaid interest on the 12 1/4%
Debentures from August 16, 1998 through August 19, 1998 of $1,829 and (iv)
estimated transaction costs of $570. In connection with the 12 1/4% Debentures
Tender Offer, CMCLA recorded an extraordinary charge of $15,224 (net of a tax
benefit of $8,199) consisting of the premiums, estimated transaction costs and
the write-off of the unamortized balance of deferred debt issuance costs.
 
     On September 30, 1998, CMCLA issued $750,000 aggregate principal amount of
9% Senior Subordinated Notes due 2008 (the "9% Notes") for net proceeds of
approximately $730,000 (the "9% Notes Offering"). The net proceeds from the 9%
Notes Offering will be used to finance a portion of CMCLA's Pending
Transactions. Prior to consummation of the Pending Transactions, CMCLA used the
net proceeds to temporarily reduce borrowings outstanding under the revolving
credit portion of the Senior Credit Facility.
 
  1998 Pending Financing Transactions
 
     On November 12, 1998, CMCLA signed a definitive purchase agreement that
provides for the issuance of $750,000 of 8% Senior Notes due 2008 (the "8%
Senior Notes Offering"). The net proceeds from the 8% Senior Notes Offering will
be used to reduce bank borrowings under the revolving credit portion of the
Senior Credit Facility and any excess proceeds will be invested in short-term
investment grade securities pending use for general corporate purposes. Although
there can be no assurance, CMCLA expects that the 8% Senior Notes Offering will
be consummated on November 17, 1998.
 
4. LONG-TERM DEBT
 
     Long-term debt consists of the following at December 31, 1997 and September
30, 1998:
 
<TABLE>
<CAPTION>
                                                      DECEMBER 31,   SEPTEMBER 30,
                                                          1997           1998
                                                      ------------   -------------
<S>                                                   <C>            <C>
Senior Credit Facility(a)...........................   $1,573,000    $   1,268,000
9 3/8% Notes(b).....................................      200,000          200,000
8 3/4% Notes(b).....................................      200,000          200,000
10 1/2% Notes(b)....................................      100,000          100,000
8 1/8% Notes(b).....................................      500,000          500,000
9% Notes(b).........................................           --          750,000
                                                       ----------    -------------
          Total long-term debt......................   $2,573,000    $   3,018,000
                                                       ==========    =============
</TABLE>
 
  (a) Senior Credit Facility
 
     On April 25, 1997, CMCLA entered into a loan agreement which amended and
restated its prior senior credit facility. Under the amended and restated
agreement, as amended on June 26, 1997, August 7, 1997, October 28, 1997,
February 10, 1998, May 1, 1998, July 31, 1998 and November 9, 1998 (as amended,
the "Senior Credit Facility"), CMCLA established a $1,250,000 revolving facility
(the "Revolving Loan Facility") and a $500,000 term loan facility (the "Term
Loan Facility"). Upon consummation of the Chancellor Merger, the aggregate
commitments under the Revolving Loan Facility and the Term Loan Facility were
increased to $1,600,000 and $900,000, respectively. In connection with the
amendment and restatement of the Senior Credit Facility, CMCLA wrote off the
unamortized balance of deferred debt issuance costs of $4,350 (net of a tax
benefit of $2,343) as an extraordinary charge.
 
     Borrowings under the Senior Credit Facility bear interest at a rate based,
at the option of CMCLA, on the participating banks' prime rate or Eurodollar
rate, plus an incremental rate. Without giving effect to the
                                       28
<PAGE>   29
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
interest rate swap and cap agreements described below, the interest rate on the
$900,000 outstanding under the Term Loan Facility at September 30, 1998 was
6.25% on a blended basis, based on Eurodollar rates, and the interest rate on
advances of $355,000 and $13,000 outstanding under the Revolving Loan Facility
were 6.25% and 8.50%, respectively, at September 30, 1998, based on the
Eurodollar and prime rates, respectively. CMCLA pays fees ranging from 0.25% to
0.375% per annum on the aggregate unused portion of the loan commitment based
upon the leverage ratio for the most recent quarter end, in addition to an
annual agent's fee. Pursuant to the Senior Credit Facility, CMCLA is required to
enter into interest hedging agreements that result in the fixing or placing a
cap on CMCLA's floating rate debt so that not less than 50% of the principal
amount of total debt outstanding has a fixed or capped rate.
 
     The Term Loan Facility is payable in quarterly installments commencing on
September 30, 2000 and ending June 20, 2005. The Revolving Loan Facility
requires scheduled annual reductions of the commitment amount, payable in
quarterly installments commencing on September 30, 2000 and ending on June 30,
2005. At October 31, 1998, CMCLA had drawn $900,000 of the Term Loan Facility
and $433,000 of the Revolving Loan Facility. The capital stock of CMCLA's
subsidiaries is pledged to secure the performance of CMCLA's obligations under
the Senior Credit Facility, and each of CMCLA's domestic subsidiaries have
guaranteed those obligations.
 
  (b) Senior Subordinated Notes
 
     Upon consummation of the Chancellor Merger, on September 5, 1997, CMCLA
assumed all of the obligations under CRBC's $200,000 aggregate principal amount
9 3/8% Senior Subordinated Notes due 2004 (the "9 3/8% Notes") and the indenture
governing such securities, and assumed all of the obligations under CRBC's
$200,000 aggregate principal amount 8 3/4% Senior Subordinated Notes due 2007
(the "8 3/4% Notes") and the indenture governing such securities. Upon
consummation of the Katz Acquisition, on October 28, 1997, CMCLA assumed all of
the obligations under Katz Media Corporation's $100,000 aggregate principal
amount of 10 1/2% Senior Subordinated Notes due 2007 (the "10 1/2% Notes") and
the amended and restated indenture governing such securities. On December 22,
1997, CMCLA issued $500,000 aggregate principal amount of 8 1/8 Senior
Subordinated Notes due 2007 (the "8 1/8% Notes") for net proceeds of
approximately $485,000. On September 30, 1998, CMCLA issued $750,000 aggregate
principal amount of 9% Notes for net proceeds of approximately $730,000.
 
  (c) Summarized Financial Information of Subsidiary Guarantors
 
     The 9 3/8% Notes, the 8 3/4% Notes, the 10 1/2% Notes, the 8 1/8% Notes and
the 9% Notes (collectively, the "Notes") are unsecured obligations of CMCLA,
subordinated in right of payment to all existing and any future senior
indebtedness of CMCLA. The Notes are fully and unconditionally guaranteed, on a
joint and several basis, by all of CMCLA's direct and indirect subsidiaries
other than certain inconsequential subsidiaries (the "Subsidiary Guarantors").
The Subsidiary Guarantors are wholly-owned subsidiaries of CMCLA. Summarized
financial information of the Subsidiary Guarantors as of December 31, 1997 and
September 30, 1998 and for the nine months ended September 30, 1998 is presented
below. Separate financial statements and other disclosures concerning the
subsidiary Guarantors are not presented because management has determined that
they are not material to investors. There are no significant restrictions on
distributions from each of the Subsidiary Guarantors to CMCLA.
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  1997           1998
                                                              ------------   -------------
<S>                                                           <C>            <C>
Current assets..............................................   $  223,913     $  300,154
Noncurrent assets...........................................      987,028        911,700
Current liabilities.........................................       89,362         90,250
Noncurrent liabilities......................................    1,130,105      1,129,460
</TABLE>
 
                                       29
<PAGE>   30
          CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
                                                               NINE MONTHS
                                                                  ENDED
                                                              -------------
                                                              SEPTEMBER 30,
                                                                  1998
                                                              -------------
<S>                                                           <C>
Net revenues................................................    $724,806
Operating income............................................      73,563
Net income..................................................      20,827
</TABLE>
 
  (d) Other
 
     The Senior Credit Facility and the indentures governing the Notes contain
customary restrictive covenants, which, among other things and with certain
exceptions, limit the ability of CMCLA and its subsidiaries to incur additional
indebtedness and liens in connection therewith, enter into certain transactions
with affiliates, pay dividends, consolidate, merge or effect certain asset
sales, issue additional stock, effect an asset swap and make acquisitions. CMCLA
is required under the Senior Credit Facility to maintain specified financial
ratios, including leverage, cash flow and debt service coverage ratios (as
defined).
 
5. OTHER INCOME
 
     Other income consists of the following for the nine months ended September
30, 1997 and 1998:
 
<TABLE>
<CAPTION>
                                                           NINE MONTHS ENDED
                                                     -----------------------------
                                                     SEPTEMBER 30,   SEPTEMBER 30,
                                                         1997            1998
                                                     -------------   -------------
<S>                                                  <C>             <C>
Gain on disposition of assets(a)...................     $18,380         $   --
WFLN Settlement(b).................................          --          3,559
                                                        -------         ------
                                                        $18,380         $3,559
                                                        =======         ======
</TABLE>
 
---------------
 
(a)  For the nine months ended September 30, 1997, CMCLA recorded a gain on
     disposition of assets of $18,380 related to the dispositions of WNKS-FM in
     Charlotte on May 15, 1997 ($3,536), WPNT-FM in Chicago on May 30, 1997
     ($529), WEJM-FM in Chicago on June 3, 1997 ($9,258), the FCC authorizations
     and certain transmission equipment previously used in the operation of
     KYLD-FM in San Francisco on July 2, 1997 ($1,726) and WEJM-AM in Chicago on
     August 27, 1997 ($3,331).
 
(b)  For the nine months ended September 30, 1998, CMCLA recorded a gain from
     the WFLN Settlement (defined above) of $3,559.
 
6. CONTINGENCIES
 
     CMCLA is involved in several lawsuits that are incidental to its business.
A discussion of certain of these lawsuits is contained in Part II, Item 1,
"Legal Proceedings", of this Form 10-Q. CMCLA believes that the ultimate
resolution of the lawsuits will not have a material effect on its financial
position or results of operations.
 
                                       30
<PAGE>   31
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 
GENERAL
 
     The Company's results of operations from period to period have not
historically been comparable because of the impact of the various acquisitions
and dispositions that the Company has completed. For a description of the
transactions completed by the Company during 1997 and to date in 1998, see the
Notes to the Consolidated Financial Statements contained in this Quarterly
Report on Form 10-Q.
 
     In the following analysis, management discusses the Company's broadcast
cash flow. The performance of a radio station group is customarily measured by
its ability to generate broadcast cash flow. The two components of broadcast
cash flow are gross revenues (net of agency commissions) and operating expenses
(excluding depreciation and amortization, corporate general and administrative
expense and non-cash and non-recurring charges). The primary source of revenues
is the sale of broadcasting time for advertising. The Company's most significant
operating expenses for purposes of the computation of broadcast cash flow are
employee salaries and commissions, programming expenses, and advertising and
promotion expenses. The Company strives to control these expenses by working
closely with local station management. The Company's revenues vary throughout
the year. As is typical in the radio broadcasting industry, the Company's first
calendar quarter generally produces the lowest revenues, and the fourth quarter
generally produces the highest revenues.
 
     Although broadcast cash flow is not calculated in accordance with generally
accepted accounting principles, the Company believes that it is widely used as a
measure of operating performance. Nevertheless, this measure should not be
considered in isolation or as a substitute for operating income, cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. Broadcast cash flow does not take into
account the Company's debt service requirements and other commitments and,
accordingly, broadcast cash flow is not necessarily indicative of amounts that
may be available for dividends, reinvestment in the Company's business or other
discretionary uses. Not all companies calculate broadcast cash flow in the same
fashion and therefore the information presented may not be comparable to other
similarly filed information of other companies.
 
  Three Months Ended September 30, 1998 Compared To Three Months Ended September
30, 1997
 
     The Company's results of operations for the three months ended September
30, 1998 are not comparable to the results of operations for the three months
ended September 30, 1997 due to the impact of the Chancellor Merger, the Viacom
Acquisition, the Katz Acquisition, the Martin Acquisition and various other
acquisitions and dispositions discussed in the Notes to the Consolidated
Financial Statements contained in this Quarterly Report on Form 10-Q.
 
     Net revenues for the three months ended September 30, 1998 increased 137.1%
to $343.8 million compared to $145.0 million for the third quarter of 1997.
Operating expenses excluding depreciation and amortization for the three months
ended September 30, 1998 increased 138.0% to $175.1 million compared to $73.6
million for the three months ended September 30, 1997. Operating income
excluding depreciation and amortization, corporate general and administrative
expense and other non-cash and non-recurring charges (broadcast cash flow) for
the three months ended September 30, 1998 increased 136.1% to $168.8 million
compared to $71.5 million for the third quarter of 1997. The increase in net
revenues, operating expenses, and broadcast cash flow for the three months ended
September 30, 1998 was primarily attributable to the net impact of the
Chancellor Merger, the Viacom Acquisition, the Katz Acquisition, the Martin
Acquisition and the various acquisitions and dispositions discussed elsewhere
herein, in addition to the overall net operational improvements realized by the
Company.
 
     Depreciation and amortization for the three months ended September 30, 1998
increased 134.9% to $118.6 million compared to $50.5 million for the third
quarter of 1997. The increase is primarily due to the impact of the Chancellor
Merger, the Viacom Acquisition, the Katz Acquisition and the Martin Acquisition,
as well as other acquisitions completed during 1997 and to date in 1998.
 
                                       31
<PAGE>   32
 
     Corporate general and administrative expenses for the three months ended
September 30, 1998 increased 68.6% to $10.1 million compared to $6.0 million for
the third quarter of 1997. The increase is due to the growth of the Company, and
the related increase in properties and staff, primarily due to recent
acquisitions.
 
     As a result of the above factors, the Company realized operating income of
$40.1 million for the three months ended September 30, 1998 compared to $15.0
million of operating income for the third quarter of 1997.
 
     Interest expense, net for the three months ended September 30, 1998
increased 118.1% to $48.6 million compared to $22.3 million for the same period
in 1997. The net increase in interest expense was primarily due to (i)
additional bank borrowings under the Senior Credit Facility required to finance
the various acquisitions discussed elsewhere herein offset by repayment of
borrowings from the net proceeds of the Company's various radio station
dispositions and the 1998 Equity Offering, (ii) the assumption of CRBC's 9 3/8%
Notes and 8 3/4% Notes upon consummation of the Chancellor Merger on September
5, 1997, (iii) the assumption of Katz' 10 1/2% Notes upon consummation of the
Katz Acquisition on October 28, 1997 and (iv) the issuance of the 8 1/8% Notes
by the Company on December 22, 1997.
 
     For the three months ended September 30, 1998, the Company recorded a gain
on disposition of representation contracts of $18.5 million related to its media
representation operations. The Company entered into the media representation
business with the acquisition of Katz on October 28, 1997.
 
     For the three months ended September 30, 1997, other income of $5.1 million
represents a gain on the disposition of assets related to the dispositions of
the FCC authorizations and certain transmission equipment previously used in the
operation of KYLD-FM in San Francisco on July 2, 1997 ($1.7 million) and WEJM-AM
in Chicago on August 27, 1997 ($3.4 million).
 
     The income tax benefit for the three months ended September 30, 1998 is
comprised of current state tax expense and a deferred federal income tax
benefit.
 
     Dividends on preferred stock of CMCLA were $0.9 million for the three
months ended September 30, 1998, which represent dividends on CMCLA's 12 1/4%
Series A Senior Cumulative Exchangeable Preferred Stock (the "12 1/4% Preferred
Stock") for the period from July 1, 1998 through July 23, 1998, issued in
September 1997 as part of the Chancellor Merger. On July 23, 1998, CMCLA
exchanged all shares of the 12 1/4% Preferred Stock for its 12 1/4% Subordinated
Exchange Debentures due 2008 (the "12 1/4% Debentures"). The 12 1/4% Debentures
were subsequently repurchased by CMCLA.
 
     For the three months ended September 30, 1998, the Company recorded an
extraordinary charge of $15.2 million (net of a tax benefit of $8.2 million)
consisting of the premiums, estimated transaction costs and the write-off of the
unamortized balance of deferred debt issuance costs in connection with the
12 1/4% Debentures Tender Offer.
 
     Dividends on Chancellor Media's preferred stock were $6.4 million for the
three months ended September 30, 1998 compared to $5.0 million for the same
period in 1997. The increase is due to dividends on Chancellor Media's 7%
Convertible Preferred Stock (the "7% Convertible Preferred Stock") issued in
September 1997 as part of the Chancellor Merger.
 
     As a result of the above factors, the Company incurred a $14.1 million net
loss attributable to common stockholders for the three months ended September
30, 1998 compared to a net loss attributable to common stockholders of $11.0
million for the third quarter of 1997.
 
     The basic and diluted loss per common share for the three months ended
September 30, 1998 was $0.10 compared to $0.12 for the third quarter of 1997.
 
  Nine Months Ended September 30, 1998 Compared To Nine Months Ended September
30, 1997
 
     The Company's results of operations for the nine months ended September 30,
1998 are not comparable to the results of operations for the nine months ended
September 30, 1997 due to the impact of the Chancellor Merger, the Viacom
Acquisition, the Katz Acquisition, the Martin Acquisition and various other
acquisitions
 
                                       32
<PAGE>   33
 
and dispositions discussed in the Notes to the Consolidated Financial Statements
contained in this Quarterly Report on Form 10-Q.
 
     Net revenues for the nine months ended September 30, 1998 increased 169.8%
to $899.1 million compared to $333.3 million for the nine months ended September
30, 1997. Operating expenses excluding depreciation and amortization for the
nine months ended September 30, 1998 increased 166.3% to $491.9 million compared
to $184.7 million for the nine months ended September 30, 1997. Operating income
excluding depreciation and amortization, corporate general and administrative
expense and other non-cash and non-recurring charges (broadcast cash flow) for
the nine months ended September 30, 1998 increased 174.1% to $407.2 million
compared to $148.6 million for the nine months ended September 30, 1997. The
increase in net revenues, operating expenses, and broadcast cash flow for the
nine months ended September 30, 1998 was primarily attributable to the net
impact of the Chancellor Merger, the Viacom Acquisition, the Katz Acquisition,
the Martin Acquisition and the various acquisitions and dispositions discussed
elsewhere herein, in addition to the overall net operational improvements
realized by the Company.
 
     Depreciation and amortization for the nine months ended September 30, 1998
increased 198.5% to $311.6 million compared to $104.4 million for the nine
months ended September 30, 1997. The increase is primarily due to the impact of
the Chancellor Merger, the Viacom Acquisition, the Katz Acquisition and the
Martin Acquisition, as well as other acquisitions completed during 1997 and to
date in 1998.
 
     Corporate general and administrative expenses for the nine months ended
September 30, 1998 increased 116.3% to $25.2 million compared to $11.6 million
for the nine months ended September 30, 1997. The increase is due to the growth
of the Company, and the related increase in properties and staff, primarily due
to recent acquisitions.
 
     The executive severance charge of $59.5 million for the nine months ended
September 30, 1998 represents a one-time charge incurred in connection with the
resignation of Scott K. Ginsburg as President and Chief Executive Officer of the
Company.
 
     As a result of the above factors, the Company realized operating income of
$10.9 million for the nine months ended September 30, 1998 compared to $32.5
million of operating income for the nine months ended September 30, 1997.
 
     For the nine months ended September 30, 1998, the Company recorded a gain
on disposition of representation contracts of $29.8 million related to its media
representation operations. The Company entered into the media representation
business with the acquisition of Katz on October 28, 1997.
 
     Interest expense, net for the nine months ended September 30, 1998
increased 201.3% to $135.7 million compared to $45.0 million for the same period
in 1997. The net increase in interest expense was primarily due to (i)
additional bank borrowings under the Senior Credit Facility required to finance
the various acquisitions discussed elsewhere herein offset by repayment of
borrowings from the net proceeds of the Company's various radio station
dispositions and the 1998 Equity Offering, (ii) the assumption of CRBC's 9 3/8%
Notes and 8 3/4% Notes upon consummation of the Chancellor Merger on September
5, 1997, (iii) the assumption of Katz' 10 1/2% Notes upon consummation of the
Katz Acquisition on October 28, 1997 and (iv) the issuance of the 8 1/8% Notes
by the Company on December 22, 1997.
 
     For the nine months ended September 30, 1997, other income of $18.4 million
represents a gain on the disposition of assets related to the dispositions of
WNKS-FM in Charlotte ($3.5 million), WPNT-FM in Chicago ($0.5 million), WEJM-FM
in Chicago ($9.3 million), the FCC authorizations and certain transmission
equipment previously used in the operation of KYLD-FM in San Francisco ($1.7
million) and WEJM-AM in Chicago ($3.4 million). For the nine months ended
September 30, 1998, other income represents a gain from the WFLN Settlement of
$3.6 million.
 
     The income tax benefit for the nine months ended September 30, 1998 is
comprised of current state tax expense and a deferred federal income tax
benefit.
 
     Dividends on preferred stock of CMCLA were $17.6 million for the nine
months ended September 30, 1998, which represent dividends on CMCLA's 12%
Exchangeable Preferred Stock (the "12% Preferred
                                       33
<PAGE>   34
 
Stock") for the period from January 1, 1998 through May 13, 1998 and on CMCLA's
12 1/4% Series A Senior Cumulative Exchangeable Preferred Stock (the "12 1/4%
Preferred Stock") for the period from January 1, 1998 to July 23, 1998, each
issued in September 1997 as part of the Chancellor Merger. On May 13, 1998,
CMCLA exchanged all shares of the 12% Preferred Stock for its 12% Debentures and
on July 23, 1998, CMCLA exchanged all shares of the 12 1/4% Preferred Stock for
its 12 1/4% Debentures. The 12% Debentures and 12 1/4 Debentures were
subsequently repurchased by CMCLA.
 
     For the nine months ended September 30, 1997, the Company recorded an
extraordinary charge of $4.4 million (net of a tax benefit of $2.3 million)
consisting of the write-off of the unamortized balance of deferred debt issuance
costs related to the amendment and restatement of the Company's Senior Credit
Facility on April 25, 1997. For the nine months ended September 30, 1998, the
Company recorded an extraordinary charge of $47.1 million (net of a tax benefit
of 25.4 million) consisting of the premiums, estimated transaction costs and the
write-off of the unamortized balance of deferred debt issuance costs in
connection with the 12% Debentures Tender Offer and 12 1/4% Debentures Tender
Offer.
 
     Dividends on Chancellor Media's preferred stock were $19.3 million for the
nine months ended September 30, 1998 compared to $5.7 million for the same
period in 1997. The increase is due to dividends on the $3.00 Convertible
Preferred Stock issued in June 1997 and dividends on the 7% Convertible
Preferred Stock issued in September 1997 as part of the Chancellor Merger.
 
     As a result of the above factors, the Company incurred a $160.1 million net
loss attributable to common stockholders for the nine months ended September 30,
1998 compared to a net loss attributable to common stockholders of $12.2 million
for the nine months ended September 30, 1997.
 
     The basic and diluted loss per common share for the nine months ended
September 30, 1998 was $1.17 compared to $0.14 for the nine months ended
September 30, 1997.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Overview. The Company historically has generated sufficient cash flow from
operations to finance its existing operational requirements and debt service
requirements, and the Company anticipates that this will continue to be the
case. The Company historically has used the proceeds of bank debt and private
and public debt and equity offerings, supplemented by cash flow from operations
not required to fund operational requirements and debt service, to fund
implementation of the Company's acquisition strategy.
 
     The total cash financing required to consummate the Pending Transactions is
expected to be $1.64 billon. The Company expects to receive $21.0 million in
cash from the completion of the Chicago Disposition. Accordingly, the Company
will require at least $1.62 billion in additional financing to consummate the
Pending Transactions. Although there can be no assurance, the Company expects
that $995.6 million of such amount will be required to be borrowed during the
fourth quarter of 1998 (for the Kunz Option and the Whiteco Acquisition), $374.6
million will be required to be borrowed during the first quarter of 1999 (for
the LIN Merger, the Cleveland Acquisitions and the Pegasus Acquisition) and
$140.0 million will be required to be borrowed during the second quarter of 1999
(for the Capstar Merger and the Phoenix Acquisition). In addition, the financing
of $129.5 million will be required if the Petry Acquisition is consummated.
Depending on the timing of the consummation of the Pending Transactions, the
Company may need to obtain additional financing.
 
     The Company believes that amounts available under the Senior Credit
Facility and an additional $250.0 million potentially available under the Senior
Credit Facility will be used to finance the remaining Pending Transactions as
well as future acquisitions. The Senior Credit Facility currently provides for a
total commitment of $2.50 billion, consisting of $1.60 billion reducing
revolving credit facility and a $900.0 million term loan facility. Other
potential sources of financing for the Pending Transactions and future
acquisitions include cash flow from operations, additional debt or equity
financings, the sale of non-core assets or a combination of those sources.
 
     In addition to debt service requirements under the Senior Credit Facility,
the Company is required to pay interest on the Notes. Interest payment
requirements of the Company on the Notes are $154.9 million per
                                       34
<PAGE>   35
 
year. Cash dividend requirements of Chancellor Media on its $3.00 Convertible
Preferred Stock and its 7% Convertible Preferred Stock are $25.7 million per
year. Because Chancellor Media is a holding company with no significant assets
other than the common stock of CMHC, Chancellor Media will rely solely on
dividends from CMHC, which in turn is expected to distribute dividends paid to
it by CMCLA and KMG to Chancellor Media, to permit Chancellor Media to pay cash
dividends on the $3.00 Convertible Preferred Stock and the 7% Convertible
Preferred Stock. The Senior Credit Facility and the indentures governing the
Notes limit, but do not prohibit, CMCLA from paying such dividends to CMHC.
 
FORWARD LOOKING STATEMENTS
 
     When used in the preceding and following discussion, the words "believes,"
"expects," "anticipates," "intends" and similar expressions are intended to
identify forward looking statements. Such statements are subject to a number of
known and unknown risks and uncertainties. Actual results in the future could
differ materially from those described in the forward looking statements. Such
risks and uncertainties include, but are not limited to, industry-wide market
factors and regulatory developments affecting the Company's operations and the
acquisitions and dispositions described elsewhere herein.
 
RECENTLY ISSUED ACCOUNTING PRINCIPLES
 
     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. This
Statement establishes standards for reporting information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial reports issued to
stockholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997. Management does
not anticipate that this Statement will have a significant effect on the
Company's consolidated financial statements.
 
     In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, Employers' Disclosure about Pensions and Other Postretirement Benefits.
This Statement revises employers' disclosures about pensions and other
postretirement benefit plans. It does not change the measurement or recognition
of those plans. SFAS No. 132 is effective for fiscal years beginning after
December 15, 1997. Management does not anticipate that this Statement will have
a significant effect on the Company's consolidated financial statements.
 
     In April 1998, Accounting Standards Executive Committee ("ACSEC") issued
Statement of Position ("SOP") No. 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") effective for fiscal years beginning after December 15,
1998. This SOP provides guidance on the financial reporting of start-up costs
and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. Initial application of SOP 98-5
should be reported as the cumulative effect of a change in accounting principle,
as described in Accounting Principles Board (APB) Opinion No. 20, "Accounting
Changes." When adopting this SOP, entities are not required to report the pro
forma effects of retroactive application. Management does not believe the
implementation of SOP 98-5 will have a material impact on the Company's
consolidated financial statements.
 
     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. SFAS No.
133 is effective for all fiscal quarters of all fiscal years beginning after
June 15, 1999. Management does not anticipate that this Statement will have a
material impact on the Company's consolidated financial statements.
 
YEAR 2000 ISSUE
 
     The "Year 2000 Issue" is whether the Company's computer systems will
properly recognize date sensitive information when the year changes to 2000, or
"00." Systems that do not properly recognize such information could generate
erroneous data or cause a system to fail. The Company has conducted a
                                       35
<PAGE>   36
 
comprehensive review of its computer systems to identify the systems that could
be affected by the Year 2000 Issue and has developed an implementation plan. The
Company uses purchased software programs for a variety of functions, including
general ledger, accounts payable and accounts receivable accounting packages.
The companies providing these software programs are Year 2000 compliant, and the
Company has received Year 2000 compliance certificates from these software
vendors. The Company's Year 2000 implementation plan also includes ensuring that
all individual work stations are Year 2000 compliant. Costs associated with
ensuring that the Company's existing systems are Year 2000 compliant are
currently expected to be less than $1.0 million. The Company believes that the
Year 2000 Issue will not pose significant operational problems for the Company's
computer systems and, therefore, will not have an impact on the operations of
the Company.
 
     In addition, the Company reviews the computer systems of companies it
intends to acquire in order to assess whether such systems are Year 2000
compliant. To the extent such systems are not Year 2000 compliant, the Company
will develop an implementation plan to ensure such systems are Year 2000
compliant or will convert such systems to the Company's computer systems which
are Year 2000 compliant. The Company has begun a comprehensive review of the
computer systems related to the pending acquisitions of Whiteco, expected to
close in the fourth quarter of 1998 and of LIN, expected to close in the first
quarter of 1999. The Company is in the process of reviewing various modification
and replacement plans related to the pending acquisitions of Whiteco and LIN.
The costs associated with such efforts are not currently estimable; however,
such costs may be material. There is no guarantee that the systems of companies
to be acquired by the Company in the future will be timely converted and would
not have an adverse effect on the operations of the Company.
 
     The ability of third parties with whom the Company transacts business to
adequately address their Year 2000 issues is outside of the Company's control.
Therefore, there can be no assurance that the failure of such third parties to
adequately address their Year 2000 issues will not have a material adverse
effect on the Company's business, financial condition, cash flows and results of
operations.
 
                                       36
<PAGE>   37
 
                                    PART II
 
ITEM 1. LEGAL PROCEEDINGS
 
     In July 1998, a stockholder derivative action was commenced in the Delaware
Court of Chancery by a stockholder purporting to act on behalf of the Company
(the "Chancellor/LIN Stockholder Lawsuit"). The defendants in the case include
Hicks, Muse, Tate & Furst, Inc. ("Hicks Muse"), LIN Television Corporation and
certain of the Company's directors. The plaintiff alleges that, among other
things, (1) Hicks Muse allegedly caused the Company to pay too high of a price
for LIN because Hicks Muse had allegedly paid too high of a price for LIN when
affiliates of Hicks Muse acquired it in March 1998, and (2) the transaction
therefore constitutes a breach of fiduciary duty and a waste of corporate assets
by Hicks Muse (which is alleged to control the Company) and the directors of the
Company named as defendants. The plaintiff seeks to enjoin consummation or
rescission of the transaction, compensatory damages, an order requiring that the
directors named as defendants "carry out their fiduciary duties," and attorneys'
fees and other costs.
 
     Although not final, plaintiff, defendants and Chancellor Media have
tentatively agreed to settle the Chancellor/LIN Stockholder Lawsuit. Such
settlement is subject to a number of conditions, including, but not limited to,
preparing and finalizing definitive documentation and approval by the court.
Pursuant to this settlement, (1) Hicks Muse and its affiliates agreed to vote
all shares of Chancellor Media common stock that they control in favor of and
opposed to the approval and adoption of the merger agreement in the same
percentage as the other stockholders of Chancellor Media vote at the special
meeting of stockholders called for that purpose, and (2) legal fees and
documented expenses will be paid to plaintiff's counsel. In connection with
settlement discussions, Chancellor Media and LIN provided counsel for the
plaintiff an opportunity to review and comment on the disclosure in the joint
proxy statement/prospectus relating to the LIN Merger. There can be no assurance
that a settlement of the Chancellor/LIN Stockholder Lawsuit can be reached on
these terms or any other terms.
 
     In September 1998, a stockholder class action complaint was filed in the
Delaware Court of Chancery by a stockholder purporting to act individually and
on behalf of all other persons (other than defendants) who own securities of the
Company and are similarly situated. The defendants in the case are named as the
Company, Hicks Muse, Thomas O. Hicks, Jeffrey A. Marcus, James E. de Castro,
Eric C. Neuman, Lawrence D. Stuart, Jr., Steven Dinetz, Thomas J. Hodson, Perry
Lewis, John H. Massey and Vernon E. Jordan, Jr. The plaintiff alleges breach of
fiduciary duties, gross mismanagement, gross negligence or recklessness, and
other matters relating to the defendants' actions in connection with the
proposed Capstar Merger. The plaintiff seeks to certify the complaint as a class
action, enjoin consummation of the Capstar Merger, order defendants to account
to plaintiff and other alleged class members for damages, and award attorneys'
fees and other costs. The Company believes that the lawsuit is without merit and
intends to vigorously defend the action.
 
     The Company is also involved in various other claims and lawsuits which are
generally incidental to its business. The Company is vigorously contesting all
such matters and believes that their ultimate resolution will not have a
material adverse effect on its consolidated financial position or results of
operations.
 
                                       37
<PAGE>   38
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
     (a) Exhibits
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        2.11(h)          -- Agreement and Plan of Merger by and among Pyramid
                            Communications, Inc., Evergreen Media Corporation and
                            Evergreen Media/Pyramid Corporation dated as of July 14,
                            1995 (see table of contents for list of omitted exhibits
                            and schedules).
        2.11A(i)         -- Amendment to Plan and Agreement of Merger by and among
                            Pyramid Communications, Inc., Evergreen Media Corporation
                            and Evergreen Media/Pyramid Corporation dated September
                            7, 1995.
        2.11B(i)         -- Amendment to Plan and Agreement of Merger by and among
                            Pyramid Communications, Inc., Evergreen Media Corporation
                            and Evergreen Media/Pyramid Corporation dated January 11,
                            1996.
        2.12(j)          -- Purchase Agreement between Fairbanks Communications, Inc.
                            and Evergreen Media Corporation dated October 12, 1995
                            (see table of contents for list of omitted exhibits and
                            schedules).
        2.13(n)          -- Option Agreement dated as of January 9, 1996 between
                            Chancellor Broadcasting Company and Evergreen Media
                            Corporation (including Form of Advertising Brokerage
                            Agreement and Form of Asset Purchase Agreement).
        2.14(o)          -- Asset Purchase Agreement dated April 4, 1996 between
                            American Radio Systems Corporation and Evergreen Media
                            Corporation of Buffalo (see table of contents for list of
                            omitted exhibits and schedules).
        2.15(o)          -- Asset Purchase Agreement dated April 11, 1996 between
                            Mercury Radio Communications, L.P. and Evergreen Media
                            Corporation of Los Angeles, Evergreen Media/Pyramid
                            Holdings Corporation, WHTT (AM) License Corp. and WHTT
                            (FM) License Corp. (see table of contents for list of
                            omitted exhibits and schedules).
        2.16(o)          -- Asset Purchase Agreement dated April 19, 1996 between
                            Crescent Communications L.P. and Evergreen Media
                            Corporation of Los Angeles (see table of contents for
                            list of omitted exhibits and schedules).
        2.17(p)          -- Asset Purchase Agreement dated June 13, 1996 between
                            Evergreen Media Corporation of Los Angeles and Greater
                            Washington Radio, Inc. (see table of contents for list of
                            omitted exhibits and schedules).
        2.18(p)          -- Asset Exchange Agreement dated June 13, 1996 among
                            Evergreen Media Corporation of Los Angeles, Evergreen
                            Media Corporation of the Bay State, WKLB License Corp.,
                            Greater Media Radio, Inc. and Greater Washington Radio,
                            Inc. (see table of contents for list of omitted exhibits
                            and schedules).
        2.19(p)          -- Purchase Agreement dated June 27, 1996 between WEDR,
                            Inc., and Evergreen Media Corporation of Los Angeles.
                            (See table of contents for list of omitted schedules)
        2.20(p)          -- Time Brokerage Agreement dated July 10, 1996 by and
                            between Evergreen Media Corporation of Detroit, as
                            Licensee, and Kidstar Interactive Media Incorporated, as
                            Time Broker.
        2.21(p)          -- Asset Purchase Agreement dated July 15, 1996 by and among
                            Century Chicago Broadcasting L.P., Century Broadcasting
                            Corporation, Evergreen Media Corporation of Los Angeles,
                            and Evergreen Media Corporation of Chicago.
</TABLE>
 
                                       38
<PAGE>   39
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        2.22(p)          -- Asset Purchase Agreement dated August 12, 1996 by and
                            among Chancellor Broadcasting Company, Shamrock
                            Broadcasting, Inc. and Evergreen Media Corporation of the
                            Great Lakes.
        2.23(p)          -- Asset Purchase Agreement dated as of August 12, 1996
                            between Secret Communications Limited Partnership and
                            Evergreen Media Corporation of Los Angeles (WQRS-FM).
                            (See table of contents for list of omitted exhibits and
                            schedules)
        2.24(p)          -- Asset Purchase Agreement dated as of August 12, 1996
                            between Secret Communications Limited Partnership and
                            Evergreen Media Corporation of Los Angeles. (See table of
                            contents for list of omitted schedules)
        2.25(q)          -- Letter of intent dated August 27, 1996 between EZ
                            Communications, Inc. and Evergreen Media Corporation.
        2.26(q)          -- Asset Purchase Agreement dated September 19, 1996 between
                            Beasley-FM Acquisition Corp., WDAS License Limited
                            Partnership and Evergreen Media Corporation of Los
                            Angeles.
        2.27(q)          -- Asset Purchase Agreement dated September 19, 1996 between
                            The Brown Organization and Evergreen Media Corporation of
                            Los Angeles.
        2.28(r)          -- Stock Purchase Agreement by and between Viacom
                            International Inc. and Evergreen Media Corporation of Los
                            Angeles, dated February 16, 1997 (See table of contents
                            for omitted schedules and exhibits).
        2.29(r)          -- Agreement and Plan of Merger, by and among Evergreen
                            Media Corporation, Chancellor Broadcasting Company and
                            Chancellor Radio Broadcasting Company, dated as of
                            February 19, 1997.
        2.30(r)          -- Stockholders Agreement, by and among Chancellor
                            Broadcasting Company, Evergreen Media Corporation, Scott
                            K. Ginsburg (individually and as custodian for certain
                            shares held by his children), HM2/Chancellor, L.P.,
                            Hicks, Muse, Tate & First Equity Fund II, L.P., HM2/HMW,
                            L.P., The Chancellor Business Trust, HM2/HMD Sacramento
                            GP, L.P., Thomas O. Hicks, as Trustee of the William Cree
                            Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as Trustee
                            of the Catherine Forgave Hicks 1993 Irrevocable Trust,
                            Thomas O. Hicks, as Trustee of the John Alexander Hicks
                            1984 Trust, Thomas O. Hicks, as Trustee of the Mack
                            Hardin Hicks 1984 Trust, Thomas O. Hicks, as Trustee of
                            Robert Bradley Hicks 1984 Trust, Thomas O. Hicks, as
                            Trustee of the Thomas O. Hicks, Jr. 1984 Trust, Thomas O.
                            Hicks and H. Rand Reynolds, as Trustees for the Muse
                            Children's GS Trust, and Thomas O. Hicks, dated as of
                            February 19, 1997.
        2.31(r)          -- Joint Purchase Agreement, by and among Chancellor Radio
                            Broadcasting Company, Chancellor Broadcasting Company,
                            Evergreen Media Corporation of Los Angeles, and Evergreen
                            Media Corporation, dated as of February 19, 1997.
        2.32(s)          -- Asset Exchange Agreement, by and among EZ Communications,
                            Inc., Professional Broadcasting Incorporated, EZ
                            Philadelphia, Inc., Evergreen Media Corporation of Los
                            Angeles, Evergreen Media Corporation of Charlotte,
                            Evergreen Media Corporation of the East, Evergreen Media
                            Corporation of Carolinaland, WBAV/WBAV-FM/WPEG License
                            Corp. and WRFX License Corp., dated as of December 5,
                            1996 (See table of contents for list of omitted
                            schedules).
</TABLE>
 
                                       39
<PAGE>   40
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        2.33(s)          -- Asset Purchase Agreement, by and among EZ Communications,
                            Inc., Professional Broadcasting Incorporated, EZ
                            Charlotte, Inc., Evergreen Media Corporation of Los
                            Angeles, Evergreen Media Corporation of the East and
                            Evergreen Media Corporation of Carolinaland, dated as of
                            December 5, 1996 (See table of contents for list of
                            omitted schedules).
        2.34(t)          -- Asset Purchase Agreement by and between Pacific and
                            Southern Company, Inc. and Evergreen Media Corporation of
                            Los Angeles (re: WGCI-AM and WGCI-FM), dated as of April
                            4, 1997 (see table of contents for list of omitted
                            schedules and exhibits).
        2.35(t)          -- Asset Purchase Agreement by and between Pacific and
                            Southern Company, Inc. and Evergreen Media Corporation of
                            Los Angeles (re: KKBQ-AM and KKBQ-FM), dated as of April
                            4, 1997 (see table of contents for list of omitted
                            schedules and exhibits)
        2.36(t)          -- Asset Purchase Agreement by and between Pacific and
                            Southern Company, Inc. and Evergreen Media Corporation of
                            Los Angeles (re: KHKS-FM), dated as of April 4, 1997 (see
                            table of contents for list of omitted schedules and
                            exhibits).
        2.41(y)          -- Amended and Restated Agreement and Plan of Merger among
                            Chancellor Broadcasting Company, Chancellor Radio
                            Broadcasting Company, Evergreen Media Corporation,
                            Evergreen Mezzanine Holdings Corporation and Evergreen
                            Media Corporation of Los Angeles, dated as of February
                            19, 1997, amended and restated as of July 31, 1997.
        2.42(gg)         -- Option Agreement, by and among Evergreen Media
                            Corporation, Chancellor Broadcasting Company, Bonneville
                            International Corporation and Bonneville Holding Company,
                            dated as of August 6, 1997.
        2.43(ss)         -- Letter Agreement, dated February 20, 1998, between CMCLA
                            and Capstar Broadcasting Corporation.
        2.44(yy)         -- Amendment No. 1, dated May 19, 1998, to Letter Agreement
                            dated February 20, 1998, between CMCLA and Capstar
                            Broadcasting Corporation.
        2.45(yy)         -- Unit and Stock Purchase Agreement by and among CMCLA,
                            Martin Media, L.P., Martin & MacFarlane, Inc., Nevada
                            Outdoor Systems, Inc., MW Sign Corp. and certain sellers
                            named therein, dated as of June 19, 1998 (see table of
                            contents for list of omitted schedules and exhibits)
        2.46(yy)         -- Agreement and Plan of Merger between Chancellor Media
                            Corporation and Ranger Equity Holdings Corporation dated
                            as of July 7, 1998.
        2.47(yy)         -- Asset Purchase Agreement, dated August 11, 1998, between
                            Chancellor Media Corporation of Los Angeles and
                            Independent Group Limited Partnership.
        2.48(yy)         -- Asset Purchase Agreement, dated August 11, 1998, between
                            Chancellor Media Corporation of Los Angeles and Zapis
                            Communications Corporation.
        2.49(yy)         -- Stock Purchase Agreement, dated August 11, 1998, among
                            Chancellor Media Corporation of Los Angeles, Young Ones,
                            Inc., Zebra Broadcasting Corporation and the Sellers
                            named therein.
        2.50(yy)         -- Stock Purchase Agreement, dated August 11, 1998, among
                            Chancellor Media Corporation of Los Angeles, ML Media
                            Partners LP., Wincom Broadcasting Corporation and WIN
                            Communications, Inc.
        2.51(yy)         -- Stock Purchase and Merger Agreement, dated July 9, 1998,
                            by and among Chancellor Media Corporation, Chancellor
                            Mexico LLC, Grupo Radio Centro, SA. De C.V., and the
                            Selling Shareholders.
</TABLE>
 
                                       40
<PAGE>   41
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        2.52+            -- Agreement and Plan of Merger among Chancellor Media
                            Corporation, Capstar Broadcasting Corporation and CBC
                            Acquisition Company, Inc., dated as of August 26, 1998.
        3.1C(ss)         -- Amended and Restated Certificate of Incorporation of
                            Chancellor Media.
        3.2B(ss)         -- Amended and Restated Bylaws of Chancellor Media.
        3.3(ff)          -- Certificate of Incorporation of Chancellor Media
                            Corporation of Los Angeles formerly known as Evergreen
                            Media Corporation of Los Angeles.
        3.3A(pp)         -- Amendment to Certificate of Incorporation of Chancellor
                            Media Corporation of Los Angeles, filed September 5,
                            1997.
        3.3B(uu)         -- Amendment to the Certificate of Incorporation of
                            Chancellor Media Corporation of Los Angeles, filed
                            October 28, 1997.
        3.4(ff)          -- Bylaws of Chancellor Media Corporation of Los Angeles.
        4.10(t)          -- Second Amended and Restated Loan Agreement dated as of
                            April 25 1997 among Evergreen Media Corporation of Los
                            Angeles, the financial institutions whose names appear as
                            Lenders on the signature pages thereof (the "Lenders"),
                            Toronto Dominion Securities, Inc., as Arranging Agent,
                            The Bank of New York and Bankers Trust Company, as
                            Co-Syndication Agents, NationsBank of Texas, N.A. and
                            Union Bank of California, as Co-Documentation Agents, and
                            Toronto Dominion (Texas), Inc., as Administrative Agent
                            for the Lenders, together with certain collateral
                            documents attached thereto as exhibits, including
                            Assignment of Partnership Interests, Assignment of Trust
                            Interests, Borrower's Pledge Agreement, Parent Company
                            Guaranty, Stock Pledge Agreement, Subsidiary Guaranty and
                            Subsidiary Pledge Agreement (see table of contents for
                            list of omitted schedules and exhibits).
        4.11(z)          -- First Amendment to Second Amended and Restated Loan
                            Agreement, dated June 26, 1997, among Evergreen Media
                            Corporation of Los Angeles, the Lenders, the Agents and
                            the Administrative Agent.
        4.12(y)          -- Specimen Common Stock Certificate of Chancellor Media.
        4.13(y)          -- Specimen 7% Convertible Preferred Stock Certificate of
                            Chancellor Media.
        4.14(y)          -- Form of Certificate of Designation for 7% Convertible
                            Preferred Stock of Chancellor Media.
        4.15(aa)         -- Indenture, dated as of February 14, 1996, governing the
                            9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
        4.16(bb)         -- First Supplemental Indenture, dated as of February 14,
                            1996, to the Indenture dated February 14, 1996, governing
                            the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
        4.17(cc)         -- Indenture, dated as of February 26, 1996, governing the
                            12 1/4% Subordinated Exchange Debentures due 2008 of
                            CMCLA.
        4.18(dd)         -- Indenture, dated as of January 23, 1997, governing the
                            12% Subordinated Exchange Debentures due 2009 of CMCLA.
        4.19(ee)         -- Indenture, dated as of June 24, 1997, governing the
                            8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
        4.21(ff)         -- Specimen of the 12 1/4% Series A Senior Cumulative
                            Exchangeable Preferred Stock Certificate of CMCLA.
        4.22(ff)         -- Specimen of the 12% Exchangeable Preferred Stock
                            Certificate of CMCLA.
</TABLE>
 
                                       41
<PAGE>   42
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        4.23(ff)         -- Form of Certificate of Designation for the 12 1/4% Series
                            A Senior Cumulative Exchangeable Preferred Stock of
                            CMCLA.
        4.24(ff)         -- Form of Certificate of Designation for the 12%
                            Exchangeable Preferred Stock of CMCLA.
        4.25(pp)         -- Second Amendment to Second Amended and Restated Loan
                            Agreement, dated August 7, 1997, among Evergreen Media
                            Corporation of Los Angeles, the Lenders, the Agents and
                            the Administrative Agent.
        4.26(hh)         -- Second Supplemental Indenture, dated as of April 15,
                            1997, to the Indenture dated February 14, 1996, governing
                            the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
        4.27(pp)         -- Third Supplemental Indenture, dated as of September 5,
                            1997, to the Indenture dated February 14, 1996, governing
                            the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
        4.28(pp)         -- First Supplemental Indenture, dated as of September 5,
                            1997, to the Indenture dated June 24, 1997, governing the
                            8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
        4.29(pp)         -- First Supplemental Indenture, dated as of September 5,
                            1997, to the Indenture dated February 26, 1997, governing
                            the 12 1/4% Subordinated Exchange Debentures due 2008 of
                            CMCLA.
        4.30(pp)         -- First Supplemental Indenture, dated as of September 5,
                            1997, to the Indenture dated January 23, 1997, governing
                            the 12% Subordinated Exchange Debentures due 2009 of
                            CMCLA.
        4.31(qq)         -- Specimen $3.00 Convertible Exchangeable Preferred Stock
                            Certificate of Chancellor Media.
        4.32(qq)         -- Certificate of Designation for $3.00 Convertible
                            Exchangeable Preferred Stock of Chancellor Media.
        4.33(qq)         -- Convertible Subordinated Exchange Indenture (including
                            form of 6% Convertible Subordinated Exchange Debentures
                            attached thereto), dated June 16, 1997, between Evergreen
                            Media Corporation and The Bank of New York.
        4.34(uu)         -- Amended and Restated Indenture, dated as of October 28,
                            1997, governing the 10 1/2% Senior Subordinated Notes due
                            2007 of CMCLA.
        4.35(uu)         -- Second Supplemental Indenture, dated as of October 28,
                            1997, to the Amended and Restated Indenture dated October
                            28, 1997 governing the 10 1/2% Senior Subordinated Notes
                            due 2007 of CMCLA.
        4.36(uu)         -- Third Amendment to Second Amended and Restated Loan
                            Agreement dated October 28, 1997, among CMCLA, the
                            Lenders, the Agents and the Administrative Agent.
        4.37(uu)         -- Fourth Amendment to Second Amended and Restated Loan
                            Agreement, dated February 10, 1998, among CMCLA, the
                            Lenders, the Agents and the Administrative Agent.
        4.38(vv)         -- Indenture, dated as of December 22, 1997, governing the
                            8 1/8% Senior Subordinated Notes due 2007 of CMCLA.
        4.39(ww)         -- Fifth Amendment to Second Amended and Restated Loan
                            Agreement, dated May 1, 1998, among CMCLA, the Lenders,
                            the Agents and the Administrative Agent.
</TABLE>
 
                                       42
<PAGE>   43
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        4.40(yy)         -- Sixth Amendment to Second Amended and Restated Loan
                            Agreement, dated July 31, 1998, among CMCLA, the Lenders,
                            the Agents and the Administrative Agent.
        4.41(zz)         -- Indenture, dated as of September 30, 1998, governing the
                            9% Senior Subordinated Notes due 2008 of CMCLA.
        4.42+            -- Seventh Amendment to Second Amended and Restated Loan
                            Agreement, dated November 9, 1998, among CMCLA, the
                            Lenders, the Agents and the Administrative Agent.
       10.23(xx)         -- Amended and Restated Chancellor Media Corporation Stock
                            Option Plan for Non-employee Directors.
       10.26(n)**        -- Employment Agreement dated February 9, 1996 by and
                            between Evergreen Media Corporation and Kenneth J.
                            O'Keefe.
       10.28(o)          -- 1995 Stock Option Plan for executive officers and key
                            employees of Evergreen Media Corporation.
       10.30(pp)**       -- First Amendment to Employment Agreement dated March 1,
                            1997 by and between Evergreen Media Corporation and
                            Kenneth J. O'Keefe.
       10.31(pp)**       -- Employment Agreement dated September 4, 1997 by and among
                            Evergreen Media Corporation, Evergreen Media Corporation
                            of Los Angeles and Scott K. Ginsburg.
       10.32(pp)**       -- Employment Agreement dated September 4, 1997 by and among
                            Evergreen Media Corporation, Evergreen Media Corporation
                            of Los Angeles and James de Castro.
       10.33(pp)**       -- Employment Agreement dated September 4, 1997 by and among
                            Evergreen Media Corporation, Evergreen Media Corporation
                            of Los Angeles and Matthew E. Devine.
       10.34(pp)**       -- Second Amendment to Employment Agreement dated September
                            4, 1997 by and among Evergreen Media Corporation,
                            Evergreen Media Corporation of Los Angeles and Kenneth J.
                            O'Keefe.
       10.35(ii)**       -- Employment Agreement dated February 14, 1996 by and among
                            Chancellor Broadcasting Company, Chancellor Radio
                            Broadcasting Company and Steven Dinetz.
       10.36(jj)         -- Chancellor Broadcasting Company 1996 Stock Award Plan.
       10.37(kk)         -- Chancellor Holdings Corp. 1994 Director Stock Option
                            Plan.
       10.38(ll)         -- Stock Option Grant Letter dated September 30, 1995 from
                            Chancellor Corporation to Steven Dinetz.
       10.39(mm)         -- Stock Option Grant Letter dated September 30, 1995 from
                            Chancellor Corporation to Eric W. Neumann.
       10.40(nn)         -- Stock Option Grant Letter dated September 30, 1995 from
                            Chancellor Corporation to Marvin Dinetz.
       10.41(oo)         -- Stock Option Grant Letter dated February 14, 1997 from
                            Chancellor Broadcasting Company to Carl M. Hirsch.
       10.44(vv)**       -- Agreement dated April 20, 1998 by and among Chancellor
                            Media Corporation, Chancellor Media Corporation of Los
                            Angeles and Scott K. Ginsburg.
       10.45(vv)**       -- Employment Agreement dated April 29, 1998 by and among
                            Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and Jeffrey A. Marcus.
       10.46(yy)         -- Chancellor Media Corporation 1998 Stock Option Plan.
       10.47(yy)         -- Voting Agreement, among Chancellor Media Corporation and
                            Rangers Equity Partners, L.P. dated as of July 7, 1998.
</TABLE>
 
                                       43
<PAGE>   44
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
       10.48(zz)**       -- Employment Agreement, dated as of May 18, 1998, by and
                            among Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and James E. de Castro.
       10.49(zz)**       -- Employment Agreement, dated as of May 18, 1998, by and
                            among Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and Matthew E. Devine.
       10.50(zz)**       -- Employment Agreement, dated as of June 1, 1998, by and
                            among Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and Eric C. Neuman.
       10.51(zz)**       -- Employment Agreement, dated as of August 18, 1998, by and
                            among Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and James A. McLaughlin, Jr.
       27.1+             -- Financial Data Schedule of Chancellor Media Corporation.
       27.2+             -- Financial Data Schedule of Chancellor Media Corporation
                            of Los Angeles.
</TABLE>
 
---------------
 
 +    Filed herewith.
 
**    Management contract or compensatory agreement.
 
(a)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
      33-60036).
 
(f)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Registration Statement on Form S-4, as amended (Reg. No.
      33-89838).
 
(h)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated July 14, 1995.
 
(i)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated January 17, 1996.
 
(j)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
      September 30, 1995.
 
(k)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
      33-69752).
 
(n)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Annual Report on Form 10-K for the fiscal year ended December
      31, 1995.
 
(o)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
      March 31, 1996.
 
(p)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Quarterly Report on Form 10-Q for the quarterly period ended
      June 30, 1996.
 
(q)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Registration Statement on Form S-3, as amended (Reg. No.
      333-12453).
 
(r)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated February 16, 1997 and filed
      March 9, 1997.
 
(s)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Annual Report on Form 10-K for the fiscal year ended December
      31, 1996.
 
(t)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated April 1, 1997 and filed May
      9, 1997.
 
(y)   Incorporated by reference to the identically numbered exhibit of
      Evergreen's Registration Statement on Form S-4, filed August 1, 1997.
 
(z)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated July 7, 1997 and filed July
      31, 1997.
 
                                       44
<PAGE>   45
 
(aa)  Incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K
      of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
      Company, as filed on February 29, 1996.
 
(bb)  Incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K
      of Chancellor Broadcasting Company, Chancellor Radio Broadcasting Company
      and Chancellor Broadcasting Licensee Company for the fiscal year ended
      December 31, 1995.
 
(cc)  Incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K
      of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
      Company, as filed on February 29, 1996.
 
(dd)  Incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K
      of Chancellor Radio Broadcasting Company, as filed on February 6, 1997.
 
(ee)  Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K
      of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
      Company as filed on July 17, 1997.
 
(ff)  Incorporated by reference to the identically-numbered exhibit to EMCLA's
      Registration Statement on Form S-4 (Reg. No. 333-32259), dated July 29,
      1997, as amended.
 
(gg)  Incorporated by reference to the identically-numbered exhibit to the
      Quarterly Report on Form 10-Q of Evergreen and EMCLA for the quarterly
      period ending June 30, 1997.
 
(hh)  Incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form
      10-Q of Chancellor and CRBC for the quarterly period ending March 31,
      1997.
 
(ii)  Incorporated by reference to Exhibit 10.6 to Chancellor's Registration
      Statement on Form S-1 (Reg. No. 333-02782) filed February 9, 1996.
 
(jj)  Incorporated by reference to Exhibit 4.22 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(kk)  Incorporated by reference to Exhibit 4.23 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(ll)  Incorporated by reference to Exhibit 4.24 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(mm)  Incorporated by reference to Exhibit 4.25 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(nn)  Incorporated by reference to Exhibit 4.26 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(oo)  Incorporated by reference to Exhibit 4.27 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(pp)  Incorporated by reference to the identically numbered exhibit to CMCLA's
      Registration Statement on Form S-4 (Reg. No. 333-36451), dated September
      26, 1997, as amended.
 
(ss)  Incorporated by reference to the identically numbered exhibit to the
      Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the fiscal
      quarter ended September 30, 1997.
 
(tt)  Incorporated by reference to the identically numbered exhibit to the
      Current Report on Form 8-K of Chancellor Media and CMCLA, dated as of
      February 23, 1998 and filed as of February 27, 1998.
 
(uu)  Incorporated by reference to the identically numbered exhibit to the
      Annual Report on Form 10-K of Chancellor Media and CMCLA for the fiscal
      year ended December 31, 1997.
 
(vv)  Incorporated by reference to the identically numbered exhibit to CMCLA's
      Registration Statement on Form S-4 (Reg. No. 333-50739), dated April 22,
      1998, as amended.
 
(ww)  Incorporated by reference to the identically numbered exhibit to the
      Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the fiscal
      quarter ended March 31, 1998.
 
(xx)  Incorporated by reference to Exhibit 4.41 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-53179), dated May 20,
      1998.
 
(yy)  Incorporated by reference to the identically numbered exhibit to the
      Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the
      quarterly period ending June 30, 1998.
 
                                       45
<PAGE>   46
 
(zz)  Incorporated by reference to the identically numbered exhibit to CMCLA's
      Registration Statement on Form S-4 (Reg. No.   ), dated November 9, 1998.
 
     (b) Current Reports on Form 8-K
 
      1. Current Report on Form 8-K, dated July 7, 1998 and filed July 7, 1998,
         of Chancellor Media and CMCLA, providing the press release regarding
         the LIN Merger.
 
                                       46
<PAGE>   47
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
 
<TABLE>
<S>                                                         <C>
            Chancellor Media Corporation                                Chancellor Media Corporation
                                                                               of Los Angeles
 
              By: /s/ MATTHEW E. DEVINE                                  By: /s/  MATTHEW E. DEVINE
  -------------------------------------------------           -------------------------------------------------
                  Matthew E. Devine                                           Matthew E. Devine
              Senior Vice-President and                                   Senior Vice-President and
               Chief Financial Officer                                     Chief Financial Officer
</TABLE>
 
Date: November 16, 1998
 
                                       47
<PAGE>   48
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        2.11(h)          -- Agreement and Plan of Merger by and among Pyramid
                            Communications, Inc., Evergreen Media Corporation and
                            Evergreen Media/Pyramid Corporation dated as of July 14,
                            1995 (see table of contents for list of omitted exhibits
                            and schedules).
        2.11A(i)         -- Amendment to Plan and Agreement of Merger by and among
                            Pyramid Communications, Inc., Evergreen Media Corporation
                            and Evergreen Media/Pyramid Corporation dated September
                            7, 1995.
        2.11B(i)         -- Amendment to Plan and Agreement of Merger by and among
                            Pyramid Communications, Inc., Evergreen Media Corporation
                            and Evergreen Media/Pyramid Corporation dated January 11,
                            1996.
        2.12(j)          -- Purchase Agreement between Fairbanks Communications, Inc.
                            and Evergreen Media Corporation dated October 12, 1995
                            (see table of contents for list of omitted exhibits and
                            schedules).
        2.13(n)          -- Option Agreement dated as of January 9, 1996 between
                            Chancellor Broadcasting Company and Evergreen Media
                            Corporation (including Form of Advertising Brokerage
                            Agreement and Form of Asset Purchase Agreement).
        2.14(o)          -- Asset Purchase Agreement dated April 4, 1996 between
                            American Radio Systems Corporation and Evergreen Media
                            Corporation of Buffalo (see table of contents for list of
                            omitted exhibits and schedules).
        2.15(o)          -- Asset Purchase Agreement dated April 11, 1996 between
                            Mercury Radio Communications, L.P. and Evergreen Media
                            Corporation of Los Angeles, Evergreen Media/Pyramid
                            Holdings Corporation, WHTT (AM) License Corp. and WHTT
                            (FM) License Corp. (see table of contents for list of
                            omitted exhibits and schedules).
        2.16(o)          -- Asset Purchase Agreement dated April 19, 1996 between
                            Crescent Communications L.P. and Evergreen Media
                            Corporation of Los Angeles (see table of contents for
                            list of omitted exhibits and schedules).
        2.17(p)          -- Asset Purchase Agreement dated June 13, 1996 between
                            Evergreen Media Corporation of Los Angeles and Greater
                            Washington Radio, Inc. (see table of contents for list of
                            omitted exhibits and schedules).
        2.18(p)          -- Asset Exchange Agreement dated June 13, 1996 among
                            Evergreen Media Corporation of Los Angeles, Evergreen
                            Media Corporation of the Bay State, WKLB License Corp.,
                            Greater Media Radio, Inc. and Greater Washington Radio,
                            Inc. (see table of contents for list of omitted exhibits
                            and schedules).
        2.19(p)          -- Purchase Agreement dated June 27, 1996 between WEDR,
                            Inc., and Evergreen Media Corporation of Los Angeles.
                            (See table of contents for list of omitted schedules)
        2.20(p)          -- Time Brokerage Agreement dated July 10, 1996 by and
                            between Evergreen Media Corporation of Detroit, as
                            Licensee, and Kidstar Interactive Media Incorporated, as
                            Time Broker.
        2.21(p)          -- Asset Purchase Agreement dated July 15, 1996 by and among
                            Century Chicago Broadcasting L.P., Century Broadcasting
                            Corporation, Evergreen Media Corporation of Los Angeles,
                            and Evergreen Media Corporation of Chicago.
        2.22(p)          -- Asset Purchase Agreement dated August 12, 1996 by and
                            among Chancellor Broadcasting Company, Shamrock
                            Broadcasting, Inc. and Evergreen Media Corporation of the
                            Great Lakes.
</TABLE>
<PAGE>   49
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        2.23(p)          -- Asset Purchase Agreement dated as of August 12, 1996
                            between Secret Communications Limited Partnership and
                            Evergreen Media Corporation of Los Angeles (WQRS-FM).
                            (See table of contents for list of omitted exhibits and
                            schedules)
        2.24(p)          -- Asset Purchase Agreement dated as of August 12, 1996
                            between Secret Communications Limited Partnership and
                            Evergreen Media Corporation of Los Angeles. (See table of
                            contents for list of omitted schedules)
        2.25(q)          -- Letter of intent dated August 27, 1996 between EZ
                            Communications, Inc. and Evergreen Media Corporation.
        2.26(q)          -- Asset Purchase Agreement dated September 19, 1996 between
                            Beasley-FM Acquisition Corp., WDAS License Limited
                            Partnership and Evergreen Media Corporation of Los
                            Angeles.
        2.27(q)          -- Asset Purchase Agreement dated September 19, 1996 between
                            The Brown Organization and Evergreen Media Corporation of
                            Los Angeles.
        2.28(r)          -- Stock Purchase Agreement by and between Viacom
                            International Inc. and Evergreen Media Corporation of Los
                            Angeles, dated February 16, 1997 (See table of contents
                            for omitted schedules and exhibits).
        2.29(r)          -- Agreement and Plan of Merger, by and among Evergreen
                            Media Corporation, Chancellor Broadcasting Company and
                            Chancellor Radio Broadcasting Company, dated as of
                            February 19, 1997.
        2.30(r)          -- Stockholders Agreement, by and among Chancellor
                            Broadcasting Company, Evergreen Media Corporation, Scott
                            K. Ginsburg (individually and as custodian for certain
                            shares held by his children), HM2/Chancellor, L.P.,
                            Hicks, Muse, Tate & First Equity Fund II, L.P., HM2/HMW,
                            L.P., The Chancellor Business Trust, HM2/HMD Sacramento
                            GP, L.P., Thomas O. Hicks, as Trustee of the William Cree
                            Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as Trustee
                            of the Catherine Forgave Hicks 1993 Irrevocable Trust,
                            Thomas O. Hicks, as Trustee of the John Alexander Hicks
                            1984 Trust, Thomas O. Hicks, as Trustee of the Mack
                            Hardin Hicks 1984 Trust, Thomas O. Hicks, as Trustee of
                            Robert Bradley Hicks 1984 Trust, Thomas O. Hicks, as
                            Trustee of the Thomas O. Hicks, Jr. 1984 Trust, Thomas O.
                            Hicks and H. Rand Reynolds, as Trustees for the Muse
                            Children's GS Trust, and Thomas O. Hicks, dated as of
                            February 19, 1997.
        2.31(r)          -- Joint Purchase Agreement, by and among Chancellor Radio
                            Broadcasting Company, Chancellor Broadcasting Company,
                            Evergreen Media Corporation of Los Angeles, and Evergreen
                            Media Corporation, dated as of February 19, 1997.
        2.32(s)          -- Asset Exchange Agreement, by and among EZ Communications,
                            Inc., Professional Broadcasting Incorporated, EZ
                            Philadelphia, Inc., Evergreen Media Corporation of Los
                            Angeles, Evergreen Media Corporation of Charlotte,
                            Evergreen Media Corporation of the East, Evergreen Media
                            Corporation of Carolinaland, WBAV/WBAV-FM/WPEG License
                            Corp. and WRFX License Corp., dated as of December 5,
                            1996 (See table of contents for list of omitted
                            schedules).
        2.33(s)          -- Asset Purchase Agreement, by and among EZ Communications,
                            Inc., Professional Broadcasting Incorporated, EZ
                            Charlotte, Inc., Evergreen Media Corporation of Los
                            Angeles, Evergreen Media Corporation of the East and
                            Evergreen Media Corporation of Carolinaland, dated as of
                            December 5, 1996 (See table of contents for list of
                            omitted schedules).
</TABLE>
<PAGE>   50
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        2.34(t)          -- Asset Purchase Agreement by and between Pacific and
                            Southern Company, Inc. and Evergreen Media Corporation of
                            Los Angeles (re: WGCI-AM and WGCI-FM), dated as of April
                            4, 1997 (see table of contents for list of omitted
                            schedules and exhibits).
        2.35(t)          -- Asset Purchase Agreement by and between Pacific and
                            Southern Company, Inc. and Evergreen Media Corporation of
                            Los Angeles (re: KKBQ-AM and KKBQ-FM), dated as of April
                            4, 1997 (see table of contents for list of omitted
                            schedules and exhibits)
        2.36(t)          -- Asset Purchase Agreement by and between Pacific and
                            Southern Company, Inc. and Evergreen Media Corporation of
                            Los Angeles (re: KHKS-FM), dated as of April 4, 1997 (see
                            table of contents for list of omitted schedules and
                            exhibits).
        2.41(y)          -- Amended and Restated Agreement and Plan of Merger among
                            Chancellor Broadcasting Company, Chancellor Radio
                            Broadcasting Company, Evergreen Media Corporation,
                            Evergreen Mezzanine Holdings Corporation and Evergreen
                            Media Corporation of Los Angeles, dated as of February
                            19, 1997, amended and restated as of July 31, 1997.
        2.42(gg)         -- Option Agreement, by and among Evergreen Media
                            Corporation, Chancellor Broadcasting Company, Bonneville
                            International Corporation and Bonneville Holding Company,
                            dated as of August 6, 1997.
        2.43(ss)         -- Letter Agreement, dated February 20, 1998, between CMCLA
                            and Capstar Broadcasting Corporation.
        2.44(yy)         -- Amendment No. 1, dated May 19, 1998, to Letter Agreement
                            dated February 20, 1998, between CMCLA and Capstar
                            Broadcasting Corporation.
        2.45(yy)         -- Unit and Stock Purchase Agreement by and among CMCLA,
                            Martin Media, L.P., Martin & MacFarlane, Inc., Nevada
                            Outdoor Systems, Inc., MW Sign Corp. and certain sellers
                            named therein, dated as of June 19, 1998 (see table of
                            contents for list of omitted schedules and exhibits)
        2.46(yy)         -- Agreement and Plan of Merger between Chancellor Media
                            Corporation and Ranger Equity Holdings Corporation dated
                            as of July 7, 1998.
        2.47(yy)         -- Asset Purchase Agreement, dated August 11, 1998, between
                            Chancellor Media Corporation of Los Angeles and
                            Independent Group Limited Partnership.
        2.48(yy)         -- Asset Purchase Agreement, dated August 11, 1998, between
                            Chancellor Media Corporation of Los Angeles and Zapis
                            Communications Corporation.
        2.49(yy)         -- Stock Purchase Agreement, dated August 11, 1998, among
                            Chancellor Media Corporation of Los Angeles, Young Ones,
                            Inc., Zebra Broadcasting Corporation and the Sellers
                            named therein.
        2.50(yy)         -- Stock Purchase Agreement, dated August 11, 1998, among
                            Chancellor Media Corporation of Los Angeles, ML Media
                            Partners LP., Wincom Broadcasting Corporation and WIN
                            Communications, Inc.
        2.51(yy)         -- Stock Purchase and Merger Agreement, dated July 9, 1998,
                            by and among Chancellor Media Corporation, Chancellor
                            Mexico LLC, Grupo Radio Centro, SA. De C.V., and the
                            Selling Shareholders.
        2.52+            -- Agreement and Plan of Merger among Chancellor Media
                            Corporation, Capstar Broadcasting Corporation and CBC
                            Acquisition Company, Inc., dated as of August 26, 1998.
        3.1C(ss)         -- Amended and Restated Certificate of Incorporation of
                            Chancellor Media.
        3.2B(ss)         -- Amended and Restated Bylaws of Chancellor Media.
</TABLE>
<PAGE>   51
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        3.3(ff)          -- Certificate of Incorporation of Chancellor Media
                            Corporation of Los Angeles formerly known as Evergreen
                            Media Corporation of Los Angeles.
        3.3A(pp)         -- Amendment to Certificate of Incorporation of Chancellor
                            Media Corporation of Los Angeles, filed September 5,
                            1997.
        3.3B(uu)         -- Amendment to the Certificate of Incorporation of
                            Chancellor Media Corporation of Los Angeles, filed
                            October 28, 1997.
        3.4(ff)          -- Bylaws of Chancellor Media Corporation of Los Angeles.
        4.10(t)          -- Second Amended and Restated Loan Agreement dated as of
                            April 25 1997 among Evergreen Media Corporation of Los
                            Angeles, the financial institutions whose names appear as
                            Lenders on the signature pages thereof (the "Lenders"),
                            Toronto Dominion Securities, Inc., as Arranging Agent,
                            The Bank of New York and Bankers Trust Company, as
                            Co-Syndication Agents, NationsBank of Texas, N.A. and
                            Union Bank of California, as Co-Documentation Agents, and
                            Toronto Dominion (Texas), Inc., as Administrative Agent
                            for the Lenders, together with certain collateral
                            documents attached thereto as exhibits, including
                            Assignment of Partnership Interests, Assignment of Trust
                            Interests, Borrower's Pledge Agreement, Parent Company
                            Guaranty, Stock Pledge Agreement, Subsidiary Guaranty and
                            Subsidiary Pledge Agreement (see table of contents for
                            list of omitted schedules and exhibits).
        4.11(z)          -- First Amendment to Second Amended and Restated Loan
                            Agreement, dated June 26, 1997, among Evergreen Media
                            Corporation of Los Angeles, the Lenders, the Agents and
                            the Administrative Agent.
        4.12(y)          -- Specimen Common Stock Certificate of Chancellor Media.
        4.13(y)          -- Specimen 7% Convertible Preferred Stock Certificate of
                            Chancellor Media.
        4.14(y)          -- Form of Certificate of Designation for 7% Convertible
                            Preferred Stock of Chancellor Media.
        4.15(aa)         -- Indenture, dated as of February 14, 1996, governing the
                            9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
        4.16(bb)         -- First Supplemental Indenture, dated as of February 14,
                            1996, to the Indenture dated February 14, 1996, governing
                            the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
        4.17(cc)         -- Indenture, dated as of February 26, 1996, governing the
                            12 1/4% Subordinated Exchange Debentures due 2008 of
                            CMCLA.
        4.18(dd)         -- Indenture, dated as of January 23, 1997, governing the
                            12% Subordinated Exchange Debentures due 2009 of CMCLA.
        4.19(ee)         -- Indenture, dated as of June 24, 1997, governing the
                            8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
        4.21(ff)         -- Specimen of the 12 1/4% Series A Senior Cumulative
                            Exchangeable Preferred Stock Certificate of CMCLA.
        4.22(ff)         -- Specimen of the 12% Exchangeable Preferred Stock
                            Certificate of CMCLA.
        4.23(ff)         -- Form of Certificate of Designation for the 12 1/4% Series
                            A Senior Cumulative Exchangeable Preferred Stock of
                            CMCLA.
        4.24(ff)         -- Form of Certificate of Designation for the 12%
                            Exchangeable Preferred Stock of CMCLA.
</TABLE>
<PAGE>   52
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        4.25(pp)         -- Second Amendment to Second Amended and Restated Loan
                            Agreement, dated August 7, 1997, among Evergreen Media
                            Corporation of Los Angeles, the Lenders, the Agents and
                            the Administrative Agent.
        4.26(hh)         -- Second Supplemental Indenture, dated as of April 15,
                            1997, to the Indenture dated February 14, 1996, governing
                            the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
        4.27(pp)         -- Third Supplemental Indenture, dated as of September 5,
                            1997, to the Indenture dated February 14, 1996, governing
                            the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
        4.28(pp)         -- First Supplemental Indenture, dated as of September 5,
                            1997, to the Indenture dated June 24, 1997, governing the
                            8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
        4.29(pp)         -- First Supplemental Indenture, dated as of September 5,
                            1997, to the Indenture dated February 26, 1997, governing
                            the 12 1/4% Subordinated Exchange Debentures due 2008 of
                            CMCLA.
        4.30(pp)         -- First Supplemental Indenture, dated as of September 5,
                            1997, to the Indenture dated January 23, 1997, governing
                            the 12% Subordinated Exchange Debentures due 2009 of
                            CMCLA.
        4.31(qq)         -- Specimen $3.00 Convertible Exchangeable Preferred Stock
                            Certificate of Chancellor Media.
        4.32(qq)         -- Certificate of Designation for $3.00 Convertible
                            Exchangeable Preferred Stock of Chancellor Media.
        4.33(qq)         -- Convertible Subordinated Exchange Indenture (including
                            form of 6% Convertible Subordinated Exchange Debentures
                            attached thereto), dated June 16, 1997, between Evergreen
                            Media Corporation and The Bank of New York.
        4.34(uu)         -- Amended and Restated Indenture, dated as of October 28,
                            1997, governing the 10 1/2% Senior Subordinated Notes due
                            2007 of CMCLA.
        4.35(uu)         -- Second Supplemental Indenture, dated as of October 28,
                            1997, to the Amended and Restated Indenture dated October
                            28, 1997 governing the 10 1/2% Senior Subordinated Notes
                            due 2007 of CMCLA.
        4.36(uu)         -- Third Amendment to Second Amended and Restated Loan
                            Agreement dated October 28, 1997, among CMCLA, the
                            Lenders, the Agents and the Administrative Agent.
        4.37(uu)         -- Fourth Amendment to Second Amended and Restated Loan
                            Agreement, dated February 10, 1998, among CMCLA, the
                            Lenders, the Agents and the Administrative Agent.
        4.38(vv)         -- Indenture, dated as of December 22, 1997, governing the
                            8 1/8% Senior Subordinated Notes due 2007 of CMCLA.
        4.39(ww)         -- Fifth Amendment to Second Amended and Restated Loan
                            Agreement, dated May 1, 1998, among CMCLA, the Lenders,
                            the Agents and the Administrative Agent.
        4.40(yy)         -- Sixth Amendment to Second Amended and Restated Loan
                            Agreement, dated July 31, 1998, among CMCLA, the Lenders,
                            the Agents and the Administrative Agent.
        4.41(zz)         -- Indenture, dated as of September 30, 1998, governing the
                            9% Senior Subordinated Notes due 2008 of CMCLA.
</TABLE>
<PAGE>   53
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
        4.42+            -- Seventh Amendment to Second Amended and Restated Loan
                            Agreement, dated November 9, 1998, among CMCLA, the
                            Lenders, the Agents and the Administrative Agent.
       10.23(xx)         -- Amended and Restated Chancellor Media Corporation Stock
                            Option Plan for Non-employee Directors.
       10.26(n)**        -- Employment Agreement dated February 9, 1996 by and
                            between Evergreen Media Corporation and Kenneth J.
                            O'Keefe.
       10.28(o)          -- 1995 Stock Option Plan for executive officers and key
                            employees of Evergreen Media Corporation.
       10.30(pp)**       -- First Amendment to Employment Agreement dated March 1,
                            1997 by and between Evergreen Media Corporation and
                            Kenneth J. O'Keefe.
       10.31(pp)**       -- Employment Agreement dated September 4, 1997 by and among
                            Evergreen Media Corporation, Evergreen Media Corporation
                            of Los Angeles and Scott K. Ginsburg.
       10.32(pp)**       -- Employment Agreement dated September 4, 1997 by and among
                            Evergreen Media Corporation, Evergreen Media Corporation
                            of Los Angeles and James de Castro.
       10.33(pp)**       -- Employment Agreement dated September 4, 1997 by and among
                            Evergreen Media Corporation, Evergreen Media Corporation
                            of Los Angeles and Matthew E. Devine.
       10.34(pp)**       -- Second Amendment to Employment Agreement dated September
                            4, 1997 by and among Evergreen Media Corporation,
                            Evergreen Media Corporation of Los Angeles and Kenneth J.
                            O'Keefe.
       10.35(ii)**       -- Employment Agreement dated February 14, 1996 by and among
                            Chancellor Broadcasting Company, Chancellor Radio
                            Broadcasting Company and Steven Dinetz.
       10.36(jj)         -- Chancellor Broadcasting Company 1996 Stock Award Plan.
       10.37(kk)         -- Chancellor Holdings Corp. 1994 Director Stock Option
                            Plan.
       10.38(ll)         -- Stock Option Grant Letter dated September 30, 1995 from
                            Chancellor Corporation to Steven Dinetz.
       10.39(mm)         -- Stock Option Grant Letter dated September 30, 1995 from
                            Chancellor Corporation to Eric W. Neumann.
       10.40(nn)         -- Stock Option Grant Letter dated September 30, 1995 from
                            Chancellor Corporation to Marvin Dinetz.
       10.41(oo)         -- Stock Option Grant Letter dated February 14, 1997 from
                            Chancellor Broadcasting Company to Carl M. Hirsch.
       10.44(vv)**       -- Agreement dated April 20, 1998 by and among Chancellor
                            Media Corporation, Chancellor Media Corporation of Los
                            Angeles and Scott K. Ginsburg.
       10.45(vv)**       -- Employment Agreement dated April 29, 1998 by and among
                            Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and Jeffrey A. Marcus.
       10.46(yy)         -- Chancellor Media Corporation 1998 Stock Option Plan.
       10.47(yy)         -- Voting Agreement, among Chancellor Media Corporation and
                            Rangers Equity Partners, L.P. dated as of July 7, 1998.
       10.48(zz)**       -- Employment Agreement, dated as of May 18, 1998, by and
                            among Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and James E. de Castro.
</TABLE>
<PAGE>   54
 
<TABLE>
<CAPTION>
        EXHIBIT
          NO.                               DESCRIPTION OF EXHIBIT
        -------                             ----------------------
<C>                      <S>
       10.49(zz)**       -- Employment Agreement, dated as of May 18, 1998, by and
                            among Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and Matthew E. Devine.
       10.50(zz)**       -- Employment Agreement, dated as of June 1, 1998, by and
                            among Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and Eric C. Neuman.
       10.51(zz)**       -- Employment Agreement, dated as of August 18, 1998, by and
                            among Chancellor Media Corporation, Chancellor Media
                            Corporation of Los Angeles and James A. McLaughlin, Jr.
       27.1+             -- Financial Data Schedule of Chancellor Media Corporation.
       27.2+             -- Financial Data Schedule of Chancellor Media Corporation
                            of Los Angeles.
</TABLE>
 
---------------
 
 +    Filed herewith.
 
**    Management contract or compensatory agreement.
 
(a)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
      33-60036).
 
(f)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Registration Statement on Form S-4, as amended (Reg. No.
      33-89838).
 
(h)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated July 14, 1995.
 
(i)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated January 17, 1996.
 
(j)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
      September 30, 1995.
 
(k)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
      33-69752).
 
(n)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Annual Report on Form 10-K for the fiscal year ended December
      31, 1995.
 
(o)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
      March 31, 1996.
 
(p)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Quarterly Report on Form 10-Q for the quarterly period ended
      June 30, 1996.
 
(q)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Registration Statement on Form S-3, as amended (Reg. No.
      333-12453).
 
(r)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated February 16, 1997 and filed
      March 9, 1997.
 
(s)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Annual Report on Form 10-K for the fiscal year ended December
      31, 1996.
 
(t)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated April 1, 1997 and filed May
      9, 1997.
 
(y)   Incorporated by reference to the identically numbered exhibit of
      Evergreen's Registration Statement on Form S-4, filed August 1, 1997.
 
(z)   Incorporated by reference to the identically numbered exhibit to
      Evergreen's Current Report on Form 8-K dated July 7, 1997 and filed July
      31, 1997.
 
(aa)  Incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K
      of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
      Company, as filed on February 29, 1996.
 
(bb)  Incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K
      of Chancellor Broadcasting Company, Chancellor Radio Broadcasting Company
      and Chancellor Broadcasting Licensee Company for the fiscal year ended
      December 31, 1995.
<PAGE>   55
 
(cc)  Incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K
      of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
      Company, as filed on February 29, 1996.
 
(dd)  Incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K
      of Chancellor Radio Broadcasting Company, as filed on February 6, 1997.
 
(ee)  Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K
      of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
      Company as filed on July 17, 1997.
 
(ff)  Incorporated by reference to the identically-numbered exhibit to EMCLA's
      Registration Statement on Form S-4 (Reg. No. 333-32259), dated July 29,
      1997, as amended.
 
(gg)  Incorporated by reference to the identically-numbered exhibit to the
      Quarterly Report on Form 10-Q of Evergreen and EMCLA for the quarterly
      period ending June 30, 1997.
 
(hh)  Incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form
      10-Q of Chancellor and CRBC for the quarterly period ending March 31,
      1997.
 
(ii)  Incorporated by reference to Exhibit 10.6 to Chancellor's Registration
      Statement on Form S-1 (Reg. No. 333-02782) filed February 9, 1996.
 
(jj)  Incorporated by reference to Exhibit 4.22 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(kk)  Incorporated by reference to Exhibit 4.23 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(ll)  Incorporated by reference to Exhibit 4.24 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(mm)  Incorporated by reference to Exhibit 4.25 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(nn)  Incorporated by reference to Exhibit 4.26 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(oo)  Incorporated by reference to Exhibit 4.27 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
      5, 1997.
 
(pp)  Incorporated by reference to the identically numbered exhibit to CMCLA's
      Registration Statement on Form S-4 (Reg. No. 333-36451), dated September
      26, 1997, as amended.
 
(ss)  Incorporated by reference to the identically numbered exhibit to the
      Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the fiscal
      quarter ended September 30, 1997.
 
(tt)  Incorporated by reference to the identically numbered exhibit to the
      Current Report on Form 8-K of Chancellor Media and CMCLA, dated as of
      February 23, 1998 and filed as of February 27, 1998.
 
(uu)  Incorporated by reference to the identically numbered exhibit to the
      Annual Report on Form 10-K of Chancellor Media and CMCLA for the fiscal
      year ended December 31, 1997.
 
(vv)  Incorporated by reference to the identically numbered exhibit to CMCLA's
      Registration Statement on Form S-4 (Reg. No. 333-50739), dated April 22,
      1998, as amended.
 
(ww)  Incorporated by reference to the identically numbered exhibit to the
      Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the fiscal
      quarter ended March 31, 1998.
 
(xx)  Incorporated by reference to Exhibit 4.41 to Chancellor Media's
      Registration Statement on Form S-8 (Reg. No. 333-53179), dated May 20,
      1998.
 
(yy)  Incorporated by reference to the identically numbered exhibit to the
      Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the
      quarterly period ending June 30, 1998.
 
(zz)  Incorporated by reference to the identically numbered exhibit to CMCLA's
      Registration Statement on Form S-4 (Reg. No.   ), dated November 9, 1998.