**Table of Contents**

** **

 

** **

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

 

**(Mark One)**

 

| **x**                                                  | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|--------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                                   |
| **For the quarterly period ended September 30,  2009** |
|                                                   |
| **or**                                                 |
|                                                   |
| **o**                                                  | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**For thetransition period from           to            **

 

**Commission File Number:**  **001-14461**

 

**Entercom Communications Corp.**

(Exact name of registrant as specified in itscharter)

 

| **Pennsylvania**                                               | ** ** | **23-1701044**                       |
|----------------------------------------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |       | (I.R.S. employer identification no.) |

 

**401 City Avenue, Suite 809**

**Bala Cynwyd, Pennsylvania 19004**

(Address of principal executive offices andzip code)

 

**(610) 660-5610**

(Registrant’s telephone number, includingarea code)

 

 

(Former name, former address and formerfiscal year, if changed since last report)

 

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

 

Indicate by checkmark whether the registranthas submitted electronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405of  Regulation S-T (section 232.405 ofthis chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files.) Yes oNo o

 

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, a non-accelerated filer, ora smaller reporting company.  See thedefinitions of “large accelerated filer,” “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act.

 

| Large accelerated filer o                     |   | Accelerated filer x         |
|-----------------------------------------------|--------|-----------------------------|
|                                          |   |                        |
| Non-accelerated filer o                       |   | Smaller reporting company o |
| (Do not check if a smaller reporting company) |   |                        |

 

Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x

 

Indicate the number of shares outstanding ofeach of the issuer’s classes of common stock, as of the latest practicabledate.

 

Class A common stock, $.01 par value –29,611,036 Shares Outstanding as of October 27, 2009

(Class A Shares Outstanding include1,925,931 unvested and vested but deferred restricted stock units)

Class B common stock, $.01 par value –7,607,532 Shares Outstanding as of October 27, 2009

 

 

** **

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Table ofContents

 

**ENTERCOM COMMUNICATIONS CORP.**

 

**INDEX**

 
| **Part I   Financial  Information** |                                                                                        |
|---------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                    |                                                                                        |   |
| Item 1.                                                 | Financial Statements                                                                        | 1 |
| Item  2.                                                | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 34 |
| Item  3.                                                | Quantitative  and Qualitative Disclosures About Market Risk                                 | 46 |
| Item 4.                                                 | Controls and  Procedures                                                                    | 47 |
|                                                    |                                                                                        |   |
| **Part II   Other  Information**    |                                                                                        |
|                                                    |                                                                                        |   |
| Item 1.                                                 | Legal Proceedings                                                                           | 48 |
| Item 1A.                                                | Risk Factors                                                                                | 48 |
| Item  2.                                                | Unregistered  Sales of Equity Securities and Use of Proceeds                                | 48 |
| Item  3.                                                | Defaults Upon  Senior Securities                                                            | 49 |
| Item  4.                                                | Submission of  Matters to a Vote of Security Holders                                        | 49 |
| Item 5.                                                 | Other Information                                                                           | 49 |
| Item 6.                                                 | Exhibits                                                                                    | 50 |
|                                                    |                                                                                        |
| **Signatures**                                          | 51                                                                                          |
|                                                    |                                                                                        |
| **Exhibit Index**                                  | 52                                                                                          |

 

**Private Securities Litigation Reform Act SafeHarbor Statement**

 

In addition to historical information, this report contains statementsby us with regard to our expectations as to financial results and other aspectsof our business that involve risks and uncertainties and may constituteforward- looking statements within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Act of1934.

 

Forward-looking statements are presented for illustrative purposes onlyand reflect our current expectations concerning future results and events.  All statements other than statements ofhistorical fact are “forward-looking statements” for purposes of federal andstate securities laws, including, without limitation, any projections ofearnings, revenues or other financial items; any statements of the plans,strategies and objectives of management for future operations; any statementsconcerning proposed new services or developments; any statements regardingfuture economic conditions or performance; any statements of belief; and anystatements of assumptions underlying any of the foregoing.

 

You can identify forward-looking statements by our use of words such as“anticipates,” “believes,” “continues,” “expects,” “intends,” “likely,” “may,” “opportunity,”“plans,” “potential,” “project,” “will,” and similar expressions which identifyforward-looking statements, whether in the negative or the affirmative.  We cannot guarantee that we actually willachieve these plans, intentions or expectations.  These forward-looking statements are subjectto risks, uncertainties and other factors, some of which are beyond ourcontrol, which could cause actual results to differ materially from those forecastedor anticipated in such forward-looking statements.  You should not place undue reliance on theseforward-looking statements, which reflect our view only as of the date of thisreport.  We undertake no obligation toupdate these statements or publicly release the result of any revision(s) tothese statements to reflect events or circumstances after the date of thisreport or to reflect the occurrence of unanticipated events.

 

Key risks to our company are described in our Annual Report on Form 10-Kfiled with the Securities and Exchange Commission on February 26, 2009 andas may be supplemented by the risks described under Part II, Item 1A, ofour quarterly reports on Form 10-Q and in our Current Reports on Form 8-K.

 

i

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Tableof Contents

 

**PART I**

 

**FINANCIAL INFORMATION**

 

**ITEM 1.      FinancialStatements**

** **

**ENTERCOMCOMMUNICATIONS CORP.**

**CONDENSEDCONSOLIDATED BALANCE SHEETS**

**(amountsin thousands)**

**(unaudited)**

 

**ASSETS**

 
| ** **                                                   | ** ** | **SEPTEMBER 30,** | ** ** | **DECEMBER 31,** | ** ** |
|--------------------------------------------------------------|------------|-------------------|------------|------------------|------------|
| ** **                                                   | ** ** | **2009**          | ** ** | **2008**         | ** ** |
| **CURRENT ASSETS:**                                          |       |              |       |             |       |
| Cash  and cash equivalents                                   |       | $                 | 20,109     |             | $          | 4,284 |   |
| Accounts  receivable, net of allowance for doubtful accounts |       | 74,574            |       | 75,354           |       |
| Prepaid  expenses and deposits                               |       | 4,742             |       | 4,801            |       |
| Insurance  claim receivable                                  |       | 16,800            |       | —           |       |
| Prepaid  and refundable income taxes                         |       | 513               |       | 628              |       |
| Short-term  investment                                       |       | 23                |       | 23               |       |
| Total  current assets                                        |       | 116,761           |       | 85,090           |       |
|                                                         |       |              |       |             |       |
| **INVESTMENTS**                                              |       | 1,361             |       | 1,376            |       |
|                                                         |       |              |       |             |       |
| **PROPERTY AND EQUIPMENT:**                                  |       |              |       |             |       |
| Land,  land easements and land improvements                  |       | 16,498            |       | 16,486           |       |
| Buildings                                                    |       | 21,000            |       | 20,964           |       |
| Equipment                                                    |       | 123,501           |       | 122,986          |       |
| Furniture  and fixtures                                      |       | 15,476            |       | 15,029           |       |
| Leasehold  improvements                                      |       | 21,249            |       | 21,129           |       |
|                                                         |       | 197,724           |       | 196,594          |       |
| Accumulated  depreciation                                    |       | (123,850          | )          | (113,036         | )          |
|                                                         |       | 73,874            |       | 83,558           |       |
| Capital  improvements in progress                            |       | 955               |       | 1,306            |       |
| Net  property and equipment                                  |       | 74,829            |       | 84,864           |       |
|                                                         |       |              |       |             |       |
| **RADIO BROADCASTING LICENSES**                              |       | 707,852           |       | 768,646          |       |
|                                                         |       |              |       |             |       |
| **GOODWILL**                                                 |       | 38,168            |       | 45,050           |       |
|                                                         |       |              |       |             |       |
| **DEFERRED CHARGES AND OTHER ASSETS - Net**                  |       | 9,211             |       | 11,708           |       |
|                                                         |       |              |       |             |       |
| **TOTAL**                                                    |       | $                 | 948,182    |             | $          | 996,734 |   |

 

**See notesto condensed consolidated financial statements.**

 

1

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**ENTERCOMCOMMUNICATIONS CORP.**

**CONDENSEDCONSOLIDATED BALANCE SHEETS**

**(amountsin thousands)**

**(unaudited)**

** **

**LIABILITIESAND SHAREHOLDERS’ EQUITY**

 
| ** **                                    | ** ** | **SEPTEMBER 30,** | ** ** | **DECEMBER 31,** | ** ** |
|-----------------------------------------------|------------|-------------------|------------|------------------|------------|
| ** **                                    | ** ** | **2009**          | ** ** | **2008**         | ** ** |
| **CURRENT LIABILITIES:**                      |       |              |       |             |       |
| Accounts  payable                             |       | $                 | 608        |             | $          | 352 |   |
| Accrued  expenses                             |       | 14,411            |       | 15,231           |       |
| Accrued  liabilities:                         |       |              |       |             |       |
| Salaries                                      |       | 6,107             |       | 7,484            |       |
| Interest                                      |       | 379               |       | 2,343            |       |
| Advertiser  obligations and other commitments |       | 1,184             |       | 1,197            |       |
| Insurance  claim payable                      |       | 16,800            |       | —           |       |
| Other                                         |       | 4,759             |       | 5,684            |       |
| Current  portion of long-term debt            |       | 70,024            |       | 30,023           |       |
| Total  current liabilities                    |       | 114,272           |       | 62,314           |       |
|                                          |       |              |       |             |       |
| **LONG-TERM LIABILITIES:**                    |       |              |       |             |       |
| Senior  debt                                  |       | 688,155           |       | 720,174          |       |
| 7.625%  senior subordinated notes             |       | 23,867            |       | 83,500           |       |
| Finance  method lease obligations             |       | 4,531             |       | —           |       |
| Other  long-term liabilities                  |       | 30,429            |       | 30,489           |       |
| Total  long-term liabilities                  |       | 746,982           |       | 834,163          |       |
| Total  liabilities                            |       | 861,254           |       | 896,477          |       |
|                                          |       |              |       |             |       |
| **CONTINGENCIES AND COMMITMENTS**             |       |              |       |             |       |
|                                          |       |              |       |             |       |
| **SHAREHOLDERS’ EQUITY:**                |       |              |       |             |       |
| Preferred  stock                              |       | —            |       | —           |       |
| Class A,  B and C common stock           |       | 372               |       | 371              |       |
| Additional  paid-in capital                   |       | 587,118           |       | 582,325          |       |
| Accumulated  deficit                          |       | (485,316          | )          | (467,177         | )          |
| Accumulated  other comprehensive loss         |       | (15,246           | )          | (15,262          | )          |
| Total  shareholders’ equity              |       | 86,928            |       | 100,257          |       |
|                                          |       |              |       |             |       |
| **TOTAL**                                     |       | $                 | 948,182    |             | $          | 996,734 |   |

 

**See notesto condensed consolidated financial statements.**

 

2

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Table ofContents

 

**ENTERCOMCOMMUNICATIONS CORP.**

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS**

**(amountsin thousands, except share and per share data)**

**(unaudited)**

 
| ** **                                                                                                       | ** ** | **NINE MONTHS ENDED** | ** ** |
|------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                       | ** ** | **SEPTEMBER 30,**     | ** ** |
| ** **                                                                                                       | ** ** | **2009**              | ** ** | **2008** | ** ** |
| ** **                                                                                                       |       |                  |       |   |   |
| **NET REVENUES**                                                                                                 |       | $                     | 276,436    |   | $ | 334,725 |   |
|                                                                                                             |       |                  |       |   |   |
| **OPERATING (INCOME) EXPENSE:**                                                                                  |       |                  |       |   |   |
| Station  operating expenses, including non-cash compensation expense of $1,460 in 2009  and $1,852 in 2008       |       | 192,006               |       | 210,695 |   |
| Depreciation  and amortization expense                                                                           |       | 12,660                |       | 16,009 |   |
| Corporate  general and administrative expenses, including non-cash expense of $4,237 in  2009 and $5,959 in 2008 |       | 17,386                |       | 21,530 |   |
| Impairment  loss                                                                                                 |       | 67,676                |       | 184,587 |   |
| Net  time brokerage agreement income                                                                             |       | (2                    | )          | (188 | ) |
| Net  (gain) loss on sale or disposal of assets                                                                   |       | 149                   |       | (9,937 | ) |
| Total  operating expense                                                                                         |       | 289,875               |       | 422,696 |   |
| **OPERATING LOSS**                                                                                               |       | (13,439               | )          | (87,971 | ) |
|                                                                                                             |       |                  |       |   |   |
| **OTHER (INCOME) EXPENSE:**                                                                                      |       |                  |       |   |   |
| Interest  expense, including amortization of deferred financing expense of $1,147 in  2009 and $1,249 in 2008    |       | 23,828                |       | 34,831 |   |
| Interest  and dividend income                                                                                    |       | (35                   | )          | (299 | ) |
| Net  gain on extinguishment of debt                                                                              |       | (19,260               | )          | (4,017 | ) |
| Net  gain on derivative instruments                                                                              |       | —                |       | (34 | ) |
| Net  loss on investments                                                                                         |       | —                |       | 461 |   |
| Other  income                                                                                                    |       | (380                  | )          | (3,256 | ) |
| **TOTAL OTHER EXPENSE**                                                                                          |       | 4,153                 |       | 27,686 |   |
|                                                                                                             |       |                  |       |   |   |
| **LOSS FROM CONTINUING OPERATIONS**                                                                              |       |                  |       |   |   |
| **BEFORE INCOME TAXES (BENEFIT)**                                                                                |       | (17,592               | )          | (115,657 | ) |
|                                                                                                             |       |                  |       |   |   |
| **INCOME TAXES (BENEFIT)**                                                                                       |       | 710                   |       | (32,307 | ) |
| **LOSS FROM CONTINUING OPERATIONS**                                                                              |       | (18,302               | )          | (83,350 | ) |
| Loss  from discontinued operations, net of income tax benefit                                                    |       | —                |       | (3,497 | ) |
| **NET LOSS**                                                                                                     |       | $                     | (18,302    | ) | $ | (86,847 | ) |
|                                                                                                             |       |                  |       |   |   |
| **NET LOSS PER SHARE - BASIC AND DILUTED**                                                                       | ** ** | ** **            | ** ** | ** ** | ** ** |
| Loss  from continuing operations                                                                                 |       | $                     | (0.52      | ) | $ | (2.25 | ) |
| Loss  from discontinued operations, net of income tax benefit                                                    |       | —                |       | (0.10 | ) |
| **NET LOSS PER SHARE - BASIC AND DILUTED**                                                                       |       | $                     | (0.52      | ) | $ | (2.35 | ) |
|                                                                                                             |       |                  |       |   |   |
| **DIVIDENDS DECLARED AND PAID PER COMMON SHARE**                                                                 |       | $                     | —     |   | $ | 0.58 |   |
|                                                                                                             |       |                  |       |   |   |
| **WEIGHTED AVERAGE SHARES:**                                                                                     |       |                  |       |   |   |
| Basic  and Diluted                                                                                               |       | 35,327,093            |       | 36,990,089 |   |

 

**See notesto condensed consolidated financial statements.**

 

3

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**ENTERCOMCOMMUNICATIONS CORP.**

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS**

**(amountsin thousands, except share and per share data)**

**(unaudited)**

 
| ** **                                                                                                       | ** ** | **THREE MONTHS ENDED** | ** ** |
|------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                                       | ** ** | **SEPTEMBER 30,**      | ** ** |
| ** **                                                                                                       | ** ** | **2009**               | ** ** | **2008** | ** ** |
| ** **                                                                                                       |       |                   |       |   |   |
| **NET REVENUES**                                                                                                 |       | $                      | 99,765     |   | $ | 115,555 |   |
|                                                                                                             |       |                   |       |   |   |
| **OPERATING (INCOME) EXPENSE:**                                                                                  |       |                   |       |   |   |
| Station  operating expenses, including non-cash compensation expense of $698 in 2009  and $739 in 2008           |       | 66,273                 |       | 72,080 |   |
| Depreciation  and amortization expense                                                                           |       | 4,120                  |       | 4,474 |   |
| Corporate  general and administrative expenses, including non-cash expense of $1,300 in  2009 and $1,354 in 2008 |       | 5,802                  |       | 6,175 |   |
| Net  time brokerage agreement income                                                                             |       | —                 |       | (45 | ) |
| Net  loss on sale or disposal of assets                                                                          |       | 149                    |       | 62 |   |
| Total  operating expense                                                                                         |       | 76,344                 |       | 82,746 |   |
| **OPERATING INCOME**                                                                                             |       | 23,421                 |       | 32,809 |   |
|                                                                                                             |       |                   |       |   |   |
| **OTHER (INCOME) EXPENSE:**                                                                                      |       |                   |       |   |   |
| Interest  expense, including amortization of deferred financing expense of $371 in 2009  and $407 in 2008        |       | 7,856                  |       | 10,421 |   |
| Interest  and dividend income                                                                                    |       | (18                    | )          | (32 | ) |
| Net  gain on extinguishment of debt                                                                              |       | (3,132                 | )          | (1,633 | ) |
| Net  loss on investments                                                                                         |       | —                 |       | 250 |   |
| **TOTAL OTHER EXPENSE**                                                                                          |       | 4,706                  |       | 9,006 |   |
|                                                                                                             |       |                   |       |   |   |
| **INCOME FROM CONTINUING OPERATIONS**                                                                            |       |                   |       |   |   |
| **BEFORE INCOME TAXES**                                                                                          |       | 18,715                 |       | 23,803 |   |
|                                                                                                             |       |                   |       |   |   |
| **INCOME TAXES**                                                                                                 |       | 440                    |       | 20,029 |   |
| **INCOME FROM CONTINUING OPERATIONS**                                                                            |       | 18,275                 |       | 3,774 |   |
| Income  from discontinued operations, net of income taxes                                                        |       | —                 |       | 480 |   |
| **NET INCOME**                                                                                                   |       | $                      | 18,275     |   | $ | 4,254 |   |
| ** **                                                                                                       | ** ** | ** **             | ** ** | ** ** | ** ** |
| **NET INCOME PER SHARE - BASIC**                                                                                 |       |                   |       |   |   |
| Income  from continuing operations                                                                               |       | $                      | 0.52       |   | $ | 0.11 |   |
| Income  from discontinued operations, net of income taxes                                                        |       | —                 |       | 0.01 |   |
| **NET INCOME PER SHARE - BASIC**                                                                                 |       | $                      | 0.52       |   | $ | 0.12 |   |
|                                                                                                             |       |                   |       |   |   |
| **NET INCOME PER SHARE - DILUTED**                                                                               |       |                   |       |   |   |
| Income  from continuing operations                                                                               |       | $                      | 0.50       |   | $ | 0.11 |   |
| Income  from discontinued operations, net of income taxes                                                        |       | —                 |       | 0.01 |   |
| **NET INCOME PER SHARE - DILUTED**                                                                               |       | $                      | 0.50       |   | $ | 0.12 |   |
|                                                                                                             |       |                   |       |   |   |
| **DIVIDENDS DECLARED AND PAID PER COMMON SHARE**                                                                 |       | $                      | —     |   | $ | 0.10 |   |
|                                                                                                             |       |                   |       |   |   |
| **WEIGHTED AVERAGE SHARES:**                                                                                     |       |                   |       |   |   |
| Basic                                                                                                            |       | 35,291,969             |       | 36,366,713 |   |
| Diluted                                                                                                          |       | 36,620,613             |       | 36,374,873 |   |

 

**See notesto condensed consolidated financial statements.**

 

4

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**ENTERCOMCOMMUNICATIONS CORP.**

**CONDENSEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS**

**(amountsin thousands)**

**(unaudited)**

 
| ** **                                                                         | ** ** | **NINE MONTHS ENDED** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                         | ** ** | **SEPTEMBER 30,**     | ** ** |
| ** **                                                                         | ** ** | **2009**              | ** ** | **2008** | ** ** |
| ** **                                                                         |       |                  |       |   |   |
| **NET LOSS**                                                                       |       | $                     | (18,302    | ) | $ | (86,847 | ) |
|                                                                               |       |                  |       |   |   |
| **OTHER COMPREHENSIVE INCOME, NET OF TAXES:**                                      |       |                  |       |   |   |
|                                                                               |       |                  |       |   |   |
| Net  unrealized gain on investments, net of taxes of $86 in 2008                   |       | —                |       | 132 |   |
|                                                                               |       |                  |       |   |   |
| Net  unrealized gain on derivatives, net of taxes of $0 in 2009 and $1,870 in 2008 |       | 16                    |       | 2,888 |   |
|                                                                               |       |                  |       |   |   |
| **COMPREHENSIVE LOSS**                                                             |       | $                     | (18,286    | ) | $ | (83,827 | ) |

 

**See notesto condensed consolidated financial statements.**

 

5

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**ENTERCOMCOMMUNICATIONS CORP.**

**CONDENSEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

**(amountsin thousands)**

**(unaudited)**

** **
| ** **                                                                                  | ** ** | **THREE MONTHS ENDED** | ** ** |
|---------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                  | ** ** | **SEPTEMBER 30,**      | ** ** |
| ** **                                                                                  | ** ** | **2009**               | ** ** | **2008** | ** ** |
| ** **                                                                                  |       |                   |       |   |   |
| **NET INCOME**                                                                              |       | $                      | 18,275     |   | $ | 4,254 |   |
|                                                                                        |       |                   |       |   |   |
| **OTHER COMPREHENSIVE LOSS, NET OF TAX BENEFIT:**                                           |       |                   |       |   |   |
|                                                                                        |       |                   |       |   |   |
| Net  unrealized loss on derivatives, net of a tax benefit of $0 in 2009 and $1,231  in 2008 |       | (1,343                 | )          | (1,902 | ) |
|                                                                                        |       |                   |       |   |   |
| **COMPREHENSIVE INCOME**                                                                    |       | $                      | 16,932     |   | $ | 2,352 |   |

 

**See notesto condensed consolidated financial statements.**

 

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**CONDENSEDCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY**

**NINEMONTHS ENDED SEPTEMBER 30, 2009 AND YEAR ENDED DECEMBER 31, 2008**

**(amountsin thousands, except share data)**

**(unaudited)**

 
| ** **                                                                        | ** ** | **Common  Stock** | ** ** | **Additional**   | ** ** | ** **  | ** ** | **Other**    | ** ** | ** **        | ** ** |
|-----------------------------------------------------------------------------------|------------|-------------------|------------|------------------|------------|-------------|------------|--------------|------------|-------------------|------------|
| ** **                                                                        | ** ** | **Class A**  | ** ** | **Class B** | ** ** | **Paid-in** | ** ** | **Retained** | ** ** | **Comprehensive** | ** ** | ** ** | ** ** |
| ** **                                                                        | ** ** | **Shares**        | ** ** | **Amount**       | ** ** | **Shares**  | ** ** | **Amount**   | ** ** | **Capital**       | ** ** | **Earnings** | ** ** | **Income  (Loss)** | ** ** | **Total** | ** ** |
|                                                                              |       |              |       |             |       |        |       |         |       |              |       |   |   |   |   |   |   |
| Balance,  December 31, 2007                                                  |       | 31,132,700        |       | $                | 311        |        | 7,607,532  |         | $          | 76                |       | $ | 595,915 |   | $ | 64,597 |   | $ | (132 | ) | $ | 660,767 |   |
| Net  loss                                                                         |       | —            |       | —           |       | —      |       | —       |       | —            |       | (516,651 | ) | — |   | (516,651 | ) |
| Compensation  expense related to granting of stock options                        |       | —            |       | —           |       | —      |       | —       |       | 425               |       | — |   | — |   | 425 |   |
| Compensation  expense related to granting of restricted stock units               |       | 478,075           |       | 5                |       | —      |       | —       |       | 8,236             |       | — |   | — |   | 8,241 |   |
| Issuance  of common stock related to an incentive plan                            |       | 72,092            |       | 1                |       | —      |       | —       |       | 328               |       | — |   | — |   | 329 |   |
| Common  stock repurchase                                                          |       | (2,073,518        | )          | (21              | )          | —      |       | —       |       | (13,923           | )          | — |   | — |   | (13,944 | ) |
| Purchase  of vested employee restricted stock units                               |       | (130,161          | )          | (1               | )          | —      |       | —       |       | (1,374            | )          | — |   | — |   | (1,375 | ) |
| Payments  of dividends                                                            |       | —            |       | —           |       | —      |       | —       |       | (7,282            | )          | (14,301 | ) | — |   | (21,583 | ) |
| Dividend  equivalents on restricted stock units (net of forfeitures and payments) |       | —            |       | —           |       | —      |       | —       |       | —            |       | (822 | ) | — |   | (822 | ) |
| Net  unrealized loss on derivatives                                               |       | —            |       | —           |       | —      |       | —       |       | —            |       | — |   | (15,262 | ) | (15,262 | ) |
| Net  unrealized gain on investments                                               |       | —            |       | —           |       | —      |       | —       |       | —            |       | — |   | 132 |   | 132 |   |
| Balance,  December 31, 2008                                                  |       | 29,479,188        |       | 295              |       | 7,607,532   |       | 76           |       | 582,325           |       | (467,177 | ) | (15,262 | ) | 100,257 |   |
| Net  loss                                                                         |       | —            |       | —           |       | —      |       | —       |       | —            |       | (18,302 | ) | — |   | (18,302 | ) |
| Compensation  expense related to granting of stock options                        |       | —            |       | —           |       | —      |       | —       |       | 390               |       | — |   | — |   | 390 |   |
| Compensation  expense related to granting of restricted stock units               |       | 805,875           |       | 8                |       | —      |       | —       |       | 5,284             |       | — |   | — |   | 5,292 |   |
| Issuance  of common stock related to an incentive plan                            |       | 74,369            |       | —           |       | —      |       | —       |       | 97                |       | — |   | — |   | 97 |   |
| Common  stock repurchase                                                          |       | (662,664          | )          | (7               | )          | —      |       | —       |       | (882              | )          | — |   | — |   | (889 | ) |
| Purchase  of vested employee restricted stock units                               |       | (81,435           | )          | —           |       | —      |       | —       |       | (96               | )          | — |   | — |   | (96 | ) |
| Dividend  equivalents on restricted stock units (net of forfeitures and payments) |       | —            |       | —           |       | —      |       | —       |       | —            |       | 163 |   | — |   | 163 |   |
| Net  unrealized gain on derivatives                                               |       | —            |       | —           |       | —      |       | —       |       | —            |       | — |   | 16 |   | 16 |   |
| Balance,  September 30, 2009                                                 |       | 29,615,333        |       | $                | 296        |        | 7,607,532  |         | $          | 76                |       | $ | 587,118 |   | $ | (485,316 | ) | $ | (15,246 | ) | $ | 86,928 |   |

** **

**See notesto condensed consolidated financial statements.**

 

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**ENTERCOMCOMMUNICATIONS CORP.**

**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

**(amountsin thousands)**

**(unaudited)**

 
| ** **                                                                                                                                               | ** ** | **NINE MONTHS ENDED** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                               | ** ** | **SEPTEMBER 30,**     | ** ** |
| ** **                                                                                                                                               | ** ** | **2009**              | ** ** | **2008** | ** ** |
| **OPERATING ACTIVITIES:**                                                                                                                                |       |                  |       |   |   |
| Net  loss                                                                                                                                                |       | $                     | (18,302    | ) | $ | (86,847 | ) |
| Income  from discontinued operations before impairment loss, net of taxes                                                                                |       | —                |       | (457 | ) |
| Impairment  loss from discontinued operations                                                                                                            |       | —                |       | 6,675 |   |
| Deferred  tax benefit from discontinued operations                                                                                                       |       | —                |       | (2,721 | ) |
| Loss  from continuing operations                                                                                                                         |       | (18,302               | )          | (83,350 | ) |
|                                                                                                                                                     |       |                  |       |   |   |
| Adjustments  to reconcile loss from continuing operations to net cash provided by  continuing operating activities:                                      |       |                  |       |   |   |
| Depreciation  and amortization                                                                                                                           |       | 12,660                |       | 16,009 |   |
| Amortization  of deferred financing costs                                                                                                                |       | 1,147                 |       | 1,249 |   |
| Deferred  taxes (benefits)                                                                                                                               |       | 605                   |       | (32,307 | ) |
| Provision  for bad debts                                                                                                                                 |       | 2,035                 |       | 2,119 |   |
| Net  (gain) loss on sale or disposal of assets                                                                                                           |       | 149                   |       | (9,937 | ) |
| Non-cash  stock-based compensation expense                                                                                                               |       | 5,697                 |       | 7,811 |   |
| Net  loss on investments                                                                                                                                 |       | —                |       | 461 |   |
| Net  gain on derivatives                                                                                                                                 |       | —                |       | (34 | ) |
| Deferred  rent                                                                                                                                           |       | 12                    |       | 582 |   |
| Unearned  revenue - long-term                                                                                                                            |       | (532                  | )          | (30 | ) |
| Net  gain on extinguishment of debt                                                                                                                      |       | (19,260               | )          | (4,017 | ) |
| Deferred  compensation                                                                                                                                   |       | 1,506                 |       | 1,228 |   |
| Tax  benefit for vesting of restricted stock unit awards                                                                                                 |       | —                |       | (474 | ) |
| Impairment  loss                                                                                                                                         |       | 67,676                |       | 184,587 |   |
| Other  income                                                                                                                                            |       | (380                  | )          | (3,500 | ) |
| Changes  in assets and liabilities (net of effects of acquisitions and dispositions in  all years and the effect of deconsolidation activities in 2008): |       |                  |       |   |   |
| Accounts  receivable                                                                                                                                     |       | (1,265                | )          | (658 | ) |
| Prepaid  expenses and deposits                                                                                                                           |       | 59                    |       | 244 |   |
| Insurance  claim receivable                                                                                                                              |       | (16,800               | )          | — |   |
| Prepaid  and refundable income taxes                                                                                                                     |       | 115                   |       | 14,403 |   |
| Accounts  payable and accrued liabilities                                                                                                                |       | (3,201                | )          | (3,141 | ) |
| Insurance  claim payable                                                                                                                                 |       | 16,800                |       | — |   |
| Accrued  interest expense                                                                                                                                |       | (1,964                | )          | (3,600 | ) |
| Accrued  expenses - long-term                                                                                                                            |       | (577                  | )          | — |   |
| Prepaid  expenses - long-term                                                                                                                            |       | (216                  | )          | 200 |   |
|                                                                                                                                                     |       |                  |       |   |   |
| **Net cash provided by continuing operating  activities**                                                                                                |       | 45,964                |       | 87,845 |   |
| Net  cash provided by discontinued operating activities                                                                                                  |       | —                |       | 29 |   |
| **Net cash provided by operating activities**                                                                                                            |       | 45,964                |       | 87,874 |   |
|                                                                                                                                                          |            |                       |            |  |  |  |  |

 

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**ENTERCOMCOMMUNICATIONS CORP.**

**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

**(amountsin thousands)**

**(unaudited)**

 
| ** **                                                               | ** ** | **NINE MONTHS ENDED** | ** ** |
|--------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                               | ** ** | **SEPTEMBER 30,**     | ** ** |
| ** **                                                               | ** ** | **2009**              | ** ** | **2008** | ** ** |
| **INVESTING ACTIVITIES:**                                                |       |                  |       |   |   |
| Additions  to property and equipment                                     |       | (1,714                | )          | (5,982 | ) |
| Proceeds  from sale of property, equipment, intangibles and other assets |       | 106                   |       | 32,733 |   |
| Purchases  of radio station assets                                       |       | —                |       | (374 | ) |
| Deferred  charges and other assets                                       |       | (83                   | )          | (991 | ) |
| Purchases  of investments                                                |       | —                |       | (6 | ) |
| Proceeds  from investments                                               |       | 15                    |       | 201 |   |
| Proceeds  from termination of radio station contract                     |       | 380                   |       | — |   |
| Proceeds  from insurance recovery                                        |       | —                |       | 3,500 |   |
| Station  acquisition deposits and costs                                  |       | —                |       | 4,094 |   |
| **Net cash provided by (used in) investing  activities**                 |       | (1,296                | )          | 33,175 |   |
|                                                                     |       |                  |       |   |   |
| **FINANCING ACTIVITIES:**                                                |       |                  |       |   |   |
| Proceeds  from issuance of long-term debt                                |       | 37,000                |       | 56,000 |   |
| Proceeds  from the financing method of lease obligations                 |       | 4,531                 |       | — |   |
| Payments  of long-term debt                                              |       | (29,017               | )          | (96,516 | ) |
| Retirement  of senior subordinated notes                                 |       | (39,703               | )          | (53,168 | ) |
| Purchase  of the Company’s common stock                             |       | (889                  | )          | (13,260 | ) |
| Proceeds  from issuance of employee stock plan                           |       | 82                    |       | 247 |   |
| Purchase  of vested restricted stock units                               |       | (96                   | )          | (1,361 | ) |
| Payment  of dividend equivalents on vested restricted stock units        |       | (751                  | )          | (915 | ) |
| Payment  of dividends                                                    |       | —                |       | (21,583 | ) |
| Tax  benefit for vesting of restricted stock awards                      |       | —                |       | 474 |   |
| **Net cash used in financing activities**                                |       | (28,843               | )          | (130,082 | ) |
|                                                                     |       |                  |       |   |   |
| **NET INCREASE (DECREASE) IN CASH AND CASH  EQUIVALENTS**                |       | 15,825                |       | (9,033 | ) |
| **CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR**                         |       | 4,284                 |       | 10,945 |   |
| **CASH AND CASH EQUIVALENTS, END OF PERIOD**                             |       | $                     | 20,109     |   | $ | 1,912 |   |
|                                                                     |       |                  |       |   |   |
| **SUPPLEMENTAL DISCLOSURES OF CASH FLOW  INFORMATION:**                  |       |                  |       |   |   |
| Cash  paid during the period for:                                        |       |                  |       |   |   |
| Interest                                                                 |       | $                     | 24,664     |   | $ | 36,368 |   |
| Income  taxes                                                            |       | $                     | 192        |   | $ | 22 |   |
| Dividends                                                                |       | $                     | —     |   | $ | 21,583 |   |

 

**SUPPLEMENTAL DISCLOSURES ON NON-CASH INVESTING AND FINANCINGACTIVITIES:**

 

During the nine months ended September 30, 2009, the Companyissued 0.2 million restricted stock units, recorded modification expense of$1.4 million and had forfeitures of $2.4 million that will decrease on anaggregate basis its paid-in capital by $0.6 million over the vesting period ofthe restricted stock units.

 

During the nine months ended 2008, the Company issued 0.5 millionrestricted stock units (net of forfeitures) and will increase itspaid-in-capital by $5.6 million over the vesting period of the restricted stockunits.

 

On March 14, 2008, the Company completed an exchange of radiostation assets with Bonneville International Corporation and as a result theCompany: (1) received $220.0 million in assets, including cash of $1.0million; (2) provided assets with a basis of $210.0 million (includingtransaction costs); and (3) recorded a gain of $10.0 million.

 

**See notes to condensed consolidated financialstatements.**

 

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**ENTERCOMCOMMUNICATIONS CORP.**

**NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NINEMONTHS ENDED SEPTEMBER 30, 2009 AND 2008**

 

**1.****                                      BASISOF PRESENTATION**

 

The condensed consolidated interim unauditedfinancial statements included herein have been prepared by EntercomCommunications Corp. and its subsidiaries (collectively, the “Company”) inaccordance with: (i) generally accepted accounting principles (“U.S. GAAP”)for interim financial information; and (ii) the instructions of theSecurities and Exchange Commission (the “SEC”) for Form 10-Q and Article 10of Regulation S-X.  Accordingly, they donot include all of the information and footnotes required by generally acceptedaccounting principles for annual financial statements.  In the opinion of management, the financialstatements reflect all adjustments considered necessary for a fair statement ofthe results of operations and financial position for the interim periodspresented.  All such adjustments are of anormal and recurring nature. The Company’s results are subject to seasonalfluctuations and, therefore, the results shown on an interim basis are notnecessarily indicative of results for a full year.

 

This Form 10-Q should be read inconjunction with the financial statements and related notes included in theCompany’s audited financial statements as of and for the year ended December 31,2008 and filed with the SEC on February 26, 2009, as part of the Company’sAnnual Report on Form 10-K.  Certaininformation and footnote disclosures normally included in financial statementsprepared in accordance with generally accepted accounting principles have beencondensed or omitted pursuant to such rules and regulations.

 

***Recent AccountingPronouncements***

 

**Subsequent Events**

 

In May 2009, an accounting standard on subsequentevents was approved, which sets forth the period, circumstances and disclosureafter the balance sheet date during which management shall evaluate events ortransactions that may occur for potential recognition or disclosure in thefinancial statements. This standard, which was effective for the Company forthe period ended June 30, 2009, did not have an effect on the Company’sresult of operations, cash flows or financial position.

 

**Interim Disclosures About Fair ValueFinancial Instruments**

 

In April 2009, anaccounting standard was issued which requires disclosures about the fair valueof financial instruments in interim reporting periods that were previously onlyrequired in annual financial statements. The Company’s adoption of this accounting standard, which waseffective for the Company for the period ended June 30, 2009, did not havean effect on the Company’s result of operations, cash flows or financialposition.

 

**Accounting Standards Codification**

 

In June 2008, an accounting standardscodification was approved as a single source of authoritative nongovernmentalU.S. GAAP that was effective for the Company in the third quarter of 2009. Thecodification does not change current U.S. GAAP, but is intended to simplifyuser access to all authoritative literature related to a particular topic inone place. The Company’s adoption of this codification did not have an impacton the Company’s results of operations, cash flows or financial position.

 

**Determination Of The Useful Life OfIntangible Assets**

 

In April 2008,an accounting standard was issued regarding the determination of the usefullife of intangible assets. This standard amends the factors thatshould be considered in developing the renewal or extension assumptions used todetermine the useful life of recognized intangible assets. This standardrequires expanded disclosure regarding the determination of intangible assetuseful lives and also improves the consistency between the useful life of arecognized intangible asset and the period of expected cash flows used tomeasure the fair value of the asset. This standard was effective for theCompany on January 1, 2009. The impact to the Company will be limited tothe application of this standard to future acquisitions.

 

**Disclosures About DerivativeInstruments And Hedging Activities**

 

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In March 2008, the disclosurerequirements for derivative instruments and hedging activities were changed.Entities are required to provide enhanced disclosures about: (1) how andwhy an entity uses derivative instruments; (2) how derivative instrumentsand related hedged items are accounted for under U.S. GAAP and its relatedinterpretations; and (3) how derivative instruments and related hedgeditems affect an entity’s financial position, financial performance and cashflows. The Company has included the relevant disclosures effective in its firstquarter 2009 financial statements under Note 8, Derivatives And HedgingActivities.

 

**Modifications To Business Combinations**

 

In December 2007, an accounting standardwas modified that will significantly change how business combinations areaccounted for through the use of fair values in financial reporting and willimpact financial statements both on the acquisition date and in subsequentperiods.  In February 2009, thisaccounting standard was again modified to allow an exception to the recognitionand fair value measurement principles of contingencies in a businesscombination. This exception requires that acquired contingencies be recognizedat fair value on the acquisition date if fair value can be reasonably estimatedduring the allocation period.  Thesemodifications were effective for the Company as of January 1, 2009 for allbusiness combinations that close on or after January 1, 2009.

 

**2.**                                      SHARE-BASEDCOMPENSATION

** **

***Restricted Stock Units or (“RSUs”)***

** **

A summary of the Company’s outstanding RSUs as of September 30,2009, and changes in RSUs during the nine months ended September 30, 2009,is as follows:

 
| ** **                                              | ** ** | ** **              | ** ** | ** **    | ** ** | ** **    | ** ** | **Weighted-**   | ** ** | **Aggregate**          | ** ** |
|---------------------------------------------------------|------------|-------------------------|------------|---------------|------------|---------------|------------|-----------------|------------|------------------------|------------|
| ** **                                              | ** ** | ** **              | ** ** | ** **    | ** ** | **Weighted-** | ** ** | **Average**     | ** ** | **Intrinsic**          | ** ** |
| ** **                                              | ** ** | ** **              | ** ** | ** **    | ** ** | **Average**   | ** ** | **Remaining**   | ** ** | **Value As Of**        | ** ** |
| ** **                                              | ** ** | ** **              | ** ** | **Number of** | ** ** | **Purchase**  | ** ** | **Contractual** | ** ** | **September 30,** | ** ** |
| ** **                                              | ** ** | **Period Ended**        | ** ** | **RSUs**      | ** ** | **Price**     | ** ** | **Term**        | ** ** | **2009**               | ** ** |
| ** **                                              | ** ** | ** **              | ** ** | ** **    | ** ** | ** **    | ** ** | ** **      | ** ** | ** **             | ** ** |
| RSUs outstanding as of:                                 |       | December 31, 2008  |       | 1,421,985     |       |          |       |            |       |                   |       |
| RSUs awarded                                            |       |                    |       | 356,596       |       |          |       |            |       |                   |       |
| RSUs issued in exchange  for options                    |       |                    |       | 711,985       |       |          |       |            |       |                   |       |
| RSUs released                                           |       |                    |       | (296,964      | )          |          |       |            |       |                   |       |
| RSUs forfeited                                          |       |                    |       | (262,706      | )          |          |       |            |       |                   |       |
| RSUs outstanding as of:                                 |       | September 30, 2009 |       | 1,930,896     |       | $             | —     |            | 1.6        |                   | $          | 9,847,570 |   |
|                                                    |       |                    |       |          |       |          |       |            |       |                   |       |
| RSUs vested and expected  to vest                       |       |                    |       | 1,789,354     |       | $             | —     |            | 1.5        |                   | $          | 8,785,208 |   |
| RSUs exercisable (vested  and deferred)                 |       |                    |       | 66,764        |       | $             | —     |            | —     |                   | $          | 340,496 |   |
| Weighted average remaining  recognition period in years |       |                    |       | 2.5           |       |          |       |            |       |                   |       |

 

***Options***

 

No options were exercised during the ninemonths ended September 30, 2009 and 2008.

 

The following table presents the optionactivity for the nine months ended September 30, 2009:

 

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| ** **                                              | ** ** | ** **              | ** ** | ** **    | ** ** | ** **    | ** ** | **Weighted-**   | ** ** | **Intrinsic**          | ** ** |
|---------------------------------------------------------|------------|-------------------------|------------|---------------|------------|---------------|------------|-----------------|------------|------------------------|------------|
| ** **                                              | ** ** | ** **              | ** ** | ** **    | ** ** | **Weighted-** | ** ** | **Average**     | ** ** | **Value**              | ** ** |
| ** **                                              | ** ** | ** **              | ** ** | ** **    | ** ** | **Average**   | ** ** | **Remaining**   | ** ** | **As of**              | ** ** |
| ** **                                              | ** ** | ** **              | ** ** | **Number of** | ** ** | **Exercise**  | ** ** | **Contractual** | ** ** | **September 30,** | ** ** |
| ** **                                              | ** ** | **Period Ended**        | ** ** | **Options**   | ** ** | **Price**     | ** ** | **Term**        | ** ** | **2009**               | ** ** |
| ** **                                              |       |                    |       |          |       |          |       |            |       |                   |       |
| Options outstanding as of:                              |       | December 31, 2008  |       | 2,493,930     |       | $             | 28.33      |            |       |                   |       |   |
| Options granted                                         |       |                    |       | 1,075,250     |       | $             | 1.38       |            |       |                   |       |   |
| Options forfeited                                       |       |                    |       | (57,312       | )          | $             | 2.58       |            |       |                   |       |   |
| Options exchanged for RSUS                              |       |                    |       | (2,084,518    | )          | $             | 29.02      |            |       |                   |       |   |
| Options expired                                         |       |                    |       | (315,475      | )          | $             | 24.51      |            |       |                   |       |   |
| Outstanding as of:                                      |       | September 30, 2009 |       | 1,111,875     |       | $             | 3.37       |            | 9.0        |                   | $          | 3,825,360 |   |
|                                                    |       |                    |       |          |       |          |       |            |       |                   |       |
| Options vested and  expected to vest as of:             |       | September 30, 2009 |       | 1,017,727     |       | $             | 3.54       |            | 9.0        |                   | $          | 3,482,837 |   |
| Options vested and  exercisable as of:                  |       | September 30, 2009 |       | 56,417        |       | $             | 35.91      |            | 3.4        |                   | $          | — |   |
| Weighted average remaining  recognition period in years |       |                    |       | 3.3           |       |          |       |            |       |                   |       |

 

As of September 30,2009, $1.2 million of accumulated unrecognized compensation costs related tounvested stock options, net of estimated forfeitures, is expected to berecognized in future periods over a weighted average period of 3.3 years.

 

The fair value of eachoption grant was estimated on the date of grant using the following weightedaverage assumptions:

 
| ** **                     | ** ** | **Nine Months Ended**  | ** ** |
|--------------------------------|------------|------------------------|------------|
| ** **                     | ** ** | **September 30,** | ** ** |
| ** **                     | ** ** | **2009**               | ** ** | **2008** | ** ** |
| Expected life (years)          |       | 6.3                    |       | 6.3 |   |
| Expected volatility factor (%) |       | 54.9% to 66.6%         |       | 30.9% to 32.3% |   |
| Risk-free interest rate (%)    |       | 2.2% to 2.9%           |       | 2.7% to 3.3% |   |
| Expected dividend yield (%)    |       | 0.0%                   |       | 3.7% to 14.6% |   |

 

Thefollowing table summarizes significant ranges of outstanding and exercisableoptions as of September 30, 2009:

 
| ** **          | ** ** | **Options  Outstanding** | ** ** | **Options  Exercisable** | ** ** |
|---------------------|------------|--------------------------|------------|--------------------------|------------|
| ** **          | ** ** | **Number  Of**           | ** ** | **Weighted**             | ** ** | ** ** | ** ** | **Number  Of** | ** ** | ** ** | ** ** |
| ** **          | ** ** | **Options**              | ** ** | **Average**              | ** ** | **Weighted** | ** ** | **Options** | ** ** | **Weighted** | ** ** |
| ** **          | ** ** | **Outstanding**          | ** ** | **Remaining**            | ** ** | **Average** | ** ** | **Exercisable** | ** ** | **Average** | ** ** |
| ** **          | ** ** | **September 30,**   | ** ** | **Contractual**          | ** ** | **Exercise** | ** ** | **September 30,** | ** ** | **Exercise** | ** ** |
| **Exercise Prices** | ** ** | **2009**                 | ** ** | **Life**                 | ** ** | **Price** | ** ** | **2009** | ** ** | **Price** | ** ** |
| $                   | 1.34       |                     | $          | 1.34                     |       | 1,006,750 |   | 9.4 |   | $ | 1.34 |   | — |   | $ | — |   |
| $                   | 1.57       |                     | $          | 11.69                    |       | 48,125 |   | 9.0 |   | $ | 7.57 |   | 6,167 |   | $ | 11.50 |   |
| $                   | 11.78      |                     | $          | 11.78                    |       | 9,000 |   | 8.4 |   | $ | 11.78 |   | 2,250 |   | $ | 11.78 |   |
| $                   | 27.75      |                     | $          | 40.00                    |       | 24,500 |   | 3.1 |   | $ | 34.11 |   | 24,500 |   | $ | 34.11 |   |
| $                   | 42.88      |                     | $          | 48.21                    |       | 23,500 |   | 2.0 |   | $ | 46.51 |   | 23,500 |   | $ | 46.51 |   |
| $                   | 1.34       |                     | $          | 48.21                    |       | 1,111,875 |   | 9.0 |   | $ | 3.37 |   | 56,417 |   | $ | 35.91 |   |

 

***Recognized Non-Cash Compensation Expense***

 

The following table summarizes stock-basedcompensation expense related to awards of RSUs, employee stock options andpurchases under the employee stock purchase plan for the nine and three monthsended September 30, 2009 and 2008:

 

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| ** **                                                        | ** ** | **Nine Months Ended**      | ** ** | **Three Months Ended** | ** ** |
|-------------------------------------------------------------------|------------|----------------------------|------------|------------------------|------------|
| ** **                                                        | ** ** | **September 30,**     | ** ** |
| ** **                                                        | ** ** | **2009**                   | ** ** | **2008**               | ** ** | **2009** | ** ** | **2008** | ** ** |
|                                                              |       | **(amounts in thousands)** |       |
| Station operating expenses                                        |       | $                          | 1,460      |                   | $          | 1,852 |   | $ | 698 |   | $ | 739 |   |
| Corporate general and administrative expenses                     |       | 4,237                      |       | 5,959                  |       | 1,300 |   | 1,354 |   |
| Stock-based compensation expense included in  operating expenses  |       | 5,697                      |       | 7,811                  |       | 1,998 |   | 2,093 |   |
| Income tax benefit (net of a fully reserved  valuation allowance) |       | —                     |       | (2,560                 | )          | — |   | (595 | ) |
| Total                                                             |       | $                          | 5,697      |                   | $          | 5,251 |   | $ | 1,998 |   | $ | 1,498 |   |

 

***2009 Option ExchangeProgram***

 

In February 2009, the Company’s Board ofDirectors approved an amendment to the Entercom Equity Compensation Plan (the “Plan”)to permit a one-time Option Exchange Program (“2009 OEP”), which amendment wasapproved at the May 2009 shareholders’ meeting. On April 13, 2009,the Company commenced the 2009 OEP, which was subject to shareholder approval,by making an offer to exchange to the Company’s eligible employees andnon-employee directors. The Company offered such persons the opportunity tomake an election to exchange all of their outstanding stock options withexercise prices equal to or greater than $11.80 per share for a lesser numberof RSUs. The exchange ratios were as follows:

 
| **Option**                             | ** ** | **Exchange  Ratio**     | ** ** |
|----------------------------------------|------------|-------------------------|------------|
| **Strike  Price**                      | ** ** | **(Options  For RSUs)** | ** ** |
| At least $11.80, but less  than $30.00 |       | 2.25 for 1              |       |
| $30.00 or more                         |       | 4.5 for 1               |       |

 

On May 15, 2009, following the May 14,2009 expiration of the Company’s 2009 OEP, the Company granted 0.7 million RSUsin exchange for 2.1 million options. As a result of the 2009 OEP, the number ofRSUs that can be issued under the Plan was effectively increased by 0.7 millionas all RSUs granted did not count against the restricted stock sublimit in thePlan.  In addition, the number of awardsthat can be issued under the Plan was effectively reduced by 2.1 million as alloptions that were exchanged will not be available for re-grant under the Plan.

 

The Company applied modification accountingfor the 2009 OEP and will recognize share-based compensation expense of $1.2million on a straight-line basis over the four-year vesting period of the RSUs.Under modification accounting, the fair value of the new shares immediatelyprior to the exchange was greater by $1.2 million than the fair value of thesurrendered options. In addition, under the bifurcated method, share-basedcompensation expense of $0.9 million associated with any unvested optionsexchanged and cancelled as of the modification date will be recognized over theremaining original option term, and the expense will only be reversed if theoriginal service period is not met.

 

**3.**                                      INTANGIBLE ASSETS AND GOODWILL

** **

***(A) Indefinite-LivedIntangibles***

 

Under the accounting standards for goodwilland certain intangible assets, these assets are not amortized.  The Company has concluded that its acquiredbroadcasting licenses are treated as an indefinite-lived intangible asset and,similar to goodwill, these assets are reviewed at least annually for impairment.At the time of each review, if the recorded value of goodwill and certainintangibles (such as broadcasting licenses) is more than their fair value, thena charge is recorded to the results of operations.

 

Under accounting guidance, the Company mayonly write down the carrying value of its indefinite-lived intangibles, but isnot permitted to increase the carrying value if the fair value of these assetssubsequently increases.

 

***Change In AnnualTesting Period For Broadcasting Licenses***

 

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In 2009, the Company changed the period whenit performs its annual impairment test for broadcasting licenses from the firstquarter to the second quarter of each year, in line with its annual impairmenttest for goodwill.  An interim impairmenttest for broadcasting licenses was performed during the fourth quarter of 2008.

 

**Broadcasting Licenses**

 

The Company performs its broadcasting licenseimpairment test by evaluating its broadcasting licenses for impairment at themarket level using the direct method. Accounting guidance states thatseparately recorded indefinite-lived intangible assets should be combined intoa single unit of accounting for purposes of testing impairment if they areoperated as a single asset.  The Companydetermines the fair value of the broadcasting licenses in each of its marketsby relying on a discounted cash flow approach (a 10-year income model) assuminga start-up scenario in which the only assets held by an investor arebroadcasting licenses. The Company’s fair value analysis contains assumptionsincorporating variables that are based on past experiences and judgments aboutfuture performance using industry normalized information for an average stationwithin a certain market. These variables include, but are not limited to: (1) theforecast growth rate of each radio market, including assumptions regarding eachmarket’s population, household income, retail sales and other factors thatwould influence advertising expenditures; (2) market share and profitmargin of an average station based upon market size and station type; (3) estimatedcapital start-up costs and losses incurred during the early years; (4) risk-adjusteddiscount rate; (5) the likely media competition within the market area; (6) aneffective tax rate assumption; and (7) future terminal values.

 

During the second quarter of 2009, theCompany completed the impairment test for broadcasting licenses and determinedthat the fair value of the broadcasting licenses was less than the amountreflected in the balance sheet for each of the Company’s markets, other thanSeattle, and recorded an impairment loss of $60.8 million. The prolongedeconomic downturn negatively impacted the radio broadcasting industry asadvertising revenues continued to decline and expectations for growth over thenext year were reduced. The projected growth levels for the industry and theCompany were less than those originally forecasted for 2009, which was the primaryreason for further impairment to broadcasting licenses in the secondquarter.  As revenues decline,profitability levels are also negatively impacted as fixed costs represent alarge component of a radio station’s operating expenses. As a result, the assetbase is particularly sensitive to the impact of continued declining revenues.

 

The following table reflects certain keyestimates and assumptions since the most recent impairment test in the fourthquarter of 2008.  The ranges foroperating profit margin and market long-term revenue growth rates are for eachof the Company’s markets. In general, when comparing between the second quarterof 2009 and the fourth quarter of 2008: (1) the market specific operatingprofit margin range declined; and (2) the market long-term revenue growthrates were consistent; however, current period revenues were less thanpreviously projected for 2009.

 
| ** **                            | ** ** | **Second**     | ** ** | **Fourth**     | ** ** |
|---------------------------------------|------------|----------------|------------|----------------|------------|
| ** **                            | ** ** | **Quarter**    | ** ** | **Quarter**    | ** ** |
| ** **                            | ** ** | **2009**       | ** ** | **2008**       | ** ** |
| Discount rates                        | ** ** | 10.6%          |       | 10.6%          | ** ** |
| Operating profit margin ranges        |       | 21.0% to 44.0% | ** ** | 21.0% to 46.7% | ** ** |
| Market long-term revenue growth rates |       | 1.0% to 2.5%   | ** ** | 1.0% to 2.0%   | ** ** |

 

The following table presents, in thousands,the changes in broadcasting licenses for the nine months ended September 30,2009 and 2008:

 

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| ** **                        | ** ** | **Carrying** | ** ** |
|-----------------------------------|------------|--------------|------------|
| ** **                        | ** ** | **Amount**   | ** ** |
| Balance as of December 31,  2008  |       | $            | 768,646    |   |
| Loss on impairment                |       | (60,794      | )          |
| Balance as of September  30, 2009 |       | $            | 707,852    |   |

 
|                              |   | **Carrying** |      |
|-----------------------------------|--------|--------------|-----------|
|                              |   | **Amount**   |      |
| Balance as of December 31,  2007  |   | $            | 1,316,983 |   |
| Acquisition                       |   | 210,358      |      |
| Loss on impairment                |   | (117,000     | )         |
| Reversal of assets held  for sale |   | 3,650        |      |
| Balance as of September  30, 2008 |   | $            | 1,413,991 |   |

 

The amount of unamortized broadcastinglicenses reflected in the balance sheet as of September 30, 2009 and December 31,2008 was $707.9 million and $768.6 million, respectively. If actual marketconditions are less favorable than those projected by the industry or theCompany, or if events occur or circumstances change that would reduce the fairvalue of the Company’s broadcasting licenses below the amount reflected in thebalance sheet, the Company may be required to recognize impairment charges,which may be material, in future periods.

 

In connection with the Company’s annualreview of its goodwill during the second quarter of 2008, the Companydetermined that the fair value of several of its markets’ broadcasting licenseswas impaired under the second step of its goodwill analysis.  As a result, for the nine months ended September 30,2008, the Company recorded an impairment loss in the Denver, Greenville,Indianapolis and Memphis markets on an aggregate basis of $117.0 million andreduced its carrying value of broadcasting licenses.  Contributing factors to the impairment were adecline in the advertising dollars in these markets and its effect on theCompany’s operations, coupled with changes in the anticipated growth of thesemarkets.

 

Please refer to Note 15, DiscontinuedOperations, for a discussion of an impairment to broadcasting licenses inRochester, New York, during the first quarter of 2008.

 

**Goodwill**

 

The Company performs its annual impairmenttest on its goodwill during the second quarter of each year by comparing thefair value for each reporting unit with the amount reflected on the balancesheet. The Company has determined that a radio market is a reporting unit andin total, the Company assesses goodwill at 22 separate reporting units. If thefair value for any reporting unit is less than the amount reflected in thebalance sheet, an indication exists that the amount of goodwill attributed to areporting unit may be impaired, and the Company is required to perform a secondstep of the impairment test. In the second step, the Company compares to theamount reflected in the balance sheet, the implied fair value of the reportingunit’s goodwill, determined by allocating the reporting unit’s fair value toall of its assets and liabilities in a manner similar to a purchase priceallocation.

 

To determine the fair value, the Company usesan income and market approach for each reporting unit. The market approachcompares recent sales and offering prices of similar properties. The incomeapproach uses the subject property’s income generated over a specified time andcapitalized at an appropriate market rate to arrive at an indication of themost probable selling price.

 

In step one of the Company’s goodwill analysis, theCompany considered the results of the market approach and the income approachin computing the fair value of the Company’s reporting units. In the marketapproach, the Company applied an estimated market multiple of six times(consistent with the multiple used in the fourth quarter of 2008) to eachreporting unit’s operating performance to calculate the fair value. The Companyapplied the same market multiple consistently across all reporting units. Inthe income approach, the Company utilized the discounted cash flow method tocalculate the fair value of the reporting unit (the key estimates andassumptions are included in the table below). The results of step one indicatedthat it was necessary to perform the second step analysis in seven of the 22markets (each market is a reporting unit). The fair values for two of the sevenmarkets were marginally above book value. Management believes that theseapproaches are commonly used methodologies for valuing broadcast radio stationsand that a six times multiple is an appropriate measurement given the recentfall in market

 

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valuationsof broadcast radio stations together with a historically low level of markettransactions in recent months. The marginal stations were included inthe Company’s step one impairment testing due to the subjective nature of thestep one analysis and the sensitivities inherent in these calculations. Factorscontributing to the determination of the reporting unit’s operating performancewere historical performance and/or management’s estimates of futureperformance.

 

Underthe second step, the Company determined that the fair value of the Company’sgoodwill was less than the amount reflected in the balance sheet for the sevenmarkets tested, which were Austin, Greensboro, Greenville, Indianapolis, KansasCity, Memphis and Wichita, and recorded an impairment loss of $6.9million during the second quarter of 2009. Contributing factors to the impairment were a decline in theadvertising dollars in these markets and its effect on the Company’soperations, coupled with changes in the anticipated growth and profitability ofthese markets.

 

The prolonged economic downturn negatively impacted the radiobroadcasting industry as advertising revenues continued to decline andexpectations for growth over the next year also declined. The projected revenuegrowth levels for the industry and the Company were less than those originallyforecasted for 2009, which caused further goodwill impairment in the secondquarter of 2009.  As revenues decline,profitability levels are also negatively impacted as fixed costs represent alarge component of a radio station’s operating expenses. As a result, the assetbase is particularly sensitive to the impact of declining revenues.

 

The following table reflects certain key estimates and assumptionssince the most recent impairment test in the fourth quarter of 2008.  The ranges for operating profit margin andrevenue growth rates are for each of the Company’s markets.  In general, when comparing between the secondquarter of 2009 and the fourth quarter of 2008: (1) the market specificoperating profit margin range declined; and (2) the market long-termrevenue growth rates were consistent; however, current period revenues wereless than previously projected for 2009.

 
| ** **                             | ** ** | **Second**     | ** ** | **Fourth**     | ** ** |
|----------------------------------------|------------|----------------|------------|----------------|------------|
| ** **                             | ** ** | **Quarter**    | ** ** | **Quarter**    | ** ** |
| ** **                             | ** ** | **2009**       | ** ** | **2008**       | ** ** |
| Discount  rates                        | ** ** | 10.6%          |       | 10.6%          |       |
| Operating  profit margin ranges        |       | 21.0% to 41.0% | ** ** | 21.0% to 44.0% |       |
| Market  long-term revenue growth rates |       | 1.0% to 2.5%   | ** ** | 1.0% to 2.0%   |       |

 

The following table presents, in thousands, the change in goodwill forthe nine months September 30, 2009 and 2008:

 
| ** **                                                           | ** ** | **Goodwill**               | ** ** |
|----------------------------------------------------------------------|------------|----------------------------|------------|
| ** **                                                           | ** ** | **Carrying Amount**        | ** ** |
| ** **                                                           | ** ** | **2009**                   | ** ** | **2008** | ** ** |
| ** **                                                           | ** ** | **(amounts in thousands)** | ** ** |
| Goodwill before cumulative loss on impairment as  of January 1, |       | $                          | 163,783    |   | $ | 160,976 |   |
| Accumulated loss on impairment                                       |       | (118,733                   | )          | (45,362 | ) |
| Goodwill after cumulative loss on impairment                         |       | 45,050                     |       | 115,614 |   |
| Loss on impairment during the year                                   |       | (6,882                     | )          | (67,587 | ) |
| Acquisitions during the year                                         |       | —                     |       | 2,807 |   |
| Ending balance as of September 30,                              |       | $                          | 38,168     |   | $ | 50,834 |   |

 

During the second quarter of 2008, the Company recorded an impairmentloss of $67.6 million on an aggregate basis for the Denver and Indianapolismarkets. Contributing factors to the impairment were a decline in the availableadvertising dollars in these markets and its effect on the Company’soperations, coupled with changes in the anticipated growth of the broadcastingindustry and its impact on prices paid for radio stations.

 

Please refer to Note 15, Discontinued Operations, for a discussion ofan impairment to goodwill during the nine months ended September 30, 2008related to the disposition of radio station assets in Rochester, New York.

 

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The amount of goodwill reflected in the Company’s balance sheet as of September 30,2009 and December 31, 2008 was $38.2 million and $45.1 million,respectively.  If actual market conditionsare less favorable than those projected by the industry or the Company, or ifevents occur or circumstances change that would reduce the fair value of theCompany’s goodwill below the amount reflected in the balance sheet, the Companymay be required to recognize impairment charges, which may be material, infuture periods.

 

***(B) Definite-LivedIntangibles***

 

The Company has definite-lived intangible assets that consist ofadvertiser lists and customer relationships, acquired advertising contracts andincome leases. These assets are amortized over the period for which the assetsare expected to contribute to the Company’s future cash flows and are reviewedfor impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. The amount of theamortization expense for definite-lived intangible assets was $0.1 million and$2.8 million for the nine months ended September 30, 2009 and 2008,respectively.  As of September 30,2009, the Company reflected $0.8 million in unamortized definite-lived assets,which is included in deferred charges and other assets on the balance sheet.

 

The following is an estimate of the amortization expense fordefinite-lived assets, in thousands, for each of the succeeding years ending December 31:

 
| ** **                                                  | ** ** | **Definite-** | ** ** |
|-------------------------------------------------------------|------------|---------------|------------|
| ** **                                                  | ** ** | **Lived**     | ** ** |
| ** **                                                  | ** ** | **Assets**    | ** ** |
| Year ending December 31,:                              |       |          |       |
| 2009 (Excludes year-to-date ended  September 30, 2009) |       | $             | 36         |   |
| 2010                                                        |       | 124           |       |
| 2011                                                        |       | 84            |       |
| 2012                                                        |       | 81            |       |
| 2013                                                        |       | 53            |       |
| Thereafter                                                  |       | 445           |       |
| Total                                                       |       | $             | 823        |   |

 

**4.****                                     ****ACQUISITIONS, DISPOSITIONSAND UNAUDITED PRO FORMA SUMMARY**

 

***Acquisitions AndDispositions For The Nine Months Ended September 30, 2009***

 

Therewere no acquisitions or dispositions (other than as disclosed under Note 7,Financing Method Lease Obligations and Note 9, Contingencies, GuarantorArrangements and Commitments), during the nine months ended September 30,2009.

 

***Unaudited Pro FormaSummary Of Financial Information***

 

The following pro forma information presents theconsolidated results of operations as if any acquisitions which occurred hadall occurred as of the beginning of each period presented, after giving effectto certain adjustments, including depreciation and amortization of assets andinterest expense on any debt incurred to fund the acquisitions which would havebeen incurred had such acquisitions occurred as of the beginning of the periodspresented. For purposes of this presentation, the data does not reflect on apro forma basis dispositions of radio stations (other than the disposition of: (1) aradio station in Cincinnati as the Company has never operated this station; and(2) the disposition of radio stations in Seattle and Cincinnati as thisdisposition was in exchange for the assets as described under Note 4).  In addition, the tables reflect on a proforma basis as if the discontinued operations in Rochester were notdiscontinued. These unaudited pro forma results have been prepared forcomparative purposes only and do not purport to be indicative of what wouldhave occurred had the acquisitions been made as of that date or results whichmay occur in the future.

 

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|                                          |       | **Nine  Months Ended**                             | ** ** | **Three  Months Ended** | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------|------------|-------------------------|------------|
| ** **                                    | ** ** | **September 30,**                             | ** ** |
| ** **                                    | ** ** | **2009 **                                     | ** ** | **2008 **          | ** ** | **2009 ** | ** ** | **2008 ** | ** ** |
| ** **                                    | ** ** | **(amounts  in thousands, except per share data)** | ** ** |
| ** **                                    | ** ** | **(unaudited)**                                    | ** ** |
| ** **                                    | ** ** | **Actual**                                         | ** ** | **Proforma**            | ** ** | **Actual** | ** ** | **Actual** | ** ** |
| ** **                                    | ** ** | ** **                                         | ** ** | ** **              | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net revenues                                  | ** ** | $                                                  | 276,436    |                    | $          | 336,165 |   | $ | 99,765 |   | $ | 115,555 |   |
| Net income (loss)                             |       | $                                                  | (18,302    | )                       | $          | (96,997 | ) | $ | 18,275 |   | $ | 4,254 |   |
| Net income (loss) per  common share - basic   |       | $                                                  | (0.52      | )                       | $          | (2.62 | ) | $ | 0.52 |   | $ | 0.12 |   |
| Net income (loss) per  common share - diluted |       | $                                                  | (0.52      | )                       | $          | (2.62 | ) | $ | 0.50 |   | $ | 0.12 |   |

 

**5.****                                      SENIORDEBT**

 

***Bank Facility***

 

Historically, the Company has carried significant amounts of debt. Asof September 30, 2009, the Company had: (1) $758.0 millionoutstanding under the Bank Facility, including: (i) $385.0 million in TermLoan; and (ii) $373.0 million in drawn Revolver; and (2) a $1.5million letter of credit.  As of September 30,2009, the Company had $20.1 million in cash and cash equivalents.

 

The undrawn amount of the Revolver was $275.5 million as of September 30,2009. The amount of the Revolver available to the Company, however, is afunction of covenant compliance at the time of borrowing. Based on the Company’sfinancial covenant analysis as of September 30, 2009, the Company would belimited to borrowings significantly less than the undrawn limit unless suchborrowings were used to repay indebtedness or for transactions that increasecash flow for purposes of covenant calculation. The Company plans to fund theamortization of the Term Loan with its available Revolver capacity and cashflow from operations.

 

In June 2007, the Company entered into a credit agreement (the “BankFacility”) with a syndicate of lenders (26 lenders as of September 30,2009) for a $1,050 million senior secured credit facility that matures in June 2012.The Bank Facility is comprised of $650 million in revolving credit (“Revolver”)and a $400 million term loan (“Term Loan”). The Company is required to makerepayments of the Term Loan (from and after September 30, 2009) inquarterly amounts starting at $15 million and increasing to $60 million. TheBank Facility is secured by a pledge of 100% of the capital stock and otherequity interest in all except one of the Company’s wholly owned subsidiaries.The Bank Facility requires the Company to comply with certain financialcovenants which are defined terms within the agreement, including: (1) ConsolidatedFunded Indebtedness not to exceed six times Consolidated Operating Cash Flow;and (2) Consolidated Operating Cash Flow to be at a minimum of two timesConsolidated Interest Charges.

 

The Company must maintain compliance with certain covenants under itsBank Facility. Management believes that over the next twelve months, theCompany can maintain compliance with these covenants. Management furtherbelieves that the Company’s ability to maintain compliance with its covenantswill be highly dependent on the Company’s results of operations as the economybegins to recover from the current economic downturn and the Company’s abilityto implement, to the extent necessary, remedial measures such as furtherreductions in operating costs, opportunistically repurchasing debt at adiscount, selling assets and taking advantage of actions permitted under thecredit agreement such as including cash from unrestricted subsidiaries inConsolidated Operating Cash Flow. If the Company were to enter into an agreementwith its lenders for covenant compliance relief, such relief could result inhigher interest expense. Failure to comply with the Company’s financialcovenants or other terms of the Bank Facility or Notes and the failure tonegotiate and obtain any required relief from its lenders could result in theacceleration of the maturity of all of the Company’s outstanding debt. Underthese circumstances, the acceleration of the Company’s debt could have amaterial adverse effect on the Company’s business.

 

The current economic downturn has reduced demand for advertising ingeneral, including advertising on the Company’s radio stations.  Management anticipates that the negativerevenue trends in the radio industry will continue into the fourth quarter of2009, but reverse in early 2010 as the economy and the advertising environmentrebounds and the Company compares favorably to prior periods of economicdownturn.

 

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**6.****                                      7.625%SENIOR SUBORDINATED NOTES**

 

During the nine months ended September 30, 2009 and 2008, theCompany repurchased $59.6 million and $58.0 million, respectively, of its Notesdue March 1, 2014. For the nine and three months ended September 30,2009, the Company recorded in the statement of operations a gain on theextinguishment of debt of $19.3 million and $3.1 million, respectively, net ofthe write-off of deferred financing costs of $0.7 million and $0.2 million,respectively. During the nine and three months ended September 30, 2008,the Company recorded in the statements of operations a gain on theextinguishment of debt of $4.0 million and $1.6 million, respectively, net ofthe write-off of deferred financing costs of $0.8 million and $0.2 million,respectively.  The Notes outstanding asof September 30, 2009 were $23.9 million.

 

In October 2009, the Company purchased in the open market $12.9million of the Company’s Notes at a price of $11.5 million.

 

**7.****                                      FINANCINGMETHOD LEASE OBLIGATIONS**

 

In September 2009, the Company entered into an agreement tosell certain tower facilities for up to $12.6 million in cash and to lease backmost of the tower sites for use by the Company’s radio stations. In addition,the agreement provides for an earn-out whereby the Company can receiveadditional cash consideration for up to $2.0 million after 42 months, dependingif the buyer meets certain revenue targets. The sale did not qualify for sale and leaseback accounting as the Company’sability to share in a future earn-out is considered continuing involvementunder accounting guidance. As a result, the Company classified thesetransactions as financing under the accounting guidance for leases. Under thefinancing method: (1) the assets and accumulated depreciation remain onthe consolidated balance sheet and continue to be depreciated; (2) no gainis recognized; (3) proceeds of $4.5 million received by the Company as of September 30,2009 from these transactions are recorded as a financing liability; and (4) transactioncosts of $0.2 million as of September 30, 2009 are recorded as deferredfinancing expense, which will be amortized over 42 months. Payments under theseleases over the partial lease term of 42 months are applied as payments ofimputed interest at an approximate interest rate of 5.5%. Once the Company hasno continuing involvement, the Company expects to apply the accountingprovisions for sale and leaseback accounting. The earn-out component of thistransaction will enable the Company to participate in the upside potential ofthese sites as the new owner (whose primary business is managing tower sites)is better suited to maximize the value of these sites through new third partytenants.

 

Asof September 30, 2009, the Company received $4.5 million in cash thatcovered eight of the tower facilities. The Company may close on additionaltower sites during the fourth quarter of 2009. For the nine and three monthsended September 30, 2009, no interest expense associated with leasefinancing obligations were recognized during these periods as lease paymentscommenced in October 2009.

 

Thefollowing table presents future minimum interest and principal payments dueunder financing method leases as of September 30, 2009:

 
| ** **                                        | ** ** | **September 30, 2009** | ** ** |
|---------------------------------------------------|------------|-----------------------------|------------|
| ** **                                        | ** ** | **Principal**               | ** ** | **Interest** | ** ** | **Total** | ** ** |
| ** **                                        | ** ** | **(amounts in thousands)**  | ** ** |
| Remainder of current year                         |       | $                           | —     |   | $ | 55 |   | $ | 55 |   |
| 2010                                              |       | —                      |       | 221 |   | 221 |   |
| 2011                                              |       | —                      |       | 231 |   | 231 |   |
| 2012                                              |       | —                      |       | 244 |   | 244 |   |
| 2013                                              |       | 4,531                       |       | 60 |   | 4,591 |   |
| Total financing method lease obligations          |       | 4,531                       |       | 811 |   | 5,342 |   |
| Less current portion                              |       | —                      |       | 219 |   | 219 |   |
| Long term financing method lease obligations, net |       | $                           | 4,531      |   | $ | 592 |   | $ | 5,123 |   |

 

The following table presents property and equipmentheld under financing method leases, by major category, which represent componentsof property and equipment included in the balance sheet under property andequipment, as of September 30, 2009:

 

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| ** **                                                      | ** ** | **September 30,** | ** ** |
|-----------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                      | ** ** | **2009**               | ** ** |
| ** **                                                      | ** ** | **(amounts in**        | ** ** |
| ** **                                                      | ** ** | **thousands)**         | ** ** |
| Land  and land improvements                                     |       | $                      | 699        |   |
| Building                                                        |       | 216                    |       |
| Equipment                                                       |       | 2,800                  |       |
| Total                                                           |       | 3,715                  |       |
| Less  accumulated depreciation                                  |       | (2,486                 | )          |
| Property  and equipment held under financing method leases, net |       | $                      | 1,229      |   |

 

The portion of depreciation expense attributable toassets held under financing method leases was less than $0.1 million for thenine and three months September 30, 2009.

 

**8.**                                      DERIVATIVESAND HEDGING ACTIVITIES

** **

The Company from time to time enters into derivative financialinstruments, including interest rate exchange agreements (“Swaps”) and interestrate collar agreements (“Collars”), to manage its exposure to fluctuations ininterest rates. Under a fixed rate Swap, the Company pays a fixed rate on anotional amount to a bank, and the bank pays to the Company a variable rate onthe notional amount equal to the Company’s Eurodollar borrowing rate. A Collarestablishes two separate agreements: an upper limit or “Cap” and a lower limitor “Floor” for the Company’s Eurodollar borrowing rate.

 

During the nine months ended September 30, 2009 and 2008, theCompany had outstanding the aggregate notional amount of $550.0 million of cashflow interest rate transactions that were hedged against the Company’s variablerate senior debt.  During the nine monthsended September 30, 2008, a derivative rate hedging transaction with anotional amount of $30.0 million and an initial term of 10 years expired.

 

As of September 30, 2009, the Company had the following derivativesoutstanding:

 
| ** ** | ** ** | ** **        | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** **         | **Effective** | ** **         | ** **        | ** ** |
|------------|------------|-------------------|------------|---------------|---------------------|------------|------------|------------|------------|------------|------------|------------|------------|----------------|--------------------|---------------|--------------------|-------------------|------------|
| ** ** | ** ** | ** **        | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** **         | **Date That** | ** **         | **Notional**      | ** ** |
| **Type**   | ** ** | ** **        | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | **Fixed**  | ** ** | ** ** | ** ** | ** **     | ** **         | **Notional**  | ** **         | **Amount**        | ** ** |
| **Of**     | ** ** | **Notional**      | ** ** | **Effective** | ** **          | ** ** | ** ** | ** ** | ** ** | **LIBOR**  | ** ** | ** ** | ** ** | **Expiration** | ** **         | **Amount**    | ** **         | **After**         | ** ** |
| **Hedge**  | ** ** | **Amount**        | ** ** | **Date**      | ** **          | ** ** | ** ** | **Collar** | ** ** | **Rate**   | ** ** | ** ** | ** ** | **Date**       | ** **         | **Decreases** | ** **         | **Decrease**      | ** ** |
| ** ** | ** ** | **(amounts**      | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** **         | ** **    | ** **         | **(amounts**      | ** ** |
| ** ** | ** ** | **(in millions)** | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** **         | ** **    | ** **         | **(in millions)** | ** ** |
|       |       | ** **        |       |          |                |       |       |       |       |       |       |       |       |           |               |          |               | ** **        |       |
| Swap       |       | $                 | 225.0      |          | Jan. 28, 2008  |       |       |       | n/a        |       | 3.03       | %          |       |           | Jan. 28, 2011 |          | Jan. 28, 2010 |              | $          | 150.0 |   |
| Collar     |       |              | 100.0      |          | Feb. 28, 2008  |       | [          |       | Cap        |       | 4.00       | %          | ]          |           | Feb. 28, 2011 |          | n/a                |              | n/a        |   |
|       | Floor      |              | 2.14       | %             |                |
| Swap       |       |              | 125.0      |          | March 28, 2008 |       |       |       | n/a        |       | 2.91       | %          |       |           | Sept. 28, 2011     |          | n/a                |              | n/a        |   |
| Swap       |       |              | 100.0      |          | May 28, 2008   |       |       |       | n/a        |       | 3.62       | %          |       |           | May 28, 2012  |          | n/a                |              | n/a        |   |
| Total      |       | $                 | 550.0      |          |                |       |       |       |       |       |       |       |       |           |               |          |               |              |       |   |
|            |            |                   |            |               |                     |            |            |            |            |            |            |            |            |                |                    |               |                    |                   |            |  |  |

 

Thefollowing is a summary of the fair value of the derivatives outstanding as of September 30,2009 and December 31, 2008:

 

20

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| ** **                       | ** ** | ** **                  | ** ** | **Fair Value**             | ** ** |
|----------------------------------|------------|-----------------------------|------------|----------------------------|------------|
| ** **                       | ** ** | ** **                  | ** ** | **September 30,**     | ** ** | **December 31,** | ** ** |
| ** **                       | ** ** | **Balance Sheet**           | ** ** | **2009**                   | ** ** | **2008** | ** ** |
| ** **                       | ** ** | **Location**                | ** ** | **Asset (Liability)**      | ** ** |
| ** **                       | ** ** | ** **                  | ** ** | **(amounts in thousands)** | ** ** |
| **Designated Derivatives**       |       |                        |       |                       |       |   |   |
| Interest rate hedge transactions |       | Other Long Term Liabilities |       | $                          | (15,246    | ) | $ | (15,262 | ) |
|                                  |            |                             |            |                            |            |  |  |  |  |

 

The Company does not expect to reclassify to the statement ofoperations within the next 12 months any portion of the amount outstanding asof September 30, 2009.

 

Thefollowing is a summary of the gains (losses) related to the Company’s cash flowhedges for the nine months ended September 30, 2009 and 2008:

 
| **Nine Months Ended  September 30, 2009** | ** ** |
|------------------------------------------------|------------|
| **Type Of**                                    | ** ** | **Amount Of** | ** ** | **Location Of** | ** ** | **Amount Of** | ** ** | ** ** | ** ** | **Amount Of** | ** ** |
| **Derivative**                                 | ** ** | **Gain (Loss)** | ** ** | **Gain (Loss)** | ** ** | **Gain (Loss)** | ** ** | **Location Of** | ** ** | **Gain (Loss)** | ** ** |
| **Designated**                                 | ** ** | **Recognized In** | ** ** | **Reclassified** | ** ** | **Reclassified** | ** ** | **Gain (Loss)** | ** ** | **In Statement** | ** ** |
| **As A**                                       | ** ** | **Other** | ** ** | **From OCI To** | ** ** | **From OCI To** | ** ** | **In Statement** | ** ** | **Of Operations** | ** ** |
| **Cash Flow**                                  | ** ** | **Comprehensive** | ** ** | **Statement Of** | ** ** | **Statement Of** | ** ** | **Of** | ** ** | **Due To** | ** ** |
| **Hedge**                                      | ** ** | **Income (“OCI”)** | ** ** | **Operations** | ** ** | **Operations** | ** ** | **Operations** | ** ** | **Ineffectiveness** | ** ** |
| ** **                                     | ** ** | **(amounts in** | ** ** | ** ** | ** ** | **(amounts in** | ** ** | ** ** | ** ** | **(amounts in** | ** ** |
| ** **                                     | ** ** | **thousands)** | ** ** | ** ** | ** ** | **thousands)** | ** ** | ** ** | ** ** | **thousands)** | ** ** |
| ** **                                     | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |   |   |
| Interest Rate                                  |       | $ | 16 |   | Interest Expense |   | $ | — |   | Interest Expense |   | $ | — |   |
|                                                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| **Nine Months Ended  September 30, 2008** | ** ** |
|------------------------------------------------|------------|
| **Type Of**                                    | ** ** | **Amount Of** | ** ** | **Location Of** | ** ** | **Amount Of** | ** ** | ** ** | ** ** | **Amount Of** | ** ** |
| **Derivative**                                 | ** ** | **Gain (Loss)** | ** ** | **Gain (Loss)** | ** ** | **Gain (Loss)** | ** ** | **Location Of** | ** ** | **Gain (Loss)** | ** ** |
| **Designated**                                 | ** ** | **Recognized In** | ** ** | **Reclassified** | ** ** | **Reclassified** | ** ** | **Gain (Loss)** | ** ** | **In Statement** | ** ** |
| **As A**                                       | ** ** | **Other** | ** ** | **From OCI To** | ** ** | **From OCI To** | ** ** | **In Statement** | ** ** | **Of Operations** | ** ** |
| **Cash Flow**                                  | ** ** | **Comprehensive** | ** ** | **Statement Of** | ** ** | **Statement Of** | ** ** | **Of** | ** ** | **Due To** | ** ** |
| **Hedge**                                      | ** ** | **Income (“OCI”)** | ** ** | **Operations** | ** ** | **Operations** | ** ** | **Operations** | ** ** | **Ineffectiveness** | ** ** |
| ** **                                     | ** ** | **(amounts in** | ** ** | ** ** | ** ** | **(amounts in** | ** ** | ** ** | ** ** | **(amount in** | ** ** |
| ** **                                     | ** ** | **thousands)** | ** ** | ** ** | ** ** | **thousands)** | ** ** | ** ** | ** ** | **thousands)** | ** ** |
| ** **                                     | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |   |   |
| Interest Rate                                  |       | $ | 4,758 |   | Interest Expense |   | $ | — |   | Interest Expense |   | $ | 34 |   |
|                                                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Thefollowing is a summary of the gains (losses) related to the Company’s cash flowhedges for the three months ended September 30, 2009 and 2008:

 

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| **Three Months Ended  September 30, 2009** | ** ** |
|-------------------------------------------------|------------|
| **Type Of**                                     | ** ** | ** ** | ** ** | **Location Of** | ** ** | **Amount Of** | ** ** | ** ** | ** ** | **Amount Of** | ** ** |
| **Derivative**                                  | ** ** | ** ** | ** ** | **Gain (Loss)** | ** ** | **Gain (Loss)** | ** ** | **Location Of** | ** ** | **Gain (Loss)** | ** ** |
| **Designated**                                  | ** ** | **Amount Of** | ** ** | **Reclassified** | ** ** | **Reclassified** | ** ** | **Gain (Loss)** | ** ** | **In Statement** | ** ** |
| **As A**                                        | ** ** | **Gain (Loss)** | ** ** | **From OCI To** | ** ** | **From OCI To** | ** ** | **In Statement** | ** ** | **Of Operations** | ** ** |
| **Cash Flow**                                   | ** ** | **Recognized In** | ** ** | **Statement Of** | ** ** | **Statement Of** | ** ** | **Of** | ** ** | **Due To** | ** ** |
| **Hedge**                                       | ** ** | **OCI** | ** ** | **Operations** | ** ** | **Operations** | ** ** | **Operations** | ** ** | **Ineffectiveness** | ** ** |
| ** **                                      | ** ** | **(amounts in** | ** ** | ** ** | ** ** | **(amounts in** | ** ** | ** ** | ** ** | **(amounts in** | ** ** |
| ** **                                      | ** ** | **thousands)** | ** ** | ** ** | ** ** | **thousands)** | ** ** | ** ** | ** ** | **thousands)** | ** ** |
| ** **                                      | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |   |   |
| Interest Rate                                   |       | $ | (1,343 | ) | Interest Expense |   | $ | — |   | Interest Expense |   | $ | — |   |
|                                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| **Three Months Ended  September 30, 2008** | ** ** |
|-------------------------------------------------|------------|
| **Type Of**                                     | ** ** | ** ** | ** ** | **Location Of** | ** ** | **Amount Of** | ** ** | ** ** | ** ** | **Amount Of** | ** ** |
| **Derivative**                                  | ** ** | ** ** | ** ** | **Gain (Loss)** | ** ** | **Gain (Loss)** | ** ** | **Location Of** | ** ** | **Gain (Loss)** | ** ** |
| **Designated**                                  | ** ** | **Amount Of** | ** ** | **Reclassified** | ** ** | **Reclassified** | ** ** | **Gain (Loss)** | ** ** | **In Statement** | ** ** |
| **As A**                                        | ** ** | **Gain (Loss)** | ** ** | **From OCI To** | ** ** | **From OCI To** | ** ** | **In Statement** | ** ** | **Of Operations** | ** ** |
| **Cash Flow**                                   | ** ** | **Recognized In** | ** ** | **Statement Of** | ** ** | **Statement Of** | ** ** | **Of** | ** ** | **Due To** | ** ** |
| **Hedge**                                       | ** ** | **OCI** | ** ** | **Operations** | ** ** | **Operations** | ** ** | **Operations** | ** ** | **Ineffectiveness** | ** ** |
| ** **                                      | ** ** | **(amounts in** | ** ** | ** ** | ** ** | **(amounts in** | ** ** | ** ** | ** ** | **(amount in** | ** ** |
| ** **                                      | ** ** | **thousands)** | ** ** | ** ** | ** ** | **thousands)** | ** ** | ** ** | ** ** | **thousands)** | ** ** |
| ** **                                      | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |   |   |
| Interest Rate                                   |       | $ | (3,133 | ) | Interest Expense |   | $ | — |   | Interest Expense |   | $ | — |   |
|                                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Thefollowing table presents the accumulated derivative gains (losses) recorded inthe statements of other comprehensive income (loss) as of September 30,2009 and December 31, 2008:

 
| ** **                              | ** ** | **September 30,**     | ** ** | **December 31,** | ** ** |
|-----------------------------------------|------------|----------------------------|------------|-----------------------|------------|
| ** **                              | ** ** | **2009**                   | ** ** | **2008**              | ** ** |
| ** **                              | ** ** | **Assets (Liabilities)**   | ** ** |
| ** **                              | ** ** | **(amounts in thousands)** | ** ** |
|                                    |       |                       |       |                  |       |
| Accumulated  derivative unrealized loss |       | $                          | (15,246    | )                     | $          | (15,262 | ) |
|                                         |            |                            |            |                       |            |  |  |

 

**9.****                                      CONTINGENCIES,GUARANTOR ARRANGEMENTS AND COMMITMENTS**

 

***Contingencies***

 

The Company is subject to various outstanding claims which arise in theordinary course of business and to other legal proceedings.  In the opinion of management, any potentialliability of the Company which may arise out of, or with respect to, thesematters will not materially affect the Company’s financial position, results ofoperations or cash flows.

 

The Company uses a combination of insurance and self-insurancemechanisms to provide for the potential liabilities for workers’ compensation,general liability, property, director and officers’ liability, vehicleliability and employee health care benefits. Liabilities associated with therisks that are retained by the Company are estimated, in part, by consideringclaims experience, demographic factors, severity factors, outside expertise andother actuarial assumptions. Under one of these policies, the Company isrequired to maintain a letter of credit in the amount of $1.5 million.

 

During January 2007, a suit seeking various damages was filedagainst the Company relating to an on-air contest. The claims, which weresettled in October 2009, were fully covered by the Company’s insurancepolicies.  In connection with the settled claim, as of September 30,2009 the Company recorded an insurance claim receivable from its insurancecompany of $16.8 million along with a claim payable to the plaintiff of $16.8million.

 

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The Company could face increased costs in theform of fines and a greater risk that the Company could lose any one or moreof its broadcasting licenses if the FCC concludes that programmingbroadcast by a Company station was obscene, indecent or profane and suchconduct warrants license revocation.  The FCC’s authority to imposea fine for the broadcast of such material is $325,000 for a singleincident, with a maximum fine of up to $3.0 million for a continuing violation.In the past, the FCC has issued Notices of Apparent Liability anda Forfeiture Order with respect to several of the Company’s stationsproposing fines for certain programming which the FCC deemed to have beenindecent. These cases are the subject of pending administrative appeals. TheFCC has also commenced several other investigations based on allegationsreceived from the public that some of the Company’s stationsbroadcast indecent programming.  The Company has cooperated in theseinvestigations, which remain pending.  The FCC has also initiated aninvestigation into the suit related to the on-air contest as noted above.

 

The Company has filed on a timely basisrenewal applications for those radio stations with radio broadcasting licensesthat are subject to renewal with the FCC. The Company’s costs to renew itslicenses with the FCC are minimal and are expensed as incurred rather thancapitalized.  Certain licenses were notrenewed prior to the renewal date, which is not unusual. The Company continuesto operate these radio stations under their existing licenses until thelicenses are renewed.  The FCC may delaythe renewal pending the resolution of open inquiries. The affected stationsare, however, authorized to continue operations until the FCC acts upon therenewal application.

 

***GuarantorArrangements***

 

The Company enters into indemnificationagreements in the ordinary course of business and other agreements whichinclude indemnification provisions.  TheCompany believes the estimated fair value of these agreements is minimal andhas not recorded liabilities for these agreements as of September 30,2009.

 

***Commitments***

 

**Disposition Of MultipleTower Sites**

 

InSeptember 2009, the Company entered into an agreement to sell multipletower sites for up to $12.6 million in cash at closing and a contingentearn-out for up to $2.0 million in cash after 42 months. Concurrently withentering into this agreement, the Company agreed to lease space at many of thesetower sites for certain of the Company’s broadcasting operations.

 

TheCompany completed closing in September 2009 on eight tower sites and mayclose on several additional tower sites during the fourth quarter of 2009 (forfurther discussion, see Note 7, Financing Method Lease Obligations).

 

**Termination Of Pending Disposition Of RadioStation In Portland, Oregon**

 

In January 2009, the Company received$0.4 million as liquidated damages from a buyer as a result of the terminationby the buyer of an asset purchase agreement and related TBA with the Company.

 

**10.****                               SHAREHOLDERS’EQUITY**

 

***Dividend Equivalents***

 

The Company’s grants of RSUs include theright, upon vesting, to receive a cash payment equal to the aggregate amount ofdividends, if any, that a holder would have received on the shares of commonstock underlying their RSUs if such RSUs had been vested during the period. Forthe nine months ended September 30, 2009 and 2008, the Company paid $0.8million and $0.9 million, respectively, to the holders of RSUs that vestedduring these periods. The long-term dividend equivalent amount, accrued andunpaid on unvested RSUs, was $0.3 million and $1.1 million as of September 30,2009 and December 31, 2008, respectively, and is included under otherlong-term liabilities in the balance sheet. The short-term dividend equivalentamount, accrued and unpaid on unvested RSUs, was $1.5 million and $1.6 millionas of September 30, 2009 and December 31, 2008, respectively, and isincluded under other current liabilities in the balance sheet. The Companyrecognizes the tax benefit for income tax purposes as a reduction to its incometax expense (before any adjustment for a valuation allowance) rather than as anincrease to its paid-in capital as all dividend equivalent payments are made tothe holders of RSUs upon the later of vesting of the units or termination ofthe deferral period for previously vested units.

 

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***Repurchases OfVested RSUs***

 

Upon vesting, unless an employee elects topay the tax withholding obligation in cash, the Company withholds shares ofstock in an amount sufficient to cover the employee’s tax withholding obligations.  As a result, during the nine months ended September 30,2009 and 2008, the Company was deemed to have repurchased 0.1 million shares ofstock during each period.

 

***Share RepurchasePrograms***

 

The Company’s share repurchase programexpired on June 30, 2009.

 

During the nine months ended September 30,2009, the Company repurchased 0.7 million shares in the amount of $0.9 millionat an average price of $1.34 per share. During the nine months ended September 30, 2008, the Companyrepurchased 1.3 million shares in the amount of $13.3 million at an averageprice of $10.18 per share.

 

***Employee Stock Purchase Plan***

 

The Company’s employee stock purchase planexpired on March 31, 2009 and was not renewed.

 

**11.****                               DEFERREDCOMPENSATION PLANS**

 

The Companyprovides certain of its employees and the Board of Directors with anopportunity to defer a portion of their compensation on a tax-favored basis.The obligations by the Company to pay these benefits under these plansrepresent unsecured general obligations that rank equally with the Company’sother unsecured indebtedness. Deferred compensation expense is allocated tocorporate general and administrative expenses and station operating expenses.

 

As of September 30,2009 and December 31, 2008, $5.2 million and $3.7 million, respectively,were deferred under these plans and were included in other long-termliabilities. For the nine months and three months ended September 30,2009, the Company recorded an increase in deferred compensation expense of $0.8million and $0.6 million, respectively. For the nine months and three monthsended September 30, 2008, the Company recorded a decrease in deferredcompensation expense of $0.7 million and $0.4 million, respectively.

 

**12.****                               NETINCOME (LOSS) PER SHARE**

 

***Nine Months Ended September 30, 2009 and2008***

 

The effect of stock options and RSUs in thecalculation of net income (loss) per share, using the treasury stock method,was anti-dilutive for the nine months ended September 30, 2009 and September 30,2008.

 

The following table sets forth the computations of basic and dilutednet loss per share for the nine months ended September 30, 2009 and 2008:

 

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| ** **                          | ** ** | **Nine Months Ended**                                        | ** ** |
|-------------------------------------|------------|--------------------------------------------------------------|------------|
| ** **                          | ** ** | **September 30, 2009**                                  | ** ** | **September 30, 2008** | ** ** |
| ** **                          | ** ** | **(amounts in thousands, except  share and per share data)** | ** ** |
| ** **                          | ** ** | ** **                                                   | ** ** | ** ** | ** ** | **Net Loss** | ** ** | ** ** | ** ** | ** ** | ** ** | **Net Loss** | ** ** |
| ** **                          | ** ** | **Net Loss**                                                 | ** ** | **Shares** | ** ** | **Per Share** | ** ** | **Net Loss** | ** ** | **Shares** | ** ** | **Per Share** | ** ** |
| Basic net loss per common  share:   |       |                                                         |       |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing  operations    |       | $                                                            | (18,302    | ) | 35,327,093 |   | $ | (0.52 | ) | $ | (83,350 | ) | 36,990,089 |   | $ | (2.25 | ) |
| Loss from discontinued  operations  |       | —                                                       |       | — |   | — |   | (3,497 | ) | — |   | (0.10 | ) |
| Net loss                            |       | $                                                            | (18,302    | ) | 35,327,093 |   | $ | (0.52 | ) | $ | (86,847 | ) | 36,990,089 |   | $ | (2.35 | ) |
| Impact of equity awards             |       |                                                         |       | — |   |   |   |   |   | — |   |   |   |
| Diluted net loss per  common share: |       |                                                         |       |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing  operations    |       | $                                                            | (18,302    | ) | 35,327,093 |   | $ | (0.52 | ) | $ | (83,350 | ) | 36,990,089 |   | $ | (2.25 | ) |
| Loss from discontinued  operations  |       | —                                                       |       | — |   | — |   | (3,497 | ) | — |   | (0.10 | ) |
| Net loss                            |       | $                                                            | (18,302    | ) | 35,327,093 |   | $ | (0.52 | ) | $ | (86,847 | ) | 36,990,089 |   | $ | (2.35 | ) |

 

For the nine months endedSeptember 30, 2009 and 2008, 0.7 million and less than 0.1 millionincremental shares, respectively, were not included in diluted net loss pershare as the shares were anti-dilutive when reporting a net loss.

 

In computing the incremental shares under thetreasury stock method for the nine months ended September 30, 2009, 0.8million RSUs (including 0.1 million RSUs with market and service conditions, ashalf of the RSUs with market conditions were not satisfied as of September 30,2009) and options to purchase 1.2 million shares of common stock at a range of$2.20 to $48.21, were excluded from the computation as they were anti-dilutive.

 

In computing the incremental shares under thetreasury stock method for the nine months ended September 30, 2008, 1.4million RSUs (including 0.3 million RSUs with market and service conditions asthe market conditions were not satisfied as of September 30, 2008) andoptions to purchase 2.5 million shares of common stock at a range of $8.92 to$52.05, were excluded from the computation as they were anti-dilutive.

 

***Three Months Ended September 30, 2009and 2008***

 

The effect of stock options and RSUs in the calculation of net incomeper share, using the treasury stock method, was dilutive for the three monthsended September 30, 2009 and September 30, 2008.

 

The following table sets forth the computations of basic and dilutednet income per share for the three months ended September 30, 2009 and2008:

 
| ** **                            | ** ** | **Three Months Ended**                                       | ** ** |
|---------------------------------------|------------|--------------------------------------------------------------|------------|
| ** **                            | ** ** | **September 30, 2009**                                  | ** ** | **September 30, 2008** | ** ** |
| ** **                            | ** ** | **(amounts in thousands, except share and per  share data)** | ** ** |
| ** **                            | ** ** | ** **                                                   | ** ** | ** ** | ** ** | **Net Income** | ** ** | ** ** | ** ** | ** ** | ** ** | **Net Income** | ** ** |
| ** **                            | ** ** | **Net Income**                                               | ** ** | **Shares** | ** ** | **Per Share** | ** ** | **Net Income** | ** ** | **Shares** | ** ** | **Per Share** | ** ** |
| Basic net income per  common share:   |       |                                                         |       |   |   |   |   |   |   |   |   |   |   |
| Income from continuing  operations    |       | $                                                            | 18,275     |   | 35,291,969 |   | $ | 0.52 |   | $ | 3,774 |   | 36,366,713 |   | $ | 0.11 |   |
| Income from discontinued  operations  |       | —                                                       |       | — |   | — |   | 480 |   | — |   | 0.01 |   |
| Net income                            |       | $                                                            | 18,275     |   | 35,291,969 |   | $ | 0.52 |   | $ | 4,254 |   | 36,366,713 |   | $ | 0.12 |   |
| Impact of equity awards               |       |                                                         |       | 1,328,644 |   |   |   |   |   | 8,160 |   |   |   |
| Diluted net income per  common share: |       |                                                         |       |   |   |   |   |   |   |   |   |   |   |
| Income from continuing  operations    |       | $                                                            | 18,275     |   | 36,620,613 |   | $ | 0.50 |   | $ | 3,774 |   | 36,374,873 |   | $ | 0.11 |   |
| Income from discontinued  operations  |       | —                                                       |       | — |   | — |   | 480 |   | — |   | 0.01 |   |
| Net income                            |       | $                                                            | 18,275     |   | 36,620,613 |   | $ | 0.50 |   | $ | 4,254 |   | 36,374,873 |   | $ | 0.12 |   |

 

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In computing the incremental shares under thetreasury stock method for the three months ended September 30, 2009, 0.7million RSUs (including 0.1 million RSUs with market and service conditions, ashalf of the RSUs with market and service conditions were not satisfied as of September 30,2009) and options to purchase 0.1 million shares of common stock at a range of$3.63 to $48.21, were excluded from the computation as they were anti-dilutive.

 

In computing the incremental shares under thetreasury stock method for the three months ended September 30, 2008, 1.4million RSUs (including 0.3 million RSUs with market and service conditions asthe market conditions were not satisfied as of September 30, 2008) andoptions to purchase 2.5 million shares of common stock at a range of $5.98 to$52.05, were excluded from the computation as they were anti-dilutive.

 

**13.****                               INCOMETAXES**

 

***Effective Tax Rate -Overview***

 

The Company’sincome tax rates for the nine months and three months ended September 30,2009 were based on the estimated annual effective tax rate for2009 (excluding the impact of a valuation allowance for deferred tax assets asdescribed below), and includes: (1) the effect of permanent differencesbetween income subject to income tax for book and tax purposes; and (2) anydiscrete items of tax. The Company’seffective tax rate, which can fluctuate from quarter to quarter, can be higherthan the federal statutory rate of 35% primarily as a result of the provisionfor state taxes (net of a federal tax deduction).

 

The Company’s effective income tax rate maybe impacted by: (1) changes in the level of income in any of the Company’staxing jurisdictions; (2) changes in the statutes and rules applicableto taxable income in the jurisdictions in which the Company operates; (3) changesin the expected outcome of income tax audits; (4) changes in the estimateof expenses that are not deductible for tax purposes; (5) income taxes incertain states where the states’ current taxable income is dependent on factorsother than the Company’s consolidated net income; and (6) the effect ofrecording changes in the Company’s liabilities for uncertain tax positions.

 

Animpairment loss will result in an income tax benefit during the period incurred(before any adjustment for a deferred tax asset valuation allowance) as theamortization of broadcasting licenses and goodwill is deductible for income taxpurposes.

 

**Tax Rate For TheNine Months And Three Months Ended September 30, 2009**

** **

The effective income tax rates (benefits)were 4.0% and 2.4% for the nine months and three months ended September 30,2009, respectively. For the nine and three months ended September 30,2009, the effective income tax rates reflect an increase and a decrease,respectively, in the deferred tax asset valuation allowance for the reasons asdescribed below under Valuation Allowance For Deferred Tax Assets (afterconsideration for any net deferred tax liabilities associated withnon-amortizable assets such as broadcasting licenses and goodwill).

 

**Tax Rate For The NineMonths And Three Months Ended September 30, 2008**

** **

The effective income tax rates (benefits)were (27.9%) and 84.1% for the nine months and three months ended September 30,2008, respectively. The effective income tax rates for the nine and three monthsended September 30, 2008 were negatively impacted by an increase in thedeferred tax asset valuation allowance.

 

***Deferred TaxLiabilities***

 

As of September 30,2009 and as of December 31, 2008, deferred tax liabilities were fully offset by deferred tax assets. Theincome tax accounting process to determine the deferred tax liabilitiesinvolves estimating all temporary differences between the tax and financialreporting bases of the Company’s assets and liabilities, based on enacted taxlaws and statutory tax rates applicable to the period in which the differencesare expected to affect taxable income. The Company estimated the currentexposure by assessing the temporary differences and computing the provision forincome taxes by applying the estimated effective tax rate to income.

 

***Valuation AllowanceFor Deferred Tax Assets***

 

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The Company increased its valuation allowanceby $4.4 million to $71.8 million as of September 30, 2009 from $67.4million as of December 31, 2008, primarily as a result of an increase inits deferred tax assets as of September 30, 2009 as compared to December 31,2008. As a result of cumulative losses incurred by the Company since 2006, adeferred tax asset valuation allowance was established due to the uncertaintythat the deferred tax assets would be realized in future years (afterconsideration for any net deferred tax liabilities associated withnon-amortizable assets such as broadcasting licenses and goodwill). Thevaluation allowance as of September 30, 2009 and December 31, 2008includes an income tax benefit recorded in other comprehensive income (loss) of$6.0 million for each period.

 

The Company has also considered futuretaxable income and ongoing prudent and feasible tax-planning strategies inassessing the need for the valuation allowance. On a quarterly basis, managementassesses whether it remains more likely than not that the deferred tax assetswill not be realized.  In theevent the Company determines at a future time that it could realize itsdeferred tax assets in excess of the net amount recorded, the Company willreduce its deferred tax asset valuation allowance and decrease income taxexpense in the period when the Company makes such determination.

 

***Income Tax PaymentsAnd Refunds***

 

The Company made income tax payments of $0.2 million and less than $0.1million for the nine months ended September 30, 2009 and 2008, respectively.  The Company received income tax refunds ofless than $0.1 million and $14.5 million for the nine months ended September 30,2009 and 2008, respectively.

 

***Liabilities ForUncertain Tax Positions***

 

For the nine and three months ended September 30,2009, the Company recorded increases of $0.5 million and $0.4 million,respectively, to income tax expense, which amounts consisted primarily of taxliabilities for the current year (including interest and principal), partiallyoffset by the expiration of statutes of limitation for certain tax liabilities(including interest and principal). For the nine and three months ended September 30,2008, the Company recorded income tax expense of less than $0.1 million foreach period, which amounts consisted primarily of interest and penalties. TheCompany’s liabilities for uncertain tax positions as of September 30, 2009and December 31, 2008 were $4.8 million and $4.3 million, respectively,which were recorded in the balance sheets as long-term tax liabilities. TheCompany reviews its estimates on a quarterly basis, and any change in itsliabilities for uncertain tax positions will result in an adjustment to itsincome tax expense in the statement of operations in each period measured. Itis reasonably possible that the Company’s gross unrecognized tax benefitsbalance (exclusive of interest and penalties) may change within the next twelvemonths by a range from zero to $1.2 million. This change would be primarily due to the expiration of various statutesof limitation, offset by additional accruals of tax for existing liabilities,

 

***Federal And StateIncome Tax Audits***

 

The Company is subject to federal and stateincome tax audits from time to time that could result in proposed assessments.The Company cannot predict with certainty how these audits will be resolved andwhether the Company will be required to make additional tax payments, which mayor may not include penalties and interest. The Company is currently under auditby the Internal Revenue Service for the tax years of 2004 through 2007. Formost states where the Company conducts business, the Company is subject toexamination for the preceding three to six years. In certain states, the periodcould be longer.

 

**14.****                               ACCOUNTSRECEIVABLE AND RELATED ALLOWANCE FOR DOUBTFUL ACCOUNTS**

 

Accountsreceivable are primarily attributable to advertising that has aired on theCompany’s radio stations, but for which payment has not been collected, net ofagency commissions and an estimated allowance for doubtful accounts. Estimates ofthe allowance for doubtful accounts are recorded based on management’s judgmentof the collectability of the accounts receivable based on historicalinformation, relative improvements or deteriorations in the age of the accountsreceivable and changes in current economic conditions.

 

The accounts receivable balances and reservefor doubtful accounts as of September 30, 2009 and December 31, 2008are presented in the following table:

 

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| ** **                                                   | ** ** | **September 30,**      | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------|------------|-----------------------------|------------|-----------------------|------------|
| ** **                                                   | ** ** | **2009**                    | ** ** | **2008**              | ** ** |
| ** **                                                   | ** ** | **(amounts  in thousands)** | ** ** |
| Accounts  receivable                                         |       | $                           | 77,966     |                  | $          | 79,830 |   |
| Allowance  for doubtful accounts                             |       | (3,392                      | )          | (4,476                | )          |
| Accounts  receivable, net of allowance for doubtful accounts |       | $                           | 74,574     |                  | $          | 75,354 |   |

 

As of September 30,2009 and December 31, 2008, the Company recorded accounts receivablecredits in the amounts of $1.8 million and $1.9 million, respectively, whichamounts are included in the balance sheets under other current liabilities.

 

As of September 30,2009 and December 31, 2008, the Company recorded: (1) short-termunearned revenues of $1.0 million and $1.4 million, respectively, which amountsare included in the balance sheets under other current liabilities; and (2) long-termunearned revenues of $0.2 million and $0.7 million, respectively, which amountsare included in the balance sheets under other long-term liabilities.

 

**15.****                               DISCONTINUEDOPERATIONS**

 

***Discontinued Operations***

 

The Company applied the accounting guidancefor the disposal of assets to: (1) the disposition on July 14, 2008of radio broadcasting assets in the Rochester, New York, market; (2) thedisposition on March 14, 2008 of radio broadcasting assets in the Cincinnati,Ohio, market and in the Seattle, Washington, market; and (3) thedisposition on January 15, 2008 of a radio station in Austin, Texas.  This requires that in a period in which acomponent of an entity has been disposed of or is classified as held for sale,the income statement of a business enterprise for current and prior periodsshall report the results of operations of the component, including any gain orloss recognized, in discontinued operations.

 

The Company did not report as discontinuedoperations the disposition during the first quarter of 2008 of the radiostations in Cincinnati, Ohio, as there was no activity in this market by theCompany since the Company’s acquisition of these stations during the fourthquarter of 2007 (these stations were operated by a third party pursuant to aTBA for the period from February 26, 2007 through March 14, 2008).

 

The Company did not report as discontinuedoperations the disposition during the first quarter of 2008 of the radiostation in the Austin market or the disposition of the three radio stations inthe Seattle market as these operations did not meet the criteria for thereclassification of operating results to discontinued operations due to theexpected migration of cash flows from the disposed stations to otherCompany-owned radio stations.  Therefore,the results remain classified in income from continuing operations.

 

The Company did not allocate any interestexpense for the periods presented, as no debt was required to be repaid underthe Company’s Bank Facility as a result of the disposition of these radiostation assets.

 

Selected financial information related todiscontinued operations in the Rochester market for the nine months and threemonths ended September 30, 2008 is as follows:

 

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| ** **                                                                 | ** ** | **Nine Months Ended**       | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------------|------------|------------------------|------------|
| ** **                                                                 | ** ** | **September 30, 2008** | ** ** |
| ** **                                                                 | ** ** | **(amounts in thousands)**  | ** ** |
|                                                                       |       |                        |       |                   |       |
| Net broadcast revenues                                                     |       | $                           | 1,440      |                   | $          | — |   |
|                                                                       |       |                        |       |                   |       |
| Station operating (income)  expenses                                       |       | 1,456                       |       | (21                    | )          |
| Time brokerage agreement  income                                           |       | (45                         | )          | (45                    | )          |
| Gain on disposition of  assets                                             |       | (725                        | )          | (725                   | )          |
| Impairment loss                                                            |       | 6,675                       |       | —                 |       |
| Total operating (income)  expense                                          |       | 7,361                       |       | (791                   | )          |
| Income (loss) before  income taxes (benefit)                               |       | (5,921                      | )          | 791                    |       |
| Income taxes (benefit)                                                     |       | (2,424                      | )          | 311                    |       |
| Income (loss) from  discontinued operations, net of income taxes (benefit) |       | $                           | (3,497     | )                      | $          | 480 |   |

 

During the first quarter of 2008, the Companyreviewed its carrying amount for the Rochester assets held for sale at thattime and determined that an aggregate impairment loss for broadcasting licensesand goodwill of $6.7 million was necessary due to: (1) the continueddecline in advertising revenues; (2) the filing of an application with theFCC to place these stations into a disposition trust; and (3) thepotential for a forced sale by the disposition trustee.

 

**16.****                               FAIRVALUE MEASUREMENTS**

 

EffectiveJanuary 1, 2008, the Company began providing enhanced disclosures aboutassets and liabilities carried at fair value.

 

The fair value is the price that would bereceived to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date (exit price).The Company utilizes market data or assumptions that market participants woulduse in pricing the asset or liability, including assumptions about risk and therisks inherent in the inputs to the valuation technique. These inputs can bereadily observable, market corroborated, or generally unobservable. The Companyutilizes valuation techniques that maximize the use of observable inputs andminimize the use of unobservable inputs. The fair value hierarchy prioritizesthe inputs used to measure fair value. The hierarchy gives the highest priorityto unadjusted quoted prices in active markets for identical assets orliabilities (level 1 measurement) and the lowest priority to unobservableinputs (level 3 measurement).

 

***Recurring Fair Value Measurements***

 

The following tables set forth, by levelwithin the fair value hierarchy, the Company’s financial assets and liabilitiesthat were accounted for at fair value on a recurring basis as of September 30,2009 and December 31, 2008. The financial assets and liabilities areclassified in their entirety based on the lowest level of input that issignificant to the fair value measurement. The Company’s assessment of thesignificance of a particular input to the fair value measurement requiresjudgment and may affect the valuation of fair value assets and liabilities andtheir placement within the fair value hierarchy levels.

 

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|                            | ** ** | **As Of September 30, 2009**              |       |
|---------------------------------|------------|------------------------------------------------|------------|
|                            | ** ** | **Value Measurements At Reporting Date Using** |       |
| ** **                      |       |                                           |       | **Quoted  Prices** |   |   |   |   |   |
| ** **                      |       |                                           |       | **In  Active** |   |   |   |   |   |
| ** **                      | ** ** | ** **                                     |       | **Markets  For** |   | **Significant** |   |   |   |
| ** **                      | ** ** | ** **                                     | ** ** | **Identical** |   | **Other** |   | **Significant** |   |
| ** **                      | ** ** | ** **                                     | ** ** | **Assets  Or** |   | **Observable** |   | **Unobservable** |   |
| ** **                      | ** ** | ** **                                     | ** ** | **Liabilities** |   | **Inputs** |   | **Inputs** |   |
| **Description**                 | ** ** | **Total**                                      | ** ** | **(Level 1)** | ** ** | **(Level 2)** | ** ** | **(Level 3)** | ** ** |
| ** **                      | ** ** | **Assets (Liabilities)**                       | ** ** |
| ** **                      | ** ** | **(amounts in thousands)**                     | ** ** |
| ** **                      | ** ** | ** **                                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Assets**                      | ** ** | ** **                                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Available For Sale Securities   |       | $                                              | 1,384      |   | $ | — |   | $ | — |   | $ | 1,384 |   |
|                            |       |                                           |       |   |   |   |   |   |   |
| **Liabilities**                 |       |                                           |       |   |   |   |   |   |   |
| Interest Rate Cash Flow  Hedges |       | $                                              | (15,246    | ) | $ |   | $ | (15,246 | ) | $ | — |   |
|                            |       |                                           |       |   |   |   |   |   |   |
|                            | ** ** | **As Of December 31, 2008**               |       |
|                            | ** ** | **Value Measurements At Reporting Date Using** |       |
| ** **                      |       |                                           |       | **Quoted  Prices** |   |   |   |   |   |
| ** **                      |       |                                           |       | **In Active** |   |   |   |   |   |
| ** **                      | ** ** | ** **                                     |       | **Markets  For** |   | **Significant** |   |   |   |
| ** **                      | ** ** | ** **                                     | ** ** | **Identical** |   | **Other** |   | **Significant** |   |
| ** **                      | ** ** | ** **                                     | ** ** | **Assets  Or** |   | **Observable** |   | **Unobservable** |   |
| ** **                      | ** ** | ** **                                     | ** ** | **Liabilities** |   | **Inputs** |   | **Inputs** |   |
| **Description**                 | ** ** | **Total**                                      | ** ** | **(Level 1)** | ** ** | **(Level 2)** | ** ** | **(Level 3)** | ** ** |
| ** **                      | ** ** | **Assets (Liabilities)**                       | ** ** |
| ** **                      | ** ** | **(amounts in thousands)**                     | ** ** |
| ** **                      | ** ** | ** **                                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Assets**                      | ** ** | ** **                                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Available For Sale  Securities  |       | $                                              | 1,399      |   | $ | — |   | $ | — |   | $ | 1,399 |   |
|                            |       |                                           |       |   |   |   |   |   |   |
| **Liabilities**                 |       |                                           |       |   |   |   |   |   |   |
| Interest Rate Cash Flow  Hedges |       | $                                              | (15,262    | ) | $ |   | $ | (15,262 | ) | $ | — |   |

 

For the Company’s interestrate hedges, the Company pays a fixed rate and receives a variable interestrate that is observable based upon a forward interest rate curve and istherefore considered a level 2 item (based on London Interbank Offered Rate, or“LIBOR”).

 

For the Company’s assetsmeasured at fair value on a recurring basis using significant unobservableinputs (level 3), the following amounts in thousands are a reconciliation ofthe activity during each of the quarters within the nine months ended September 30,2009 and 2008:

 

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| ** **                                                | ** ** | **Available**  | ** ** |
|-----------------------------------------------------------|------------|----------------|------------|
| ** **                                                | ** ** | **For Sale**   | ** ** |
| ** **                                                | ** ** | **Securities** | ** ** |
| **Assets**                                                | ** ** | ** **     | ** ** |
| Balance  as of December 31, 2008                     |       | $              | 1,399      |   |
| Recovery  of investment                                   |       | (6             | )          |
| Balance  as of March 31, 2009 and June 30, 2009 |       | 1,393          |       |
| Recovery  of investment                                   |       | (9             | )          |
| Balance  as of September 30, 2009                    |       | $              | 1,384      |   |
|                                                      |       |           |       |
| ** **                                                | ** ** | **Available**  | ** ** |
| ** **                                                | ** ** | **For  Sale**  | ** ** |
| ** **                                                | ** ** | **Securities** | ** ** |
| **Assets**                                                | ** ** | ** **     | ** ** |
| Balance  as of December 31, 2007                     |       | $              | 1,557      |   |
| Purchases                                                 |       | 6              |       |
| Balance  as of March 31, 2008 and June 30, 2008 |       | 1,563          |       |
| Impairment  of investment value                           |       | (155           | )          |
| Balance  as of September 30, 2008                    |       | $              | 1,408      |   |

 

***Non-Recurring Fair Value Measurements***

 

The Company has certain assets that aremeasured at fair value on a non-recurring basis under the circumstances andevents described in Note 3, Intangible Assets And Goodwill, and are adjusted tofair value only when the carrying values are more than the fair values.  The categorization of the framework used to pricethe assets is considered a level 3, due to the subjective nature of theunobservable inputs used to determine the fair value (see Note 3, IntangibleAssets And Goodwill, for the disclosure of certain key assumptions used todevelop the unobservable inputs).

 

Included in the following table are the majorcategories of assets measured at fair value on a non-recurring basis as of September 30,2009, along with the impairment loss recognized on the fair value measurementfor the nine and three months ended September 30, 2009:

 
| **Non-Recurring Assets Subject To Fair Value  Measurement** |       |
|-------------------------------------------------------------|------------|
|                                                        | ** ** | **As Of September 30, 2009** |   |   |   |   |   |
|                                                        | ** ** | **Fair Value Measurements Using** |   |   |   |   |   |
|                                                        | ** ** | ** ** |   | **Quoted Prices** |   |   |   |   |   |   |   |   |   |
|                                                        | ** ** | ** ** |   | **In Active** |   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                  | ** ** | ** ** | ** ** | **Markets For** |   | **Significant** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                  | ** ** | ** ** | ** ** | **Identical** | ** ** | **Other** | ** ** | **Significant** | ** ** | **Nine Months** | ** ** | **Three Months** | ** ** |
| ** **                                                  | ** ** | ** ** | ** ** | **Assets Or** | ** ** | **Observable** | ** ** | **Unobservable** | ** ** | **Ended** | ** ** | **Ended** | ** ** |
| ** **                                                  | ** ** | ** ** | ** ** | **Liabilities** | ** ** | **Inputs** |   | **Inputs** |   | **September 30, 2009** |   |
| **Description**                                             | ** ** | **Total** | ** ** | **(Level 1)** | ** ** | **(Level 2)** | ** ** | **(Level 3)** |   | **Impairment Loss** |   |
| ** **                                                  | ** ** | **(amounts in thousands)** | ** ** |
| Net property and equipment                                  |       | $ | 73,509 |   | $ | — |   | $ | — |   | $ | 73,509 |   | $ | — |   | $ | — |   |
| Other intangibles, net                                      |       | 1,708 |   | — |   | — |   | 1,708 |   | — |   | — |   |
| Goodwill                                                    |       | 38,168 |   | — |   | — |   | 38,168 |   | 6,882 |   | — |   |
| Radio broadcasting  licenses                                |       | 707,852 |   | — |   | — |   | 707,852 |   | 60,794 |   | — |   |
|                                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                       |       | $ | 821,237 |   | $ | — |   | $ | — |   | $ | 821,237 |   | $ | 67,676 |   | $ | — |   |

 

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***Fair Value Of Financial Instruments SubjectTo Disclosure***

 

The estimated fair value of financialinstruments is determined using the best available market information andappropriate valuation methodologies. Considerable judgment is necessary, however, in interpreting market datato develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative ofthe amounts that the Company could realize in a current market exchange, or thevalue that ultimately will be realized upon maturity or disposition.  The use of different market assumptions mayhave a material effect on the estimated fair value amounts.

 

The following methods and assumptions wereused to estimate the fair value of financial instruments:

 

(1) Cash and cash equivalents, accountsreceivable and accounts payable, including accrued liabilities: The carryingamount of these assets and liabilities approximates fair value because of theshort maturity of these instruments.

 

(2) Senior debt (see Note 5, SeniorDebt): As of September 30, 2009 and December 31, 2008, the fair valueof the Company’s senior debt under the Company’s Bank Facility was $697.7million and $700.3 million, respectively, while the carrying value was $758.0million and $750.0 million, respectively. The Company’s determination of thefair value was based on a risk adjusted rate.

 

(3) 7.625% Senior Subordinated Notes(see Note 6): As of September 30, 2009 and December 31 ̧ 2008, thefair value of the Company’s Notes was $20.5 million and $45.8 million,respectively, while the carrying value was $23.9 million and $83.5 million,respectively. The fair values were based on available market prices.

 

(4) Outstanding Letters of Credit: TheCompany had a letter of credit outstanding in the amount of $1.5 million as of September 30,2009 and 2008. The Company does not believe it is practicable to estimate thefair value of this financial instrument and does not expect any material lossfrom the resolution since performance is not likely to be required.

 

**17.**                               DEFERRED CHARGES AND OTHER ASSETS AND OTHER LONG-TERM LIABILITIES

** **

**Deferredcharges and other assets, including definite-lived intangible assets, consistof the following:**

** **
| ** **                                        | ** ** | **September 30,**     | ** **  | **December 31,** | ** ** |
|---------------------------------------------------|------------|----------------------------|-------------|-----------------------|------------|
| ** **                                        | ** ** | **2009**                   | ** **  | **2008**              | ** ** |
| ** **                                        | ** ** | **(amounts in thousands)** | ** **  |
| Debt issuance costs, net                          |       | $                          | 4,139       |                  | $          | 5,775 |   |
| Software costs, net                               |       | 1,556                      |        | 2,454                 |       |
| Prepaid assets - long term                        |       | 1,463                      |        | 1,600                 |       |
| Deferred contracts and  other agreements, net     |       | 768                        |        | 857                   |       |
| Leasehold premium, net                            |       | 728                        |        | 795                   |       |
| Deposits - long term                              |       | 353                        |        | —                |       |
| Advertiser lists and  customer relationships, net |       | 51                         |        | 80                    |       |
| Other                                             |       | 153                        |        | 147                   |       |
|                                              |       | $                          |  9,211 |                  | $          | 11,708 |   |

 

As of September 30, 2009 and December 31,2008, the deferred rent liabilities were $3.5 million and $3.4 million,respectively, and are included in other under long-term liabilities.

 

**18.**                               SUBSEQUENT EVENTS

** **

**The Company has performed anevaluation of subsequent events through November 9, 2009, which is the**

 

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**date the financial statements wereissued.**

 

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**ITEM 2.****                                                    ****Management’sDiscussion And Analysis Of Financial Condition And Results Of Operations**

 

In preparing the discussion and analysis contained in this Item 2, wepresume that readers have read or have access to the discussion and analysiscontained in our Annual Report on Form 10-K filed with theSecurities and Exchange Commission (the “SEC”) on February 26, 2009. Inaddition, you should read the following discussion and analysis of ourfinancial condition and results of operations in conjunction with ourconsolidated financial statements and related notes included elsewhere in thisreport. The following results of operations include a discussion of the nine andthree months ended September 30, 2009 as compared to the nine and threemonths ended September 30, 2008. Our results of operations during the relevant periods: (i) representthe operations of the radio stations: (1) owned and operated by us; (2) operatedby us pursuant to time brokerage agreements (“TBAs”); and (ii) excludethose radio stations owned by us but operated by others pursuant to TBAs.

 

We discuss netrevenues, station operating expenses and operating income by comparing theperformance of stations owned or operated by us throughout a relevant period tothe performance of those same stations in the prior period whether or not ownedor operated by us. We use these comparisons to assess the performance of ouroperations by analyzing the effect of acquisitions and dispositions of stationson net revenues and station operating expenses throughout the periods measured.

 

**Resultsof Operations**

 

The followingsignificant factors affected our results of operations for the nine monthsended September 30, 2009 as compared to the nine months ended September 30,2008:

 

**Acquisitions**

** **

·                  On March 14, 2008, we acquiredthree radio stations in San Francisco, California, that in 2008 increased ourdepreciation and amortization expense as we acquired amortizable assets withlives of a short duration.

 

**Dispositions**

 

·                  On July 14, 2008, we sold three of oureight Rochester, New York, radio stations, which the buyer began operating on May 1,2008 under a TBA with us, for net cash proceeds of $12.2 million. The resultsfor these stations were recognized as discontinued operations.

 

·                  On March 14, 2008, we sold three of ourseven Seattle, Washington, radio stations and recognized a gain of $10.0million on the disposition of these assets.

 

·                  On January 15, 2008, we sold an Austin,Texas, radio station for $20.0 million in cash.

 

**Financing**

 

·                  Ourinterest expense decreased due to: (1) a decrease in interest rates; (2) adecrease in our outstanding debt; and (3) the redemption of a portion ofour 7.625% Senior Subordinated Notes (“Notes”) that had a higher interest ratethan the rate under our senior debt.

 

·                  Duringthe nine months ended September 30, 2009, we repurchased $59.6 million ofour Notes and recognized a net gain on extinguishment of debt of $19.3 million(net of deferred financing expenses). During the nine months ended September 30,2008, we repurchased $58.0 million of our Notes and recognized a net gain onextinguishment of debt of $4.0 million.

 

**Other**

 

·                  During thesecond quarters of 2009 and 2008, we recorded an impairment loss of $67.7 and$184.6 million, respectively, in connection with our review of certainintangible assets.

 

·                  Since the thirdquarter of 2008, we have increased the valuation allowance for our net deferredtax assets (after consideration for any net deferred tax liabilities associatedwith non-amortizable assets such as 

 

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broadcastinglicenses and goodwill) due to the cumulative losses incurred by us since 2006,which caused uncertainty as to the realization of the deferred tax assets infuture years.

 

·                  During thesecond quarter of 2008, we recovered $3.5 million from our insurance companyfor damages resulting from Hurricane Katrina.

 

·                  During the firstquarter of 2008, we reviewed our carrying amount for the Rochester assets thenheld for sale and determined that an impairment loss of $6.7 million wasnecessary as a result of the status of our then ongoing divestiture process.

 

**NineMonths Ended September 30, 2009 As Compared To The Nine Months Ended September 30,2008**

 

***Net Revenues***

 
| ** **        | ** ** | **Nine Months Ended**        | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
|              |       | **(dollars in millions)**    |       |
| Net Revenues      |       | $                            | 276.4      |   | $ | 334.7 |   |
| Amount of Change  |       | $                            | (58.3      | ) |   |   |
| Percentage Change |       | (17.4                        | )%         |   |   |
|                   |            |                              |            |  |  |  |  |

 

Our decreasein net revenues was impacted by the current economic downturn that caused declinesin advertising and radio revenues. Net revenues declined in most of the marketswhere we operate stations.  Our netrevenues were impacted the most by the decline in net revenues for those radiostations located in the Boston, Sacramento, San Francisco and Seattlemarkets.  Management anticipates that thenegative revenue trends in the radio industry will continue into the fourthquarter of 2009, but reverse in early 2010 as the economy and the advertisingenvironment rebounds and we compare favorably to prior periods of economicdownturn.

 

***Station Operating Expenses***

 
| ** **                 | ** ** | **Nine Months Ended**        | ** ** |
|----------------------------|------------|------------------------------|------------|
| ** **                 | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                 | ** ** | **(dollars in millions)**    | ** ** |
| Station Operating Expenses |       | $                            | 192.0      |   | $ | 210.7 |   |
| Amount of Change           |       | $                            | (18.7      | ) |   |   |
| Percentage Change          |       | (8.9                         | )%         |   |   |
|                            |            |                              |            |  |  |  |  |

 

The decreasein station operating expenses was primarily due to: (1) a decrease in netrevenues as described above as certain variable expenses decrease with acorresponding decrease in net revenues; and (2) certain cost reductioninitiatives that commenced during the fourth quarter of 2008, including but notlimited to reductions in workforce and the elimination of the 401(k) employermatching contribution.  Managementanticipates that the trend of declining station operating expenses will continuefor the balance of the year as we realize the effects of previously implementedcost-cutting measures together with the decline in variable station operatingexpenses.

 

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***Depreciation And AmortizationExpense***

 
| ** **                            | ** ** | **Nine Months Ended**        | ** ** |
|---------------------------------------|------------|------------------------------|------------|
| ** **                            | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                            | ** ** | **(dollars in millions)**    | ** ** |
| Depreciation And Amortization Expense |       | $                            | 12.7       |   | $ | 16.0 |   |
| Amount of Change                      |       | $                            | (3.3       | ) |   |   |
| Percentage Change                     |       | (20.6                        | )%         |   |   |
|                                       |            |                              |            |  |  |  |  |

 

Depreciationand amortization expense decreased in 2009 as the expense in 2008 was higherdue to acquisitions during the first quarter of 2008 and the fourth quarter of2007, which included certain amortizable assets with lives of a short duration.

 

***Corporate General AndAdministrative Expenses***

 
| ** **                                    | ** ** | **Nine Months Ended**        | ** ** |
|-----------------------------------------------|------------|------------------------------|------------|
| ** **                                    | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                                    | ** ** | **(dollars in millions)**    | ** ** |
| Corporate General And Administrative Expenses |       | $                            | 17.4       |   | $ | 21.5 |   |
| Amount of Change                              |       | $                            | (4.1       | ) |   |   |
| Percentage Change                             |       | (19.0                        | )%         |   |   |
|                                               |            |                              |            |  |  |  |  |

 

Corporategeneral and administrative expenses decreased primarily due to: (1) adecrease in non-cash compensation expense of $1.7 million as a result of adecrease in the fair value of equity awards issued; and (2) a decrease inlegal expense of $1.0 million associated with certain legal proceedings during2008 which did not reoccur in 2009.  Thedecrease was offset by a $1.1 million net increase in deferred compensationexpense as our deferred compensation liability generally tracks the movementsin the stock market.

 

***Operating Loss***

 
| ** **        | ** ** | **Nine Months Ended**        | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **        | ** ** | **(dollars in millions)**    | ** ** |
| Operating Loss    |       | $                            | (13.4      | ) | $ | (88.0 | ) |
| Amount of Change  |       | $                            | 74.6       |   |   |   |
| Percentage Change |       | 84.8                         | %          |   |   |
|                   |            |                              |            |  |  |  |  |

 

The decreasein operating loss was primarily due to a reduction in impairment loss of $116.9million in connection with our review of broadcasting licenses and goodwill inthe second quarter of 2009 as compared to our review of goodwill during thesecond quarter of 2008. The decrease in operating loss was offset by: (1) adecrease in net revenues for the reasons described above under Net Revenues,net of a decrease in station operating expenses for the reasons described underStation Operating Expenses; and (2) a decrease in net gain on sale ordisposal of assets of $10.0 million as a result of the sale in 2008 of ourSeattle stations.

 

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***Interest Expense***

 
| ** **        | ** ** | **Nine Months Ended**        | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **        | ** ** | **(dollars in millions)**    | ** ** |
| Interest Expense  |       | $                            | 23.8       |   | $ | 34.8 |   |
| Amount of Change  |       | $                            | (11.0      | ) |   |   |
| Percentage Change |       | (31.6                        | )%         |   |   |
|                   |            |                              |            |  |  |  |  |

 

The decreasein interest expense was primarily due to: (1) a decrease in interest rateson outstanding debt during the nine months ended September 30, 2009 ascompared to the nine months ended September 30, 2008; (2) a declinein outstanding debt upon which interest is computed; and (3) therepurchase of our Notes, which have a higher interest rate than the replacementdebt.

 

***Loss From Continuing OperationsBefore Income Taxes (Benefit)***

 
| ** **                                                    | ** ** | **Nine Months Ended**        | ** ** |
|---------------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                    | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                                                    | ** ** | **(dollars in millions)**    | ** ** |
| Loss From Continuing Operations Before Income Taxes (Benefit) |       | $                            | (17.6      | ) | $ | (115.7 | ) |
| Amount of Change                                              |       | $                            | 98.1       |   |   |   |
| Percentage Change                                             |       | 84.8                         | %          |   |   |
|                                                               |            |                              |            |  |  |  |  |

 

The decreasewas primarily attributable to: (1) a decrease in operating loss for thereasons as described above under Operating Loss; (2) a $15.2 millionincrease in gain on the retirement of our Notes as we repurchased debt at alarger discount; and (3) a decrease in our interest expense of $11.0million for the reasons described above under Interest Expense.

 

***Income Taxes (Benefit)***

 
| ** **             | ** ** | **Nine Months Ended**        | ** ** |
|------------------------|------------|------------------------------|------------|
| ** **             | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **             | ** ** | **(dollars in millions)**    | ** ** |
| Income Taxes (Benefit) |       | $                            | 0.7        |   | $ | (32.3 | ) |
| Amount of Change       |       | $                            | 33.0       |   |   |   |
| Percentage Change      |       | 102.1                        | %          |   |   |
|                        |            |                              |            |  |  |  |  |

 

Our income taxexpense was higher in 2009 as a result of recording a valuation allowance forthe full amount of our net deferred tax assets, net of deferred tax liabilities(after consideration for any net deferred tax liabilities associated withnon-amortizable assets such as broadcasting licenses and goodwill). Therecording of a valuation allowance commenced during the third quarter of 2008,which was required due to the cumulative losses incurred by us over the pastthree years.

 

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***Loss From DiscontinuedOperations, Net Of Tax Benefit***

 
| ** **                                            | ** ** | **Nine Months Ended**        | ** ** |
|-------------------------------------------------------|------------|------------------------------|------------|
| ** **                                            | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                                            | ** ** | **(dollars in millions)**    | ** ** |
| Loss From Discontinued Operations, Net Of Tax Benefit |       | $                            | —     |   | $ | (3.5 | ) |
| Amount of Change                                      |       | $                            | 3.5        |   |   |   |
| Percentage Change                                     |       | 100.0                        | %          |   |   |
|                                                       |            |                              |            |  |  |  |  |

 

The net change was primarily due to anon-cash impairment loss of $6.7 million (before income tax benefit) in thefirst quarter of 2008 for the Rochester assets that were held for sale and thatwere subsequently disposed of during the third quarter of 2008.

 

***Net Loss***

 
| ** **        | ** ** | **Nine Months Ended**        | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **        | ** ** | **(dollars in millions)**    | ** ** |
| Net Loss          |       | $                            | (18.3      | ) | $ | (86.9 | ) |
| Amount of Change  |       | $                            | 68.6       |   |   |   |
| Percentage Change |       | 79.0                         | %          |   |   |
|                   |            |                              |            |  |  |  |  |

 

The net change wasprimarily attributable to the reasons described above under Loss FromContinuing Operations Before Income Taxes (Benefit) and Income Taxes (Benefit).

 

**ThreeMonths Ended September 30, 2009 As Compared To The Three Months Ended September 30,2008**

 

***Net Revenues***

 
| ** **        | ** ** | **Three Months Ended**       | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **        | ** ** | **(dollars in millions)**    | ** ** |
| Net Revenues      |       | $                            | 99.8       |   | $ | 115.6 |   |
| Amount of Change  |       | $                            | (15.8      | ) |   |   |
| Percentage Change |       | (13.7                        | )%         |   |   |
|                   |            |                              |            |  |  |  |  |

 

The decreasein net revenues was impacted by the current economic downturn that contributedto weak demand for advertising in general, including advertising on our radiostations. Our net revenues were impacted the most by the decline in net revenuesfor those radio stations located in the Boston, Portland, Sacramento andSeattle markets.

 

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***Station Operating Expenses***

 
| ** **                 | ** ** | **Three Months Ended**       | ** ** |
|----------------------------|------------|------------------------------|------------|
| ** **                 | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                 | ** ** | **(dollars in millions)**    | ** ** |
| Station Operating Expenses |       | $                            | 66.3       |   | $ | 72.1 |   |
| Amount of Change           |       | $                            | (5.8       | ) |   |   |
| Percentage Change          |       | (8.0                         | )%         |   |   |
|                            |            |                              |            |  |  |  |  |

 

The decreasein station operating expenses was primarily due to: (1) the factorsleading to the decrease in Net Revenues as described above as certain variableexpenses decrease with a corresponding decrease in net revenues; and (2) certaincost reduction initiatives that commenced during the fourth quarter of 2008,such as reductions in workforce and the elimination of the 401(k) employermatching contribution.

 

***Depreciation And AmortizationExpense***

 
| ** **                            | ** ** | **Three Months Ended**       | ** ** |
|---------------------------------------|------------|------------------------------|------------|
| ** **                            | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                            | ** ** | **(dollars in millions)**    | ** ** |
| Depreciation And Amortization Expense |       | $                            | 4.1        |   | $ | 4.5 |   |
| Amount of Change                      |       | $                            | (0.4       | ) |   |   |
| Percentage Change                     |       | (8.9                         | )%         |   |   |
|                                       |            |                              |            |  |  |  |  |

 

Depreciationand amortization expense decreased as 2008 was impacted by acquisitions duringthe first quarter of 2008 and the fourth quarter of 2007, which includedcertain amortizable assets with lives of a short duration.

 

***Corporate General AndAdministrative Expenses***

 
| ** **                                    | ** ** | **Three Months Ended**       | ** ** |
|-----------------------------------------------|------------|------------------------------|------------|
| ** **                                    | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                                    | ** ** | **(dollars in millions)**    | ** ** |
| Corporate General And Administrative Expenses |       | $                            | 5.8        |   | $ | 6.2 |   |
| Amount of Change                              |       | $                            | (0.4       | ) |   |   |
| Percentage Change                             |       | (6.5                         | )%         |   |   |
|                                               |            |                              |            |  |  |  |  |

 

Corporategeneral and administrative expenses decreased primarily due to certain costcutting measures that commenced during the fourth quarter of 2008. The decreasewas offset by a $0.8 million net increase in deferred compensation expense asour deferred compensation liability generally tracks the movements in the stockmarket.

 

***Operating Income***

 
| ** **        | ** ** | **Three Months Ended**       | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **        | ** ** | **(dollars in millions)**    | ** ** |
| Operating Income  |       | $                            | 23.4       |   | $ | 32.8 |   |
| Amount of Change  |       | $                            | (9.4       | ) |   |   |
| Percentage Change |       | (28.6                        | )%         |   |   |
|                   |            |                              |            |  |  |  |  |

 

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The decreasein operating income was due to a decrease in net revenues for the reasonsdescribed above under Net Revenues, net of a decrease in station operating expensesfor the reasons described under Station Operating Expenses.

 

***Interest Expense***

 
| ** **        | ** ** | **Three Months Ended**       | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **        | ** ** | **(dollars in millions)**    | ** ** |
| Interest Expense  |       | $                            | 7.9        |   | $ | 10.4 |   |
| Amount of Change  |       | $                            | (2.5       | ) |   |   |
| Percentage Change |       | (24.0                        | )%         |   |   |
|                   |            |                              |            |  |  |  |  |

 

The decreasein interest expense was primarily due to: (1) a decrease in interest rateson outstanding debt during the three months ended September 30, 2009 ascompared to the three months ended September 30, 2008; (2) a declinein outstanding debt upon which interest is computed; and (3) therepurchase of our Notes, which have a higher interest rate than the replacementdebt.

 

***Income From Continuing OperationsBefore Income Taxes***

 
| ** **                                            | ** ** | **Three Months Ended**       | ** ** |
|-------------------------------------------------------|------------|------------------------------|------------|
| ** **                                            | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                                            | ** ** | **(dollars in millions)**    | ** ** |
| Income From Continuing Operations Before Income Taxes |       | $                            | 18.7       |   | $ | 23.8 |   |
| Amount of Change                                      |       | $                            | (5.1       | ) |   |   |
| Percentage Change                                     |       | (21.4                        | )%         |   |   |
|                                                       |            |                              |            |  |  |  |  |

 

The decreasewas primarily attributable to a decrease in operating income for the reasons asdescribed above under Operating Income and an increase in gains on theretirement of our Notes as we repurchased debt at a higher discount.

 

***Income Taxes***

 
| ** **        | ** ** | **Three Months Ended**       | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **        | ** ** | **(dollars in millions)**    | ** ** |
| Income Taxes      |       | $                            | 0.4        |   | $ | 20.0 |   |
| Amount of Change  |       | $                            | (19.6      | ) |   |   |
| Percentage Change |       | (97.9                        | )%         |   |   |
|                   |            |                              |            |  |  |  |  |

 

Due to thecumulative losses incurred by us over the past three years, effective with thethird quarter of 2008, we recorded a valuation allowance for the full amount ofour net deferred tax assets, net of deferred tax liabilities (afterconsideration for any net deferred tax liabilities associated withnon-amortizable assets such as broadcasting licenses and goodwill).  Even though we continue to record in eachquarter a full valuation allowance for the full amount of our net deferred taxassets, the initial recording substantially increased our income tax expenseduring the third quarter of 2008.

 

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***Income From DiscontinuedOperations, Net Of Taxes***

 
| ** **                                        | ** ** | **Three Months Ended**       | ** ** |
|---------------------------------------------------|------------|------------------------------|------------|
| ** **                                        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                                        | ** ** | **(dollars in millions)**    | ** ** |
| Income From Discontinued Operations, Net Of Taxes |       | $                            | —     |   | $ | 0.5 |   |
| Amount of Change                                  |       | $                            | (0.5       | ) |   |   |
| Percentage Change                                 |       | (104.2                       | )%         |   |   |
|                                                   |            |                              |            |  |  |  |  |

 

During thethird quarter of 2008, we completed the transaction to sell the assets of threeradio stations in Rochester, New York.

 

***Net Income***

 
| ** **        | ** ** | **Three Months Ended**       | ** ** |
|-------------------|------------|------------------------------|------------|
| ** **        | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **        | ** ** | **(dollars in millions)**    | ** ** |
| Net Income        |       | $                            | 18.3       |   | $ | 4.3 |   |
| Amount of Change  |       | $                            | 14.0       |   |   |   |
| Percentage Change |       | 329.4                        | %          |   |   |
|                   |            |                              |            |  |  |  |  |

 

The net change wasprimarily attributable to the reasons described above under Income Taxes and thereasons described above under Income From Continuing Operations Before IncomeTaxes.

 

**Future Impairments**

 

We may determine that it will be necessary totake impairment charges in future periods for various reasons, including if theeconomic downturn worsens and/or continues for an extended period of time.  Although the annual impairment test of ourbroadcasting licenses and goodwill was performed in the second quarter of 2009,we may be required to retest prior to our next annual evaluation.  Any such impairment could be material.

 

**Liquidity And Capital Resources**

 

***Liquidity***

 

Historically,we have carried significant amounts of debt. As of September 30, 2009, wehad outstanding $788.1 million in debt, including: (1) $758.0 millionunder our Bank Facility, which is comprised of $385.0 million in Term Loan and$373.0 million in drawn Revolver; (2) $23.9 million in Notes; (3) financemethod lease obligations of $4.5 million; and (4) $1.5 million in a letterof credit.

 

As ofSeptember 30, 2009, we had $20.1 million in cash and cash equivalents. Duringthe nine months ended September 30, 2009, we decreased our outstanding debt by$47.1 million (which included a discount of $19.9 million on the retirement ofour Notes).

 

We believethat cash on hand and cash from operating activities, together with availableborrowings under the Bank Facility, will be sufficient to permit us to meet ourliquidity requirements. While our operating cash flow has been reduced fromprior periods during the recent economic downturn, it has remained positive andadequate to fund our operating needs. As a result, we have not been required torely upon, and we do not anticipate having to rely upon, our Revolver to fundour operations. Notwithstanding the foregoing, we may from time to time seek toamend our existing Bank Facility or obtain other funding or additional financing.

 

The undrawnamount of the Revolver was $275.5 million as of September 30, 2009. Theamount of the Revolver available to us, however, is a function of covenant complianceat the time of borrowing.  Based on ourfinancial covenant analysis as of September 30, 2009, we would be limitedto borrowings significantly less than the undrawn limit unless such borrowingswere used to repay indebtedness or for transactions that increase cash flow forpurposes of covenant calculation.  Weplan to fund the amortization of the Term Loan with our available Revolvercapacity and cash flow from operations.

 

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Our lendersrequire that we remain in compliance with certain covenants in our creditagreements. We believe that over the next 12 months we can maintain ourcompliance with these covenants. Our ability to maintain compliance with ourconvenants will be highly dependent on our results of operations as the economybegins to recover from the current economic downturn and our ability toimplement, to the extent necessary,  remedial measures such as further reductionsin operating costs, opportunistically repurchasing debt at a discount, sellingassets and taking advantage of actions permitted under our credit agreementsuch as including cash from unrestricted subsidiaries in Consolidated OperatingCash Flow.  If we were to enter into anagreement with our lenders for covenant compliance relief, such relief couldresult in higher interest expense. Failure to comply with our financial covenants or other terms of ourcredit agreements and the failure to negotiate and obtain any required relieffrom our lenders could result in the acceleration of the maturity of alloutstanding debt. Under these circumstances, the acceleration of our debt couldhave a material adverse effect on our business.

 

The currenteconomic downturn has reduced demand for advertising in general, includingadvertising on our radio stations. Management anticipates that the negative revenue trends in the radioindustry will continue into the fourth quarter of 2009, but reverse in early2010 as the economy and the advertising environment rebounds and we comparefavorably to prior periods of economic downturn.

 

***Our Credit Agreement***

 

Our creditagreement (the “Bank Facility”), currently with a syndicate of 26 lenders,provides for $1,050 million in senior secured credit that matures on June 30,2012, which is comprised of $650 million in revolving credit (“Revolver”) and$400 million in a term loan (“Term Loan”). The Term Loan reduces (from andafter September 30, 2009) in quarterly amounts starting at $15 million andincreasing to $60 million. The Revolver provides us with working capital andcapital for general corporate purposes, including capital expenditures and anyor all of the following: Term Loan principal payments, repurchases of ourNotes, repurchases of Class A common stock, investments, dividends andacquisitions. The Bank Facility is secured by a pledge of 100% of the capitalstock and other equity interest in all but one of our wholly ownedsubsidiaries. The Bank Facility requires us to comply with certain financialcovenants which are defined terms within the agreement, including: (1) ConsolidatedFunded Indebtedness not to exceed six times Consolidated Operating Cash Flow;and (2) Consolidated Operating Cash Flow to be at a minimum of two timesConsolidated Interest Charges. Management believes we are in compliance withthe financial covenants and all other terms of the Bank Facility.

 

***NYSE — Continued Listing***

 

Our commonstock is currently listed on the New York Stock Exchange (“NYSE”).  Thecontinued listing requirements of the NYSE include, among other things, aminimum closing price of our common stock and a minimum market capitalization.** **While we are presently in compliancewith the NYSE continued listing requirements, if we can not meet the continuedlisting requirements that may be in effect at a future time, it is possible ourcommon stock may be subject to suspension and delisting procedures.

 

***Operating Activities***

 

Net cash flows provided by operating activities were $46.0 million and$87.9 million for the nine months ended September 30, 2009 and 2008,respectively. The decrease in 2009 was mainly attributable to: (1) adecrease in net revenues, net of station operating expenses, of $39.6 million;and (2) a decrease in prepaid and refundable taxes of $14.4 million as wereceived most of our state and federal tax refunds during the prior year.

 

***Investing Activities***

 

Net cash flows used in investing activities were $1.3 million for thenine months ended September 30, 2009 and net cash flows provided byinvesting activities were $33.2 million for the nine months ended September 30,2008.

 

For the nine months ended September 30, 2009, the cash used ininvesting activities primarily reflects $1.7 million for additions to propertyand equipment.  For the nine months endedSeptember 30, 2008, the cash provided by investing activities primarilyreflects $20.0 million in cash proceeds from the sale of a station in Austin,Texas and $12.2 million in cash proceeds from the sale of three stations inRochester, New York, offset by cash used in investing activities for theadditions to property and equipment of $6.0 million.

 

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***Financing Activities***

 

Net cash flows used in financing activities were $28.8 million and$130.1 million for the nine months ended September 30, 2009 and 2008,respectively.

 

For the nine months ended September 30, 2009, the cash flows usedin financing activities primarily reflect the repurchase of our Notes at $39.7million (after a discount of $19.9 million). This was offset by additional netborrowings of $8.0 million under our Revolver and $4.5 million under finance methodlease obligations. For the nine months ended September 30, 2008, the cashflows used in financing activities primarily reflect the net repayment of debtof $93.7 million (including the repurchase of our Notes), the payment ofdividends of $21.6 million and the repurchase of our common stock of $13.3million.

 

***Dividends***

 

Any futuredividends will be at the discretion of the Board of Directors based upon therelevant factors at the time of such consideration. Previously, we used aportion of our capital resources to pay dividends on a quarterly basis,effective with the first quarter of 2006 through the third quarter of 2008.

 

***Share Repurchase Programs***

 

Our mostrecent share repurchase program, which had $25.4 million remaining inauthorization for repurchases, expired on June 30, 2009.

 

***Debt Repurchases***

 

We may fromtime to time seek to repurchase and retire our outstanding debt through cashpurchases, open market purchases, privately negotiated transactions orotherwise. Such repurchases or exchanges, if any, will depend on prevailingmarket conditions, our liquidity requirements, contractual restrictions andother factors.  The amounts involved maybe material. During the nine months ended September 30, 2009, werepurchased and retired $59.6 million of our Notes.

 

***2009 Option ExchangeProgram***

 

In February 2009,our Board of Directors approved an amendment to the Entercom EquityCompensation Plan to permit a one-time Option Exchange Program (“2009 OEP”),which amendment was approved at the May 2009 shareholders’ meeting. On April 13,2009, we commenced the 2009 OEP (subject to shareholder approval) by making anoffer to exchange to our eligible employees and non-employee directors. Weoffered such persons the opportunity to make an election to exchange all oftheir outstanding stock options with exercise prices equal to or greater than$11.80 per share for a lesser number of restricted stock units. The exchangeratio under the 2009 OEP was as follows:

 
| **Option**                            | ** ** | **Exchange Ratio**     | ** ** |
|---------------------------------------|------------|------------------------|------------|
| **Strike Price**                      | ** ** | **(Options For RSUs)** | ** ** |
| At least $11.80, but less than $30.00 |       | 2.25 for 1             |       |
| $30.00 or more                        |       | 4.5 for 1              |       |

 

On May 15,2009, following the May 14, 2009 expiration of our 2009 OEP, we granted0.7 million restricted stock units in exchange for 2.1 million options. As aresult of the 2009 OEP, the number of restricted stock units that can be issuedunder the Plan was effectively increased by 0.7 million as all restricted stockunits granted did not count against the restricted stock sublimit.  In addition, the number of awards that can beissued under the Plan was effectively reduced by 2.1 million as all optionsthat were exchanged will not be available for re-grant under the Plan.

 

***Income Taxes***

 

During thenine months ended September 30, 2009, we paid $0.2 million in state incometaxes. We anticipate that it will not be necessary to make any quarterlyestimated federal and state income tax payments for the remainder of 2009 basedupon existing prepayments and expected quarterly income subject to tax.

 

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***Capital Expenditures***

 

Capitalexpenditures for the nine months ended September 30, 2009 were $1.7million. We anticipate that capital expenditures in 2009 will be between $2.5million and $3.0 million.

 

**ContractualObligations**

 

The following tablereflects a summary as of September 30, 2009 of our calendar contractualobligations for the remainder of the year 2009 and thereafter:

 
| ** **                           | ** ** | **Payments Due By Period** | ** ** |
|--------------------------------------|------------|----------------------------|------------|
| ** **                           | ** ** | ** **                 | ** ** | **Less Than** | ** ** | **1 To 3** | ** ** | **3 To 5** | ** ** | **More Than 5** | ** ** |
| **Contractual Obligations:**         | ** ** | **Total**                  | ** ** | **1 Year** | ** ** | **Years** | ** ** | **Years** | ** ** | **Years** | ** ** |
| ** **                           | ** ** | **(amounts in thousands)** | ** ** |
| ** **                           | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Long-term debt obligations (1)       |       | $                          | 838,541    |   | $ | 21,733 |   | $ | 291,285 |   | $ | 501,279 |   | $ | 24,244 |   |
| Operating lease obligations          |       | 68,218                     |       | 2,985 |   | 22,559 |   | 17,689 |   | 24,985 |   |
| Finance method lease obligations (2) |       | 5,342                      |       | 55 |   | 452 |   | 4,835 |   | — |   |
| Purchase obligations (3)             |       | 244,222                    |       | 20,571 |   | 105,919 |   | 63,036 |   | 54,696 |   |
| Other long-term liabilities (4)      |       | 30,429                     |       | 59 |   | 11,550 |   | 5,911 |   | 12,909 |   |
| Total                                |       | $                          | 1,186,752  |   | $ | 45,403 |   | $ | 431,765 |   | $ | 592,750 |   | $ | 116,834 |   |

 

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(1)                     (a)        Our Bank Facility had outstanding debt in theamount of $758.0 million as of September 30, 2009. The maturity under ourBank Facility could be accelerated if we do not maintain compliance withcertain covenants.

(b)         Under our Notes, the maturity could beaccelerated if we do not maintain compliance with certain covenants or could berepaid in cash by us at our option prior to the due date of the notes.

(c)          The above table includes projected interestexpense under the remaining term of our Bank Facility and our Notes.

 

(2)                            Financelease obligations outstanding were $5.3 million as of September 30, 2009,which include principal and interest expense. When our continuing involvement in this transaction ceases after aperiod of 42 months, we will discontinue finance accounting and instead treatour obligations under the accounting guidance for capital and operating leases.

 

Also, we will recognize additional obligations not included in theabove table of $18.2 million that cover: (i) lease payments of $16.4million for the period subsequent to the 42 month period of continuinginvolvement; and (ii) finance lease payments of $1.8 million fortransactions not yet completed. The minimum term for each of the leases is 20years, which covers the period of continuing involvement and the periodsubsequent to continuing involvement. For further discussion, see Note 7,Financing Method Lease Obligations in the accompanying notes to the financialstatements.

 

(3)                     (a)  We have $1.5 million inliabilities primarily related to our obligation to provide a letter of credit.

(b)  In addition to the above, purchaseobligations of $242.7 million include contracts primarily for on-airpersonalities, sports programming rights, ratings services, music licensingfees, equipment maintenance and certain other operating contracts.

 

(4)                     Included within total otherlong-term liabilities of $30.4 million are liabilities for unrecognized taxpositions of $4.8 million, which have been reflected in the above table in thecolumn labeled as “More Than 5 Years” as it is impractical to determine whetherthere will be a cash impact to an individual year.  See Note 13, Income Taxes, in theaccompanying notes to the consolidated financial statements for a discussion ofdeferred tax liabilities, including liabilities for unrecognized tax positions.

 

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**Off-BalanceSheet Arrangements**

 

Variableinterest entity accounting was not applicable as of September 30, 2009 aswe had no pending transactions to acquire or dispose of radio stationassets.  As of September 30, 2009,we had no other off-balance sheet arrangements.

 

**RecentAccounting Pronouncements**

 

See Note 1 tothe accompanying financial statements, Basis Of Presentation - New AccountingPronouncements, for a discussion of the status and potential impact of newaccounting pronouncements.

 

**CriticalAccounting Policies**

 

The SECdefines critical accounting policies as those that are most important to theportrayal of a company’s financial condition and results and that requiremanagement’s most difficult, subjective or complex judgments, often as a resultof the need to make estimates about the effect of matters that are inherentlyuncertain.

 

There havebeen no material changes to our critical accounting policies from theinformation provided in Part II, Item 7, “Management’s Discussion andAnalysis of Financial Condition and Results of Operations,” under the heading “CriticalAccounting Policies” in our Annual Report on Form 10-K for the year ended December 31,2008.  We have, however, providedadditional disclosures to one of our critical accounting policies forimpairment testing of radio broadcasting licenses and goodwill.

 

***Radio Broadcasting Licenses And Goodwill***

 

We have madeacquisitions in the past for which a significant amount of the purchase pricewas allocated to broadcasting licenses and goodwill assets. As of September 30,2009, we have recorded approximately $746.0 million in radio broadcastinglicenses and goodwill, which represents 78.7% of our total assets at that date.We must conduct impairment testing at least annually, or more frequently ifevents or changes in circumstances indicate that the asset might be impairedand charge to operations an impairment expense only in the periods in which therecorded value of these assets is more than their fair value. After an impairmentexpense is recognized, the recorded value of these assets will be reduced bythe impairment recognized and this shall be the assets’ new accounting basis.In 2009 and 2008, we recorded an impairment loss of $67.7 million and $835.7million, respectively, for radio broadcasting licenses and goodwill.

 

We believe ourestimate of the value of our radio broadcasting licenses and goodwill assets isa critical accounting estimate as the value is significant in relation to ourtotal assets, and our estimate of the value uses assumptions that incorporatevariables based on past experiences and judgments about future performance ofour stations. These variables include but are not limited to: (1) theforecast growth rate of each radio market, including assumptions regarding eachmarket’s population, household income, retail sales and other expenditures thatwould influence advertising expenditures; (2) market share and profitmargin of an average station within a market; (3) estimated capitalstart-up costs and losses incurred during the early years; (4) risk-adjusteddiscount rate; (5) the likely media competition within the market area;and (6) terminal values. Changes in our estimates of the fair value ofthese assets could result in material future period write-downs in the carryingvalue of our broadcasting licenses and goodwill assets.

 

If we were toassume a 100 basis point change in certain of our key assumptions (a reductionin the long-term revenue growth rate, a reduction in the operating performancecash flow and an increase in the weighted average cost of capital) used todetermine the fair value of our broadcasting licenses and goodwill during thesecond quarter of 2009, the following would be the incremental impact:

 

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**Sensitivity Analysis**

 
| ** **                                              | ** ** | **Results Of**            | ** ** | ** **      | ** ** | **Results Of** | ** ** |
|---------------------------------------------------------|------------|---------------------------|------------|-----------------|------------|----------------|------------|
| ** **                                              | ** ** | **Long-Term**             | ** ** | **Results Of**  | ** ** | **Weighted**   | ** ** |
| ** **                                              | ** ** | **Revenue**               | ** ** | **Operating**   | ** ** | **Average**    | ** ** |
| ** **                                              | ** ** | **Growth**                | ** ** | **Performance** | ** ** | **Cost Of**    | ** ** |
| ** **                                              | ** ** | **Rate**                  | ** ** | **Cash Flow**   | ** ** | **Capital**    | ** ** |
| ** **                                              | ** ** | **Decrease**              | ** ** | **Decrease**    | ** ** | **Increase**   | ** ** |
| ** **                                              | ** ** | **(amounts in millions)** | ** ** |
| Broadcasting Licenses                                   |       |                      |       |            |       |           |       |
| Impairment assumption sensitivity result                |       | $                         | 127.6      |            | $          | 84.0           |       | $ | 159.7 |   |
| Impairment recorded during the second quarter of  2009  |       | 60.8                      |       | 60.8            |       | 60.8           |       |
| Incremental broadcasting licenses impairment            |       | 66.8                      |       | 23.2            |       | 98.9           |       |
|                                                    |       |                      |       |            |       |           |       |
| Goodwill                                                |       |                      |       |            |       |           |       |
| Impairment assumption sensitivity result                |       | 2.6                       |       | 6.6             |       | 5.0            |       |
| Impairment recorded during the second quarter of  2009  |       | 6.9                       |       | 6.9             |       | 6.9            |       |
| Incremental goodwill impairment (decrease)              |       | (4.3                      | )          | (0.3            | )          | (1.9           | )          |
|                                                    |       |                      |       |            |       |           |       |
| Total incremental impairment from sensitivity  analysis |       | $                         | 62.5       |            | $          | 22.9           |       | $ | 97.0 |   |

 

The prolonged economic downturn negatively impacted the radiobroadcasting industry as advertising revenues continue to decline and expectationsfor growth over the next year also declined. The projected revenue growthlevels for the industry and for us are now less than those originallyforecasted for 2009, which caused further impairment to broadcasting licensesand goodwill in the second quarter of 2009. As revenues decline, profitabilitylevels are also negatively impacted as fixed costs represent a high componentof a radio station’s operating expenses. As a result, the asset base isparticularly sensitive to the impact of declining revenues.  Please refer to Note 3, Intangible Assets AndGoodwill, in the accompanying notes to the financial statements for adiscussion of several key assumptions used in the fair value estimate of ourbroadcasting licenses and goodwill during the second quarter of 2009 ascompared to the fourth quarter 2008 interim impairment test.

 

For a more comprehensive list of our accounting policies, please seeNote 2, Significant Accounting Policies, accompanying the consolidatedfinancial statements included in our latest annual report on Form 10-K forthe year ended December 31, 2008. Note 2 to the consolidated financial statements included with Form 10-Kcontains several other policies, including policies governing the timing ofrevenue recognition, that are important to the preparation of our consolidatedfinancial statements, but do not meet the SEC’s definition of criticalaccounting policies because they do not involve subjective or complexjudgments.  In addition, for furtherdiscussion of new accounting policies that were effective for us on January 1,2009, please refer to the new accounting pronouncements under Note 1 to theaccompanying notes to the financial statements.

 

**ITEM 3.                  Quantitative And QualitativeDisclosures About Market Risk**

 

We are exposed to market risk from changes in interest rates on ourvariable rate senior debt.  From time totime, we may seek to limit our exposure to interest rate volatility through theuse of derivative rate hedging instruments. If the borrowing rates under LIBOR were to increase 1% above the currentrates as of September 30, 2009, our interest expense on our senior debtwould increase by approximately $2.0 million on an annual basis, including anyinterest benefit or interest expense associated with the use of derivative ratehedging instruments as described below. We do not have interest rate riskrelated to our Notes, which have a fixed interest rate of 7.625%.

 

The following derivative rate hedging transactions, which fix intereston our variable rate debt, are outstanding as of September 30, 2009 in theaggregate notional amount of $550.0 million. These rate hedging transactionsare tied to the one-month LIBOR interest rate.

 

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| ** ** | ** ** | ** **        | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** **         | **Effective** | ** **         | ** **        | ** ** |
|------------|------------|-------------------|------------|---------------|---------------------|------------|------------|------------|------------|------------|------------|------------|------------|----------------|--------------------|---------------|--------------------|-------------------|------------|
| ** ** | ** ** | ** **        | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** **         | **Date That** | ** **         | **Notional**      | ** ** |
| **Type**   | ** ** | ** **        | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | **Fixed**  | ** ** | ** ** | ** ** | ** **     | ** **         | **Notional**  | ** **         | **Amount**        | ** ** |
| **Of**     | ** ** | **Notional**      | ** ** | **Effective** | ** **          | ** ** | ** ** | ** ** | ** ** | **LIBOR**  | ** ** | ** ** | ** ** | **Expiration** | ** **         | **Amount**    | ** **         | **After**         | ** ** |
| **Hedge**  | ** ** | **Amount**        | ** ** | **Date**      | ** **          | ** ** | ** ** | **Collar** | ** ** | **Rate**   | ** ** | ** ** | ** ** | **Date**       | ** **         | **Decreases** | ** **         | **Decrease**      | ** ** |
| ** ** | ** ** | **(amounts**      | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** **         | ** **    | ** **         | **(amounts**      | ** ** |
| ** ** | ** ** | **(in millions)** | ** ** | ** **    | ** **          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** **         | ** **    | ** **         | **(in millions)** | ** ** |
|       |       | ** **        |       |          |                |       |       |       |       |       |       |       |       |           |               |          |               | ** **        |       |
| Swap       |       | $                 | 225.0      |          | Jan. 28, 2008  |       |       |       | n/a        |       | 3.03       | %          |       |           | Jan. 28, 2011 |          | Jan. 28, 2010 |              | $          | 150.0 |   |
|       |       |              |       |          |                |       |       |       |       |       |       |       |       |           |               |          |               |              |       |   |   |
| Collar     |       | $                 | 100.0      |          | Feb. 28, 2008  |       | [          |       | Cap        |       | 4.00       | %          | ]          |           | Feb. 28, 2011 |          | n/a                |              | n/a        |   |
|       | Floor      |              | 2.14       | %             |                |
|       |       |              |       |          |                |       |       |       |       |       |       |       |       |           |               |          |               |              |       |   |
| Swap       |       | $                 | 125.0      |          | March 28, 2008 |       |       |       | n/a        |       | 2.91       | %          |       |           | Sept. 28, 2011     |          | n/a                |              | n/a        |   |
|       |       |              |       |          |                |       |       |       |       |       |       |       |       |           |               |          |               |              |       |   |
| Swap       |       | $                 | 100.0      |          | May 28, 2008   |       |       |       | n/a        |       | 3.62       | %          |       |           | May 28, 2012  |          | n/a                |              | n/a        |   |

 

The fair value (based upon current market rates) of the rate hedgingtransactions is included as derivative instruments in long-term assets and/orliabilities as the maturity dates on these instruments are greater than oneyear. The fair value of the hedging transactions is affected by a combinationof several factors, including the change in the one-month LIBOR rate and theforward interest rate to maturity. Any increase in the one-month LIBOR rateand/or the forward interest rate to maturity results in a more favorablevaluation, while any decrease in the one-month LIBOR rate and/or forwardinterest rate to maturity results in a less favorable valuation. Our creditexposure under these hedging agreements, or similar agreements we may enterinto in the future, is the cost of replacing an agreement in the event ofnon-performance by our counter-party. As of September 30, 2009, the fairvalue of our derivative instruments was a liability of $15.2 million, whichrepresented no change from the balance as of December 31, 2008.  In most cases, the liability would decreaseover time as the remaining term for each derivative instrument decreases. Therewas no decrease in the liability since December 31, 2008, however, as therewas a corresponding increase in the liability due to a decline in theforward-looking interest rates over the remaining terms of the hedgedtransactions. The liability as of September 30, 2009 included a reductionin value for non-performance in accordance with the accounting provisions forfair value measurement.

 

Our cash equivalents are money market instruments consisting ofshort-term government securities and repurchase agreements that are fullycollateralized by government securities. We do not believe that we have any material credit exposure with respectto these assets.

 

Our credit exposure related to our accounts receivable does notrepresent a significant concentration of credit risk due to the quantity ofadvertisers, the minimal reliance on any one advertiser, the multiple marketsin which we operate and the wide variety of advertising business sectors.

 

See also additional disclosures regarding liquidity and capitalresources made under Liquidity and Capital Resources in Part 1, Item 2above.

 

**ITEM 4.                  Controls And Procedures**

 

**Evaluation Of Controls And Procedures**

 

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and15d-15(e) of the Exchange Act) that are designed to ensure that: (i) informationrequired to be disclosed in our Exchange Act reports is recorded, processed,summarized and reported within the time periods specified in the Securities andExchange Commission’s rules and forms; and (ii) such information isaccumulated and communicated to our management, including our Chief ExecutiveOfficer and Chief Financial Officer, as appropriate, to allow for timelydecisions regarding required disclosure. In designing and evaluating ourdisclosure controls and procedures, our management recognizes that any controlsand procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, and ourmanagement is required to apply its judgment in evaluating the cost-benefitrelationship of possible controls and procedures.

 

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We carried out an evaluation, under the supervision and with theparticipation of our management, including our Chief Executive Officer andChief Financial Officer, of the effectiveness of our disclosure controls andprocedures as of the end of the period covered by this report.  Based onthe foregoing, our President/Chief Executive Officer and Executive VicePresident - Operations/Chief Financial Officer concluded that our disclosurecontrols and procedures were effective at the reasonable assurance level.

 

**Changes In Internal Control Over FinancialReporting**

 

There has been no change in our internal control over financialreporting during our most recent fiscal quarter that has materially affected,or is reasonably likely to materially affect, our internal control overfinancial reporting.

 

**PART II**

 

**OTHERINFORMATION**

 

**ITEM 1.                  Legal Proceedings**

 

Except as described below, there have been no material developmentsrelating to the legal proceedings described in our Annual Report on Form 10-Kfor the year ended December 31, 2008, filed with the Securities andExchange Commission on February 26, 2009:

 

During January 2007, a suit seeking various damages was filedagainst us relating to an on-air contest. The claims, which were settled in October 2009,were fully covered by our insurance policies.

 

**ITEM 1A.               Risk Factors**

 

There have been no material changes from the Risk Factors described inour Form 10-K, filed with the SEC on February 26, 2009.

 

**ITEM 2.                  Unregistered Sales Of EquitySecurities And Use Of Proceeds**

 

A $100 millionshare repurchase program adopted by our Board of Directors on May 8, 2006and extended on May 3, 2007 and on April 23, 2008, expired on June 30,2009.

 

Duringthe three-month period ending September 30, 2009, we withheld shares ofstock upon the vesting of restricted stock units to cover withholding taxobligations, unless an employee elected to pay such tax in cash.  Thefollowing table provides information on shares withheld (which are consideredrepurchased) during the three-month period ended September 30, 2009:

 
| ** **                                        | ** ** | ** **    | ** ** | ** **    | ** ** | **(c)**          | ** ** | **(d)**             | ** ** |
|---------------------------------------------------|------------|---------------|------------|---------------|------------|------------------|------------|---------------------|------------|
| ** **                                        | ** ** | ** **    | ** ** | ** **    | ** ** | **Total**        | ** ** | **Maximum**         | ** ** |
| ** **                                        | ** ** | ** **    | ** ** | ** **    | ** ** | **Number Of**    | ** ** | **Approximate**     | ** ** |
| ** **                                        | ** ** | ** **    | ** ** | ** **    | ** ** | **Shares**       | ** ** | **Dollar Value**    | ** ** |
| ** **                                        | ** ** | ** **    | ** ** | ** **    | ** ** | **Purchased**    | ** ** | **Of**              | ** ** |
| ** **                                        | ** ** | ** **    | ** ** | ** **    | ** ** | **As**           | ** ** | **Shares That**     | ** ** |
| ** **                                        | ** ** | **(a)**       | ** ** | **(b)**       | ** ** | **Part Of** | ** ** | **May Yet Be** | ** ** |
| ** **                                        | ** ** | **Total**     | ** ** | **Average**   | ** ** | **Publicly**     | ** ** | **Purchased**       | ** ** |
| ** **                                        | ** ** | **Number**    | ** ** | **Price**     | ** ** | **Announced**    | ** ** | **Under**           | ** ** |
| ** **                                        | ** ** | **Of Shares** | ** ** | **Paid**      | ** ** | **Plans Or**     | ** ** | **The Plans**       | ** ** |
| **Period**                                        | ** ** | **Purchased** | ** ** | **Per Share** | ** ** | **Programs**     | ** ** | **Or Programs**     | ** ** |
| July 1, 2009 -  July 31, 2009           |       | 344           |       | $             | 1.72       |             | —     |                | $          | — |   |
| August 1, 2009 -  August 31, 2009       |       | —        |       | $             | —     |             | —     |                | $          | — |   |
| September 1, 2009 -  September 30, 2009 |       | 1,044         |       | $             | 4.87       |             | —     |                | $          | — |   |
| Total                                             |       | 1,388         |       |          |       | —           |       |                |       |

 

Inconnection with employee tax obligations related to the vesting of restrictedstock units during the three months ended September 30, 2009 and inaccordance with elections by certain employees, we are deemed to have purchasedthe shares withheld to satisfy employees’ tax obligations of 344 shares at anaverage price of $1.72 per 

 

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share in July 2009and 1,044 shares at an average price of $4.87 per share in September 2009.These shares are included in the above table.

 

**ITEM 3.                  Defaults Upon SeniorSecurities**

 

None.

 

**ITEM 4.                  Submission Of Matters To AVote Of Security Holders**

 

None.

 

**ITEM 5.                  Other Information**

 

None.

 

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**ITEM 6.  Exhibits**

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                |
|---------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.01                |       | Amended  and Restated Articles of Incorporation of the Entercom Communications Corp.  as further amended on December 19, 2007 and May 15, 2009. (1)                                                                                                  |
| 3.02                |       | Amended  and Restated Bylaws of the Entercom Communications Corp. (2)                                                                                                                                                                                          |
| 4.01                |       | Indenture  dated as of March 5, 2002 by and among Entercom Radio, LLC and Entercom  Capital, Inc., as co-issuers, the Guarantors named therein and HSBC Bank  USA, as trustee. (3)  (Originally filed as Exhibit 4.02)                     |
| 4.02                |       | First  Supplemental Indenture dated as of March 5, 2002 by and among Entercom  Radio, LLC and Entercom Capital, Inc., as co-issuers, the Guarantors  named therein and HSBC Bank USA, as trustee. (3)  (Originally filed as  Exhibit 4.03) |
| 31.01               |       | Certification  of President and Chief Executive Officer required by  Rule 13a-14(a) or Rule 15d-14(a), as created by  Section 302 of the Sarbanes-Oxley Act of 2002. (4)                                                                   |
| 31.02               |       | Certification  of Executive Vice President and Chief Financial Officer required by  Rule 13a-14(a) or Rule 15d-14(a), as created by  Section 302 of the Sarbanes-Oxley Act of 2002. (4)                                                    |
| 32.01               |       | Certification  of President and Chief Executive Officer pursuant to 18 U.S.C. § 1350, as  created by Section 906 of the Sarbanes-Oxley Act of 2002. (5)                                                                                              |
| 32.02               |       | Certification  of Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C.  § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002. (5)                                                                               |

 

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(1)                                  Incorporatedby reference to Exhibit 3.01 of our Amendment to Registration Statement onForm S-1, as filed on January 27, 1999 (File No. 333-61381), Exhibit 3.1of our Current Report on Form 8-K as filed on December 21, 2007 and Exhibit 3.02of our Quarterly Report on Form 10-Q for the quarter ended June 30,2009, as filed on August 5, 2009.

(2)                                  Incorporatedby reference to Exhibit 3.1 of our Current Report on Form 8-K asfiled on February 21, 2008.

(3)                                  Incorporatedby reference to an exhibit of our Quarterly Report on Form 10-Q for thequarter ended March 31, 2002, as filed on May 13, 2002.

(4)                                  Filedherewith.

(5)                                  Theseexhibits are submitted herewith as “accompanying” this Quarterly Report on Form 10-Qand shall not be deemed to be “filed” as part of such Quarterly Report on Form 10-Q.

 

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**SIGNATURES**

 

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

 

 
|                         | **ENTERCOM COMMUNICATIONS CORP.**                                                                        |
|------------------------------|----------------------------------------------------------------------------------------------------------|
|                         | (Registrant)                                                                                             |
|                         |                                                                                                     |
|                         |                                                                                                     |
| Date:  November 9, 2009 | /S/  David J. Field                                                                                      |
|                         | Name:  David J. Field                                                                                    |
|                         | Title:  President and Chief Executive Officer                                                            |
|                         | (principal  executive officer)                                                                           |
|                         |                                                                                                     |
|                         |                                                                                                     |
| Date:  November 9, 2009 | /S/  Stephen F. Fisher                                                                                   |
|                         | Name:  Stephen F. Fisher                                                                                 |
|                         | Title:  Executive Vice President - Operations and Chief Financial Officer (principal  financial officer) |

 

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**ITEM 6.  Exhibits**

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                |
|---------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.01                |       | Amended  and Restated Articles of Incorporation of the Entercom Communications Corp.  as further amended on December 19, 2007 and May 15, 2009. (1)                                                                                                  |
| 3.02                |       | Amended  and Restated Bylaws of the Entercom Communications Corp. (2)                                                                                                                                                                                          |
| 4.01                |       | Indenture  dated as of March 5, 2002 by and among Entercom Radio, LLC and Entercom  Capital, Inc., as co-issuers, the Guarantors named therein and HSBC Bank  USA, as trustee. (3)  (Originally filed as Exhibit 4.02)                     |
| 4.02                |       | First  Supplemental Indenture dated as of March 5, 2002 by and among Entercom  Radio, LLC and Entercom Capital, Inc., as co-issuers, the Guarantors  named therein and HSBC Bank USA, as trustee. (3)  (Originally filed as  Exhibit 4.03) |
| 31.01               |       | Certification  of President and Chief Executive Officer required by  Rule 13a-14(a) or Rule 15d-14(a), as created by  Section 302 of the Sarbanes-Oxley Act of 2002. (4)                                                                   |
| 31.02               |       | Certification  of Executive Vice President and Chief Financial Officer required by  Rule 13a-14(a) or Rule 15d-14(a), as created by  Section 302 of the Sarbanes-Oxley Act of 2002. (4)                                                    |
| 32.01               |       | Certification  of President and Chief Executive Officer pursuant to 18 U.S.C. § 1350, as  created by Section 906 of the Sarbanes-Oxley Act of 2002. (5)                                                                                              |
| 32.02               |       | Certification  of Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C.  § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002. (5)                                                                               |

 

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(1)                                  Incorporatedby reference to Exhibit 3.01 of our Amendment to Registration Statement onForm S-1, as filed on January 27, 1999 (File No. 333-61381), Exhibit 3.1of our Current Report on Form 8-K as filed on December 21, 2007 and Exhibit 3.02of our Quarterly Report on Form 10-Q for the quarter ended June 30,2009, as filed on August 5, 2009.

(2)                                  Incorporatedby reference to Exhibit 3.1 of our Current Report on Form 8-K asfiled on February 21, 2008.

(3)                                  Incorporatedby reference to an exhibit of our Quarterly Report on Form 10-Q for thequarter ended March 31, 2002, as filed on May 13, 2002.

(4)                                  Filedherewith.

(5)                                  These exhibits aresubmitted herewith as “accompanying” this Quarterly Report on Form 10-Qand shall not be deemed to be “filed” as part of such Quarterly Report on Form 10-Q.

 

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