UNITED STATES
                       SECURITIES AND 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 March 31, 1998

__       Transition report pursuant to Section 13 or 15(d) of the Securities 
         Exchange Act of 1934.

Commission File Number: 0-26102

                       AMERICAN RADIO SYSTEMS CORPORATION
             (Exact name of registrant as specified in its charter)

             Delaware                               04-3196245
 (State or other jurisdiction of                 (I.R.S. Employer
  incorporation or organization)                Identification No.)


                              116 Huntington Avenue
                           Boston, Massachusetts 02116
                    (Address of principal executive offices)

                         Telephone Number (617)-375-7500
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days:

         Yes  X                             No __

Class of Common Stock                      Outstanding at April 30, 1998
---------------------                      -----------------------------
Class A Common Stock                       24,786,638 shares
Class B Common Stock                        3,473,616 shares
Class C Common Stock                        1,295,518 shares
Total                                      29,555,772 shares

<PAGE>

                       AMERICAN RADIO SYSTEMS CORPORATION

                                      INDEX

                          PART I. FINANCIAL INFORMATION



Item 1. Unaudited Condensed Consolidated Financial Statements           Page No.

Condensed Consolidated Balance Sheets
December 31, 1997 and March 31, 1998.......................................   3

Condensed Consolidated Statements of Operations
Three months ended March 31, 1997 and 1998.................................   5

Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1997 and 1998.................................   6

Notes to Condensed Consolidated Financial Statements.......................   7

Item 2. Management's  Discussion and Analysis of Financial 
        Condition and Results of Operations................................  21


                           PART II. OTHER INFORMATION

Item 1.   Legal Proceedings................................................  28

Item 2.   Changes in Securities and Use of Proceeds........................  28

Item 6.   Exhibits and Reports on Form 8-K.................................  29

          Signatures.......................................................  31

                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.   UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                           AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES

                                       CONSOLIDATED BALANCE SHEETS
                                    (In thousands, except share data)


                                                                     December 31, 1997       March 31, 1998
                                                                     -----------------       --------------
<S>                                                                  <C>                     <C>
ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                        $   16,643              $   12,997
     Accounts receivable (less allowance for doubtful                                        
       accounts of $7,703 in 1997 and $7,846 in 1998,                                        
       respectively)                                                      90,468                  78,953
     Unbilled receivables                                                                          3,028
     Prepaid expenses and other assets                                     5,153                   8,966
     Current portion of investment notes receivable (less valuation                          
       allowance of $6,750 in 1997 and 1998)                               2,250                   2,250
     Deferred income taxes                                                 6,428                   6,428
                                                                      ----------              ----------
               Total current assets                                      120,942                 112,622
                                                                      ----------              ----------
PROPERTY AND EQUIPMENT--Net                                              250,189                 278,319
                                                                      ----------              ----------
OTHER ASSETS:                                                                                
     Restricted cash                                                      22,141                     
     Investment notes receivable                                          36,812                  27,108
     Intangible Assets, net
         Goodwill                                                        353,897                 351,634
         FCC licenses                                                  1,112,273               1,171,196
         Other intangible assets                                          38,884                  36,234
         Unallocated purchase price, net                                 108,192                 221,532
     Deposits and other long-term assets                                  10,875                   8,942
     Deferred income taxes                                                                       123,273
                                                                      ----------              ----------
               Total other assets                                      1,683,074               1,939,919
                                                                      ----------              ----------
TOTAL                                                                 $2,054,205              $2,330,860
                                                                      ==========              ==========
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       3
<PAGE>
<TABLE>
<CAPTION>
                                   AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES

                                               CONSOLIDATED BALANCE SHEETS
                                            (In thousands, except share data)

                                                                                 December 31, 1997       March 31, 1998
                                                                                 -----------------       --------------
<S>                                                                             <C>                    <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:

     Current maturities of long-term debt                                        $       450             $       394   
     Accounts payable                                                                  9,687                   7,339
     Accrued compensation                                                              3,456                   3,667
     Accrued expenses                                                                 18,956                  27,056
     Unearned income                                                                   1,752                   2,557
     Accrued interest                                                                 14,177                  11,416
     Income taxes payable                                                               --                   125,774
                                                                                 -----------             -----------
          Total current liabilities                                                   48,478                 178,203
                                                                                 -----------             -----------
DEFERRED INCOME TAXES                                                                196,028                 186,237
                                                                                 -----------             -----------
OTHER LONG-TERM LIABILITIES                                                            8,954                   8,579
                                                                                 -----------             -----------
LONG-TERM DEBT                                                                       923,704               1,020,398
                                                                                 -----------             -----------
MINORITY INTEREST IN SUBSIDIARIES                                                        626                  78,208
                                                                                 -----------             -----------
                                                                                                         
COMMITMENTS AND CONTINGENCIES                                                                            
REDEEMABLE PREFERRED STOCK:                                                                              
     Cumulative Exchangeable Preferred Stock, $0.01 par value;                                           
        10,000,000 shares authorized; 2,105,602 shares issued and                                        
        outstanding; liquidation preference $100 per share                           215,550                 215,550
                                                                                 -----------             -----------
STOCKHOLDERS' EQUITY:                                                                                    
     Preferred Stock; $0.01 par value; 10,000,000 shares authorized:                                     
        Convertible Exchangeable Preferred Stock; 137,500 shares issued                                  
        and outstanding (represented by 2,750,000 depositary shares);                                    
        liquidation preference $1,000 per share                                            1                       1
     Class A Common Stock; $.01 par value; 100,000,000 shares authorized;                                
        24,708,096 and 24,746,510 shares issued and outstanding, respectively            247                     247
     Class B Common Stock; $.01 par value; 15,000,000 shares authorized;                                 
        3,508,639 and 3,494,325 shares issued and outstanding, respectively               35                      35
     Class C Common Stock; $.01 par value; 6,000,000 shares authorized;                                  
        1,295,518 shares issued and outstanding                                           13                      13
     Additional paid-in capital                                                      671,211                 663,036
     Unearned compensation                                                              (202)                   (178)
     Accumulated deficit                                                              (9,982)                (19,011)
                                                                                 -----------             -----------
          Total                                                                      661,323                 644,143
                                                                                 -----------             -----------
     Less:                                                                                               
          Treasury stock, at cost, 19,019 shares                                        (458)                   (458)
                                                                                 -----------             -----------
          Total stockholders' equity                                                 660,865                 643,685
                                                                                 -----------             -----------
TOTAL                                                                            $ 2,054,205             $ 2,330,860
                                                                                 ===========             ===========
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       4
<PAGE>
<TABLE>
<CAPTION>
                           AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES

                                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (In thousands, except per share data)

                                                               Three Months Ended March 31,
                                                               ----------------------------
                                                             1997                      1998 
                                                          ----------                ---------- 
<S>                                                      <C>                       <C>         
NET REVENUES                                              $  54,237                 $ 106,180   
                                                          ---------                 --------- 
OPERATING EXPENSES:                                                                
     Operating expenses excluding depreciation and                                 
        amortization, net local marketing agreement and                            
        corporate general and administrative expenses        40,884                    77,049
     Net local marketing agreement expenses                   1,932                       709
     Depreciation and amortization                            7,424                    23,820
     Merger expenses                                                                    3,572
     Corporate general and administrative                     1,777                     1,905
                                                          ---------                 --------- 
          Total expenses                                     52,017                   107,055
                                                          ---------                 --------- 
OPERATING INCOME (LOSS)                                       2,220                      (875)
                                                          ---------                 --------- 
OTHER INCOME (EXPENSE):                                                            
     Interest expense                                        (7,504)                  (19,013)
     Interest income                                            656                     1,195
     Gains (losses) on sale of assets and other, net            218                       261
                                                          ---------                 --------- 
          Total other income (expense)                       (6,630)                  (17,557)
                                                          ---------                 --------- 
LOSS FROM OPERATIONS BEFORE                                                        
   EXTRAORDINARY LOSS AND INCOME TAXES                       (4,410)                  (18,432)
INCOME TAX BENEFIT                                            1,685                     9,402
                                                          ---------                 --------- 
LOSS BEFORE EXTRAORDINARY LOSS                               (2,725)                   (9,030)
EXTRAORDINARY LOSS ON EXTINGUISHMENT                                               
   OF DEBT, NET OF INCOME TAX BENEFIT OF                                           
   $1,013 IN 1997                                            (1,639)                
                                                          ---------                 --------- 
NET LOSS                                                     (4,364)                   (9,030)
PREFERRED STOCK DIVIDENDS                                    (6,198)                   (8,394)
                                                          ---------                 --------- 
NET LOSS APPLICABLE TO COMMON                                                      
   STOCKHOLDERS                                           $ (10,562)                $ (17,424)
                                                          =========                 ========= 
BASIC AND DILUTED PER COMMON SHARE AMOUNTS:                                        
   Loss before extraordinary loss                         $    (.42)                $    (.59)
   Extraordinary loss                                          (.08)                     
                                                          ---------                 --------- 
   Net loss                                               $    (.50)                $    (.59)
                                                          =========                 ========= 
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON                                
   SHARES OUTSTANDING                                                              
                                                             21,095                    29,533
                                                          =========                 ========= 
</TABLE>

       See notes to unaudited condensed consolidated financial statements

                                       5
<PAGE>
<TABLE>
<CAPTION>
                            AMERICAN RADIO SYSTEMS CORPORATION

                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      (In thousands)

                                                            Three Months Ended March 31,
                                                            ----------------------------
                                                                 1997         1998
                                                              ---------    ---------  
<S>                                                          <C>          <C>
CASH FLOWS FROM (USED FOR) OPERATING
   ACTIVITIES:                                                $  (1,587)   $  10,951
                                                              ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:

 Payments for purchase of property, equipment and intangible
    assets                                                       (7,853)     (15,684)
 Proceeds from radio station sales                               20,403        3,952
 Payments for radio station acquisitions                       (262,863)     (42,153)
 Payments for tower related acquisitions                                     (71,069)
 Issuance of investment notes receivable                           (624)      (6,000)
 Repayment of investment note receivable                          1,243        2,004
 Deposits and other long-term assets                             16,417       (4,155)
                                                              ---------    ---------
    Cash used for investing activities                         (233,277)    (133,105)

CASH FLOWS FROM FINANCING ACTIVITIES:

 Borrowings under Credit Agreements and other                   276,500       97,000
 Repayments under Credit Agreements                            (230,000)            
 Repayments of other obligations                                   (274)        (235)
 Net proceeds from equity offerings and options                     160       30,242
 Net proceeds from exchangeable preferred stock offering        192,350          
 Additions to deferred financing costs                           (5,526)         
 Distributions to minority interest                                (105)        (105)
 Dividends paid                                                  (2,406)      (8,394)
                                                              ---------    ---------
    Cash provided by financing activities                       230,699      118,508

 DECREASE IN CASH AND CASH
   EQUIVALENTS                                                   (4,165)      (3,646)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   10,447       16,643
                                                              ---------    ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                      $   6,282    $  12,997
                                                              =========    =========
</TABLE>
       See notes to unaudited condensed consolidated financial statements.

                                       6
<PAGE>

                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of Presentation - The financial  statements included herein have been
     prepared by American Radio Systems Corporation  (American Radio, ARS or the
     Company),  without  audit,  pursuant  to the rules and  regulations  of the
     Securities  and Exchange  Commission  (the  Commission).  Although  certain
     information  and  footnote   disclosures  normally  included  in  financial
     statements  prepared  in  accordance  with  generally  accepted  accounting
     principles  have been  condensed  or  omitted  pursuant  to such  rules and
     regulations, the Company believes that the disclosures are adequate to make
     the  information  presented  not  misleading  and reflect  all  adjustments
     (consisting only of normal recurring adjustments) which are necessary for a
     fair  presentation  of results of operations  for such periods.  Results of
     interim  periods may not be indicative of results for the full year.  These
     financial  statements  should be read in conjunction  with the consolidated
     financial  statements  for the year ended  December  31, 1997 and the notes
     thereto included in the Company's Annual Report on Form 10-K (Form 10-K).

     Accounting  Policies - In June 1997,  the  Financial  Accounting  Standards
     Board issued  Statement of Financial  Accounting  Standards  (FAS) No. 130,
     "Reporting  Comprehensive  Income," which became  effective for the Company
     for periods  beginning  after  December 15, 1997.  FAS No. 130  establishes
     standards  for  reporting  and  displaying  comprehensive  income  and  its
     components (revenues, expenses, gains, and losses) in a full set of general
     purpose  financial  statements.  FAS No. 130  requires  that a company  (a)
     classify items of other comprehensive income by their nature in a financial
     statement and (b) display the  accumulated  balance of other  comprehensive
     income separately from retained earnings and additional  paid-in-capital in
     the equity  section of the balance  sheet.  Reclassification  of  financial
     statements  for  earlier  periods  provided  for  comparative  purposes  is
     required.  The Company has adopted this  statement in the first  quarter of
     1998. Comprehensive income does not differ from net income.

     Reclassifications  - Certain  reclassifications  have been made to the 1997
     financial statements to conform to the 1998 presentation.

2.   Business and Corporate Structure

     Tower Subsidiaries: American Tower Systems Corporation (ATS, Tower or Tower
     Subsidiary) is a majority owned  subsidiary of ARS.  American Tower Systems
     (Delaware),  Inc. (ATSI) is a wholly-owned subsidiary of ATS and one of the
     two operating subsidiaries of ATS. American Tower Systems, L.P. (ATSLP), is
     an indirect  wholly-owned  subsidiary  of ATS,  which  conducts  all of the
     business  of ATS other  than  that  conducted  by ATSI.  ATSI and ATSLP are
     collectively referred to as the Operating Subsidiaries.

     CBS  Merger:  In  September  1997,  American  Radio  entered  into a merger
     agreement  as amended and  restated in December  1997,  as amended (the CBS
     Merger Agreement) pursuant to which a subsidiary of CBS will be merged (the
     CBS Merger) into American  Radio.  As a consequence of the  consummation of
     the CBS Merger,  all of the shares of ATS owned by ARS will be  distributed
     to ARS common  stockholders  and  holders of options to acquire  ARS Common
     Stock or upon  conversion  of  shares  of ARS 7%  Convertible  Exchangeable
     Preferred Stock (the Convertible  Preferred Stock). As a consequence of the
     CBS  Merger,  ATS will  cease to be a  subsidiary  of,  or to be  otherwise
     affiliated with, American Radio and will operate as an independent publicly
     traded company. Pursuant to the provisions of the CBS Merger Agreement, ATS
     will enter into an agreement (the ARS-ATS  Separation  Agreement)  with CBS
     and ARS providing  for, among other things,  the orderly  separation of ARS
     and ATS, the allocation of certain tax liabilities to ATS,  certain closing
     date  adjustments  relating  to ARS,  the  lease  to ARS by ATS of space on
     certain towers  previously owned by ARS and transferred to ATS, and certain
     indemnification  obligations  (including  with  respect to  securities  law
     matters) of ATS.

                                      7
<PAGE>
                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


2.   Business and Corporate Structure - (Continued)

     ATS's  principal  obligation is to reimburse CBS on a  "make-whole"  (after
     tax) basis for the tax liabilities to be incurred by ARS in excess of $20.0
     million  attributable  to the  distribution  of the Common Stock to the ARS
     security  holders  and  certain  related  transactions.  In  light  of  the
     significant increase in the trading levels of the ATS Class A Common Stock,
     ATS and CBS have  agreed  that ARS will treat the  distribution  on its tax
     return on a more conservative  basis than originally  contemplated in order
     to avoid the  possibility of  significant  interest and penalties for which
     ATS would be responsible.

     Assuming the "fair market  value" of ARS's stock  interest in ATS was equal
     to $23.00  per  share,  the last  reported  sale price of such stock in the
     "when-issued"   market  on  April  30,  1998,   the  total   estimated  tax
     reimbursement ATS would be required to make would be between  approximately
     $315.0 and $345.0 million,  depending on applicable  state tax rates.  Such
     estimate gives effect to deductions of approximately  $93.0 million,  based
     on such closing  price,  available to ARS as a consequence  of stock option
     cancellations  contemplated by the CBS Merger. The tax reimbursement  would
     change by between approximately $20.5 and $22.5 million, again depending on
     applicable  state tax  rates,  for each  $1.00  change in the "fair  market
     value" of the ATS  Common  Stock  under the tax  reporting  position  to be
     followed.   The  estimates  described  above  are  based  on  a  number  of
     assumptions and  interpretations of various applicable income tax rules and
     are subject to change.

     ARS has agreed that it will pursue, for the benefit and at the cost of ATS,
     a refund claim,  attributable to the "make whole"  provision,  estimated at
     approximately  $90.0 million,  based on the assumed "fair market value" set
     forth above.  Any such refund claim will,  in fact,  be based on the actual
     amount of tax paid. In light of existing tax law, there can, of course,  be
     no assurance that any such refund claim will be successful.

     ARS and CBS have agreed that in  computing  the amount of taxable gain that
     is recognized by ARS in connection with the  distribution of the ATS Common
     Stock, ARS shall, subject to certain  limitations,  if so requested by ATS,
     report  the amount so  realized  based on the "fair  market  value" of such
     stock as  determined  based on an appraisal  prepared by a mutually  agreed
     upon  appraiser.  Any such  appraisal  is not,  of  course,  binding on the
     Internal Revenue Service or other taxing authorities.

     In connection with an  inter-corporate  taxable  transfer of assets entered
     into in January 1998 by ATS in  contemplation  of the separation of ATS and
     ARS,  a  portion  of the tax with  respect  to which  ATS is  obligated  to
     indemnify  CBS was incurred.  Such transfer  resulted in an increase in the
     tax bases of ATS's assets of  approximately  $330.0 million.  ATS will have
     potential  depreciation and amortization  deductions over the next 15 years
     of  $22.0   million  per  year  and  recorded  a  deferred  tax  asset  and
     corresponding  income tax  liability  of  approximately  $125.0  million to
     reflect these transactions.

     The ARS-ATS  Separation  agreement will provide  closing date balance sheet
     adjustments  based upon the working  capital  (current  assets less defined
     liabilities)  and  specified  debt levels of ARS.  ATS will benefit from or
     bear the  cost of such  adjustments.  ATS's  preliminary  estimate  of such
     adjustments  is that it will not be required to make a payment of more than
     $20.0 million and that,  in addition,  it will be required to reimburse CBS
     for  the tax  consequences  of any  such  payment  which  would  result  in
     additional  liability to ATS of  approximately  $13.0  million  (assuming a
     $20.0 million  adjustment)  payment  under the tax  reporting  method to be
     followed and as to which a refund claim will be filed. Since the amounts of
     working  capital and debt are dependent upon the  uncertainty,  among other
     things, of recent operating results and cash capital expenditures,  as well
     as CBS  Merger  expenses  and the  interpretation  and  intent  of  certain
     provisions of the CBS Merger  Agreement as to which certain  issues between
     ATS and CBS exist, ATS is unable to state  definitively  what payments,  if
     any, will be owed by ATS or CBS.

                                       8
<PAGE>
                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 2.  Business and Corporate Structure - (Continued)

     ATS is actively  negotiating a commitment from a major  investment  banking
     firm with respect to a preferred  stock  financing (the Interim  Financing)
     which  provides for the issuance and sale by ATS of up to $400.0 million of
     preferred stock (the Interim  Preferred  Stock).  ATS plans to draw on such
     commitment  and sell Interim  Preferred  Stock to finance its obligation to
     CBS  with  respect  to tax  reimbursement,  unless  a  public  offering  is
     consummated  prior  to the  time  the  tax  reimbursement  is  due to  CBS.
     Consummation  of the Interim  Financing is subject to the  negotiation  and
     execution of a definitive  preferred stock purchase  agreement (the Interim
     Financing  Agreement) and satisfaction of the closing  conditions to be set
     forth therein.  ATS intends to redeem the Interim  Preferred  stock, to the
     extent  issued,  out of the  proceeds  of a public  offering of ATS Class A
     Common Stock to be registered  under the Securities Act of 1933, as amended
     (Securities  Act), if, as is likely,  the tax reimbursement is due prior to
     the  consummation  of such public  offering  or, if not, to use such public
     offering  proceeds  directly to reimburse CBS for such tax  liability.  Any
     remaining proceeds are intended to be used to fund any closing date balance
     sheet adjustments (or repay bank borrowings incurred for such purpose). Any
     public  offering  would  have a  dilutive  effect  on ATS's  then  existing
     stockholders,  particularly  since the  proceeds  will be used to satisfy a
     liability and not to finance the acquisition of revenue producing property.
     Further,  any public  offering  would be subject to market  conditions  and
     other factors.  There can be no assurance that any such financing  would be
     available on terms favorable to ATS.

     The CBS Merger has been approved by stockholders of ARS who held sufficient
     voting  power to approve  such  action.  Consummation  of the CBS Merger is
     subject to, among other things, the approval by the Federal  Communications
     Commission  (FCC) of the  transfer  of control of ARS's FCC  licenses  with
     respect to its radio stations to CBS.  Subject to the  satisfaction of such
     conditions,  the CBS Merger is expected to be  consummated in the Spring of
     1998.

     The foregoing is a description of the rights and obligations of ARS and ATS
     in the event the CBS Merger is consummated. Although the ARS-ATS Separation
     Agreement  will be effective and  operational if the merger of a subsidiary
     of ARS into ARS (the  Tower  Merger) is  consummated,  in the event the CBS
     Merger is not subsequently consummated, ARS and ATS have reserved the right
     to alter the terms of that agreement to provide for a sharing of the rights
     and  obligations  in a manner  that may be more or less  favorable  to ATS.
     Because ARS and ATS believe  that the CBS Merger  will be  consummated,  no
     determination  has been made of what the rights and  obligations of ARS and
     ATS should be in the event it were not.

3.   Per  Share  Data - In the  fourth  quarter  of 1997,  the  Company  adopted
     Statement of Financial  Accounting  Standards  No. 128,  Earnings Per Share
     (SFAS  128).  Prior to the fourth  quarter of 1997,  the  Company  computed
     income  (loss) per common  share using the methods  outlined in  Accounting
     Principles   Board   Opinion   No.  15,   Earnings   Per  Share,   and  its
     interpretations.

     Basic income (loss) per common share is computed using the weighted average
     number of common shares outstanding during each year. Diluted income (loss)
     per common share reflects the effect of the Company's  outstanding  options
     (using the  treasury  stock  method),  except  where  such  items  would be
     antidilutive.  Shares of redeemable preferred stock convertible into common
     stock  have  been  excluded  from  the  diluted  computation  as  they  are
     anti-dilutive.  Had such  shares  been  included,  shares  for the  diluted
     computation  would have been increased by  approximately  3,235,000 in 1997
     and 1998. In addition, because such shares are anti-dilutive, no adjustment
     has been made to reconcile from income (loss) for the basic  computation to
     that for the diluted computation. No effect has been given to stock options
     in 1997 and 1998 as they are  anti-dilutive for that year. Had such options
     been included, shares for the diluted computation would have been increased
     by 1,067,000 and 1,870,000 in 1997 and 1998, respectively.

                                       9
<PAGE>
                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


4.   Income  Taxes - The Company  provides  for income  taxes at the end of each
     interim  period  based  on the  estimated  effective  tax rate for the full
     fiscal year for each tax reporting corporate entity. Cumulative adjustments
     to the tax benefit  (provision) are recorded in the interim period in which
     a change in the estimated annual effective rate is determined.

5.   Property and Equipment and  Intangible  Assets - Property and equipment and
     intangible assets included approximately $84.0 million and $56.9 million of
     assets related to radio stations held for sale or under exchange agreements
     (excluding the CBS Merger  Agreement) as of December 31, 1997 and March 31,
     1998,   respectively.   The  following  summary  presents  the  results  of
     operations  (excluding  depreciation and amortization,  net local marketing
     agreement and corporate general and  administrative  expenses)  relating to
     these stations that are included in the  accompanying  unaudited  condensed
     consolidated financial statements for each respective period.

   In thousands:

                                                   Three Months Ended March 31,
                                                   ----------------------------
                                                     1997             1998
                                                   -------          -------
Net operating revenues...............              $ 1,835          $ 2,195
Net operating expenses...............                1,787            2,621
                                                            

6.   ATS Loan  Agreement  - ATS is in the  process of  negotiating  amended  and
     restated loan  agreements,  with its senior lenders,  pursuant to which the
     Company expects that the existing maximum  borrowing will be increased from
     $400.0  million to $900.0  million,  subject  to  compliance  with  certain
     financial  ratios,  and ATS will be able to  borrow  an  additional  $150.0
     million.  In connection with the  refinancing,  ATS expects to recognize an
     extraordinary loss of approximately  $1.4 million,  net of a tax benefit of
     $0.9  million,   during  the  second  quarter  of  1998.  See  Management's
     Discussion and Analysis for a description of the new credit facilities.

7.   Acquisitions and Dispositions

     General:  The  following  acquisitions  have all been  accounted for by the
     purchase method of accounting,  and, accordingly,  the operating results of
     the acquired entities, to the extent that a local marketing agreement (LMA)
     did not exist,  have been included in consolidated  operating results since
     the date of  acquisition.  The  purchase  price has been  allocated  to the
     assets acquired, principally intangible assets, and the liabilities assumed
     based on their  estimated  fair  values  at the dates of  acquisition.  The
     excess of purchase  price over the  estimated  fair value of the net assets
     acquired has been recorded as goodwill.  The financial  statements  reflect
     the preliminary allocation of certain purchase prices as the appraisals for
     certain  acquisitions  have not yet been  finalized.  The Company  does not
     expect the final  appraisals  will have a material  effect on the financial
     position, results of operations or liquidity of the Company.

     During  the  first  three  months  of 1998,  the  Company  consummated  the
     following  station and tower  related  transactions.  See the Form 10-K for
     additional information on these transactions and transactions during 1997.

                                       10
<PAGE>

                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


7.   Acquisitions and Dispositions - (Continued)

     1998 Acquisitions and Dispositions:

     Dayton and Kansas  City:  In  January  1998,  the  Company  consummated  an
     agreement  to exchange  WXEG-FM,  WBTT-FM,  WLQT-FM,  WMMX-FM,  WTUE-FM and
     WONE-AM serving Dayton in exchange for WDAF-AM, KOZN-FM (formerly KYYS-FM),
     KMXV-FM and KUDL-FM serving Kansas City. The Company began  programming and
     marketing  KYYS-FM and KMXV-FM  pursuant to an LMA  agreement  in September
     1997.

     Kansas  City,  Sacramento  and St.  Louis:  In January  1998,  the  Company
     acquired KLOU-FM in St. Louis in exchange for KUDL-FM and WDAF-AM in Kansas
     City and approximately $7.0 million. The Company also consummated a related
     agreement  with the same party,  pursuant to which the Company sold KCTC-AM
     serving Sacramento for approximately $4.0 million.

     Riverside/San  Bernardino and Sun City: In March 1998, the Company acquired
     KFRG-FM,  serving the Riverside/San Bernardino market, and KXFG-FM, serving
     Sun City,  California,  for approximately $60.0 million.  The Company began
     programming  and  marketing  the stations  pursuant to an LMA  agreement in
     August 1997.
   
     Tower  Subsidiary:  In January 1998,  the Tower  Subsidiary  consummated an
     agreement  to acquire  all of the  outstanding  stock of Gearon & Co.  Inc.
     (Gearon),  a company based in Atlanta,  Georgia,  for an aggregate purchase
     price of  approximately  $80.0  million.  The purchase  price  consisted of
     approximately  $32.0  million  in  cash  and  assumed  liabilities  and the
     issuance of  approximately  5.3 million shares of Tower  Subsidiary Class A
     Common  Stock  valued  at  $9.00  per  share.  Gearon  is  engaged  in site
     acquisition,  development, construction and facility management of wireless
     network communication facilities on behalf of its customers and at the time
     of  acquisition  owned or had  under  construction  approximately  40 tower
     sites.  Following  consummation,  the Tower  Subsidiary  granted options to
     acquire up to 1,400,000 shares of Class A Common Stock at an exercise price
     of $13.00 per share to employees of Gearon.

     In January  1998,  the Tower  Subsidiary  consummated  the  acquisition  of
     OPM-USA-INC.  (OPM), a company which owned  approximately  90 towers at the
     time of  acquisition.  In addition,  OPM is in the process of developing an
     additional 160 towers that are expected to be  constructed  during the next
     12 to 18 months.  The  purchase  price,  which is variable and based on the
     number of towers  completed  and the forward cash flow of the completed OPM
     towers,  could aggregate up to $105.0 million, of which approximately $21.3
     million was paid at the closing. The Company had also agreed to provide the
     financing to OPM to enable it to  construct  the 160 towers in an aggregate
     amount  not to exceed  $37.0  million  (less  advances  as of  consummation
     aggregating approximately $5.8 million).

     In January 1998,  the Tower  Subsidiary  consummated  the  acquisition of a
     communications  site with six towers in Tucson,  Arizona for  approximately
     $12.3 million.

     In January 1998,  the Tower  Subsidiary  consummated  the  acquisition of a
     tower near Palm Springs, California for approximately $0.75 million.

     In  January  1998,  the  Company  transferred  to the Tower  Subsidiary  14
     communications  sites  currently  used by the  Company  and  various  third
     parties (with an ARS net book value of approximately $4.7 million), and the
     Company and the Tower Subsidiary  entered into leases or subleases of space
     on the

                                       11
<PAGE>
                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


7.    Acquisitions and Dispositions - (Continued)

     transferred towers. Two additional communications sites will be transferred
     and leases entered into  following  acquisition by the Company of the sites
     from third parties.

     In February 1998, the Tower  Subsidiary  acquired 11  communications  tower
     sites in northern California for approximately $11.8 million.

     The following  unaudited pro forma summary for the three months ended March
     31, 1997 and 1998 presents the consolidated results of operations as if the
     acquisitions  had  occurred  as of January 1, 1997 after  giving  effect to
     certain adjustments,  including depreciation and amortization of assets and
     interest  expense  on any debt  incurred  to fund the  acquisitions.  These
     unaudited  pro forma results have been  prepared for  comparative  purposes
     only and do not purport to be  indicative  of what would have  occurred had
     the  acquisitions  been made as of January 1, 1997 or of results  which may
     occur in the future.

     In thousands, except per share data:


                                   Three Months Ended      Three Months Ended
                                     March 31,1997           March 31, 1998
                                     -------------           --------------

Net revenues                            $102,693                $107,266
Loss before extraordinary loss           (14,381)                (11,375)
Net loss                                 (16,020)                (11,375)
Net loss applicable to common  
  stockholders                           (22,218)                (19,769)
Basic and diluted net loss per common
  share                                 $  (0.75)               $  (0.67)


8.   Pending  Transactions - The Company has numerous pending  transactions that
     are described in the Form 10-K.

     Portland,  Sacramento,  San  Francisco  and San Jose:  In April  1997,  the
     Company entered into an asset exchange  agreement pursuant to which it will
     acquire KINK-FM,  serving Portland,  Oregon,  KUFX-FM  (formerly  KBRG-FM),
     serving  Fremont/San  Francisco,  California,  $2.0 million in a promissory
     note to ARS due  September  30,  1998,  or at the time of  certain  earlier
     events, and 150,000 shares of common stock of Latin  Communications,  Inc.,
     in exchange for KBRG-FM (formerly  KBAY-FM),  serving San Jose, and KRRE-FM
     (formerly KSSJ-FM), serving Sacramento. The agreement also provides for the
     exchange of KINK-FM for KBRG-FM in the event  regulatory  approval  for the
     exchange of KUFXX-FM and KRRE-FM cannot be obtained. The Justice Department
     approved  the   exchange  of  KRRE-FM  for  KUFX-FM.   Subject  to  certain
     conditions,  including  the receipt of FCC  approval,  the  transaction  is
     expected to be consummated in the second quarter of 1998. The Company began
     programming and marketing  KINK-FM and KUFX-FM pursuant to an LMA agreement
     in January 1998.

                                       12
<PAGE>

                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

8.     Pending Transactions - (Continued)

     Portsmouth:  In March 1998, entered into an agreement to sell the assets of
     WQSO-FM  and  WZNN-AM  serving  Rochester,  New  Hampshire  and WERZ-FM and
     WMYF-AM,  serving  Exeter,  New Hampshire for  approximately  $6.0 million.
     Subject to the receipt of FCC approval,  the  transaction is expected to be
     consummated in the second quarter of 1998.

     Sacramento:  In March 1998, the Company entered an asset exchange agreement
     pursuant  to which the  Company's  KRAK-FM  would  exchange  FCC  frequency
     position's with another radio station also located in the Sacramento market
     for approximately $4.4 million. Subject to the receipt of FCC approval, the
     transaction is expected to be consummated in the third quarter of 1998.

     San Jose and  Monterey:  In March 1997,  the Company  entered into a merger
     agreement  pursuant to which the Company will acquire the assets of KEZR-FM
     and KLUE-FM  serving  Monterey,  California  in exchange for  approximately
     723,000  shares  of Class A Common  Stock  valued  at  approximately  $20.0
     million and $4.0  million in cash.  Subject to the receipt of FCC  approval
     and  resolution of the matters raised by the Antitrust  Division  described
     above,  the acquisition is expected to be consummated in the second quarter
     of 1998.

     San Jose:  In October 1997,  the Company  entered into an agreement to sell
     KSJO-FM  for  approximately  $30.0  million.  Subject to the receipt of FCC
     approval,  and the expiration or earlier termination of the HSR Act waiting
     period, the transaction is expected to be consummated in the second quarter
     of 1998.

     St. Louis: In September 1997, the Company entered into an agreement to sell
     the  assets  of  KFNS-AM  serving  the  St.  Louis,   Missouri  market  for
     approximately  $3.8 million.  Subject to the receipt of FCC  approval,  the
     transaction is expected to be consummated in the second quarter of 1998.

     Temple: In May 1997, the Company entered into an agreement to acquire radio
     station  KKIK-FM,  licensed  to  Temple,  Texas  (in the  Austin  area) for
     approximately  $3.7  million.  Subject  to the  approval  of the  FCC,  the
     transaction is expected to be consummated in the second quarter of 1998.

     West Palm Beach:  In July 1997,  the Company  entered  into an agreement to
     acquire  WTPX-FM  for  approximately  $11.0  million.   The  Company  began
     programming and marketing the stations  pursuant to an LMA in June 1997. In
     October  1997,  the Company  entered into an  agreement to terminate  these
     agreements. (See Note 9).

     In October  1997,  the Company  entered  into an  agreement to sell WEAT-AM
     serving West Palm Beach, Florida for approximately $1.5 million. Subject to
     the receipt of FCC approval,  the transaction is expected to be consummated
     in the second quarter of 1998.

                                       13
<PAGE>

                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

8.   Pending Transactions - (Continued)

     Tower  Subsidiary:  In December 1997, the Tower  Subsidiary  entered into a
     merger  agreement with American Tower  Corporation  (ATC) pursuant to which
     ATC will  merge  with and into  ATS  (the ATC  Merger),  which  will be the
     surviving  corporation.  Pursuant  to the  merger,  ATS expects to issue an
     aggregate of approximately  30.0 million shares of ATS Class A Common Stock
     (including  shares  issuable upon exercise of options to acquire ATC common
     stock which will become options to acquire ATS Class A Common  Stock).  ATC
     is engaged in the business of acquiring,  developing  and leasing  wireless
     communications  sites to companies using or providing  cellular  telephone,
     paging,  microwave and specialized  mobile radio services.  At December 31,
     1997,  ATC owned  and  operated  approximately  775  communications  towers
     located in 31 states.  Consummation of the transaction is subject to, among
     other things, the expiration or earlier  termination of the HSR Act waiting
     period, and is expected to occur in the Spring of 1998.

     In January 1998, the Tower Subsidiary entered into an agreement to purchase
     the assets relating to a teleport  serving the Washington,  D.C. area for a
     purchase price of approximately  $30.5 million.  The facility is located in
     northern  Virginia,  inside  of  the  Washington  Beltway,  on  ten  acres.
     Consummation of the transaction is expected to occur in the Spring of 1998.

     ATS  is  negotiating   certain  changes  in  the  ATS/PCS,   LLC  (formerly
     Communications  Systems  Development,  LLC)  arrangements,   including  the
     acquisition by ATS of the 58  communications  sites in northern  California
     presently  owned by  ATS/PCS,  LLC in  exchange  for  shares of ATS Class A
     Common   Stock,   arrangements   with   respect  to  the   development   of
     communications  sites  in  other  locations,  a  priority  return  of ATS's
     construction  advances, an increase in the percentage interest of the other
     member in ATS/PCS, LLC, and a management fee to ATS.

     ATS is also  negotiating  an agreement to acquire a company which is in the
     process of constructing approximately 40 towers in the Tampa, Florida area,
     of which seven are presently operational.  The purchase price will be equal
     to the excess of (i) ten times the "Current Run Rate Cash Flow" at the time
     of closing,  over (ii) the principal amount of the secured note referred to
     below. The purchase price will be payable in shares of Class A Common Stock
     (valued at market prices  shortly prior to closing) and, at the election of
     the  seller,  cash in an amount  not to exceed 49% of the  purchase  price.
     "Current  Run Rate Cash  Flow"  means  twelve  (12) times the excess of net
     revenues over direct  operating  expenses for the month preceding  closing.
     ATS  is  obligated  to  advance  construction  funds  to the  seller  in an
     aggregate  amount not to exceed $12.0 million in the form of a secured note
     (guaranteed by the  stockholders on a nonrecourse  basis and secured by the
     stock of the  seller),  of which  approximately  $1.0  million was advanced
     through  March 31,  1998.  The secured note would be payable in the event a
     definitive acquisition agreement is not executed or if the acquisition were
     not  consummated.  Subject to the negotiation and execution of a definitive
     agreement  and  to  the  satisfaction  of  certain  conditions,  including,
     depending on the  circumstances,  the expiration or earlier  termination of
     the HSR Act waiting  period,  the acquisition is expected to be consummated
     in the Spring of 1999.

                                       14
<PAGE>

                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



9.   Subsequent  Events - Subsequent to March 31, 1998, the Company  consummated
     the following transactions:

     West Palm  Beach - In May  1998,  the  WTPX-FM  termination  agreement  was
     consummated and a third party acquired  WTPX-FM from the seller pursuant to
     which the Company  received the net proceeds of certain  investment  notes,
     subject to the  valuation  allowance  that was  recorded as of December 31,
     1997.

     Tower  Subsidiary - In April 1998, ATS entered into an agreement to acquire
     a  broadcasting  tower in the Boston area for 720,000 shares of ATS Class A
     Common Stock. Subject to the satisfaction of certain conditions,  including
     the expiration or earlier  termination of the HSR Act waiting  period,  the
     acquisition is expected to be consummated in the second quarter of 1998.

     On May 12, 1998, ATS filed a registration  statement (No.  333-52481)  with
     the  Commission  with  respect  to an  underwritten  public  offering  (the
     Offering) of an aggregate of 22,918,499  shares of ATS Class A Common Stock
     (including an Underwriter's  over-allotment  option of 2,083,500 shares) by
     ATS and certain selling  stockholders.  Pursuant to the consummation of the
     Offering,  ATS will issue and sell  approximately  17,400,000 shares of ATS
     Class A Common  Stock  and  receive  net  proceeds  estimated  (based on an
     assumed initial public offering price of $23.00 per share) at approximately
     $381.5 million (exclusive of the Underwriter's  over-allotment option). ATS
     will  receive no proceeds  from the sale of ATS Class A Common Stock by the
     selling  stockholders.  ATS expects to use such net  proceeds to redeem the
     Interim  Preferred  Stock,  the net proceeds from the sale of which will be
     used  principally  to reimburse  CBS with respect to the taxes payable as a
     consequence of the separation of ARS and ATS pursuant to the CBS Merger and
     to reduce bank borrowings.

     The Offering is subject to various conditions,  including prevailing market
     conditions,  and therefore may change.  Further, there can be no assurances
     that the Offering  will be completed or that, if the Offering is completed,
     it will be completed on terms favorable to ATS. The registration  statement
     relating to these securities has been filed with the Commission but has not
     yet become  effective.  These  securities may not be sold nor may offers to
     buy be  accepted  prior  to the  time the  registration  statement  becomes
     effective.  This communication shall not constitute an offer to sell or the
     solicitation  of an  offer  to buy nor  shall  there  be any  sale of these
     securities in any state in which such offer,  solicitation or sale would be
     unlawful prior to registration or  qualification  under the securities laws
     of any such state. Copies of the Prospectus relating to the Offering may be
     obtained from Credit Suisse First Boston, Prospectus Department, 11 Madison
     Avenue, New York, New York 10010, (212) 325-2000.




                                       15
<PAGE>

                       AMERICAN RADIO SYSTEMS CORPORATION

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


10.  Subsidiary Guarantees

     The Company's payment obligations under the 9.00% Senior Subordinated Notes
     (9.00%  Notes) and the 9.75% Senior  Subordinated  Notes (9.75%  Notes) are
     fully  and  unconditionally   guaranteed  on  a  joint  and  several  basis
     (collectively,  the Subsidiary Guarantees),  on a senior basis (in the case
     of the 9.75%  Notes)  and a senior  subordinated  basis (in the case of the
     9.00% Notes) by all of its present and any future  Restricted  Subsidiaries
     (collectively Restricted Guarantors). The Restricted Subsidiaries have also
     unconditionally  guaranteed, and any future Restricted Subsidiaries will be
     required to  guarantee,  on a joint and several  basis  (collectively,  the
     Senior  Subsidiary  Guarantees),  all  obligations of the Company under the
     1997 Credit Agreement.  The Tower Subsidiary has not guaranteed obligations
     under the Credit  Agreements  or either  series of the Senior  Subordinated
     Notes.

     The 9.00%  Notes and the  Subsidiary  Guarantees  are  subordinated  to all
     Senior Debt (as defined) of the Company  including  indebtedness  under the
     1997 Credit Agreement and the Senior Subsidiary  Guarantees and 9.75% Notes
     related  guarantees.  The  indenture  governing  each  series of the Senior
     Subordinated  Notes  contains  limitations  on the  amount of  indebtedness
     (including Senior Debt) which the Company may incur.

     With the intent that the Subsidiary  Guarantees  not constitute  fraudulent
     transfers  or  conveyances  under  applicable  state or  federal  law,  the
     obligation of each guarantor under its Subsidiary Guarantee is also limited
     to the  maximum  amount  as will,  after  giving  effect  to any  rights to
     contribution of such guarantor  pursuant to any agreement  providing for an
     equitable  contribution  among such  guarantor and other  affiliates of the
     Company of  payments  made by  guarantees  by such  parties,  result in the
     obligations  of such  guarantor  in  respect  of such  maximum  amount  not
     constituting a fraudulent conveyance.

     The following unaudited condensed  consolidating financial data illustrates
     the  composition  of the combined  guarantors.  The Company  believes  that
     separate complete financial  statements of the respective  guarantors would
     not  provide  additional  material  information  which  would be  useful in
     assessing the financial composition of the guarantors.  No single guarantor
     has any  significant  legal  restrictions  on the ability of  investors  or
     creditors  to  obtain  access  to its  assets  in event of  default  on the
     Subsidiary  Guarantee,  other  than in the  case  of the  9.00%  Notes  its
     subordination to Senior Debt described above.

     Investments in  subsidiaries  are accounted for by the parent on the equity
     method  for   purposes   of  the   unaudited   supplemental   consolidating
     presentation.  Earnings (losses) of subsidiaries are therefore reflected in
     the parent's  investment accounts and earnings.  The principal  elimination
     entries eliminate investments in subsidiaries and intercompany balances and
     transactions.

                                       16
<PAGE>
               AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

10.  Subsidiary Guarantees--(Continued)
<TABLE>
<CAPTION>
                             Unaudited Condensed Consolidating Balance Sheet
                                              March 31, 1998
                                          (Dollars in thousands)


                                                 Parent and      Guarantor      Non-guarantor                     Consolidated
                                                its Divisions   Subsidiaries    Subsidiary        Eliminations       Totals
                                                -------------   ------------    ------------      ------------    ------------
<S>                                            <C>             <C>             <C>                 <C>          <C>
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                    $     4,303     $     1,895     $     6,799                      $    12,997 
   Accounts receivable, net                          44,460          28,751           5,742                           78,953
   Unbilled receivables                                                               3,028                            3,028
   Prepaid expenses and other assets                  8,243           1,636           1,337                           11,216
   Deferred income taxes                              4,006           2,359              63                            6,428
                                                -----------     -----------     -----------     -----------      -----------
      Total current assets                           61,012          34,641          16,969                          112,622
                                                                                                                 
PROPERTY AND EQUIPMENT, NET                          75,078          46,414         156,827                          278,319      
OTHER ASSETS:                                                                                                    
   Restricted cash                                                                                               
   Investment in and advances to subsidiaries     1,344,168                                     $(1,344,168)              
   Investment notes receivable                       25,498             610           1,000                           27,108
   Intangible assets - net
      Goodwill - net                                330,875          20,759                                          351,634      
      FCC licenses - net                                          1,171,196                                        1,171,196      
      Other intangible assets - net                  26,373           2,204           7,657                           36,234
      Unallocated purchase price - net                                              221,532                          221,532      
   Deposits and other long-term assets                3,120              66           5,756                            8,942
   Deferred income taxes                                                            123,273                          123,273
                                                -----------     -----------     -----------     -----------      -----------
      Total other assets                          1,730,034       1,194,835         359,218      (1,344,168)       1,939,919
                                                -----------     -----------     -----------     -----------      -----------
TOTAL                                           $ 1,866,124     $ 1,275,890     $   533,014     $(1,344,168      $ 2,330,860
                                                ===========     ===========     ===========     ===========      ===========
                                                                                                               
                                       17
<PAGE>
<CAPTION>
                           AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES

                   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                             (Continued)

10.  Subsidiary Guarantees--(Continued)

                             Unaudited Condensed Consolidating Balance Sheet
                                              March 31, 1998
                                          (Dollars in thousands)


                                                 Parent and      Guarantor      Non-guarantor                     Consolidated
                                                its Divisions   Subsidiaries    Subsidiary        Eliminations       Totals
                                                -------------   ------------    ------------      ------------    ------------
<S>                                            <C>             <C>             <C>                 <C>          <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Current maturities of long-term debt         $       282                     $       112                       $       394 
   Accounts payable and accrued expenses             27,771          7,560           16,704                            52,035
   Due to Parent                                                                    125,210           (125,210)            
   Income taxes payable                             107,016         18,758                                            125,774
                                                -----------    -----------      -----------        -----------    -----------
     Total current liabilities                      135,069         26,318          142,026           (125,210)       178,203
                                                                                                  
NON-CURRENT LIABILITIES                                                                           
   Deferred income taxes                                367        185,870                                            186,237
   Other long-term liabilities                        8,507             39               33                             8,579
   Long-term debt                                   863,361                         157,037                         1,020,398
                                                -----------    -----------      -----------        -----------    -----------
      Total non-current liabilities                 872,235        185,909          157,070                         1,215,214
                                                                                                  
MINORITY INTEREST  IN SUBSIDIARIES                     (415)                            600             78,023         78,208
                                                                                                  
REDEEMABLE PREFERRED STOCK                          215,550                                                           215,550
                                                                                                  
STOCKHOLDERS'  EQUITY:                                                                            
   Preferred stock                                        1                                                                 1
   Common stock                                         295                             490               (490)           295
   Notes receivable, due from stockholders                                          (49,375)            49,375             
   Additional paid-in capital                       663,036      1,053,602          286,590         (1,340,192)       663,036
   Unearned compensation                               (178)                                                             (178)
   Retained earnings (accumulated deficit)          (19,011)        10,061           (4,387)            (5,674)       (19,011)
   Treasury stock                                      (458)                                                             (458)
                                                -----------    -----------      -----------        -----------    -----------
      Total stockholders' equity                    643,685      1,063,663          233,318         (1,296,981)       643,685
                                                -----------    -----------      -----------        -----------    -----------
TOTAL                                           $ 1,866,124    $ 1,275,890      $   533,014        $(1,344,168)   $ 2,330,860
                                                ===========    ===========      ===========        ===========    ===========
                                                                                              
                                       18
<PAGE>
<CAPTION>

                           AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES

                   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                             (Continued)

10.  Subsidiary Guarantees--(Continued)

                        Unaudited Condensed Consolidating Statement of Operations
                                For the Three Months Ended March 31, 1998
                                          (Dollars in thousands)

 

                                                 Parent and      Guarantor      Non-guarantor                     Consolidated
                                                its Divisions   Subsidiaries    Subsidiary        Eliminations       Totals
                                                -------------   ------------    ------------      ------------    ------------
<S>                                            <C>             <C>             <C>               <C>            <C>

Net broadcast revenues                         $  53,789       $  34,804                          $     (13)      $  88,580  
Tower revenues                                                                 $  17,925               (325)         17,600
License fees charged to Parent                    (4,283)          4,283                                                  0
                                               ---------       ---------       ---------          ---------       --------- 
Total net revenues                                49,506          39,087          17,925               (338)        106,180
                                                                                                                 
Operating expenses excluding                                                                                     
   depreciation and amortization, net                                                                            
   local marketing agreement and                                                                                 
   corporate general and administrative                                                                          
   expenses                                       39,664          25,687          11,495                203          77,049
Net local marketing agreement expense                683              26                                                709
Depreciation and amortization                      5,228          12,790           5,802                             23,820
Merger expenses                                    3,572                                                              3,572
Corporate general and administrative               1,905                             541               (541)          1,905
                                               ---------       ---------       ---------          ---------       --------- 
Operating income (loss)                           (1,546)            584              87                  0            (875)
                                                                                                                 
Other income (expense):                                                                                          
Interest expense                                 (16,583)                         (2,430)                           (19,013)
Interest income                                      330                             865                              1,195
Gains (loss) on sale of assets and other,                                                                        
   net                                               (21)            (54)            (79)                              (154)
Equity in income (loss) of subsidiaries             (842)                                             1,257             415
                                               ---------       ---------       ---------          ---------       --------- 
Income (loss) before income taxes                (18,662)            530          (1,557)             1,257         (18,432)
Income tax provision (benefit)                     9,632            (260)            (30)                             9,402
                                               ---------       ---------       ---------          ---------       --------- 
Net income (loss)                              $  (9,030)      $     270       $  (1,527)         $   1,257       $  (9,030)
                                               =========       =========       =========          =========       ========= 
                                                                                                              
                                       19
<PAGE>
<CAPTION>
                           AMERICAN RADIO SYSTEMS CORPORATION AND SUBSIDIARIES

                   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                             (Continued)

10.  Subsidiary Guarantees--(Continued)

                        Unaudited Condensed Consolidating Statement of Cash Flows
                                For the Three Months Ended March 31, 1998
                                          (Dollars in thousands)


                                                 Parent and      Guarantor      Non-guarantor                     Consolidated
                                                its Divisions   Subsidiaries    Subsidiary        Eliminations       Totals
                                                -------------   ------------    ------------      ------------    ------------
<S>                                            <C>             <C>             <C>               <C>            <C>

Cash flows provided by operating activities      $  (7,595)      $  20,284        $  (1,738)                       $  10,951  
                                                 ---------       ---------        ---------        ---------       ---------
Investing Activities:                                                                                             
  Payments for purchase of property                                                                               
        equipment and intangible assets             (2,994)                         (12,690)                         (15,684)
  Proceeds from asset and radio station sales        3,952                                                             3,952
  Repayment of investment notes receivable               4                            2,000                            2,004
  Payments for  purchase of tower properties                                        (71,069)                         (71,069)
  Payments for purchase of radio stations          (42,153)                                                          (42,153)
  Repayments for investment notes receivable                                         (6,000)                          (6,000)
  Deposits and other long-term assets                  (79)                          (4,076)                          (4,155)
                                                 ---------       ---------        ---------        ---------       ---------
Cash flows used for investing activities           (41,270)                         (91,835)                        (133,105)
                                                 ---------       ---------        ---------        ---------       ---------
Financing Activities:                                                                                             
  Borrowings under  the Credit Agreements                                                                         
        and other                                   30,000                           67,000                           97,000
  Repayments under the Credit Agreements                                                                          
  Repayments under other obligations                  (208)                             (27)                            (235)
  Distributions to minority interest                                                   (105)                            (105)     
  Dividends paid                                    (8,394)                                                           (8,394)
  Net proceeds from equity offerings and                                                                          
        options                                        219                           30,023                           30,242
                                                                                                                  
  Investment in and advances to subsidiaries        21,081         (19,966)          (1,115)                               0
                                                 ---------       ---------        ---------        ---------       ---------
Cash flows from financing activities                42,698         (19,966)          95,776                          118,508
                                                 ---------       ---------        ---------        ---------       ---------
Increase (decrease) in cash and cash                                                                              
        equivalents                                 (6,167)            318            2,203                           (3,646)
Cash and cash equivalents, beginning of period      10,470           1,577            4,596                           16,643
                                                 ---------       ---------        ---------        ---------       ---------
Cash and cash equivalents, end of period         $   4,303       $   1,895        $   6,799        $       0       $  12,997
                                                 =========       =========        =========        =========       =========
                                                                                                               
</TABLE>
      
                                       20
<PAGE>
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.


This  report  contains   "forward-looking   statements"   including   statements
concerning  projections,  plans,  objectives,  future events or performance  and
underlying  assumptions and other  statements which are other than statements of
historical  fact. The Company wishes to caution  readers that certain  important
factors may have affected and could in the future  affect the  Company's  actual
results and could cause the Company's  actual results for subsequent  periods to
differ materially from those expressed in any forward-looking  statement made by
or on behalf of the Company.  These important factors include among others,  the
following:  (i)  any  adverse  change  in the  laws,  regulations  and  policies
governing the operation, ownership and acquisition of radio stations, including,
but not limited to, those  established by Congress,  the Federal  Communications
Commission and the Antitrust Division of the U.S. Justice  Department;  and (ii)
the Company's  financial  leverage as a result of borrowings under the Company's
credit  agreements,  which bear interest at variable rates,  and the issuance of
the  Senior  Subordinated  Notes  could make it  vulnerable  to an  increase  in
interest rates or a downturn in the operating  performance of its radio stations
or a downturn in economic conditions.

As of March 31, 1998, the Company owned and/or operated  approximately  96 radio
stations and approximately 820  communications  sites. See the Form 10-K and the
unaudited condensed  consolidated  financial statements for a description of the
1997 station and tower  acquisitions.  As of March 31, 1997,  the Company  owned
and/or  operated   approximately  71  radio  stations  and   approximately   270
communications  sites.  During 1997 and 1998, the Tower Subsidiary  continued to
increase  the  number of tower  sites and  management  agreements  with  several
acquisitions.  These transactions have significantly affected operations for the
three months  ended March 31, 1998  compared to the three months ended March 31,
1997.

Results of Operations

Three months ended March 31, 1998 and 1997

Net  revenues  were  $106.2  million for the three  months  ended March 31, 1998
compared  to $54.2  million  for the same  period in 1997,  an increase of $52.0
million or 95.9%.  This increase was  attributable  to revenue growth in some of
the Company's existing markets and, to a more substantial  extent, the impact of
the EZ Merger in 1997 and radio and  tower  acquisitions  that  occurred  in the
latter half of 1997 and first quarter of 1998.

Operating   expenses   excluding  net  local   marketing   agreement   expenses,
depreciation and amortization and corporate general and administrative  expenses
were $77.0  million for the three months ended March 31, 1998  compared to $40.9
million for the same period in 1997, an increase of $36.1 million or 88.3%. This
increase was due to the impact of increased costs  associated with the Company's
revenue growth and acquisitions.

Net local  marketing  agreement  expenses were $0.7 million for the three months
ended March 31, 1998  compared  to $1.9  million for the same period in 1997,  a
decrease of $1.2  million.  Local  marketing  agreement  expenses  for the three
months ended March 31, 1998 and 1997 are  presented  net of  approximately  $0.1
million  and  $0.7  million,   respectively,   of  revenues  earned  under  such
agreements.  The change in the  balances for each period are based on the timing
of pending station acquisitions and dispositions.

Depreciation  and  amortization was $23.8 million and $7.4 million for the three
months  ended  March  31,  1998 and 1997,  respectively,  an  increase  of $16.4
million.  This  increase was primarily  attributable  to the impact of increased
expenses  associated  with the increase in depreciable  and  amortizable  assets
resulting from the 1997 and 1998 acquisitions.

                                       21
<PAGE>
Results of Operations - (continued):


Merger  expenses were $3.6 million for the three months ended March 31, 1998 and
result from costs incurred to date in connection  with the pending sale of radio
properties to CBS.

Corporate general and administrative  expenses increased to $1.9 million for the
three months ended March 31, 1998 from $1.8 million for the same period in 1997,
an increase of $0.1 million or 5.6%. This increase was primarily attributable to
the higher  personnel costs  associated  with  supporting the Company's  greater
number of stations and tower properties.

Interest  expense was $19.0  million for the three  months  ended March 31, 1998
compared  to $7.5  million  for the same  period in 1997,  an  increase of $11.5
million or 153.3%.  The increase is related to higher borrowing levels under the
Company's credit  agreements in 1998 as compared to 1997 which resulted from the
1997 and 1998 acquisitions.

Interest  income was $1.2  million  for the three  months  ended  March 31, 1998
compared  to $0.7  million  for the same  period  in 1997,  a  increase  of $0.5
million. The increase is attributable to higher investable cash balances in 1998
and higher interest income earned on certain station  investment and stockholder
notes in 1998 as compared to 1997.

Gains on the sale of assets and other, net was $0.3 million and $0.2 million for
the three months ended March 31, 1998 and 1997, respectively. The gains for both
1998 and 1997 were primarily attributed to the gains on certain asset sales. The
income tax benefit for the three months ended March 31, 1998 was $9.4 million as
compared  to a  provision  of $1.7  million  for the same  period  in 1997.  The
effective  tax rate for the three months ended March 31, 1998 was  approximately
51.0%  compared to 38.2% in 1997.  The effective rate in 1998 and 1997 is due to
the effect of permanent differences,  principally amortization of non-deductible
goodwill.  Extraordinary loss for the three months ended March 31, 1997 was $1.6
million,  net of a $1.0 million tax benefit. The extraordinary loss was a result
from  the  write-off  of  certain  deferred  financing  costs  pursuant  to  the
extinguishment of debt under ARS's previous credit agreement.

Preferred  stock  dividends  for the three months ended March 31, 1998 were $8.4
million  compared to $6.2 million for the same period in 1997. The dividends for
the 1998 and 1997 period include $2.4 million of dividends  attributable  to the
Convertible  Exchangeable  Preferred  Stock  issued  in late  June 1996 and $6.0
million  and  $3.8  million  of  dividends   attributable   to  the   Cumulative
Exchangeable Preferred Stock issued in late January 1997, respectively.

Net loss applicable to common  stockholders for the three months ended March 31,
1998 was  $17.4  million  compared to $10.6 million for the same period in 1997,
as a result of the factors discussed above.

Broadcast cash flow for the three months ended March 31, 1998 was  $29.1 million
compared to $13.4  million for the same period in 1997, a $15.7 million or 117.2
% increase.  Broadcast cash flow margins were 27.4% in 1998 compared to 24.6% in
1997.

                                       22
<PAGE>
Liquidity and Capital Resources

The Company's  liquidity  needs arise from its  acquisition-related  activities,
debt service,  working  capital,  capital  expenditures  and dividend  payments.
Historically,   the  Company  has  met  its  operational  liquidity  needs  with
internally   generated   funds  and  has  financed  the   acquisition  of  radio
broadcasting properties and tower related properties,  including related working
capital needs,  with a combination of bank borrowings and proceeds from the sale
of the Company's  equity and debt  securities.  For the three months ended March
31, 1998 cash flows  provided by  operating  activities  was $11.0  million,  as
compared to cash flows used for  operating  activities  of $1.6  million for the
three months ended March 31, 1997.

Cash flows used for  investing  activities  were  $133.1  million  for the three
months  ended March 31, 1998 as compared to $233.3  million for the three months
ended March 31,  1997.  The  decrease is  attributable  to the  decreased  radio
acquisition activity in 1998 as compared to 1997.

Cash provided by financing  activities  was $118.5  million for the three months
ended March 31, 1998 as compared to $230.7  million for the three  months  ended
March 31, 1997. The decrease in 1998 is  attributable  to the Company's  reduced
efforts in raising capital through equity offerings.

CBS Merger:  In  September  1997,  American  Radio  entered  into the CBS Merger
Agreement  pursuant to which a  subsidiary  of CBS will be merged into  American
Radio. As a consequence of the consummation of the CBS Merger, all of the shares
of ATS owned by ARS will be distributed to ARS common  stockholders  and holders
of  options  to  acquire  ARS  Common  Stock or upon  conversion  of  shares  of
Convertible Preferred.  As a consequence of the CBS Merger, ATS will cease to be
a subsidiary  of, or to be otherwise  affiliated  with,  American Radio and will
operate as an independent publicly traded company. Pursuant to the provisions of
the CBS Merger Agreement,  ATS will enter into the ARS-ATS Separation  Agreement
with CBS and ARS providing  for, among other things,  the orderly  separation of
ARS and ATS, the allocation of certain tax  liabilities to ATS,  certain closing
date  adjustments  relating to ARS,  the lease to ARS by ATS of space on certain
towers   previously   owned  by  ARS  and   transferred   to  ATS,  and  certain
indemnification  obligations  (including with respect to securities law matters)
of ATS.

ATS's  principal  obligation is to reimburse CBS on a  "make-whole"  (after tax)
basis for the tax  liabilities  in excess of $20.0 million to be incurred by ARS
attributable to the distribution of the Common Stock to the ARS security holders
and certain related  transactions.  In light of the significant  increase in the
trading  levels of the Class A Common  Stock,  ATS and CBS have  agreed that ARS
will treat the distribution on its tax return on a more conservative  basis than
originally  contemplated  in order  to  avoid  the  possibility  of  significant
interest and  penalties for which ATS would be  responsible.  Assuming the "fair
market value" of ARS's stock interest in ATS was equal to $23.00 per share,  the
last  reported  sale price of such stock in the when issued  market on April 30,
1998, the total estimated tax  reimbursement ATS would be required to make would
be between  approximately  $315.0 and $345.0  million,  depending on  applicable
state tax rates. Such estimate gives effect to deductions of approximately $93.0
million, based on such closing price, available to ARS as a consequence of stock
option cancellations contemplated by the CBS Merger. The tax reimbursement would
change by between  approximately  $20.5 and $22.5  million,  again  depending on
applicable  state tax rates, for each $1.00 change in the "fair market value" of
the Common Stock under the tax reporting position to be followed.  The estimates
described  above are based on a number of  assumptions  and  interpretations  of
various applicable income tax rules and are subject to change.

ARS has agreed  that it will  pursue,  for the benefit and at the cost of ATS, a
refund  claim,  attributable  to  the  "make  whole"  provision,   estimated  at
approximately $90.0 million,  based on the assumed "fair market value" set forth
above. Any such refund claim will, in fact, be based on the actual amount of tax
paid. In light of existing tax law,  there can, of course,  be no assurance that
any such refund claim will be successful.

                                       23
<PAGE>
Liquidity and Capital Resources - (continued):

ARS and CBS have agreed  that in  computing  the amount of taxable  gain that is
recognized by ARS in connection with the  distribution of the Common Stock,  ARS
shall, subject to certain limitations, if so requested by ATS, report the amount
so realized  based on the "fair market value" of such stock as determined  based
on an appraisal prepared by a mutually agreed upon appraiser. Any such appraisal
is not,  of course,  binding on the  Internal  Revenue  Service or other  taxing
authorities.

In connection with an inter-corporate taxable transfer of assets entered into in
January 1998 by ATS in contemplation of the separation of ATS and ARS, a portion
of the tax with respect to which ATS is obligated to indemnify CBS was incurred.
Such  transfer  resulted  in an  increase  in the tax  bases of ATS's  assets of
approximately  $330.0  million.   ATS  will  have  potential   depreciation  and
amortization  deductions  over the next 15 years of $22.0  million  per year and
recorded a deferred tax asset of  approximately  $125.0 million to reflect these
transactions.

The ARS-ATS  Separation  Agreement  will provide for closing date balance  sheet
adjustments  based  upon  the  working  capital  (current  assets  less  defined
liabilities) and specified debt levels of ARS. ATS will benefit from or bear the
cost of such adjustments. ATS's preliminary estimate of such adjustments is that
it will not be required  to make a payment of more than $20.0  million and that,
in addition,  it will be required to reimburse CBS for the tax  consequences  of
any  such  payment  which  would  result  in  additional  liability  to  ATS  of
approximately  $13.0 million assuming a $20.0 million  adjustment  payment under
the tax  reporting  method to be followed and as to which a refund claim will be
filed.  Since the  amounts of working  capital and debt are  dependent  upon the
uncertainty,  among other things,  of recent operating  results and cash capital
expenditures,  as well as CBS Merger expenses and the  interpretation and intent
of certain  provisions of the CBS Merger  Agreement as to which  certain  issues
between ARS and ATS exist, ATS is unable to state definitively what payments, if
any, will be owed by ATS or CBS.

The foregoing is a description  of the rights and  obligations of ARS and ATS in
the event  the CBS  Merger  is  consummated.  Although  the  ARS-ATS  Separation
Agreement will be effective and  operational if the Tower Merger is consummated,
in the event the CBS Merger is not  subsequently  consummated,  ARS and ATS have
reserved the right to alter the terms of that agreement to provide for a sharing
of the rights and  obligations in a manner that may be more or less favorable to
ATS.  Because ARS and ATS believe  that the CBS Merger will be  consummated,  no
determination  has been made of what the rights and  obligations  of ARS and ATS
should be in the event it were not.

ATS is actively  negotiating a commitment from a major  investment  banking firm
with  respect to a preferred  stock  financing  (the  Interim  Financing)  which
provides for the  issuance and sale by ATS of up to $400.0  million of preferred
stock (the Interim  Preferred  Stock).  ATS plans to draw on such commitment and
sell Interim  Preferred  Stock to finance its  obligation to CBS with respect to
tax  reimbursement,  unless the public offering referred to below is consummated
prior to the  time  the tax  reimbursement  is due to CBS.  Consummation  of the
Interim  Financing is subject to the  negotiation  and execution of a definitive
preferred  stock  purchase  agreement  (the  Interim  Financing  Agreement)  and
satisfaction of the closing  conditions to be set forth therein.  ATS intends to
redeem the Interim Preferred stock, to the extent issued, out of the proceeds of
a public offering of Class A Common Stock to be registered  under the Securities
Act, if, as is likely, the tax reimbursement is due prior to the consummation of
such public offering or, if not, to use such public offering  proceeds  directly
to reimburse CBS for such tax liability.  Any remaining proceeds are intended to
be used to fund any  closing  date  balance  sheet  adjustments  (or repay  bank
borrowings incurred for such purpose). Any public offering would have a dilutive
effect on ATS's then existing stockholders, particularly since the proceeds will
be used to satisfy a  liability  and not to finance the  acquisition  of revenue
producing  property.  Further,  any public  offering  would be subject to market
conditions and other factors.  There can be no assurance that any such financing
would be available on terms favorable to ATS.

On May 12, 1998, ATS filed a registration  statement  (No.  333-52481)  with the
Commission with respect to the Offering of an aggregate of 22,918,499  shares of
ATS Class A Common Stock  (including an Underwriter's  over-allotment  option of
2,083,500  shares) by ATS and  certain  selling  stockholders.  Pursuant  to the
consummation of the Offering,  ATS will issue and sell approximately  17,400,000
shares of ATS Class A Common Stock and receive net proceeds  estimated (based on
an assumed initial public  offering price of $23.00 per share) at  approximately
$381.5 million (exclusive of the Underwriter's  over-allotment option). ATS will
receive no  proceeds  from the sale of ATS Class A Common  Stock by the  selling
stockholders.  ATS  expects  to use such net  proceeds  to  redeem  the  Interim
Preferred  Stock,  the  net  proceeds  from  the  sale  of  which  will  be used
principally  to reimburse CBS with respect to the taxes payable as a consequence
of the  separation  of ARS and ATS pursuant to the CBS Merger and to reduce bank
borrowings.

The  Offering  is subject to various  conditions,  including  prevailing  market
conditions,  and therefore may change.  Further, there can be no assurances that
the Offering will be completed or that, if the Offering is completed, it will be
completed  on terms  favorable to ATS. The  registration  statement  relating to
these  securities  has been  filed  with the  Commission  but has not yet become
effective.  These  securities  may not be sold nor may offers to buy be accepted
prior  to  the  time  the  registration   statement  becomes   effective.   This
communication  shall not constitute an offer to sell or the  solicitation  of an
offer to buy nor  shall  there be any sale of these  securities  in any state in
which such offer,  solicitation  or sale would be unlawful prior to registration
or  qualification  under the  securities  laws of any such state.  Copies of the
Prospectus  relating to the  Offering may be obtained  from Credit  Suisse First
Boston,  Prospectus  Department,  11 Madison  Avenue,  New York, New York 10010,
(212) 325-2000.

Credit  Agreements:  In order to finance  acquisitions of radio stations,  tower
related properties and for general corporate purposes,  the Company has borrowed
and expects to continue to borrow under its credit  agreements.  As of March 31,
1998, the Company had  approximately  $1,020.8  million of total  long-term debt
(including the current portion thereof) outstanding. This included approximately
$690.0  million of  borrowings  outstanding  under ARS's credit  agreements  and
$325.0 million  outstanding  under Senior  Subordinated  Notes.  As of March 31,
1998, ATS had  approximately  $157.1 million of total  long-term  debt, of which
approximately $155.5 million represented borrowings outstanding under ATS's Loan
Agreement.

                                       24
<PAGE>
Liquidity and Capital Resources - (continued):

In order to  facilitate  future  growth  and,  in  particular,  to  finance  its
construction   program,  ATS  and  the  Operating   Subsidiaries  have  received
commitments  for,  and  are  in the  process  of  negotiating,  the  New  Credit
Facilities  with its senior  lenders,  pursuant  to which the  existing  maximum
borrowing of the Operating  Subsidiaries  would be increased from $400.0 million
to $900.0  million,  subject to compliance with financial  ratios,  and ATS (the
parent company) would be able to borrow an additional $150.0 million. Borrowings
under such loan agreements would also be available to finance acquisitions.  The
New  Credit  Facilities  with ATS would  provide  for $150.0  million  term loan
maturing at the earlier of (i) eight and  one-half  years or (ii)  December  31,
2006,  amortizing  quarterly in an amount equal to 2.5% of the principal  amount
outstanding  at June 30, 2001 at the end of each  quarter  between such date and
June 30, 2006,  both  inclusive,  and the balance in two equal  installments  on
September 30 and December 21, 2006.  The ATS New Credit  Facility would be fully
drawn at closing and would provide for interest rates determined,  at the option
of ATS, of either the LIBOR Rate (as to be defined)  plus 3.50% or the Base Rate
(as to be  defined)  plus 2.5%.  The New Credit  Facilities  with the  Operating
Subsidiaries  provide  for $900.0  million  credit  facilities  maturing  at the
earlier of (a) eight years or (b) June 30, 2006 consisting of the following: (i)
a  $250.0  million  multiple-draw  term  loan,  (ii) a $400.0  million  reducing
revolving  credit facility and (iii) a $250.00 million 364-day  revolving credit
facility  that converts to a term loan  facility  thereafter.  The interest rate
provisions  are  similar to those in the Loan  Agreement,  except that the range
over the Base Rate is between 0.00% and 1.250% and the range over the LIBOR Rate
is between 0.750% and 2.250%.  Borrowings under the Operating  Subsidiaries' New
Credit  Facilities are conditioned upon compliance with certain financial ratios
and are required to be repaid, commencing June 30, 2001, in increasing quarterly
amounts designed to amortize the loans at maturity.

The loans to ATS and the Operating  Subsidiaries  will be  cross-guaranteed  and
cross-collateralized  by  substantially  all of the  assets of the  consolidated
group. The Operating  Subsidiaries will be required to pay quarterly  commitment
fees  equal to 0.375% or  0.250%  per  annum,  depending  on their  consolidated
financial leverage,  on the aggregate unused portion of the aggregate commitment
(other than,  until taken down, the 364-day facility on which it is 0.125% until
so taken down).  Other proposed  provisions of the Operating  Subsidiaries'  New
Credit  Facilities are comparable to the Loan Agreement,  although the financial
and other covenants are somewhat more favorable to the Operating Subsidiaries in
certain  respects,  including  an increase  of the Total Debt (of the  Operating
Subsidiaries)  to Annualized  Operating  Cash flow ratio from 6.1:1 to 6.5:1 and
the  inclusion  of a Total  Debt  (of ATS and  the  Operating  Subsidiaries)  to
Annualized  Operating Cash flow ratio of 8.0:1.  The New Credit  Facility of ATS
will  prohibit the payment of cash  dividends  and the  redemption,  purchase or
other acquisition of equity securities, except to the extent of the net proceeds
of the proposed  public  offering  used to redeem the Interim  Preferred  Stock.
There can, of course,  be no assurance  that the New Credit  Facilities  will be
executed on terms  satisfactory to ATS. In connection with the refinancing,  ATS
expects to recognize an extraordinary loss of approximately $1.4 million, net of
a tax benefit of $0.9 million, during the second quarter of 1998.

A substantial portion of the Company's cash flow from operations is required for
debt  service.  However,  the Company's  leverage  could make it vulnerable to a
downturn in the operating performance of its radio stations, tower properties or
a downturn in economic conditions. The Company believes that its cash flows from
operations  will be  sufficient to meet its  quarterly  dividends,  debt service
requirements  for interest and  scheduled  payments of principal  under the 1997
Credit  Agreements  and its  other  debt  obligations.  If such cash flow is not
sufficient to meet such debt service  requirements,  the Company may be required
to sell equity  securities,  refinance its obligations or dispose of one or more
of its  properties  in order to make such  scheduled  payments.  There can be no
assurance that the Company would be able to effect any of such  transactions  on
favorable terms.

                                       25
<PAGE>
Liquidity and Capital Resources - (continued):

The  Company's  working  capital  needs  fluctuate  throughout  the  year due to
industry-wide  seasonality  and its  broadcast  of sporting  events at different
times during the year. The Company historically has had sufficient cash from its
operations  to meet its working  capital  needs,  apart from needs  generated by
newly  acquired  properties,  and  believes  that  it has  sufficient  financial
resources available to it, including  borrowing under the credit agreements,  to
finance operations for the foreseeable future.

The Company has entered into numerous station and tower  acquisition and related
agreements  as described in the Notes to the  Unaudited  Condensed  Consolidated
Financial  Statements.  The  consummation of each of these agreements is subject
to, among other  things,  FCC approval and in some cases  expiration  or earlier
termination  of the HSR Act waiting  period and the  negotiation  of  definitive
agreements.  Unless  otherwise  noted,  the Company intends to effect all of the
transactions  as soon as the  necessary  approvals  are  obtained.  The  Company
intends to finance the  acquisitions  with available cash,  borrowings under the
credit agreements, and, in certain cases, issuance of equity securities.

ARS and ATS made approximately $2.3 million and $12.7 million,  respectively, in
capital  expenditures  for the three months  ended March 31,  1998,  principally
related to office  consolidations  and tower  construction.  ARS expects capital
expenditures in 1998 to be approximately $26.7 million consisting principally of
office  consolidations  and ongoing  technical  improvements.  During 1998,  ATS
(including  ATC and  other  acquired  companies)  plans  to  build  or  commence
construction of approximately  550 towers (most of which are on a build to suite
basis) at an estimated aggregate cost of approximately $110.0 million, including
a contract presently being negotiated with a wireless service company to provide
more than 200 towers (of which more than 160 will be newly  constructed)  for an
estimated  cost  of  approximately  $32.0  million,  although  there  can  be no
assurance that such negotiations will result in a definitive  agreement.  To the
extent that funds generated from operations, or available cash, are insufficient
to finance non-recurring capital expenditures,  the Company would seek to borrow
the necessary funds under the credit agreements.

If additional  substantial  acquisition  or  construction  opportunities  become
available,  ATS may require additional financing during 1998. Any such financing
could take the form of an increase in the maximum borrowing levels under the New
Credit  Facilities  (which  would be  dependent  on the ability to meet  certain
leverage ratios),  the issuance of debt or senior equity securities (which could
have the  effect of  increasing  its  consolidated  leverage  ratios)  or equity
securities (which, in the case of Common Stock or securities convertible into or
exercisable for Common Stock,  would have a dilutive effect on the proportionate
ownership  of ATS of its then  existing  common  stockholders).  There can be no
assurance that any such financing would be available on favorable terms.

Management  expects that the consummated  acquisitions,  the consummation of the
ATC Merger and current and future  construction  activities will have a material
impact on liquidity.  Management believes that the acquisition activities,  once
integrated,  will have a  favorable  impact on  liquidity  and will  offset  the
initial effects of the funding  requirements.  Management also believes that the
construction  activities  may  initially  have an  adverse  effect on the future
liquidity of ATS as newly  constructed  towers will initially  decrease  overall
liquidity,  although,  as such sites become more fully  operational  and achieve
higher  utilization,  they  should  generate  cash flow,  and in the  long-term,
increase liquidity.

ATS Stock  Purchase  Agreement:  On January 22, 1998,  ATS  consummated  a stock
purchase  agreement (the ATS Stock Purchase  Agreement),  dated as of January 8,
1998, with Steven B. Dodge, Chairman of the Board, President and Chief Executive
Officer of ARS and ATS,  and certain  other  officers  and  directors of ARS (or
their  affiliates or family members or family  trusts),  pursuant to which those
persons  purchased 8.0 million shares of ATS Common Stock at a purchase price of
$10.00 per share for an aggregate purchase price of $80.0 million, including 4.0
million shares by Mr. Dodge for $40.0 million. Payment of the purchase price was
in the form of cash aggregating  approximately  $30.6 million and in the form of
notes  aggregating  approximately  $49.4  million  due  on  the  earlier  of the
consummation  of the CBS  Merger or, in the event the CBS  Merger  Agreement  is
terminated, December 31, 2000. The notes bear interest at the six-month

                                       26
<PAGE>
Liquidity and Capital Resources - (continued):

London  Interbank Rate, from time to time, plus 1.5% per annum,  and are secured
by shares of ARS Common  Stock  having a fair market value of not less than 175%
of the  principal  amount of and accrued and unpaid  interest on the notes.  The
notes are  prepayable  at any time at the option of the  obligor and will be due
and  payable,  at the  option of the Tower  Subsidiary,  in the event of certain
defaults as described in the notes.

Year 2000

The Company is aware of the issues  associated  with the Year 2000 as it relates
to information  systems. The Year 2000 is not expected to have a material impact
on the  Company's  current  information  systems  because its software is either
already Year 2000 compliant or required changes are not expected to be material.
Based on the nature of the Company's business, the Company anticipates it is not
likely to experience  material  business  interruption due to the impact of Year
2000 compliance on its customers and vendors.  As a result, the Company does not
anticipate that incremental expenditures to address Year 2000 compliance will be
material to the Company's liquidity, financial position or results of operations
over the next few years.

Inflation

The impact of inflation on the Company's  operations has not been significant to
date.  However,  there can be no assurance  that a high rate of inflation in the
future would not have an adverse effect on the Company's operating results.

Recent Accounting Pronouncements

In June 1997, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial  Accounting  Standards  (FAS) No.  130,  "Reporting  Comprehensive
Income,"  which became  effective  for the Company for periods  beginning  after
December  15,  1997.  FAS  No.  130  establishes  standards  for  reporting  and
displaying comprehensive income and its components (revenues,  expenses,  gains,
and losses) in a full set of general purpose financial  statements.  FAS No. 130
requires  that a company (a)  classify  items of other  comprehensive  income by
their nature in a financial statement and (b) display the accumulated balance of
other  comprehensive  income  separately  from retained  earnings and additional
paid-in-capital in the equity section of the balance sheet.  Reclassification of
financial  statements for earlier periods  provided for comparative  purposes is
required.  The Company has adopted this  statement in the first quarter of 1998.
Comprehensive income does not differ from net income.

In June 1997,  the FASB released FAS No. 131  "Disclosures  about Segments of an
Enterprise and Related Information" (FAS 131). FAS 131 established standards for
reporting  information  about the  operating  segments in its annual  report and
interim  reports,  the Company  will adopt this  standard for its full year 1998
financial information.

In February 1998, the FASB released FAS No. 132,  "Employer's  Disclosures about
Pensions and Other Postretirement Benefits" (FAS 132), which the Company will be
required to adopt in 1998. FAS 132 will require additional disclosure concerning
changes in the Company's pension  obligations and assets and eliminates  certain
other  disclosures no longer considered  useful.  Adoption of this standard will
not have any effect on reported results of operations or financial position.

                                       27
<PAGE>
PART II.   OTHER INFORMATION.


Item 1. - Legal Proceedings.

In the normal  course of business,  the Company is subject to certain  suits and
other matters.  Management  believes that the eventual resolution of any pending
matters,  either  individually  or in the  aggregate,  will not have a  material
effect on financial position, liquidity or results of operations.

Item 2. - Changes in Securities and Use of Proceeds.

On January 22, 1998, ATS acquired all of the outstanding  stock of Gearon & Co.,
Inc.  (Gearon) for an aggregate  purchase price of $80.0  million.  The purchase
price consisted of approximately  $32.0 million in cash and assumed  liabilities
and the issuance of 5,333,333 shares of ATS Class A Common Stock valued at $9.00
per share or $48.0 million.

On January 22, 1998, ATS sold 8,000,000  shares of Common Stock (1,350,050 Class
A,  4,649,950 of Class B and 2,000,000 of Class C) at a purchase price of $10.00
per share for an  aggregate  purchase  price of $80.0  million.  Payment  of the
purchase  price of  3,062,500  shares  was in the form of cash of  approximately
$30.6  million and an aggregate of 4,487,500  shares of Class B Common Stock and
450,000 shares of Class A Common Stock were issued in exchange for $49.4 million
of notes due at the earlier of  consummation  of the CBS Merger or, in the event
the CBS Merger  Agreement  is  terminated,  December  31,  2000.  The notes bear
interest at the six month London  Interbank Rate, as measured from time to time,
plus 1.5% per annum, and are secured by shares of ARS Common Stock having a fair
market value of not less than 175% of the principal  amount and unpaid  interest
on the notes.  The notes are  prepayable at any time at the option of the debtor
and will be due and  payable,  at the  option  of the  Company,  in the event of
certain defaults as described in the notes.

All of the shares referred to in the foregoing  paragraphs were issued by ATS in
reliance on the  exemption  from  registration  provided by Section  4(2) of the
Securities  Act.  Each holder  represented  that it was acquiring its shares for
investment  purposes and not with a view to  distribution  within the meaning of
the  Securities  Act.  The stock  certificates  issued to all such  holder  bore
restrictive  legends.  No commission or other renumeration will be paid or given
by  ATS  directly  or  indirectly  in  connection  with  any  of  the  foregoing
transactions.

                                       28
<PAGE>

Item 6. - Exhibits and Reports on Form 8-K.

(a)       Exhibits

         Listed below are the exhibits which are filed as part of this Form 10-Q
(according to the number  assigned to them in Item 601 of Regulation  S-K). Each
exhibit marked by a (*) is  incorporated  by reference to American's  Definitive
Proxy  filed on  February  17,  1998.  See Form S-4  Registration  Statement  of
American Tower Systems Corporation (File No. 333-46025) as declared effective by
the Securities and Exchange Commission on February 17, 1998. Each exhibit marked
by a (+) is  incorporated  by reference to American Tower Systems  Corporation's
Registration Statement on Form S-1 (File No. 333-50111) as declared effective by
the Securities and Exchange  Commission on May 8, 1998. Each exhibit marked by a
(++) is  incorporated  by  reference  to American  Tower  Systems  Corporation's
Registration  Statement on Form S-1 (File No.  333-52481) filed on May 12, 1998.
Exhibit  numbers in  parenthesis  refer to the exhibit  number in the applicable
Registration Statement.
<TABLE>
<CAPTION>
  Exhibit No.                     Description of Document                               Exhibit File No.
  -----------                     -----------------------                               ----------------
     <S>        <C>                                                                  <C>

      2.1        Amendment No. 1 to Agreement and Plan of Merger, dated as of 
                 January 22, 1998, among ATS, American Tower Systems (Delaware),
                 Inc., a Delaware  corporation  (formerly  known as American 
                 Tower Systems, Inc.) ("ATSI"), Gearon & Co., Inc., a Georgia 
                 corporation, and J. Michael Gearon, Jr.........................      Incorporated herein by reference to
                                                                                      Exhibit 2.1 from the Form 8-K filed
                                                                                      on January 23, 1998.

      2.2        Amendment No. 1 to Agreement and Plan of Merger, dated as of 
                 January 22, 1998, among ATS, American Tower Systems (Delaware),
                 Inc., a Delaware corporation (formerly known as American Tower
                 Systems, Inc.), Gearon and the Gearon Stockholder..............      (*2.2)

     3(i).1      Certificate   of   Amendment   to   Restated   Certificate   of
                 Incorporation  of ATS, as filed with the  Secretary of State of
                 the State of Delaware on April 28, 1998........................      (++3(i).3)

      10.1       Assumption Agreement, dated as of January 22, 1998, by and 
                 among  ATS,  ATSI,  American  Tower  Systems,  L.P.,  a
                 Delaware limited partnership,  Toronto Dominion (Texas),  Inc.,
                 as Administrative Agent and the Banks parties thereto..........      (*10.4)

      10.2       American  Tower  Systems  Corporation  1997 Stock  Option Plan,
                 dated as of November 5, 1997, as amended and restated on April 
                 28, 1998 ......................................................      (+10.26)

      10.3       American Tower Systems Corporation Stock Purchase Agreement, 
                 dated as of January 8, 1998, by and among ATS and the 
                 Purchasers.....................................................       Incorporated herein by reference to
                                                                                       Exhibit 10.2 from the Form 8-K filed
                                                                                       on January 23, 1998.

      10.4       Employment Agreement, dated as of January 22, 1998, by and
                 between ATSI and J. Michael Gearon, Jr.........................       (*10.28)

                                       29

<PAGE>
<CAPTION>
Item 6. - Exhibits and Reports on Form 8-K - (Continued)

  Exhibit No.                     Description of Document                               Exhibit File No.
  -----------                     -----------------------                               ----------------
     <S>        <C>                                                                  <C>

      10.5       Asset Purchase Agreement, dated as of January 23, 1998, by  and 
                 among  ATSI,  Midcontinent  Media,   Inc.,   a   South   Dakota 
                 corporation  ("Midcontinent"),  Midcontinent  Teleport  Co.,  a 
                 South  Dakota  corporation  and  a  wholly-owned  subsidiary of
                 Midcontinent  ("MTC"),  Wit  Communications,  Inc.,  ("Wit")  a 
                 Delaware corporation and a wholly-owned subsidiary  of MTC, and 
                 Washington International Teleport, Inc., a Delaware corporation
                 and a wholly-owned subsidiary of Wit...........................       (*10.29)

       11        Statement Re Computation of Per Share Earnings.................        Filed herewith as Exhibit 11

       12        Statement Re Computation of Ratio of Earnings to Combined Fixed
                 Charges and Preferred Stock Dividends..........................        Filed herewith as Exhibit 12

       27        Financial Data Schedule........................................        Filed herewith as Exhibit 27
</TABLE>

(b)      Reports on Form 8-K

1.    Form 8-K (Items 5 and 7) on January 9, 1998.
2.    Form 8-K (Items 5 and 7) on January 23, 1998.
3.    Form 8-K (Items 5 and 7) on February 6, 1998.
4.    Form 8-K (Items 5 and 7) on May 1, 1998.

                                       30
<PAGE>
                                   SIGNATURES

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



                              AMERICAN RADIO SYSTEMS CORPORATION

Date: May 15, 1998            BY: /s/ Joseph L. Winn
                                    Joseph L. Winn
                                    Treasurer & Chief Financial Officer
                                    (Duly Authorized Officer)



Date: May 15, 1998            BY: /s/ Justin D. Benincasa
                                    Justin D. Benincasa
                                    Vice President & Corporate Controller
                                    (Duly Authorized Officer)


                                       31