<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13D OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                   For the fiscal year ended December 31, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

           For the transition period from ____________ to ____________

                         Commission File Number 1-10321

                            THE ACKERLEY GROUP, INC.
                            ------------------------
             (Exact name of Registrant as specified in its charter)

               Delaware                                       91-1043807
----------------------------------------               -------------------------
   (State or other jurisdiction of                         (I.R.S. Employer
    incorporation or organization)                        Identification No.)

    1301 Fifth Avenue, Suite 4000
        Seattle, Washington                                       98101
----------------------------------------               -------------------------
(Address of principal executive offices)                       (Zip code)


Registrant's telephone number, including area code:  (206) 624-2888
                                                     --------------

Securities registered pursuant to Section 12(b) of the Act:

          Title of each class               Name of exchange on which registered

             Common Stock                        New York Stock Exchange, Inc.
-------------------------------------       ------------------------------------

Securities registered pursuant to Section 12(g) of the Act:

                                       N/A
                                       ---
                                (Title of class)

      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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                   Yes   X    No
                                        ---      ---

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]

      The aggregate market value of the voting stock held by nonaffiliates of
the registrant as of March 1, 2002 was $252,689,416.

      The number of shares outstanding of each of the registrant's classes of
common stock as of March 1, 2002 was:

          Title of Class                            Number of Shares Outstanding
          --------------                            ----------------------------
   Common Stock, $.01 Par Value                           24,298,380 shares
Class B Common Stock, $.01 Par Value                      11,020,622 shares

<PAGE>

                                     PART I

                               ITEM 1 -- BUSINESS

MERGER

        On October 5, 2001, we entered into a merger agreement (the "Merger
Agreement") with Clear Channel Communications, Inc. ("Clear Channel"). Under the
terms of the Merger Agreement, each share of our common stock and our Class B
common stock will be converted into the right to receive 0.35 of a share of the
common stock of Clear Channel. The transaction is intended to be tax-free to our
stockholders. Our stockholders approved the transaction on January 24, 2002. The
transaction, which we expect to consummate in the second quarter of 2002, is
subject to customary regulatory approvals and closing conditions.

GENERAL INFORMATION

        The Ackerley Group, Inc. was founded in 1975 as a Washington
corporation. In 1978, we were reincorporated under Delaware law. We are a
diversified media and entertainment company which engages in four principal
businesses: outdoor media, television broadcasting, radio broadcasting, and
interactive media. Our outdoor media, television broadcasting, radio
broadcasting, and interactive media segments accounted for approximately 39%,
49%, 12%, and 0%, respectively, of our net revenue for the year ended December
31, 2001. On April 2, 2001, we sold our Seattle SuperSonics NBA franchise, along
with our interests in the Seattle Storm WNBA team and our Full House Sports &
Entertainment division, for approximately $200.0 million plus the assumption of
certain liabilities. Accordingly, our sports & entertainment segment is now
reported as "discontinued operations."

        -  Outdoor Media. We engage in outdoor advertising in Massachusetts, New
           York, and New Jersey and the Pacific Northwest. We have 6,096 outdoor
           displays in our primary markets of Boston-Worcester, Massachusetts;
           Seattle-Tacoma, Washington; and Portland, Oregon. We believe that we
           have leading positions in the primary markets in which we operate,
           based upon the number of outdoor advertising displays.

        -  Television Broadcasting. We engage in television broadcasting in New
           York, California, Oregon, Washington, and Alaska. We own sixteen
           television stations and provide programming and other services to two
           additional television stations under time brokerage or local
           marketing agreements ("LMAs"). Consistent with our strategy of local
           news leadership, ten of the sixteen network-affiliated television
           stations we own or program ranked first or second in their designated
           market areas ("DMAs"), in terms of local news ratings points
           delivered, according to the November 2001 Nielsen Station Index.

        -  Radio Broadcasting. We own and operate four radio stations in the
           Seattle-Tacoma, Washington market. We also provide sales and other
           services for

<PAGE>

           KFNK(FM), another station in the Seattle-Tacoma market, pursuant to a
           joint sales agreement with the owner of that station. KUBE(FM) is the
           highest ranked FM station in the market in its target demographic of
           adults 18 to 34 years old and is third overall in the market in terms
           of share of its market service area ("MSA"), according to the Fall
           2001 Arbitron Radio Market Report; KJR(AM) is the only sports talk
           station in the market.

        -  Interactive Media. We own and operate local market news and
           information Web sites in California and New York that are built
           through strategic partnerships with local media companies that
           provide promotional power, reliable news and information content and
           intimate knowledge of the local marketplace. We currently operate
           three portal sites: www.iknowbakersfield.com in Bakersfield,
           California, www.iknowcentralcoast.com in Salinas, California, and
           www.iknowrochester.com in Rochester, New York. These operations,
           known as the iKnow Network(TM), combine the live, multimedia aspects
           of television and radio with the depth of news and community
           information of newspapers.

BUSINESS STRATEGY

        Our primary strategy is to develop and acquire media assets that enable
us to offer advertisers a choice of media outlets for distributing their
marketing messages. To this end, we have assembled a diverse portfolio of media
assets. Our businesses are linked by a common goal of increasing the number of
advertising impressions made, regardless of whether the impression is made via
radio, television, outdoor media display, or web page. Following disposal of our
sports & entertainment operations (which is described in greater detail in Note
5 to the Consolidated Financial Statements), we have evolved as a media company
focused on these segments and pursuing our core competencies.

        We seek to grow by investing in the expansion of our existing operations
through additions and upgrades to our facilities and programming. We also look
to grow through opportunistic acquisitions in our existing business lines and by
exploring new synergistic business ventures and investments. We target markets
where we see an opportunity to improve market share, take advantage of regional
efficiencies, and develop our television stations into local news franchises.

        We believe the following elements of our strategy provide us with
competitive advantages:

        Maintain and Develop Leadership Positions in Markets Served. We seek to
be a leader in each of our markets. We own the most outdoor advertising display
faces in each of the primary geographic markets in which we operate, based on
the Traffic Audit Bureau's online database of audited markets. Ten of the
sixteen network-affiliated television stations we own or program ranked first or
second in their DMAs, in terms of local news ratings points delivered, according
to the November 2001 Nielsen Station Index. Our four radio stations include
KUBE(FM), which is the highest ranked FM station in the Seattle-Tacoma market in
its target


                                       2

<PAGE>

demographic of adults 18 to 34 years old and is fourth overall in the market in
terms of share of its MSA, according to the Fall 2001 Arbitron Radio Market
Report, and KJR(AM), the only sports talk station in the market. We believe this
market leadership enables us to provide advertisers a cost-effective means of
delivering a quality message to their target audiences.

        Use Advanced Communications Technology to Create Regional Television
Groups. On April 6, 1999, we announced the launch of Digital CentralCasting(TM),
a digital broadcast system which allows us to operate multiple television
stations using the back-office functions of a single station. The system
contemplates that all of our television stations in a geographic area will be
linked through a fiber optic-based communications network, and that the stations
themselves will switch from analog to digital broadcasting equipment. This
permits the stations to share digital programming and other data along the
fiber-optic network, as well as allowing a single station within the geographic
area to perform back-office functions such as operations, programming and
advertising scheduling, and accounting for all of our television stations in the
area. To implement this strategy, we have organized sixteen of the television
stations we own or program into the following regional station groups: New York
(WIXT, WOKR, WIVT, WBGH, WUTR, WWTI, and WETM), Central California (KCOY, KKFX,
KGPE and KGET), and North Coast (KCBA, KION, KMTR, KVIQ, and KFTY).

        While the advantages of owning multiple stations in a market are evident
in radio broadcasting, current television ownership rules prohibit the ownership
of more than one station in a designated market, with some exceptions. We
believe that the confluence of falling prices for fiber-optic-based
communications services and the advancement of digital transmission technology
has created an opportunity to realize the benefits of multi-station ownership by
linking several distinct television markets into one regional group. We believe
that we are among the first companies to introduce this technology in the
industry. We anticipate that Digital CentralCasting(TM) will enhance our
operational efficiency through economies of scale and the sharing of resources
and programming among our stations. However, we can give no assurance as to the
timing or extent of the anticipated benefits of Digital CentralCasting(TM).

        Experienced Management; Decentralized Management Structure. We believe
that our efficient management structure and the experience of our management
team enable us to respond effectively to competitive challenges across our
markets and our business segments. We have granted the management of our
operating units the authority and autonomy necessary to run each unit as a
business and to respond to changes in each market environment. Experienced local
managers enhance our ability to respond to local challenges rapidly and
effectively. The average experience of our 10 division managers in their
respective industries is approximately 20 years. These local managers are
supported and guided by an experienced and cohesive executive team. Our four
executive officers collectively have an aggregate of 69 years of experience in
the various industries in which we are involved.

        Barry A. Ackerley, one of our founders and our current Chairman and
Chief Executive Officer, has been actively involved with this company since our
inception in 1975. Early in our history, Mr. Ackerley recognized the synergies
that could be achieved through ownership of outdoor advertising and television
and radio broadcasting assets. With this vision, Mr. Ackerley


                                       3

<PAGE>

led our expansion from outdoor advertising into television and radio
broadcasting and sports and entertainment well before the current trend toward
consolidation among these industries.

OUTDOOR  MEDIA

        Our outdoor media business sells advertising space on outdoor displays
and often participates in the design of advertisements and the construction of
outdoor structures that carry those displays.

        Industry Overview. During the nineteenth century, companies began to
lease out space on wooden boards for advertising messages, or "bills." Today,
outdoor advertising extends nationwide, providing advertisers with a relatively
low-cost means of reaching large audiences. Outdoor advertising is used by large
national advertisers as part of multi-media and other advertising campaigns, as
well as by local and regional advertisers seeking to reach local and regional
markets.

        We believe that outdoor advertising is a cost-effective form of
advertising, particularly when compared to television, radio, and print, on a
"cost-per-rating point" basis (meaning cost per 1,000 impressions). Displays
provide advertisers with the opportunity for their message to target a specified
percentage of the general population. The displays are generally placed in
appropriate well-traveled areas throughout a geographic area. This results in
the advertisement's broad exposure within a market.

        Outdoor advertising companies generally establish and publish "rate
cards" periodically, which list monthly rates for bulletins, posters, and junior
posters. Rates are based, in part, on surveys made by independent traffic audits
that determine a given display's exposure to the public. Actual rates charged to
customers are subject to negotiation. Advertising contracts relating to
bulletins, posters, and junior posters usually have terms of one year or less.

        Outdoor advertising has been a stable source of revenue for us over the
last five years. The number and diversity of our advertisers have increased,
broadening the use of outdoor advertising in a variety of business sectors. For
example, we have seen an increase in outdoor advertising revenues from retail,
real estate, entertainment, media, and financial services companies. In
addition, we have seen an increase in customers who have not traditionally used
outdoor advertising, such as fashion designers, internet service providers and
internet-based businesses, and telecommunications companies.

        Operations. We operate primarily in the markets of Seattle-Tacoma,
Washington; Portland, Oregon; and Boston-Worcester, Massachusetts. In 2000, we
expanded our operations into the New York, New York market. Until we sold our
Florida outdoor advertising business in January 2000, we also operated in Miami,
Fort Lauderdale, West Palm Beach and Fort Pierce, Florida. Based on the Traffic
Audit Bureau's online database of audited markets, we had more outdoor
advertising displays in each of our primary markets than any other outdoor
advertising company.


                                       4

<PAGE>

        We believe that our presence in large markets, the geographic diversity
of our operations, and our emphasis on local advertisers within each of our
markets lend stability to our revenue base, reduce our reliance on any
particular regional economy or advertiser, and mitigate the effects of
fluctuations in national advertising expenditures. However, because of zoning
and other regulatory limitations on the development of new outdoor advertising
displays, we anticipate that future growth in our outdoor advertising business
will result primarily through diversification of our customer base, creative
marketing, upgrading our existing structures, increased rates, and increased
demand brought about by advertisers who have not historically used outdoor
media.

        Our outdoor advertising operations involve the sale of space on
advertising display faces. They also include, in many cases, the design of
advertisements and the construction of outdoor structures that carry those
displays. Our principal outdoor advertising display is the billboard, of which
there are generally three sizes:

        -  Bulletins: Bulletins are generally 14 feet high and 48 feet wide.
           Generally, bulletins are covered with a single sheet of vinyl, called
           "Superflex," on which an image has been produced by a large format
           printer. The Superflex is then transported to the site of the
           billboard and mounted to the face of the display. To attract more
           attention, advertising may extend beyond the linear edges of the
           display face and may include three-dimensional embellishments.
           Bulletins are usually located near major highways for maximum impact.
           Space is usually sold to advertisers for periods of four to twelve
           months.

        -  Posters: The most common type of billboard, posters are generally 12
           feet high by 25 feet wide. Lithographed or silk-screened paper sheets
           are typically supplied by the advertiser. They are applied like
           wallpaper to the face of the display. Posters are usually located on
           major traffic arteries. Space is usually sold to advertisers for
           periods of one to twelve months.

        -  Junior posters: Junior posters are generally 6 feet high by 12 feet
           wide. These displays are prepared and mounted in the same manner as
           posters. Most junior posters, because of their smaller size, are
           concentrated on city streets and are targeted to pedestrian traffic.
           Space on junior posters usually is sold to advertisers for periods of
           one to twelve months.


                                       5

<PAGE>

        We have 1,105 bulletins, 4,711 posters, and 324 junior posters. The
following chart itemizes markets we served and their designated market area
(DMA) rank:

<TABLE>
<CAPTION>
                                          DMA                           JUNIOR
                  MARKET                RANK(1)   BULLETINS   POSTERS   POSTERS
                  ------                -------   ---------   -------   -------
<S>                                     <C>       <C>         <C>       <C>
        Seattle-Tacoma (2) .........       12        338       1,691      243
        Portland (2) ...............       23        275       1,057        0


        Boston-Worcester ...........     6(3)        448       1,963       81

        New York, New York:                 1         44          --       --
</TABLE>

-------------
    (1) Source: Television & Cable Factbook, 2001 Edition. DMA rank is a measure
        of market size in the United States based on population as reported by
        the Nielsen Rating Service.

    (2) In the first quarter of 2000, we purchased outdoor advertising assets in
        the Portland Metro and Salem, Oregon areas (which for operating purposes
        we deem to be part of the Portland market) and Bellingham, Washington
        (which for operating purposes we deem to be part of the Seattle-Tacoma
        market). See "--Acquisitions."

    (3) Reflects DMA rank for the Boston market.

        We own substantially all of our outdoor displays. These displays
generally are located on leased property. The typical property lease provides
for a term ranging from 5 to 15 years and for a reduction in or termination of
rental payments if the display becomes obstructed during the lease term. In
certain circumstances leases may be terminated, such as where the property owner
develops or sells the property. If a lease is terminated, we generally seek to
relocate the display in order to maintain our inventory of advertising displays
in the particular geographic region. Display relocation is typically subject to
local zoning laws.

        Sales and Marketing. We sell advertising space directly to advertisers
and also sell to advertising agencies and specialized media buying services.
These agencies charge us a commission for their services. In recent years, we
have focused increasingly on selling directly to local and regional advertisers.

        Competition. We compete directly with other outdoor advertising
companies, and with other types of advertising media companies, including
television, radio, newspapers, magazines, transit advertising, yellow page
directories, direct mail, local cable systems, and satellite broadcasting
systems. Substantial competition exists among all advertising media on a
cost-per-rating-point basis and on the ability to effectively reach a particular
demographic section of the market. As a general matter, competition is confined
to defined geographic markets.

        Regulation. Outdoor advertising displays are subject to governmental
regulation at the federal, state, and local levels. These regulations, in some
cases, limit the height, size, location, and operation of outdoor displays and,
in some circumstances, regulate the content of the advertising copy displayed on
outdoor displays. Certain jurisdictions have recently proposed or


                                       6

<PAGE>

enacted regulations restricting or banning outdoor advertising of tobacco or
liquor. Likewise, regulations in certain jurisdictions prohibit the construction
of new outdoor displays or the replacement, relocation, enlargement, or
upgrading of existing structures.

        Our outdoor advertising operations are significantly affected by local
zoning regulations. Some jurisdictions impose a limitation on the number of
outdoor advertising structures permitted within the city limits. In addition,
local zoning ordinances can restrict or prohibit outdoor advertising displays in
specific areas. Most of our outdoor advertising structures are located in
commercial and industrial zones subject to such regulations. Some states and
municipalities have also enacted restrictions on the content of outdoor
advertising signs.

        Federal and corresponding state outdoor advertising statutes require
compensation payment for removal of existing structures by governmental order in
some circumstances. Some jurisdictions have adopted ordinances which have sought
the removal of existing structures without compensation. Ordinances requiring
the removal of a billboard without compensation have been challenged in various
state and federal courts on both statutory and constitutional grounds, with
differing results. In our markets, however, we have generally prevailed in such
challenges.

        Federal law also imposes additional regulations upon our operations.
Under the Federal Highway Beautification Act of 1965, states are required to
adopt programs regulating outdoor advertising along federal highways. The Act
also provides for the payment of compensation to the owner of a lawfully erected
outdoor advertising structure that is removed by operation of the statute.

        Our policy, when a governmental entity seeks to remove one of our
outdoor advertising displays, is to actively resist unless adequate compensation
is paid. Although we have been successful in the past in challenging
circumstances in which our displays have been subject to removal, we cannot
predict whether we will be successful in the future and what effect, if any,
such regulations may have on our operations. In addition, we are unable to
predict what additional regulations may be imposed on outdoor advertising in the
future. Legislation regulating the content of billboard advertisements has been
introduced in the U.S. Congress from time to time in the past.

TELEVISION BROADCASTING

        Our television broadcasting operations involve the sale of advertising
time to a broad range of national, regional, and local advertisers. We own
and/or program eighteen television stations in markets that offer a large and
affluent population base that is attractive to many advertisers.

        Industry Overview. Television stations in the United States are either
"very high frequency" or "VHF" stations, transmitting on channels 2 through 13,
or "ultra high frequency" or "UHF" stations, transmitting on channels 14 through
69. Broadcast licenses are issued by the Federal Communications Commission
("FCC"). Television station revenue comes primarily


                                       7

<PAGE>

from local, regional and national advertising. Revenue also comes, to a lesser
extent, from network compensation and from studio rental and commercial
production activities.

        Advertising rates are based upon (1) a program's popularity among the
viewers whom an advertiser wishes to attract, (2) the number of advertisers
competing for the available time, (3) the size and demographic makeup of the
market, and (4) the availability of alternative advertising media in the market
area. The size of a television station's audience is measured and reported by
independent rating service surveys.

        Affiliation with a major network (e.g., ABC, NBC, CBS, or FOX) can have
a significant impact on a station's revenue, expenses and operations. A typical
affiliate receives a significant portion of its daily programming from a
network. Networks provide programming, and in some cases cash payments, to the
affiliate in exchange for a substantial majority of the advertising time during
network programs. The network sells this advertising time and retains the
revenues. A small portion of inventory contained within network programming is
sold by the local affiliates who retain the corresponding revenue.

        Operations. We currently own sixteen television stations and program two
stations under time brokerage or local marketing agreements ("LMAs"). The
following table sets forth information about our portfolio of television
stations and the markets in which they operate.

<TABLE>
<CAPTION>
                                                                                                             NO. OF
                                                                                                           COMMERCIAL
                                                   DATE                                PROPOSED   DMA     TV STATIONS
                                   CALL        ACQUIRED OR    NETWORK       NTSC       DIGITAL   MARKET    RANKED IN
MARKET                            LETTERS       AFFILIATED  AFFILIATION   CHANNEL(1)   CHANNEL   RANK(2)   MARKET(3)
------                            -------      -----------  -----------   ----------   --------  -------  -----------
<S>                               <C>         <C>           <C>           <C>          <C>       <C>      <C>
NEW YORK

Syracuse, New York (owned)........  WIXT         May 1982       ABC           9           17        80       3VHF
                                                                                                             3UHF

Rochester, New York (owned).......  WOKR        April 1999      ABC          13           59        74       3VHF
                                                                                                             1UHF

Binghamton, New York (owned)......  WIVT       July 1997(4)     ABC          34            4       156       1VHF
                                                                                                             2UHF

Binghamton, New York (owned)...... WBGH-CA   February 2000(5)   NBC           8           --(6)    156       1VHF
                                                                                                             2UHF

Utica, New York (owned)...........  WUTR       June 1997(7)     ABC          20           30       168       1VHF
                                                                                                             2UHF

Elmira, New York (LMA)............  WETM     February 2000(8)   NBC          18            2       171       3UHF

Watertown, New York (owned)......   WWTI        June 2000       ABC          50           21       176       1VHF
                                                                                                             1UHF

CENTRAL COAST

Fresno-Visalia, California (owned)  KGPE       August 2000      CBS          47           34        54      10UHF
</TABLE>


                                       8

<PAGE>

<TABLE>
<CAPTION>
                                                                                                             NO. OF
                                                                                                           COMMERCIAL
                                                   DATE                                PROPOSED   DMA     TV STATIONS
                                   CALL        ACQUIRED OR    NETWORK       NTSC       DIGITAL   MARKET    RANKED IN
MARKET                            LETTERS       AFFILIATED  AFFILIATION   CHANNEL(1)   CHANNEL   RANK(2)   MARKET(3)
------                            -------      -----------  -----------   ----------   --------  -------  -----------
<S>                               <C>        <C>            <C>           <C>          <C>       <C>      <C>
Santa Barbara-Santa
  Maria-San Luis Obispo,
  California (owned)..............  KCOY     January 1999(9)    CBS          12           19       117       3VHF
                                                                                                             2UHF
Santa Barbara-Santa
  Maria-San Luis Obispo,
  California (owned)..............  KKFX-CA    May 2000(10)     FOX          24           --(6)    117       3VHF
                                                                                                             2UHF
Bakersfield, California (owned)...  KGET      October 1983      NBC          17           25       130       4UHF(12)

NORTH COAST

Monterey-Salinas,
  California (owned)..............  KION      April 1999(10)    CBS          46           32       118       2VHF
                                                                                                             3UHF(11)
Monterey-Salinas,
  California (LMA)................  KCBA      June 1986(13)     FOX          35           13       118       2VHF
                                                                                                             3UHF(11)

Eugene, Oregon (owned)............  KMTR    December 1998(14)   NBC          16           17       122       2VHF
                                                                                                             3UHF

Eureka, California (owned)........  KVIQ      July 1998(15)     CBS           6           17       191       2VHF
                                                                                                             2UHF

Santa Rosa, California (owned)....  KFTY      April 1996        None         50           54        --(16)   5VHF
                                                                                                             12UHF

PACIFIC NORTHWEST

Fairbanks, Alaska (owned).........  KTVF      August 1999     NBC/UPN        11           26       203       4VHF

Vancouver, British Columbia
  and portions of Seattle,
  Washington (owned)..............  KVOS       June 1985        None         12           35        --(17)     --(17)
</TABLE>

(1)   Refers to the current analog channel used by such station.
(2)   Source: November 2001 Nielsen Station Index.
(3)   Source: November 2001 Nielsen Station Index. The number of stations listed
      does not include digital television stations, public broadcasting
      stations, satellite stations, low-power stations, or translators that
      rebroadcast signals from distant stations, and also may not include
      smaller television stations whose rankings fall below reporting
      thresholds.
(4)   We acquired WIVT in August 1998. Pending closing of the transaction, we
      programmed the station under an LMA with the previous owner. The date in
      this column reflects the date the LMA was entered into.
(5)   In February 2000, we acquired substantially all of the assets of WBGH,
      other than the FCC license, which we acquired on May 1, 2000. Pending FCC
      approval of the transfer of the FCC license to us, we programmed the
      station under an LMA with the FCC licensee. The date in this column
      reflects the date the LMA was entered into.
(6)   Low power stations have not been assigned proposed digital channels. Our
      lower power stations, WBGH and KKFX, are Class A stations.
(7)   We acquired WUTR in January 2000. Pending closing of the transaction, we
      programmed the station under an LMA with the previous owner. The date in
      this column reflects the date the LMA was entered into.


                                       9

<PAGE>

(8)   We do not own WETM but program the station under an LMA with the current
      owner of the station. The date in this column reflects the date the LMA
      was entered into.
(9)   In May 1999, we exchanged the assets of KKTV, our former television
      station in Colorado Springs, Colorado for the assets of KCOY and a cash
      payment. Pending closing of the transaction, we programmed KCOY under an
      LMA with the previous owner. The date in this column reflects the date
      that the LMA was entered into.
(10)  We acquired KION in January 2000. Pending closing of the transaction, we
      programmed the station under an LMA with the previous owner. The date in
      this column reflects the date the LMA was entered into.
(11)  One additional UHF channel has been allocated in the Salinas-Monterey
      market; however, there has been no construction activity to date with
      respect to this channel.
(12)  Two additional UHF channels have been allocated in the Bakersfield market;
      however, there has been no construction activity to date with respect to
      these channels.
(13)  In January 2000, we sold substantially all the assets of KCBA. We program
      up to 15% of the station's weekly broadcast hours and provide sales and
      other services under an LMA with the purchaser. The date in this column
      reflects the date we originally acquired the station.
(14)  We acquired KMTR in March 1999. Pending closing of the transaction, we
      programmed the station under an LMA with the previous owner. The date in
      this column reflects the date the LMA was entered into. The acquisition
      includes the assets of two satellite stations, KMTX (Roseburg, Oregon) and
      KMTZ (Coos Bay, Oregon), and one low power station, KMOR-LP (Eugene,
      Oregon).
(15)  We acquired KVIQ in January 1999. Pending closing of the transaction, we
      programmed the station under an LMA with the previous owner. The date in
      this column reflects the date this LMA was entered into.
(16)  While KFTY is included in the San Francisco-Oakland-San Jose DMA market,
      which has a DMA rank of 5, the station principally serves the community of
      Santa Rosa, which is not separately ranked.
(17)  KVOS, located in Bellingham, Washington, serves primarily the Vancouver,
      British Columbia market (located in size, according to the Nielsen Rating
      Service as of February 2001, between the markets of Denver, Colorado and
      Sacramento-Stockton-Modesto, California, which have DMA rankings of 18 and
      19, respectively), and a portion of the Seattle, Washington market (DMA
      rank 12) and the Whatcom County, Washington market. The station's primary
      competition consists of five Canadian stations. The Canadian Radio and
      Television Commission granted license approval for an additional
      commercial station in Victoria and a religious station in Vancouver
      recently. It is likely that these stations will be operational by
      September 2001. DMA rankings are from the Television & Cable Factbook,
      2001 Edition.

        Programming. Our network-affiliated television stations operate under
standard contracts. These standard contracts are automatically renewed for
successive terms unless we or the network exercises cancellation rights. The
networks offer our network-affiliated stations a variety of programs. Our
network-affiliated stations have a right of first refusal to broadcast network
programs before those programs can be offered to any other television station in
the same market.

        Our network-affiliated stations often pre-empt network programming with
alternative programming. By emphasizing non-network programming during certain
time periods, we increase the amount of commercial time available to us. Such
programming includes locally produced news, as well as syndicated and first-run
talk programs, children's programming and movies acquired from independent
sources.

        KVOS(TV), which does not have a network affiliation, is located in
Bellingham, Washington and serves primarily the market of Vancouver, British
Columbia, Canada. Canadian regulations require Canadian cable television
operators to delete the signals of U.S.-based stations broadcasting network
programs in regularly scheduled time slots and to replace them with the signals
of the Canadian-based network affiliates broadcasting at the same time. By


                                       10

<PAGE>

broadcasting non-network programming, and by securing exclusive programming
rights for the Vancouver/Victoria Market, KVOS (TV) is not blacked out on
Canadian cable systems.

        Acquisitions and Local Marketing Agreements. We seek to acquire
television broadcast stations generally in DMA markets ranking from 50 to 175.
We also enter into time brokerage or local marketing agreements ("LMAs") with
owners of television stations. Under those agreements, we provide programming
and sales services and make monthly payments to station owners in exchange for
the right to receive revenues from advertising and, in some cases, network
compensation.

        Sales and Marketing. We receive revenues from our television
broadcasting operations from the sale of advertising time, usually in the form
of local, regional, and national spot or schedule advertising, and, to a much
lesser extent, network compensation. Spot or schedule advertising consists of
short announcements and sponsored programs either on behalf of advertisers in
the immediate area served by the station or on behalf of national and regional
advertisers.

        During 2001, local spot or schedule advertising, which is sold by our
personnel at each broadcast station, accounted for approximately 48% of our
television stations' total revenue. National spot or schedule advertising, which
is sold primarily through national sales representative firms on a
commission-only basis, accounted for approximately 42% of our television
stations' total revenue.

        In certain cases, we also receive revenue from our network affiliations.
The networks pay us an hourly rate that is tied to the number of network
programs that our television stations broadcast. Hourly rates are established in
our agreements with the networks and are subject to change by the networks. We
have the right, however, to terminate a network agreement if the network effects
a decrease in hourly rates. Overall, network compensation revenue was not a
significant portion of our television stations' total revenue for 2001.

        Competition. We compete directly with other television stations, and
indirectly with other types of advertising media companies, including radio,
magazines, newspapers, outdoor advertising, transit advertising, yellow page
directories, direct mail marketing, local cable systems, and satellite
broadcasting systems. Substantial competition exists among all advertising media
on a cost-per-rating-point basis and on the ability to effectively reach a
particular demographic section of the market. As a general matter, competition
is confined to defined geographic markets.

        Maintenance of our competitive positions in our broadcast markets
generally depends upon the management experience of each station's managers, the
station's authorized broadcasting power, the station's assigned frequency, the
station's network affiliation, the station's access to non-network programming,
the audience's identification with the station and its acceptance of the
station's programming, and the strength of the local competition.

        In addition, our television stations compete for both audience and
advertising with cable television and other news and entertainment media serving
the same markets. Cable television


                                       11

<PAGE>

systems, which operate generally on a subscriber-payment basis, compete by
carrying television signals from outside the broadcast market and by
distributing programming originated exclusively for cable systems. Historically,
cable operators have not competed with local broadcast stations for a share of
the local news audience. If they do, however, the increased competition for
local news audiences could have an adverse effect on our advertising revenue.

        We also face competition from high-powered direct broadcast satellite
services which transmit programming directly to homes equipped with special
receiving antennas or to cable television systems for transmission to their
subscribers. In addition, our television stations compete with other forms of
home entertainment, such as home videotape and video disc players. Moreover, the
television industry is continually faced with technological change and
innovation, the possible rise in popularity of competing entertainment and
communications media, and changes in labor conditions and government
regulations.

        We believe that the advertising revenues generated by our television
stations are significantly influenced by rankings of their local news programs
in their respective markets. Of the sixteen network-affiliated television
stations we currently own or program, ten rank first or second in their
respective geographic markets in local news ratings points delivered, according
to the November 2001 Nielsen Station Index.

RADIO BROADCASTING

        Our radio broadcasting operations involve the sale of air time to a
broad range of national, regional, and local advertisers. In addition, we earn
revenue from the sale of sponsorships to a variety of events, such as concerts.
We own and operate four radio stations and provide sales and other services to a
fifth radio station in the Seattle-Tacoma area.

        Industry Overview. Radio stations in the United States operate either on
the "amplitude modulation" ("AM") band, comprising 107 different frequencies
located between 540 and 1700 kilohertz ("KHz") in the low frequency band of the
electromagnetic spectrum, or the "frequency modulation" ("FM") band, comprising
approximately 100 different frequencies located between 88 and 108 megahertz
("MHz") in the very high frequency band of the electromagnetic spectrum. FM
radio stations have captured a high percentage of the listening audience, in
part because of the public's perception that stereo broadcasting, which until
recently was only available on FM radio stations, provides enhanced sound
quality.

        Our radio stations derive most of their revenue from local, regional,
and national advertising and, to a lesser extent, from network compensation. In
2001, approximately 72% of our radio broadcasting revenue was derived from local
advertising generated by the stations' local sales staffs. National sales, on
the other hand, are usually generated by national independent sales
representatives acting as agents for the stations. The representatives obtain
advertising from national advertising agencies and receive commissions based on
a percentage of gross advertising revenue generated. The principal costs
incurred in the operation of radio stations are salaries, programming, promotion
and advertising, sports broadcasting rights fees, rental of premises for
studios, costs of transmitting equipment, and music license royalty fees.


                                       12

<PAGE>

        Operations. We own four radio stations, which consist of KHHO(AM) in
Tacoma, Washington and KJR(AM), KBTB(FM) and KUBE(FM) in Seattle, Washington. We
also provide sales and other services to KFNK(FM) in Eatonville, Washington.

        The following table sets forth information about our portfolio of radio
stations.

<TABLE>
<CAPTION>
                                                                                                  RADIO
                                                                            NO. OF           STATION FORMAT
                                                                 MSA      COMMERCIAL          AND PRIMARY
                                   CALL          DATE           MARKET     STATION            DEMOGRAPHIC
        MARKET                    LETTERS      ACQUIRED         RANK(1)   IN MARKET(1)          TARGET
        ------                    --------   -------------      -------   ------------  ----------------------
<S>                               <C>        <C>                <C>       <C>           <C>
Seattle-Tacoma, Washington         KJR(AM)     May 1984           14         11 AM            SportsTalk;
                                                 (2)                                           Men 25-54
                                  KBTB(FM)   October 1987                    19 FM          Rhythmic Oldies
                                                 (2)                                          Women 25-54

                                  KUBE(FM)     July 1994                                 Rhythmic Contemporary
                                                 (3)                                     Hits; Persons 18-34

                                  KHHO(AM)    March 1998                                      SportsTalk;
                                                                                               Men 24-54

                                  KFNK(FM)  September 1999                                    Alternative;
                                                 (4)                                            Men 18-24
</TABLE>

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

(1)  Source: Fall 2001 Arbitron Radio Market Report. Metro Service Area ("MSA")
     market rank is based on population as reported upon by The Arbitron
     Company.

(2)  Reflects the dates on which we originally acquired the stations. We
     contributed the stations' assets to New Century Seattle Partners L.P., a
     Delaware limited partnership ("the Partnership") in 1994. We first acquired
     a limited partnership interest in the Partnership in 1994 and, in 1998, the
     Partnership became a wholly-owned subsidiary. Since then, the broadcast
     licenses have been transferred to one of our other subsidiaries, and the
     Partnership has been dissolved.

(3)  The date shown in the column reflects the date on which the Partnership
     acquired the station.

(4)  The date shown in the column reflects the date on which we entered into an
     agreement to provide sales and other services.

        Sales and Marketing. Most of our radio broadcasting revenue comes from
the sale of air time to local advertisers. Each station's advertising rates
depend upon, among other things, (1) the station's ability to attract audiences
in its target demographic group, and (2) the number of stations competing in the
market area. The size of a radio station's audience is measured by independent
rating service surveys.

        Much like our television broadcasting stations, the radio stations sell
local spot or schedule advertising. During 2001, such advertising accounted for
approximately 72% of the radio stations' revenue. In contrast, approximately 19%
of the radio stations' 2001 revenue was received from national spot or schedule
advertising, which is sold primarily through national sales representative firms
on a commission-only basis. The remaining revenue consisted of tower rentals and
production fees.

        Competition. We compete directly with other radio stations and
indirectly with other types of advertising media companies, including
television, newspapers, magazines, outdoor advertising, transit advertising,
yellow page directories, direct mail, local cable systems, and satellite
broadcasting systems. Substantial competition exists among all advertising media
on a


                                       13

<PAGE>

cost-per-rating-point basis and on the ability to effectively reach a particular
demographic section of the market. As a general matter, competition is confined
to defined geographic markets.

        A radio station's ability to maintain its competitive position in a
market is dependent upon a number of factors, including (1) the station's rank
within the market, (2) transmitter power, (3) assigned frequency, (4) audience
characteristics, (5) audience acceptance of the station's local programming, and
(6) the number and types of other stations in the market area.

        Radio stations frequently change their broadcasting formats and radio
personalities in order to seize a larger percentage of the market. Thus, our
radio stations' ratings are regularly affected by changing formats.

TELEVISION AND RADIO BROADCASTING REGULATION

        General. Our television and radio operations are heavily regulated under
the Communications Act of 1934 and other federal laws. The Communications Act,
for instance, limits the number of broadcast properties that we may acquire and
operate. It also restricts ownership of broadcasting properties by foreign
individuals and foreign companies.

        The Communications Act authorizes the FCC to supervise the
administration of federal communications laws, and to adopt additional rules
governing broadcasting. Thus, our television and radio broadcasting operations
are primarily regulated by the FCC. The FCC, for example, approves all
transfers, assignments and renewals of our broadcasting properties.

        KVOS(TV), which derives much of its revenue from the Vancouver, British
Columbia market, is additionally regulated and affected by Canadian law. Unlike
U.S. law, for instance, a Canadian firm cannot deduct expenses for advertising
on a U.S.-based television station which broadcasts into a Canadian market. In
order to compensate for this disparity, KVOS(TV) sells advertising time in
Canada at a discounted rate. In addition, Canadian law limits KVOS(TV)'s ability
to broadcast certain programming.

        Ownership. FCC rules limit the number and type of broadcasting
properties that we may own in the same geographic market. Thus, in a particular
geographic market, we cannot own the following combinations: more than one
television station (with certain exceptions); or a radio station and a daily
newspaper. In addition, there are limitations which vary according to the size
of the market, on the number of radio stations that we may own in a market.

        In addition, the Communications Act and FCC rules prohibit aliens from
owning of record or voting more than one-fifth of the capital stock of a
corporation holding a radio or television station license or more than
one-fourth of the capital stock of a corporation holding the stock of a
broadcast licensee. Our Bylaws provide that none of our shares of capital stock
may be issued or transferred to any person where such issuance or transfer will
result in a violation of the Communications Act or any regulations promulgated
thereunder, and that any purported transfer in violation of those restrictions
is void.

        Digital Television. The Telecommunications Act requires the FCC to
oversee the transition from current analog television broadcasting to Digital
Television ("DTV")


                                       14

<PAGE>

broadcasting. During the transition period, the FCC will issue one digital
broadcast license to each existing television licensee that files a license
application. Network affiliates in larger broadcast markets were required to
begin DTV broadcasts during 1999. Our stations that have received construction
permits are required to complete construction of their digital transmission
facilities by November 1, 2002. We currently estimate the cost to convert to DTV
will be approximately $9 to $11 million. Most of the full power television
stations that we own or program have received construction permits from the FCC
for their DTV facilities. Some of our stations encountered regulatory delays in
obtaining DTV construction permits. We anticipate that, eventually, all of our
full power stations will be granted permits to construct DTV facilities.
Following construction, the stations will then be allowed to broadcast two
signals using two channels, one digital and one analog, during the transition
period, which will extend until December 31, 2006. At the end of the transition
period, broadcasters will be required to choose whether they will continue
broadcasting on the digital or the analog channel, and to return the other
channel to the FCC.

        Local Marketing Agreements. Prior to November 16, 1999, FCC rules
prohibited the common ownership of two television stations in a single market.
Under rules effective November 16, 1999, common ownership of two television
stations (commonly known as a duopoly) in one market became permissible in
certain limited circumstances. The new rules also permit a television station
owner to program up to 15% of the weekly broadcast hours of another station in
the same market pursuant to agreements known as time brokerage agreements or
local marketing agreements ("LMAs"), provided that the licensee of the other
station maintains ultimate control and responsibility for the programming and
operations of the station and compliance with applicable FCC rules and policies.
Currently there are no television duopolies in any of our markets.

        Programming and Advertising. The Communications Act requires
broadcasters to serve the public interest. Thus, our television and radio
stations are required to present some programming that is responsive to
community problems, needs, and interests. We must also broadcast informational
and educational programming for children, and limit the amount of commercials
aired during children's programming. We are also required to maintain records
demonstrating our broadcasting of public interest programming. FCC rules impose
restrictions on the broadcasting of political advertising, sponsorship
identifications, and the advertisement of contests and lotteries.

        Cable Television. In many parts of the country, cable television
operators rebroadcast television signals via cable. In connection with cable
rebroadcasts of those signals, each television station is granted, pursuant to
the Cable Television Consumer Protection and Competition Act of 1992, either
"must-carry rights" or "retransmission consent rights." Each television
broadcaster must choose either must-carry rights or retransmission consent
rights with regard to its local cable operators.

        If a broadcaster chooses must-carry rights, then the cable operator will
probably will be required to carry the local broadcaster's signal. Must-carry
rights are not absolute, however, and their exercise depends on variables such
as the number of activated channels on, and the location


                                       15

<PAGE>

and size of, the cable system, and the amount of duplicative programming on the
broadcast station which duplicates the programming of another broadcast station
with must-carry rights.

        If a broadcaster chooses retransmission consent rights, the broadcaster
is entitled to (1) prohibit a cable operator from carrying its signal, or (2)
consent to a cable operator's rebroadcast of the broadcaster's signal, either
without compensation or pursuant to a negotiated compensation arrangement.

        All of the television stations that we own or program have, in the
majority of cases, chosen retransmission consent rights, rather than must-carry
rights, within their respective markets.

        FCC Rule Changes. Communications laws and FCC rules are subject to
change. For example, the FCC recently adopted rules that reduce the required
distance between existing stations and allow the utilization of directional
antennas, terrain shielding, and other engineering techniques. Other changes may
result in the addition of more AM and FM stations, or increased broadcasting
power for existing AM and FM stations, thus increasing competition to our
broadcasting operations.

        Congress and the FCC are currently considering many new laws,
regulations, and policies that could affect our broadcasting operations. For
instance, Congress and/or the FCC currently are considering proposals to:

        -  impose spectrum use or other fees upon broadcasters;

        -  revise rules governing political broadcasting, which may require
           stations to provide free advertising time to political candidates;

        -  restrict or prohibit broadcast advertising of alcoholic beverages;

        -  change broadcast technical requirements; and

        -  expand the operating hours of daytime-only stations.

        We cannot predict the likelihood of Congress or the FCC adopting any of
these proposals. If any should be adopted, we cannot assess their impact on our
broadcasting operations. In addition, we cannot predict the other changes that
Congress or the FCC might consider in the future. In addition, FCC rules may be
subjected to court challenges. We cannot predict whether any new or current
rules will be sustained or struck down if reviewed in courts.

        Low Power FM. The FCC has adopted rules creating a new, low power FM
(LPFM) radio service, which may create new competition in the radio industry.
The new LPFM service is limited to non-commercial operation. The LPFM service
will consist of two classes of LPFM radio stations with maximum power levels of
10 watts and 100 watts. The 10 watt stations will reach an area with a radius of
between one and two miles; the 100 watt stations will reach an area with a
radius of approximately three and a half miles. These LPFM stations will operate


                                       16

<PAGE>

throughout the FM band. There can be no assurance that the development and
introduction of LPFM service will not have an adverse effect on the radio
broadcast industry.

        Digital Audio Broadcasting. The radio broadcasting industry is subject
to competition from new media technologies that are being developed or
introduced, including the delivery of audio programming by digital audio
broadcasting ("DAB"). The FCC has issued licenses for two companies which have
begun to provide DAB service by satellite, delivering multiple new audio
programming formats to local and national audiences. This new capability has
provided an additional source of competition in our markets. Historically, the
radio broadcasting industry has grown in terms of total revenues despite the
introduction of new technologies for the delivery of entertainment and
information, such as television broadcasting, cable television, audio tapes and
compact disks. There can be no assurance, however, that the development or
introduction in the future of any new media technology will not have an adverse
effect on the radio broadcast industry. We are unable to predict the effect such
technologies will have on our broadcasting operations.

        Equal Employment Opportunity Rules. On January 20, 2000, the FCC adopted
new Equal Employment Opportunity ("EEO") rules in response to the D.C. Circuit
Court of Appeals decision in 1998 in Lutheran Church Missouri Synod v. FCC
(Lutheran Church), which held that certain aspects of the FCC's previous
broadcast EEO outreach requirements were unconstitutional. On January 16, 2001,
the Appeals Court found certain of these rules unlawful. On January 31, 2001,
the FCC suspended its EEO Rules. On December 13, 2001, the FCC issued a notice
of proposed rulemaking seeking public comment on proposed new EEO rules.

        Satellite Home Viewer Improvements Act. The Satellite Home Viewer
Improvement Act of 1999 ("SHVIA"), signed into law on November 29, 1999, permits
satellite companies to provide local broadcast TV signals to all subscribers who
reside in a particular DMA. This ability to provide local broadcast channels is
commonly referred to as "local into local" service. The SHVIA also permits
satellite companies to provide "distant" network broadcast stations to eligible
satellite subscribers. A distant network signal is a signal from a market other
than the local market. To be eligible to receive a distant network signal, a
television viewing household must be an unserved household unable to receive a
local network signal, as determined pursuant to criteria established by the FCC.
The SHVIA generally seeks to place satellite carriers on an equal footing with
local cable television operators when it comes to the availability of broadcast
programming, and thus gives consumers more and better choices in selecting a
multichannel video program distributor (MVPD), such as cable or satellite
service. Local-into-local service is not available in any of our television
markets, however, and distant network signals are generally available only to a
limited number of unserved television households which cannot receive our
broadcast television signal using a conventional rooftop antenna. There can be
no assurance that satellite delivered television programming will not have an
adverse effect on our broadcasting operations.

        Low Power Television Stations. The Community Broadcasters Protection Act
was signed into law on November 29, 1999. This law gives many low power
television ("LPTV") stations the opportunity to achieve primary status.
Presently, LPTV stations are secondary, meaning that they are not protected from
interference from full power stations and are subject to being


                                       17

<PAGE>

displaced by applications to construct new or to modify existing full power
stations. LPTV stations that qualify are entitled to receive protection from all
other stations in their service area. This class of low power stations is known
as "Class A". Our stations KKFX and WBGH are Class A stations. There can be no
assurance that the development and introduction of a new class of low power
stations will not have an adverse effect on the broadcasting operations of our
full-power stations.

        Purchase and Sale Transactions. The FCC must approve applications to
transfer or assign control of a broadcast license. In connection with the
application to acquire a broadcasting license, the FCC considers factors
generally similar to those discussed under "Renewal of Broadcasting Licenses"
below. In addition, the filing by third parties of petitions to deny, informal
objections or comments to a proposed transaction can result in significant
delays to, as well as denial of, FCC action on a particular application.

        Renewal of Broadcasting Licenses. Our broadcasting operations' success
depends upon our ability to renew our broadcasting licenses, and the ability of
the station owners to renew the licenses for the stations we operate under LMAs.
Television and radio licenses (including renewals) currently are issued for
terms of eight years.

        In considering whether to renew a license, the FCC considers several
factors, including the licensee's compliance with the FCC's children's
television rules, the FCC's equal employment opportunity rules, and the FCC's
radio frequency rules. The FCC also considers the Communications Act's
limitations on license ownership by foreign individuals and foreign companies,
and rules limiting common ownership of broadcast, cable and newspaper
properties. The FCC also considers the licensee's general character, including
the character of persons holding interests in the licensee. In addition, the FCC
considers complaints from the public concerning the license holder, and
applications from third parties to acquire an existing license.

        The FCC usually renews a license holder's broadcasting license. Because
the FCC may not grant renewal, however, we have no assurance that any of our
broadcasting licenses will be renewed, especially if third parties challenge our
renewal applications or file competing applications to acquire our licenses.

        None of our primary broadcasting licenses, or broadcasting licenses
owned by the owners of television stations we program under LMAs, are subject to
renewal within the next two years. There are no pending challenges or competing
applications with respect to any of our broadcasting licenses.

INTERACTIVE MEDIA

        We believe our interactive media operations currently provide more
in-depth local news and information than any other Web site covering the markets
of Bakersfield, California, Salinas-Monterey, California, and Rochester, New
York. Our operations known as the iKnow Network(TM), combine the live,
multimedia aspects of television and radio with the depth of news and community
information of newspapers. We believe this philosophy of independent partner-


                                       18

<PAGE>

built Web sites will make the iKnow Network a useful source for local news and
information as well as creating a platform that maximizes the Internet's
potential as a unique media outlet.

Industry Overview

        Due to changes in traditional media over the past five years,
broadcasters and publishers have struggled with how to stake a profitable claim
in the Internet territory. At the heart of this struggle is the conflict between
tradition and the new media model required to succeed on the Internet.

        Traditional media companies have moved en-masse to mirror their
broadcast and print formats on-line. This strategy has been only marginally
successful and traditional media companies have been largely unsuccessful in
attracting the lion's share of the Internet audience. The Internet news and
information experience is unlike its more traditional counterparts. Unlimited,
on-demand, 24 X 7 multimedia content is rapidly becoming the experience most
users expect.

        Online media is one of the most challenging areas for Internet ventures
and content based Web sites have encountered some difficulty because they have
had to invest in original content and spend large sums of money on marketing to
attract national audiences. Also, startups must overcome the unwillingness of
consumers to pay for Web content and therefore must become profitable through
the sale of advertising on their Web sites.

        Despite the growth of local site competition, out-of-market competitors
lack a significant advantage owned by every local TV station, radio station or
newspaper--the intimate knowledge of the marketplace. The strength of the iKnow
Network strategy rests in its local partnership model. By combining the news and
information reporting resources of the local iKnow Network partners, we believe
that we create a distinct advantage over other Web sites. The iKnow Network's
existing ad sales, editorial and promotional staff have first-hand knowledge of
the community and possess established relationships at the local market level
which we believe increases the potential for success.

        Operations. Through separate joint venture arrangements with local media
partners, we manage the iKnow Network operations in the markets of Bakersfield,
California, and Rochester, New York.

<TABLE>
<CAPTION>
MARKET                     URL                             LAUNCH DATE        DMA
------                     ---                             -----------        ---
<S>                        <C>                             <C>                <C>
ROCHESTER, NY              www.iKnowRochester.com          March 1997(1)       74
BAKERSFIELD, CA            www.iKnowBakersfield.com        November 2000      130
MONTEREY-SALINAS, CA       www.iKnowCentralCoast.com       May 2001           118
</TABLE>

----------
(1)  Originally launched as RochesterToday.com, relaunched in March 2001 as
     iKnowRochester.com.


                                       19

<PAGE>

        Sales and Marketing. We sell advertising through banner ads, classified
ads, business directory subscriptions, and Web sponsorships directly to local
businesses.

        Competition. We compete directly with other local web sites and
indirectly with other types of advertising media companies, including
television, newspapers, magazines, outdoor advertising, transit advertising,
yellow page directories, direct mail, local cable systems, and satellite
broadcasting systems. As a general matter, competition is confined to defined
geographic markets.

EMPLOYEES

        As of December 31, 2001, we employed 1,338 full-time persons. The
following table sets forth a breakdown of employment in each of our operating
segments and our corporate offices for that date:

        OPERATING SEGMENT/CORPORATE OFFICE           PERSONS EMPLOYED
        ----------------------------------           ----------------
                   Outdoor Media                            243

              Television Broadcasting                       919

                Radio Broadcasting                          107

                 Interactive Media                           14

                 Corporate Offices                           55

        Approximately 323 of our employees are represented by unions under 15
collective bargaining agreements. Collective bargaining agreements covering
approximately 4% of our employees are terminable during 2002. We believe that
these collective bargaining agreements will be renegotiated or automatically
extended and that any renegotiation will not have a material adverse effect on
our operations.

RESTRICTIONS ON OUR OPERATIONS

        In addition to restrictions on our operations imposed by governmental
regulations, franchise relationships and other restrictions discussed above, our
operations are subject to additional restrictions imposed by our current
financing arrangements.

        Our operations are subject to restrictions imposed by (1) a credit
agreement with various lending banks, dated September 7, 2001, as amended (the
"2001 Credit Agreement"), and (2) an indenture (the "Indenture"), dated December
14, 1998, respecting our 9% Senior Subordinated Notes due 2009 (the "9% Senior
Subordinated Notes"). Some of those provisions restrict our ability to:


                                       20


<PAGE>

        -  apply cash flow in excess of certain levels or proceeds from our sale
           of capital stock, debt securities or certain asset dispositions;

        -  incur additional indebtedness;

        -  pay dividends on, redeem or repurchase our capital stock, or make
           investments;

        -  issue or allow any person to own any preferred stock of restricted
           subsidiaries;

        -  enter into sale and leaseback transactions;

        -  incur or permit to exist certain liens;

        -  sell assets;

        -  in the case of our subsidiaries (other than unrestricted
           subsidiaries), guarantee indebtedness;

        -  in the case of our subsidiaries (other than unrestricted
           subsidiaries), create or permit to exist dividend or payment
           restrictions with respect to The Ackerley Group, Inc.;

        -  engage in transactions with affiliates;

        -  enter into new lines of business; and

        -  consolidate, merge, or transfer all or substantially all of our
           assets and the assets of our subsidiaries on a consolidated basis.

        In addition, we are required to maintain specified financial ratios,
including maximum leverage ratios, a minimum interest coverage ratio, and a
minimum fixed charge coverage ratio. The 2001 Credit Agreement also provides
that it is an event of default thereunder if a change of control occurs (as
defined in the 2001 Credit Agreement). Assuming that our proposed merger with
Clear Channel is consummated, all outstanding amounts under the 2001 Credit
Agreement will become due and payable. Similarly, upon a Change of Control (as
defined in the Indenture), within 30 days after the closing of the Change of
Control transaction, we are required to make an offer to repurchase all of the
outstanding 9% Senior Subordinated Notes, on the terms set forth in the
Indenture.

        The 2001 Credit Agreement also requires, subject to certain exceptions,
that we apply (i) 100% of the net cash proceeds (as defined in the 2001 Credit
Agreement) received by us from the sale of our capital stock (reduced to 50% of
the net proceeds if our interest coverage ratio exceeds a certain amount); (ii)
100% of the net cash proceeds received by us from the sale of our debt
securities; (iii) 100% of the net cash proceeds received by us from asset
dispositions, subject to certain exceptions; (iv) under certain circumstances,
100% of the net insurance or condemnation proceeds (as defined in the 2001
Credit Agreement) received by us; and (v) 100%


                                       21

<PAGE>

of our excess cash flow (as defined in the 2001 Credit Agreement) to repay
borrowings under the 2001 Credit Agreement (reduced to 75% of the excess cash
flow if our interest coverage ratio exceeds a certain amount). It further
provides that the amount of borrowings available under the 2001 Credit Agreement
will be permanently reduced by the amount of such repayments. In addition, with
the exception of repayments derived from excess cash flows, it provides that we
must pay a prepayment penalty in certain circumstances.

        We have pledged substantially all of the stock and material assets of
our subsidiaries to secure our obligations under the 2001 Credit Agreement. In
addition, nearly all of our subsidiaries have provided guarantees of obligations
under the 2001 Credit Agreement and the Indenture. In the event of a default
under the 2001 Credit Agreement, the bank lenders could demand immediate payment
of the principal of and interest on all such indebtedness, and could force a
sale of all or a portion of our subsidiaries to satisfy our obligations.
Likewise, because of cross-default provisions in our debt instruments, a default
under the 2001 Credit Agreement or the Indenture could result in acceleration of
indebtedness outstanding under other debt instruments.

        Additional information concerning the 2001 Credit Agreement and the
Indenture is set forth in Item 7--MD&A--Liquidity and Capital Resources, and in
Note 9 to the Consolidated Financial Statements.

FINANCIAL INFORMATION REGARDING BUSINESS SEGMENTS

        Financial information concerning each of our business segments is set
forth in Note 17 to the Consolidated Financial Statements.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

        The following risk factors and other information included in this report
should be carefully considered. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks actually occur, it could have a
material adverse effect on our business, financial condition, and operating
results.

        -  After May 31, 2002, we would likely need to extend our waivers of
           compliance with certain restrictive covenants of our 2001 Credit
           Agreement or secure other financing arrangements. There can be no
           guarantee as to whether we would be able to obtain such extensions or
           financing arrangements.

        -  National advertising may continue to decrease or remain at current
           levels as a result of current national economic conditions. Our
           liquidity may be impacted negatively depending on the magnitude of
           this trend, its duration, and our ability to offset decreased
           national sales with increased local sales.

        -  Under current FCC regulations, we will need to construct DTV
           facilities for several of our television stations by November 1,
           2002. We estimate that this will cost approximately $9 to $11
           million.


                                       22

<PAGE>

LEVERAGE; RESTRICTIONS UNDER DEBT INSTRUMENTS; COVENANT COMPLIANCE

        Financial Leverage. As of March 1, 2002, we had approximately $290.6
million of outstanding indebtedness. Historically, we have acquired additional
outdoor media, television and radio broadcasting businesses. We may make
acquisitions or capital expenditures in the future that are financed with the
proceeds from borrowings. As a result of such transactions, our outstanding
indebtedness and interest expense would increase, perhaps substantially.
Likewise, such transactions would increase our depreciation and amortization
expenses, perhaps substantially.

        Our degree of leverage could have important consequences to investors,
including the following:

        -  our ability to obtain additional financing in the future for working
           capital, capital expenditures, acquisitions, general corporate
           purposes, or other purposes may be impaired;

        -  restrictive covenants in debt instruments, as well as the need to
           apply cash to make debt service payments, may limit payment of
           dividends on our outstanding Common Stock and Class B Common Stock:

        -  EBITDA (defined as net revenue less operating expenses, workforce
           reduction costs, and restructuring expenses before amortization,
           depreciation, interest, net gain (loss) on dispositions of assets,
           litigation and other expenses) available for purposes other than
           payment of principal and interest on indebtedness may be reduced;

        -  we may be exposed to the risk of increased interest rates since a
           portion of our borrowings, including borrowings under the 2001 Credit
           Agreement (as defined below), bear interest at floating rates;

        -  we may be at a competitive disadvantage compared to competitors that
           are less leveraged than we are;

        -  we may have limited ability to adjust to changing market conditions;

        -  we may have decreased ability to withstand competitive pressures; and

        -  we may have increased vulnerability to a downturn in general economic
           conditions or our business.

        Our ability to make scheduled payments on or to refinance our
indebtedness will depend on our financial and operating performance, which in
turn will be subject to economic conditions and to financial, business, and
other factors beyond our control. In order to fund our debt service and other
obligations, we may be forced to reduce or delay planned expansion and capital
expenditures, sell assets, obtain additional equity capital or debt financing
(if available), or restructure our debt. Accordingly, we cannot guarantee that
our operating results, EBITDA, and


                                       23

<PAGE>

capital resources will be sufficient for future payments of our indebtedness, to
make planned capital expenditures, to finance acquisitions, or to pay our other
obligations.

        Restrictions Imposed by Debt Instruments. We are subject to a number of
significant operating and financial restrictions and are required to maintain
specified financial ratios, which restrict our operations. See "--Restrictions
on Our Operations." Our ability to comply with such covenants and financial
ratios may be affected by events beyond our control.

        Covenant Compliance. In the past, we have from time to time obtained
amendments or waivers to certain provisions of our debt instruments, including
the 2001 Credit Agreement, in order to remain in compliance with the financial
covenants thereunder. We are currently operating under waivers to compliance
with certain covenants, including our senior leverage ratio, interest coverage
ratio, and fixed charge coverage ratio. There can be no assurance that we will
not be required to seek additional waivers or amendments under our debt
instruments in the future. Any failure to obtain a necessary amendment or waiver
could result in a default under the relevant debt instrument and acceleration of
the indebtedness thereunder. An acceleration of our senior debt instruments
could result in an acceleration of indebtedness under the 9% senior subordinated
notes and other loan documents. If the indebtedness under any of these debt
instruments were accelerated, there can be no assurance that we would be able to
repay such indebtedness.

REGULATION OF OUTDOOR ADVERTISING

        Outdoor advertising displays are subject to governmental regulation at
the federal, state, and local levels. These regulations, in some cases, limit
the height, size, location, and operation of outdoor displays and, in some
circumstances, regulate the content of the advertising copy displayed on outdoor
displays. Changes in laws and regulations affecting outdoor advertising at any
level of government may have a material adverse effect on our business,
financial condition, or results of operations. See "--Outdoor Media--Outdoor
Advertising--Regulation."

TELEVISION AND RADIO BROADCASTING

        Government Regulation of Broadcasting Industry. Pursuant to the
Communications Act, the domestic broadcasting industry is subject to extensive
federal regulation. In addition, our television station, KVOS, which is located
in Bellingham, Washington and broadcasts into Vancouver, British Columbia, is
regulated and affected by Canadian law. The restrictions and obligations imposed
by these laws and regulations, including their amendment, interpretation, or
enforcement, could have a material adverse effect on our business, financial
condition, or results of operations. See "--Television and Radio Broadcasting
Regulation."

        Renewal of Broadcasting Licenses. Our business will continue to be
dependent upon acquiring and maintaining broadcasting licenses issued by the
FCC. Such licenses are currently issued for a term of eight years. Historically,
we have been able to renew our broadcast licenses on a regular basis. However,
we cannot guarantee that pending or future applications to acquire or renew
broadcasting licenses will be approved, or will not include conditions or
qualifications adversely affecting our operations, any of which could have a
material adverse effect on us.


                                       24

<PAGE>

Moreover, governmental regulations and policies may change over time and we
cannot guarantee that such changes would not have a material adverse impact on
our business, financial condition, or results of operations. See "--Television
and Radio Broadcasting Regulation--Renewal of Broadcasting Licenses."

        Approval of Purchase and Sale Transactions. In connection with purchase
and sales transactions, we are required to seek FCC approval. We cannot
guarantee that the FCC will approve our applications. Failure to obtain FCC
approval to transfer broadcasting licenses in connection with such transactions
could adversely affect our business, financial condition, or results of
operations. See "--Television and Radio Broadcasting Regulation--Purchase and
Sale Transactions."

COMPETITION

        Our four business segments are in highly competitive industries. Our
broadcasting and outdoor media businesses compete for audiences and advertising
revenue with other broadcasting stations and outdoor media advertising
companies, as well as with other media forms. Such other media forms may include
newspapers, magazines, transit advertising, yellow page directories, direct
mail, local cable systems, satellite broadcasting systems and other local Web
sites. Audience ratings and market shares are subject to many variables. Any
change, and any adverse change in a particular market, could have a material
adverse effect on our business, financial condition, or results of operations.
Changes which could have an adverse effect on us include economic conditions,
both general and local; shifts in population and other demographics; the level
of competition for advertising dollars; a station's market rank; broadcasting
power, assigned frequency, network affiliation, and audience identification;
fluctuations in operating costs; technological changes and innovations; changes
in labor conditions; and changes in governmental regulations and policies and
actions of federal regulatory bodies. There can be no assurance that we will be
able to maintain or increase our current audience ratings and advertising
revenue. In this respect, the entrance of a new television station in the
Vancouver, British Columbia market in October 1997 has adversely affected the
financial performance of our television station in Bellingham, Washington
(KVOS).

        Certain of our competitors, including a few outdoor advertising and
radio broadcasting companies that are substantially larger than our outdoor
advertising and radio broadcasting operations have significantly greater
financial, marketing, sales and other resources than we have. There can be no
assurance that we will be able to compete successfully against our competitors
in the future.

        The interactive media segment is also highly competitive. There do not
exist significant barriers to entry for interactive media companies. We focus
our interactive media operations primarily on the local television markets that
we serve. We do not presently experience significant competition from other
interactive media companies that operate on an international or national level.
There can be no assurance that this competitive situation will not change in the
future.

DEPENDENCE ON MANAGEMENT

                                       25

<PAGE>

        Certain of our executive officers and divisional managers, including
Barry A. Ackerley, are especially important to our direction and management. The
loss of the services of such persons could have a material adverse effect on the
Company, and there can be no assurance that we would be able to find
replacements for such persons with equivalent business experience.

VOTING CONTROL BY PRINCIPAL STOCKHOLDER

        Each share of Common Stock has one vote per share and each share of
Class B Common Stock has ten votes per share. As of March 1, 2002, Barry A.
Ackerley, our Chairman of the Board and Chief Executive Officer, beneficially
owned approximately 37% of the outstanding shares of Common Stock and
approximately 99% of the outstanding shares of Class B Common Stock, giving him
approximately 88% of the combined voting power of our voting securities. See
"Item 12--Security Ownership of Certain Beneficial Owners and Management."

        As a director, the Chairman and Chief Executive Officer, and the
majority stockholder of The Ackerley Group, Mr. Ackerley has certain fiduciary
duties to minority stockholders under applicable law. However, so long as Mr.
Ackerley continues to own or control stock having a majority of the combined
voting power of our voting securities, he will have the power to elect all of
our directors and effect fundamental corporate transactions, such as mergers,
asset sales, and "going private" transactions, without the approval of any other
stockholders. Moreover, Mr. Ackerley's voting control would effectively delay or
prevent any other person or entity from acquiring or taking control of The
Ackerley Group without his approval, whether or not the transaction could
provide stockholders with a premium over the then-prevailing market price of
their shares or would otherwise be in their best interests.

RESTRICTIONS ON THE OWNERSHIP AND TRANSFER OF COMMON STOCK

        Our Bylaws contain certain restrictions on the transfer of our capital
stock in order to comply with the prohibitions on foreign ownership of radio and
television stations contained in the Communications Act of 1934 and FCC rules.
See "--Television and Radio Broadcasting Regulation--Ownership." These
restrictions in our Bylaws, as well as certain related provisions in our
Certificate of Incorporation, may adversely affect the ability of investors to
acquire, hold, or otherwise transfer our Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

        As of March 1, 2002, 9,089,652 shares of Common Stock and 11,007,096
shares of Class B Common Stock were held by officers and directors who are
considered to be our "affiliates" for purposes of Rule 144 under the Securities
Act. As noted above, each share of Class B Common Stock is convertible by the
holder at any time into one share of Common Stock. Our affiliates may sell these
shares in the public market subject to the volume and other limitations (other
than the holding Period limitations, which have been satisfied) of Rule 144
under the Securities Act. No prediction can be made as to the effect, if any,
that future sales of shares, or the availability of shares for future sale, will
have on the market price of the Common Stock from time to time. Sales of
substantial amounts of Common Stock in the public market (including Common Stock
issued upon conversion of Class B Common Stock), or the perception


                                       26

<PAGE>

that such sales could occur, could have a material adverse effect on prevailing
market prices for the Common Stock.

ITEM 2 - PROPERTIES

        Our principal executive offices are located at 1301 Fifth Avenue, Suite
4000, Seattle, Washington 98101. We lease the offices, which consist of
approximately 16,800 square feet, pursuant to a lease that expires in 2006.

        The following table sets forth certain information regarding our
facilities as of December 31, 2001:

<TABLE>
<CAPTION>
                                                                Approximate
                                                                   Square       Approximate
                                                                  Footage         Square
Location                                     Nature of Facility    Owned      Footage Leased
--------                                     ------------------    -----      --------------
<S>                                          <C>                <C>           <C>
OUTDOOR MEDIA

   Seattle, Washington (Outdoor
   Advertising)                                     Plant          24,966          1,185
   Portland, Oregon (Outdoor Advertising)           Plant          10,923            570
   Boston Massachusetts (Outdoor
   Advertising)                                     Plant          31,882          3,825

TELEVISION BROADCASTING

   Syracuse, New York (WIXT)                  Station Operations   40,000             --
   Rochester, New York (WOKR)                 Station Operations   35,427             --
   Binghamton, New York (WIVT, WBGH)          Station Operations   10,819             --
   Utica, New York (WUTR)                     Station Operations   12,148             --
   Watertown, New York (WWTI)                 Station Operations       --         10,000
   Elmira, New York (WETM)(1)                 Station Operations   20,606             --
   Santa Barbara-Santa Maria-San Luis
   Obispo, California (KCOY, KKFX)            Station Operations   13,000             --
   Salinas-Monterey, California
   (KCBA(1), KION)                            Station Operations   47,841             --
   Bakersfield, California (KGET)             Station Operations   30,450             --
   Fresno, California (KGPE)                  Station Operations    6,500             --
   Eugene, Oregon (KMTR)                      Station Operations    9,230          3,000
   Eureka, California (KVIQ)                  Station Operations   10,162          1,200
   Santa Rosa, California (KFTY)              Station Operations   13,000             --
   Bellingham, Washington (KVOS)              Station Operations   13,130         11,889
   Fairbanks, Alaska (KTVF)                   Station Operations       --         13,872

RADIO BROADCASTING

   Seattle, Washington (KJR(AM), KBTB(FM),
   KUBE(FM))                                  Station Operations       --         42,816
   Tacoma, Washington (KHHO(AM))              Station Operations       --          2,075

INTERACTIVE MEDIA(2)                                   --              --             --

OTHER

   Seattle, Washington (Corporate Offices)          Offices            --         16,814
   National Sales Offices in New York,
   Los Angeles, and Chicago                         Offices            --          9,164
</TABLE>

--------------------
(1) As of December 31, 2001, we programmed these stations under LMAs.
    Accordingly, this table reflects data for the properties which are owned or
    leased by the station owners for whom we program the stations.

(2) Our interactive media operations utilizes equipment within our existing
    facilities and currently do not have separate designated facilities.

        In general, we believe that our facilities are adequate for our present
business and that additional space is generally available for expansion without
significant delay. In 2001, we paid aggregate annual rentals on office space and
operating facilities of approximately $4.3 million.


                                       27

<PAGE>

        At December 31, 2001, we owned 205 vehicles and leased 214 vehicles of
various types for use in our operations. We own a variety of broadcast-related
equipment, including broadcast towers, transmitters, generators, microwave
systems and audio and video equipment used in our broadcasting business. We
presently lease, under a private carrier agreement, a Gulfstream jet which is
used for executive travel between our facilities. We also lease a high
definition mobile television broadcasting unit which is used to provide
broadcast and production services for our television stations and outside
parties.

        We believe that all of our buildings and equipment are adequately
insured in accordance with industry practice.

                           ITEM 3 - LEGAL PROCEEDINGS

        We become involved, from time to time, in various claims and lawsuits
incidental to the ordinary course of our operations, including such matters as
contract and lease disputes and complaints alleging employment discrimination.
In addition, we participate in various governmental and administrative
proceedings relating to, among other things, condemnation of outdoor advertising
structures without payment of just compensation and matters affecting the
operation of broadcasting facilities.

        Malecki v. The Ackerley Group, Inc. On February 25, 2002, a complaint
was filed in the Superior Court of Washington against The Ackerley Group, Inc.
by James Malecki, a photographer in Seattle, Washington, who in 1998 provided
photography services to the Company. The complaint alleges that a contract
existed between the Company and plaintiff and that the Company breached that
alleged contract by not returning certain photographs to plaintiff. Plaintiff
claims damages in excess of $1.5 million plus interest and attorneys' fees as
redress for the alleged breach.

                         ITEM 4 - SUBMISSION OF MATTERS
                          TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote of security holders in the fourth
quarter of 2001.

                      EXECUTIVE OFFICERS OF THE REGISTRANT

        Our executive officers are:

<TABLE>
<CAPTION>
             Name                           Age           Position
             ----                           ---           --------
<S>                                         <C>     <C>
        Barry A. Ackerley                    67     Chairman and Chief Executive Officer
        Gail A. Ackerley                     64     Co-Chairman and Co-Chief Executive Officer
        Christopher H. Ackerley              32     President
        Kevin E. Hylton                      45     Senior Vice President, Chief Financial
                                                    Officer, Treasurer and Assistant Secretary
        Sean M. Tallarico                    36     Corporate Controller
</TABLE>


                                       28

<PAGE>

        Mr. Barry A. Ackerley, one of our founders, has been the Chief Executive
Officer and a director of The Ackerley Group and its predecessor and subsidiary
companies since 1975. He currently serves as our Chairman.

        Ms. Gail A. Ackerley was elected to our Board of Directors in May 1995,
and became Co-Chairman in September 1996. She served as one of our Co-Presidents
from November 1997 to February 15, 2000. Ms. Ackerley has served as our Chairman
of Ackerley Corporate Giving since 1986, supervising our charitable activities.

        Mr. Christopher H. Ackerley was named President on July 31, 2001, with
principal responsibility for overseeing our operating segments and corporate
functions. As Co-President, he was responsible for overseeing our marketing,
investor relations, information technology, and technology-venture investments.
He joined The Ackerley Group in 1995, and was elected Vice President for
Marketing and Development in May 1998. He also served as Executive Vice
President, Operations and Development from December 1998 until his election as
Co-President in 2000.

        Mr. Kevin E. Hylton was named Senior Vice President and Chief Financial
Officer on June 5, 2000. Prior to joining us he served as Director of Finance
for Nordstrom, Inc. from March 1999 to April 2000. From December 1987 to July
1998, he was Vice President and Corporate Controller for Westin Hotels and
Resorts.

        Mr. Sean M. Tallarico was named Corporate Controller on April 1, 1998.
He joined The Ackerley Group in 1996 as Controller of the Sports & Entertainment
segment. Prior to joining us, Mr. Tallarico served in the audit practice of
Ernst & Young, LLP, from December 1990 to June 1996, leaving as an Audit
Manager.

        Barry A. Ackerley and Gail A. Ackerley are husband and wife. Christopher
H. Ackerley is their son. There are no other family relationships among any of
our executive officers. All officers serve at the pleasure of our Board of
Directors.

                                     PART II

                   ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON
                     EQUITY AND RELATED STOCKHOLDER MATTERS

        As of March 1, 2002, 35,319,002 shares of our common stock were issued
and outstanding, of which 24,298,380 shares were Common Stock and 11,020,622
shares were Class B Common Stock. The Common Stock was held by 491 shareholders
of record; the Class B Common Stock was held by 22 shareholders of record.

        Our Board of Directors declared a cash dividend of $.02 per share in
2000. Our Board of Directors determined not to declare a dividend in 2001.
Payment of any future dividends is at the discretion of the Board of Directors
and depends on a number of conditions. Among other things, dividend payments
depend upon our results of operations and financial condition, capital
requirements and general economic conditions. The terms of our senior debt
impose certain limits upon our ability to pay dividends and make other
distributions. In addition, we are subject


                                       29

<PAGE>

to the General Corporation Law of Delaware, which restricts our ability to pay
dividends in certain circumstances.

COMMON STOCK

        Our Common Stock is listed and trades on the New York Stock Exchange
under the symbol "AK."

        The table below sets forth the high and low sales prices of our Common
Stock for each full quarterly period in the two most recent fiscal years
according to the New York Stock Exchange.

<TABLE>
<CAPTION>
2001                High               Low               2000              High        Low
----                ----               ---               ----              ----        ---
<S>                 <C>                <C>               <C>               <C>         <C>
First Quarter       $15.06             $ 8.69            First Quarter     $19.53      $12.36
Second Quarter      $12.80             $10.33            Second Quarter    $15.06      $10.94
Third Quarter       $14.85             $ 8.50            Third Quarter     $14.13      $ 9.69
Fourth Quarter      $17.89             $ 9.40            Fourth Quarter    $11.63      $ 7.88
</TABLE>

        On March 1, 2002, the high and low sales prices of our Common Stock,
according to the New York Stock Exchange, were $16.73 and $16.15, respectively.

CLASS B COMMON STOCK

        Our Class B Common Stock is not publicly traded. Persons owning shares
of our Class B Common Stock may trade such shares only as permitted by our
Certificate of Incorporation, which imposes restrictions on such transfer. Thus,
there is no trading market for shares of our Class B Common Stock.


                                       30

<PAGE>

                        ITEM 6 - SELECTED FINANCIAL DATA

        The table below sets forth selected consolidated financial data
regarding our operations. The information in the table has been derived from
audited Consolidated Financial Statements.

        You should read the information in the table in conjunction with the
sections titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Consolidated Financial Statements (and Notes)
included elsewhere in this report.

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                       ----------------------------------------------------------------------------------
                                         2001            2000               1999               1998               1997
                                       ---------       ---------          ---------          ---------          ---------
Consolidated Statement of Income Data:                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                    <C>             <C>                <C>                <C>                <C>
Revenue ...........................    $ 231,425       $ 263,305          $ 243,130          $ 235,516          $ 229,828
Agency commissions and discounts          32,568          38,741             35,547             34,015             32,085
                                       ---------       ---------          ---------          ---------          ---------
Net revenue .......................      198,857         224,564            207,583            201,501            197,743
Expenses (other income):
    Operating expenses ............      179,715         181,644            157,065            150,911            142,089
    Workforce reduction costs .....        2,442              --                 --                 --                 --
    Restructuring expenses ........           --            (178)             1,125                 --                 --
    Depreciation and amortization
      expense......................       45,193          39,161             26,042             14,078             13,184
    Interest expense ..............       28,834          27,687             33,510             23,151             24,666
    Interest Income ...............         (348)         (1,892)              (551)              (359)              (457)
    Net loss (gain) on
      dispositions of assets.......        2,202        (277,650)(1)        (28,999)(1)        (33,524)(1)             --

    Litigation expense (adjustment)           --              --                 --                 --             (5,000)

    Other .........................        2,056             901                733                452              9,344
                                       ---------       ---------          ---------          ---------          ---------
      Total expenses (other
        income)....................      260,094         (30,327)           188,925            154,709            183,826
                                       ---------       ---------          ---------          ---------          ---------

Income (loss) from continuing
    operations before income
    taxes and extraordinary items..      (61,237)        254,891             18,658             46,792             13,917

Income tax benefit (expense) ......       21,206         (96,284)            (7,917)           (18,576)            19,168
                                       ---------       ---------          ---------          ---------          ---------
Income (loss) from continuing
    operations before extraordinary
    items..........................      (40,031)        158,607             10,741             28,216             33,085

Income (loss) from discontinued
    operations, net of taxes(2) ...       92,681          (9,707)            (2,778)            (4,693)              (156)
                                       ---------       ---------          ---------          ---------          ---------
Income before extraordinary items         52,650         148,900              7,963             23,523             32,929
Extraordinary items - loss on
    debt extinguishment and
    merger costs, net of taxes ....       (7,115)             --             (1,373)            (4,346)                --
                                       ---------       ---------          ---------          ---------          ---------
Net income applicable to common
    shares.........................    $  45,535       $ 148,900          $   6,590          $  19,177          $  32,929
                                       =========       =========          =========          =========          =========
Per common share:

    Income from continuing
      operations before
      extraordinary items..........    $   (1.14)      $    4.54          $     .33          $     .89          $    1.05

    Discontinued operations .......         2.64            (.28)              (.09)              (.14)                --
    Extraordinary items ...........         (.20)             --               (.04)              (.14)                --
                                       ---------       ---------          ---------          ---------          ---------
    Net income ....................    $    1.30       $    4.26          $     .20          $     .61          $    1.05
                                       =========       =========          =========          =========          =========
    Common shares used in per
    share computation..............       35,088          34,994             32,932             31,627             31,345

Per common share -- assuming
    dilution:
    Income before extraordinary
       items.......................    $   (1.14)      $    4.52          $     .32          $     .88          $    1.04
    Discontinued operations .......         2.64            (.28)              (.08)              (.14)                --
    Extraordinary items ...........         (.20)             --               (.04)              (.14)                --
                                       ---------       ---------          ---------          ---------          ---------
    Net income ....................    $    1.30       $    4.24          $     .20          $     .60          $    1.04
                                       =========       =========          =========          =========          =========
    Common shares used in per
      share computation -- assuming
      dilution ....................       35,088          35,122             33,110             31,883             31,652

Dividends ........................          $---       $     .02          $     .02          $     .02          $     .02
                                       =========       =========          =========          =========          =========
Consolidated Balance Sheet Data
  (at end of period):

Working capital (deficit) ........     ($233,991)      $  15,310          $  21,704          $  15,706          $  12,019
Total assets .....................       576,841         667,307            528,436            316,126            266,385
Total long-term debt .............         1,493         385,641            403,761            266,999            213,294
Total debt .......................       290,579         394,671            414,593            270,100            229,424
Stockholders' equity (deficiency).       223,005         175,980             27,289            (25,841)           (44,909)
</TABLE>
--------------------
(1) See Note 4  to the Consolidated Financial Statements.
(2) See Note 5 to the Consolidated Financial Statements.


                                       31

<PAGE>

                ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

        Statements appearing in this section, Management's Discussion and
Analysis of Financial Condition and Results of Operations, and elsewhere in this
report, which are not historical in nature (including the discussions of the
effects of recent acquisitions and dispositions, business transactions, and
similar information), are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. We caution our shareholders
and potential investors that any forward-looking statements or projections set
forth in this section and elsewhere in the annual report are subject to risks
and uncertainties which may cause actual results to differ materially from those
projected. After the date of this Annual Report, we will not make any public
announcements updating any forward-looking statement contained in this report.

        Important factors that could cause the results to differ materially from
those expressed in this section or elsewhere in the annual report include:

        -  material adverse changes in general economic conditions, including
           changes in inflation and interest rates, changes in demand for
           advertising nationally or in the local markets that we serve,
           including cyclical aspects such as political advertising;

        -  recessionary influences in the regional markets that we serve;

        -  changes in laws and regulations affecting the outdoor advertising and
           television and radio broadcasting businesses, including changes in
           the FCC's treatment of local marketing agreements and related
           matters, and the possible inability to obtain FCC consent to proposed
           or pending acquisitions or dispositions of broadcasting stations;

        -  competitive factors in the outdoor advertising, television
           broadcasting, radio broadcasting, and interactive media businesses;

        -  expiration or non-renewal of broadcasting licenses and local
           marketing agreements;

        -  labor matters, changes in labor costs, loss of key employees,
           including key broadcasting employees, renegotiation of labor
           contracts, and risk of work stoppages or strikes;

        -  matters relating to our level of indebtedness, including restrictions
           imposed by financial covenants;

        -  material changes to accounting standards.


                                       32

<PAGE>

OVERVIEW

        We reported net income of $45.5 million in 2001, compared to $148.9
million in 2000. Our net income for 2001 includes a net gain from disposal of
discontinued operations of $92.7 million and extraordinary losses of $7.1
million. By contrast, our 2000 net income includes a net gain on dispositions of
assets of $277.7 million and a loss from discontinued operations of $9.7
million. Net revenue in 2001 decreased by $25.7 million, or 11%, from 2000, and
our EBITDA (as defined below) decreased by $26.4 million, or 61%.

        On October 5, 2001, we entered into a merger agreement (the "Merger
Agreement") with Clear Channel Communications, Inc. ("Clear Channel"). Under the
terms of Merger Agreement, each share of the common stock and the Class B common
stock of Ackerley will be converted into the right to receive 0.35 of a share of
the common stock of Clear Channel. The transaction is intended to be tax-free to
the Company's stockholders. Our stockholders approved the transaction on January
24, 2002. The transaction, which we expect to consummate in the second quarter
of 2002, is subject to customary regulatory approvals and closing conditions.

        On April 2, 2001, we sold our sports & entertainment operations pursuant
to a letter of intent signed on December 8, 2000. Accordingly, our sports &
entertainment operations are reflected in our financial statements as a
discontinued operation for all periods presented. This transaction is more fully
discussed in Note 5 to the Consolidated Financial Statements.

        As with many media companies, our acquisitions and dispositions have
resulted in significant non-cash and non-recurring charges to income. For this
reason, in addition to net income, our management believes that EBITDA (defined
as net revenue less operating expenses, work force reduction costs, and
restructuring expenses before amortization, depreciation, interest, net gain
(loss) on dispositions of assets and other expenses) is an appropriate measure
of our financial performance. Similarly, we believe that Segment Operating Cash
Flow (defined as EBITDA before corporate overhead and workforce reduction costs)
is an appropriate measure of our segments' financial performance. These measures
exclude certain expenses that management does not consider to be costs of
ongoing operations. We use EBITDA to pay interest and principal on our long-term
debt as well as to finance capital expenditures. EBITDA and Segment Operating
Cash Flow, however, are not to be considered as alternatives to net income as an
indicator of our operating performance or to cash flows as a measure of our
liquidity.

RESULTS OF OPERATIONS

        The following tables set forth certain historical financial and
operating data for each of the three years in the period ended December 31,
2001, including net revenue, operating expenses, and Segment Operating Cash Flow
information by segment:


                                       33

<PAGE>

<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31,
                                ----------------------------------------------------------------
                                        2001                   2000                  1999
                                -------------------    -------------------   -------------------
                                            AS % OF                AS % OF               AS % OF
                                              NET                    NET                   NET
                                 AMOUNT     REVENUE     AMOUNT     REVENUE    AMOUNT     REVENUE
                                --------    -------    --------    -------   --------    -------
<S>                             <C>         <C>        <C>          <C>      <C>          <C>
Net revenue                     $198,857     100.0%    $224,564      100.0%  $207,583      100.0%
Segment operating expenses       162,668      81.8      157,674       70.2    142,048       68.4
Corporate overhead                17,047       8.6       23,792       10.6     16,142        7.8
Workforce reduction costs          2,442       1.2           --         --         --         --
                                --------               --------              --------
  Total operating expenses       182,157      91.6      181,466       80.8    158,190       76.2
                                --------               --------              --------
EBITDA                            16,700       8.4       43,098       19.2     49,393       23.8
Other expenses and (income):
  Depreciation and
    amortization expenses         45,193      22.7       39,161       17.4     26,042       12.5
  Interest expense                28,834      14.5       27,687       12.3     33,510       16.1
  Interest Income                   (348)     (0.2)      (1,892)      (0.8)      (551)      (0.3)
  Net loss (gain) on
    dispositions of assets         2,202       1.1     (277,650)    (123.6)   (28,999)     (14.0)
  Other                            2,056       1.0          901        0.4        733        0.4
                                --------               --------              --------
    Total other expenses and
        (income)                  77,937      39.2     (211,793)     (94.3)    30,735       14.8
Income (loss) from
  continuing operations
  before income taxes and
  extraordinary items            (61,237)    (30.8)     254,891      113.5     18,658        9.0
Income tax benefit (expense)      21,206      10.7      (96,284)     (42.9)    (7,917)      (3.8)
                                --------               --------              --------
Income (loss) from
  continuing operations                                                                      5.2
  before extraordinary items     (40,031)    (20.1)     158,607       70.6     10,741
Gain (loss) from
  discontinued operations,
  net of taxes                    92,681      46.6       (9,707)      (4.3)    (2,778)      (1.4)
                                --------               --------              --------

Income before extraordinary
  items                           52,650      26.5      148,900       66.3      7,963        3.8
Extraordinary items, net of
  taxes                           (7,115)     (3.6)          --         --     (1,373)      (0.6)
                                --------               --------              --------
Net income                       $45,535      22.9     $148,900       66.3   $  6,590        3.2
                                 =======               ========                ======
</TABLE>


                                       34

<PAGE>

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                               -----------------------------------------
                                                  2001           2000            1999
                                               ---------       ---------       ---------
                                                         (DOLLARS IN THOUSANDS)
<S>                                            <C>             <C>             <C>
NET REVENUE:

    Outdoor media                              $  77,912       $  89,309       $  98,751
    Television broadcasting                       98,222         107,615          81,669
    Radio broadcasting                            22,509          27,589          27,163
    Interactive media                                214              51              --
                                               ---------       ---------       ---------
       Total net revenue                       $ 198,857       $ 224,564       $ 207,583
                                               =========       =========       =========
SEGMENT OPERATING EXPENSES:

    Outdoor media                              $  48,927       $  51,364       $  56,877
    Television broadcasting                       92,307          86,841          69,608
    Radio broadcasting                            20,058          19,018          15,563
    Interactive media                              1,376             451              --
                                               ---------       ---------       ---------
       Total segment operating expenses        $ 162,668       $ 157,674       $ 142,048
                                               =========       =========       =========
SEGMENT OPERATING CASH FLOW AND EBITDA:

    Outdoor media                              $  28,985       $  37,945       $  41,874
    Television broadcasting                        5,915          20,774          12,061
    Radio broadcasting                             2,451           8,571          11,600
    Interactive media                             (1,162)           (400)             --
                                               ---------       ---------       ---------
       Total Segment Operating Cash Flow          36,189          66,890          65,535
    Corporate overhead                           (17,047)        (23,792)        (16,142)
    Workforce reduction costs                     (2,442)             --              --
                                               ---------       ---------       ---------
       EBITDA                                  $  16,700       $  43,098       $  49,393
                                               =========       =========       =========
CHANGE IN NET REVENUE FROM PRIOR PERIODS:

    Outdoor media                                  (12.8)%          (9.6)%          (9.0)%
    Television broadcasting                         (8.7)           31.8            19.3
    Radio broadcasting                             (18.4)            1.6            11.0
    Interactive media                              319.6              NA              NA
       Change in total net revenue                 (11.4)            8.2             3.0
SEGMENT OPERATING EXPENSES AS A % OF NET
  REVENUE:

    Outdoor media                                   62.8%           57.5%           57.6%
    Television broadcasting                         94.0            80.7            85.2
    Radio broadcasting                              89.1            68.9            57.3
    Interactive media                              643.0           884.3              --
       Total segment operating expenses as
          a % of total net revenue:                 81.8            70.2            68.4
SEGMENT OPERATING CASH FLOW AS A % OF NET
  REVENUE:

    Outdoor media                                   37.2%           42.5%           42.4%
    Television broadcasting                          6.0            19.3            14.8
    Radio broadcasting                              10.9            31.1            42.7
    Interactive media                             (543.0)         (784.3)             --
      Segment Operating Cash Flow as a %
        of total net revenue                        18.2            29.8            31.6
EBITDA AS A % OF TOTAL NET REVENUE                   8.4            19.2            23.8
</TABLE>


                                       35

<PAGE>

2001 COMPARED WITH 2000

        Net Revenue. Our 2001 net revenue was $198.9 million. This represented a
decrease of $25.7 million, or 11%, compared to $224.6 million in 2000. Changes
in net revenue were as follows:

    -   Outdoor Media. 2001 net revenue from our outdoor media segment decreased
        by $11.4 million, or 13%, from 2000. This decrease resulted primarily
        from a decrease in national sales, particularly in the dot-com and
        automotive advertising categories. While our local sales were also
        impacted negatively by declines in dot-com advertising, they were
        partially offset by increases in a variety of other categories.

    -   Television Broadcasting. 2001 net revenue from our television
        broadcasting segment decreased by $9.4 million, or 9%, from 2000. These
        results include television stations WETM and WBGH acquired in February
        2000, WWTI in April 2000, KKFX in May 2000, and KGPE in August 2000.
        Excluding these transactions, net revenue for 2001 decreased $13.8
        million, or 15% compared to 2000. This decrease was due primarily to
        decreases in political revenue and national sales, particularly in the
        automotive advertising category.

    -   Radio Broadcasting. 2001 net revenue from our radio broadcasting segment
        decreased by $5.1 million, or 18%, from 2000. This decrease was due
        primarily to a decrease in both national and local sales, particularly
        in the dot-com and automotive advertising categories, and is consistent
        with industry trends.

        Segment Operating Expenses. 2001 segment operating expenses (which
exclude corporate overhead) were $162.7 million. This represented an increase of
$5.0 million, or 3%, compared to $157.7 million in 2000. Changes in segment
operating expenses were as follows:

    -   Outdoor Media. 2001 operating expenses from our outdoor media segment
        decreased by $2.5 million, or 5%, from 2000. This decrease was due
        primarily to cost reduction initiatives implemented in the second
        quarter of 2001.

    -   Television Broadcasting. 2001 operating expenses from our television
        broadcasting segment increased by $5.5 million, or 6%, from 2000. This
        increase was mainly due to the addition of stations WETM and WBGH in
        February 2000, WWTI in April 2000, KKFX in May 2000, and KGPE in August
        2000. Excluding those transactions, operating expenses for 2001
        increased $1.0 million, or 1%, compared to 2000. The increase was due to
        increased programming and fiber optic connection costs, offset partially
        by cost reduction initiatives implemented in the second quarter of 2001.

    -   Radio Broadcasting. 2001 operating expenses from our radio broadcasting
        segment increased by $1.0 million, or 6%, from 2000. This increase was
        primarily due to increased costs of on-air talent and increased costs
        related to the radio broadcasting segment's new operating facility.


                                       36

<PAGE>

        Corporate Overhead Expenses. Corporate overhead expenses were $17.0
million in 2001. This represented a decrease of $6.7 million, or 28%, from 2000.
This decrease was a result primarily of cost reduction initiatives implemented
in the second quarter of 2001 and one-time costs associated with celebrating our
25th anniversary in the second quarter of 2000.

        Workforce Reduction Costs. As more fully described in Note 16 to the
consolidated financial statements, we recorded a charge of $2.4 million in the
second quarter of 2001 consisting of termination benefits for employees whose
positions were eliminated in connection with a company-wide cost reduction
initiative, which included a senior management transition.

        EBITDA. Our EBITDA was $16.7 million in 2001. This represented a
decrease of $26.4 million, or 61%, compared to $43.1 million in 2000.

        Depreciation and Amortization Expenses. Our depreciation and
amortization expenses were $45.2 million in 2001. This represented an increase
of $6.0 million, or 15%, compared to $39.2 million in 2000. This increase
resulted primarily from depreciation and amortization expenses relating to our
business acquisitions during 2000, depreciation expense from construction of a
new operating facility for our radio broadcasting operations and our corporate
technology group, and depreciation expense from our investment in Digital
CentralCasting and automated news production systems for our television
broadcasting segment.

        Interest Expenses. Our interest expense was $28.8 million in 2001. This
represented an increase of $1.1 million, or 4%, from $27.7 million. This
increase was due primarily to higher average debt balances during 2001, which
resulted primarily from borrowings to fund the acquisition of television station
KGPE in the third quarter of 2000 and our funding of operating losses associated
with our discontinued sports & entertainment operations through April 2, 2001.
Our debt balances were lower in 2000 due to the application of proceeds from the
sale of our Florida outdoor advertising operations in January 2000.

        Interest Income. We recognized interest income of $0.3 million in 2001
compared to $1.9 million in 2000. The 2000 amount was higher due primarily to
interest income received on the proceeds from the sale of our Florida outdoor
advertising operations in January 2000.

        Other. We hold investments in several closely held companies. During
2001, impairment charges of $1.7 million were recorded with respect to these
investments as we considered these impairments to be other than temporary. The
remaining items in other expenses include $0.3 million and $0.1 million of stock
compensation expense in 2001 and 2000, respectively, and equity in losses of
affiliates of $0.8 million in 2000.

        Net Gain on Dispositions of Assets. As described in Note 4 to the
consolidated financial statements, we recognized a net loss of $2.2 million on
the disposal of radio broadcasting transmission facilities in the second quarter
of 2001. We recognized a net gain at $277.7 million in 2000 due to the sale of
our Florida outdoor advertising operations and television station KCBA in
California in January 2000.


                                       37

<PAGE>

        Income Taxes. We recognized an income tax benefit of $21.2 million based
on our loss from continuing operations before extraordinary items of $61.2
million in 2001 compared to income tax expense of $96.3 million based on our
income from continuing operations before extraordinary item of $254.9 million in
2000. The effective tax rate was 35% in 2001 compared to 38% in 2000.

        Discontinued Operations. As more fully described in Note 5 to the
consolidated financial statements, we recorded an after-tax gain of $92.7
million in 2001 on the sale of our discontinued sports & entertainment
operations. For 2000, we recorded an after-tax loss of $9.7 million from our
discontinued sports & entertainment operations.

        Extraordinary Items. In 2001, we incurred costs of $6.7 million in
connection with our proposed merger with Clear Channel. In addition, we recorded
a pre-tax charge of $2.0 million for the write-off of deferred financing costs
in connection with the replacement of our bank credit facilities. Net of the
income tax benefit of $1.6 million, these two items totaled $7.1 million. There
were no such charges in 2000.

        Net Income. Our net income was $45.5 million in 2001. This represented a
decrease of $103.4 million, or 69%, from $148.9 million in 2000.

2000 COMPARED WITH 1999

        Net Revenue. Our 2000 net revenue was $224.6 million. This represented
an increase of $17.0 million, or 8%, compared to $207.6 million in 1999. Changes
in net revenue were as follows:

        -  Outdoor Media. Net revenue from our outdoor media segment decreased
           by $9.5 million, or 10%, from 1999. This decrease was primarily due
           to the absence of our Florida outdoor advertising operations, which
           we sold in January 2000. Excluding our Florida outdoor advertising
           operations, net revenue from our outdoor media segment increased by
           $16.4 million, or 23%, from 1999. This increase mainly resulted from
           growth in national and local sales in the Boston and Northwest
           markets. We completed the expansion of our national sales
           organization during 1999, which contributed to our national sales
           growth. Within this segment, dot-com advertising increased 148% to
           $12.1 million in 2000.

        -  Television Broadcasting. Net revenue from our television broadcasting
           segment increased by $25.9 million, or 32%, from 1999. This increase
           was mainly due mainly to the addition of stations WETM, WBGH, WWTI,
           KGPE, and KKFX in 2000; stations WOKR and KTVF in 1999; and the
           exchange of station KKTV for KCOY in 1999. Excluding these
           transactions, net revenue from our television broadcasting segment
           increased by $5.3 million, or 9%, from 1999. This increase was due
           primarily to political advertising revenue, which totaled
           approximately $12.0 million ($10.1 million excluding acquired
           stations) in 2000.


                                       38

<PAGE>

        -  Radio Broadcasting. Net revenue from our radio broadcasting segment
           increased by $0.4 million, or 2%, from 1999. Revenue growth was
           negatively impacted by the format change with one of our FM stations.

        Segment Operating Expenses. Segment operating expenses (which exclude
corporate overhead) were $157.7 million in 2000. This represented an increase of
$15.7 million, or 11%, compared to $142.0 million in 1999. Changes in segment
operating expenses were as follows:

        -  Outdoor Media. Operating expenses from our outdoor media segment
           decreased by $5.5 million, or 10%, from 1999. This decrease was due
           primarily to the absence of our Florida outdoor advertising
           operations, which we sold in January 2000. Excluding our Florida
           outdoor advertising operations, operating expenses from our outdoor
           media segment increased by $11.7 million, or 30%, from 1999. This
           increase was primarily due to the acquisition of five outdoor media
           companies, higher lease costs, increased employment-related expenses,
           and increased expenses related to the expansion of our national sales
           force.

        -  Television Broadcasting. Operating expenses from our television
           broadcasting segment increased by $17.2 million, or 25%, from 1999.
           This increase was due mainly to the addition of stations WETM, WBGH,
           WWTI, KGPE, and KKFX in 2000; stations WOKR and KTVF in 1999; and the
           exchange of station KKTV for KCOY in 1999. Our 1999 operating
           expenses included a restructuring charge of $1.1 million recognized
           in connection with our implementation of Digital CentralCasting. This
           restructuring charge consisted primarily of costs associated with
           employee staff reductions, contract terminations, legal, and other
           costs associated directly with the restructuring. Excluding these
           transactions, operating expenses from our television broadcasting
           segment increased by $2.4 million, or 4%, from 1999. This increase
           was primarily due to higher program, promotion, and production
           expenses relating to the expansion of our local news.

        -  Radio Broadcasting. Operating expenses from our radio broadcasting
           segment increased by $3.5 million, or 22%, from 1999. This increase
           was primarily due to higher expenses associated with increased sales
           activity and the expense associated with the previously noted format
           change with one of our FM stations.

        Corporate Overhead Expenses. Our corporate overhead expenses were $23.8
million in 2000. This represented an increase of $7.7 million, or 47%, from
1999. Approximately $3.3 million of this increase was due to costs associated
with the celebration of our 25th anniversary and the operating and estimated
disposal costs of a company aircraft. The remainder of the increase was due
primarily to increased travel costs, expansion of corporate staff to support our
growth from our acquisitions, and greater utilization of outside services.

        EBITDA. Our EBITDA was $43.1 million in 2000. This represented a
decrease of $6.3 million, or 13%, compared to $49.4 million in 1999. The
decrease in Segment Operating Cash Flow from our outdoor media and radio
broadcasting segments, and the increase in corporate overhead expenses, was
partially offset by the increase in Segment Operating Cash


                                       39

<PAGE>

Flow from our television broadcasting segment. EBITDA as a percentage of total
net revenue decreased to 19% in 2000 compared to 24% in 1999.

        Depreciation and Amortization Expenses. Our depreciation and
amortization expenses were $39.2 million in 2000. This represented an increase
of $13.2 million, or 51%, compared to $26.0 million in 1999. This increase
resulted primarily from depreciation and amortization expenses relating to our
business acquisitions during 2000. In addition, depreciation expense increased
as a result of our investment in a new operating facility for our radio
broadcasting and corporate technology operations, and our investment in the
Digital CentralCasting and ParkerVision systems for our television broadcasting
segment.

        Interest Expense. Our interest expense was $27.7 million in 2000. This
represented a decrease of $5.8 million, or 17%, from $33.5 million in 1999. This
decrease was due to lower average debt balances during 2000 resulting from the
application of proceeds from the sale of our Florida outdoor advertising
operations.

        Interest Income. We recognized interest income of $1.9 million in 2000
compared to $0.6 million in 1999. The 2000 amount was higher due primarily to
interest income received on the proceeds from the sale of our Florida outdoor
advertising operations in January 2000.

        Other. We recognized stock compensation expense of $0.1 million in 2000
compared to $0.6 million in 1999. The 1999 expense primarily related to the
amendments of certain stock option agreements. Other expenses also includes
equity in losses of affiliates of $0.8 million in 2000 and $0.2 million in 1999.

        Net Gain on Dispositions of Assets. We recognized a net gain on
disposition of assets of $277.7 million. This gain consisted of a $269.3 million
gain from the sale of our Florida outdoor advertising operations, an $8.8
million gain from the sale of station KCBA, and a $0.4 million loss on disposal
of certain assets of our radio broadcasting segment resulting from its
relocation to a new facility. The net gain of $29.0 million in 1999 resulted
from a $28.6 million gain from the exchange of the assets of television station
KKTV for the assets of television station KCOY, a $1.6 million gain relating to
the sale of our airport advertising operations, and a $1.2 million loss on the
sale of a radio broadcasting tower.

        Income Tax Expense. We recognized income tax expense of $96.3 million
based on our income from continuing operations before extraordinary item of
$254.9 million in 2000 compared to $7.9 million based on our income from
continuing operations before extraordinary item of $18.7 million in 1999. The
effective tax rate in 2000 was 38% compared to 42% in 1999.

        Loss From Discontinued Operations. Our loss from discontinued operations
was $9.7 million net of taxes for 2000 compared to $2.8 million in 1999. This
increase was due primarily to increased operating expenses, particularly for
SuperSonics player compensation and other team costs, which outpaced the growth
in net revenue.


                                       40

<PAGE>

        Extraordinary Item. In 1999, we replaced our existing 1998 Credit
Agreement with a new $325.0 million credit agreement and redeemed our $20.0
million 10.48% Senior Subordinated Notes. These transactions resulted in an
aggregate charge of $1.4 million, net of taxes, primarily consisting of the
write-off of deferred financing costs and prepayment fees.

        Net Income. Our net income was $148.9 million in 2000. This represented
an increase of $142.3 million from $6.6 million in 1999.

LIQUIDITY AND CAPITAL RESOURCES

        Cash used in operating activities was $63.2 million in 2001 compared to
$78.3 million in 2000. Included in these amounts are cash paid for income taxes
of $35.8 and $70.7 million in 2001 and 2000, respectively. These income tax
payments resulted primarily from the gain on sale of our sports & entertainment
operations in 2001 and the gain on sale of our Florida outdoor advertising
operations in 2000. In addition, our cash flow from operating activities was
impacted negatively by the operating losses from our discontinued sports &
entertainment operations for all of 2000 and the first quarter of 2001. On a
pre-tax basis, this loss amounted to $15.6 million in 2000. Finally, in the
first quarter of 2000 we paid $7.5 million in damages in connection with a
lawsuit.

        Our working capital decreased to a deficit of $234.0 million at December
31, 2001 from $15.1 million at December 31, 2000. This decrease was due
primarily to the reclassification of outstanding borrowings under our 2001
Credit Agreement and our 9% Senior Subordinated Notes as a current liability, as
discussed below. This was offset partially by a decrease in accrued liabilities
and deferred revenue due to the sale of our sports & entertainment operations in
April 2001.

        Capital expenditures were $8.3 million in 2001, compared to $41.4
million in 2000. Capital expenditures in 2001 were primarily for equipment to
complete our Digital CentralCasting implementation, automated news production
systems and news sets, upgrades to our operating facilities for television
station KGPE in Fresno, California, and for outdoor advertising structures in
Washington.

        For the periods presented, our long-term liquidity needs have been
principally for acquisitions, capital expenditures, and refinancing our
indebtedness. We have financed these needs through proceeds from the sale of our
sports & entertainment operations in 2001, proceeds from the sale of our Florida
outdoor advertising operations in 2000, proceeds from the issuance of common
stock in 1999, proceeds from the sale of subordinated debt securities in 1999,
and bank borrowings.

        Following is a summary of our financing activities and debt structure:

        On January 22, 1999, we replaced our previous credit agreement with a
new $325.0 million credit agreement (the "1999 Credit Agreement"), consisting of
a $150.0 million term loan facility (the "Term Loan") and a $175.0 million
revolving credit facility (the "Revolver"), which includes up to $10.0 million
in standby letters of credit. This transaction resulted in a


                                       41

<PAGE>

charge of approximately $0.6 million, net of taxes, consisting of the write-off
of deferred financing costs.

        On January 5, 2000, we applied proceeds from the sale of our Florida
outdoor advertising operations (as discussed in Note 4 to the Consolidated
Financial Statements) to fully repay outstanding borrowings under our 1999
Credit Agreement, consisting of $43.0 million under the Revolver and $150.0
million under the Term Loan. In connection with the transaction, we amended the
1999 Credit Agreement to waive, on a one-time basis, the mandatory requirement
to apply 100% of net proceeds from asset dispositions to permanently repay
borrowings under the Revolver and to provide for a new commitment amount under
the Revolver of approximately $147.9 million. Additionally, we amended the 1999
Credit Agreement to provide for a delayed-draw term loan facility of
approximately $126.8 million (the "2000 Term Loan") allowing us to borrow,
through no more than two separate borrowings, the maximum amount available under
the 2000 Term Loan. On September 15, 2000 we borrowed $54.0 million under the
2000 Term Loan to acquire television station KGPE(TV).

        On September 7, 2001, we replaced our 1999 Credit Agreement with a new
$120.0 million credit agreement (the "2001 Credit Agreement"), consisting of a
$100.0 million term loan (the "2001 Term Loan") and a $20.0 revolving credit
facility (the "2001 Revolver"). The 2001 Revolver includes up to $5.0 million in
standby letters of credit. The transaction resulted in a charge of $1.6 million,
net of applicable taxes of $0.9 million, consisting of the write-off of deferred
financing costs. In addition, the transaction included a discount of $3.6
million, which is being amortized in interest expense over the term of the 2001
Credit Agreement.

        At closing, a portion of the 2001 Term Loan was placed in escrow to fund
our estimated federal income tax payments due in October and December of 2001
and the interest payment on our senior subordinated notes due in January 2002.
The estimated federal income tax payments were funded, leaving $9.0 million in
escrow to fund the January 15, 2002 interest payment. Accordingly, the interest
payment was funded out of escrow on January 15, 2002. The $9.0 million is
classified as restricted cash on our consolidated balance sheet.

        Principal payments under the 2001 Term Loan are due in quarterly
installments of $250,000 each for the period commencing on December 31, 2001 and
ending on September 30, 2005, and $24.0 million each for the period commencing
on December 31, 2005 and ending on August 31, 2006. Any outstanding borrowings
under the 2001 Revolver will be due on August 31, 2004. At December 31, 2001,
outstanding borrowings under the 2001 Term Loan were $91.3 million. The
unamortized discount at December 31, 2001 was $3.3 million. There were no
outstanding borrowings under the 2001 Revolver at December 31, 2001.

        In addition, the 2001 Credit Agreement and the 9% Senior Subordinated
Notes restrict, among other things, our ability to borrow, pay dividends,
repurchase outstanding shares of our stock, and sell or transfer our assets.
They also contain restrictive covenants requiring us to maintain certain
financial ratios.

        We can choose to have interest calculated at rates based on either LIBOR
or a base rate plus defined margins. The interest rate applicable to the 2001
Revolver will be subject to certain


                                       42

<PAGE>

reductions based on our interest coverage ratio. Commitment fees on the unused
portion of the 2001 Revolver are payable quarterly at an annual rate of 1.5%.

        We have obtained waivers of compliance with certain restrictive
covenants effective for the period December 31, 2001 through May 31, 2002.
Pursuant to the terms of the waivers, we cannot access the 2001 Revolver during
the waiver period. After May 31, 2002, our lenders would have the right to
accelerate the payment of our indebtedness, unless we were to obtain an
extension of the waivers. In addition, an acceleration of our indebtedness under
the 2001 Credit Agreement could cause an acceleration of our indebtedness under
the 9% Senior Subordinated Notes. As the waivers currently expire prior to
December 31, 2002, all outstanding borrowings under the 2001 Credit Agreement
and the 9% Senior Subordinated Notes have been classified as current at December
31, 2001. If the merger does not close by May 31, 2002, we will need to obtain
extensions of the waivers or make other financing arrangements. There can be no
guarantee that we will be able to do so. Under the change of control provisions
of the 2001 Credit Agreement, all outstanding borrowings thereunder will be
repaid fully upon closing of the merger with Clear Channel.

        We have pledged substantially all of our subsidiaries' outstanding stock
and assets as collateral for amounts due under the 2001 Credit Agreement. Thus,
if we default under the 2001 Credit Agreement, the lenders may take possession
of and sell substantially all of our subsidiaries and their assets.

        On February 24, 1999, we issued additional Senior Subordinated Notes due
2009 in the aggregate principal amount of $25.0 million. The total aggregate
amount of Senior Subordinated Notes issued and outstanding is $200.0 million.
The Senior Subordinated Notes bear interest at 9%, which is payable
semi-annually in January and July. Principal is payable in full in January 2009.
Under the change of control provisions of the Indenture, within 30 days after
the closing of the merger with Clear Channel, the Company will be required to
make an offer to repurchase all of the outstanding 9% Senior Subordinated Notes
at a price of 101% plus accrued interest to the date of repurchase. Such
repurchase must occur no less than 30 days and no later than 45 days after the
date of the repurchase offer.

        On March 15, 1999, we redeemed the $20.0 million outstanding principal
of our 10.48% Senior Subordinated Notes due 2000 with borrowings under the 1999
Credit Agreement. This transaction resulted in a charge of approximately $0.8
million, net of taxes, consisting of prepayment fees and the write-off of
deferred financing costs.

        On August 6, 1999, we issued 3,000,000 shares of common stock at a price
of $15.25 per share pursuant to an underwritten public offering. Our net
proceeds were approximately $42.9 million, which were used primarily to repay
borrowings outstanding under the 1999 Credit Agreement. On September 7, 1999, we
received approximately $3.6 million in net proceeds from the issuance of 250,000
shares of common stock upon the exercise of the underwriters' overallotment
option, which were also used to repay borrowings under the 1999 Credit
Agreement.


                                       43

<PAGE>

        Following are items that may impact our liquidity in 2002:

        -  After May 31, 2002, we would likely need to extend our waivers of
           compliance with certain restrictive covenants of our 2001 Credit
           Agreement. It is uncertain as to whether we would be able to obtain
           such extensions of the waivers.

        -  National advertising may continue to decrease or remain at current
           levels as a result of the current national economic conditions. Our
           liquidity may be impacted negatively depending on the magnitude of
           this trend, its duration, and our ability to offset decreased
           national sales with increased local sales.

        -  Under current FCC regulations, we will need to construct DTV
           facilities for several of our television stations by November 1,
           2002. We estimate that this will cost approximately $9 to $11
           million.

QUARTERLY VARIATIONS

        Our results of operations may vary from quarter to quarter due in part
to the timing of acquisitions or dispositions and to seasonal variations in the
operations of the television broadcasting and radio broadcasting segments. In
particular, our net revenue and EBITDA historically have been affected
positively by increased advertising activity in the second and fourth quarters.

TAXES

        Due to the gain on the sale of our Florida outdoor advertising
operations, our federal net operating loss, alternative minimum tax credit, and
charitable contribution carryforwards were fully utilized in our 2000 federal
tax return.

INFLATION

        The effects of inflation on our costs generally have been offset by our
ability to correspondingly increase our rate structure.

CRITICAL ACCOUNTING POLICIES

        Our significant accounting policies are included in Note 1 to the
Consolidated Financial Statements. These policies, along with the underlying
assumptions and judgments made in their application, may have a significant
impact on our consolidated financial statements. We identify the most critical
accounting policies as those that are the most pervasive and important to the
portrayal of our financial position and results of operations, and that require
the most difficult, subjective and/or complex judgments and estimates about
matters that are inherently uncertain. Following are our most critical
accounting policies.


                                       44

<PAGE>

Allowance for Doubtful Accounts

        We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. We
determine the adequacy of this allowance by regularly reviewing our accounts
receivable aging and evaluating individual customer receivables. This involves
considering the customer's financial condition and credit history, current
economic conditions, and overall historical bad debt experience. If the
financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.

Business Combinations -- Purchase Price Allocation

        During 1999 and 2000, we completed acquisitions of other companies. The
amounts assigned to the identifiable assets and liabilities acquired in
connection with these acquisitions were based on estimated fair values as of the
date of the acquisitions, with the remainder recorded as goodwill. The fair
values were determined by our management, generally based on information
supplied by the management of the acquired entities, and valuations prepared by
independent appraisal experts.

        In connection with these acquisitions, we have recorded a significant
amount of intangible assets, consisting primarily of FCC licenses, network
affiliation agreements, and goodwill. The appraisal experts utilized a
discounted cash flow analysis to determine the fair values of the FCC licenses
and network affiliation agreements.

Valuation of Investments

        We hold investments in several closely held companies. These investments
are carried at cost, less adjustments to reflect any impairment deemed to be
other than temporary. The investments are reviewed on a regular basis for the
existence of facts or circumstances that may suggest impairment. This review
includes an analysis of the companies' historical financial condition, results
of operations, and cash flows, as well as forecasts of future financial
performance. It also includes information obtained from discussions with members
of the companies' senior management team and measurements based on the pricing
of recent debt and/or equity financings and/or the anticipated pricing of
financing expected over the coming year. If an impairment is identified and
considered to be other than temporary, the impairment loss is measured by
comparing the estimated fair value to the carrying value of the investment.
During 2001, impairment charges of $1.7 million were recorded with respect to
these investments.

Long-lived Assets -- Impairment

        We assess our long-lived assets, including identifiable intangible
assets and goodwill, for impairment whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Factors we consider
important that could trigger an impairment review include the following:


                                       45

<PAGE>

        -  a significant underperformance relative to historical or projected
           future operating results that is other than temporary;

        -  a significant change in the manner of our use of the acquired asset
           or the strategy for our overall business;

        -  a significant negative industry or economic trend that is other than
           temporary;

        -  our market capitalization relative to net book value.

        In addition, for 2001 we considered the value of our business
represented by the common stock exchange ratio under terms of our merger with
Clear Channel. The common stock exchange ratio, based on the closing price of
Clear Channel shares on October 5, 2001, the trading day immediately prior to
the date of public announcement of the merger, represented a 28% premium to the
closing share price of our common stock on October 5, 2001. During the period
from October 5, 2001 through March 1, 2002, based on the trading price of Clear
Channel common stock, this premium has been maintained or increased.

NEW ACCOUNTING STANDARDS

        In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, Business
Combinations, effective for business combinations, occurring after June 30,
2001, and No. 142, Goodwill and Other Intangible Assets, effective for fiscal
years beginning after December 12, 2001. Under the new rules, goodwill (and
intangible assets deemed to have indefinite lives) will no longer be amortized,
but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives.

        We will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the no
amortization provisions of SFAS No. 142 is expected to result in an increase in
pre-tax income of approximately $19 million per year. During 2002, we will
perform the first of the required impairment tests of goodwill and indefinite
lived intangible assets as of January 1, 2002. We have not yet determined what
the effect of these tests will be on our earnings and financial position.

        In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, effective for fiscal years
beginning after December 15, 2001. SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, providing a single model for long-lived assets to be disposed
of. In addition, SFAS No. 144 amends certain provisions of Accounting Principles
Board Opinion No. 30, Reporting the Results of Operations--Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, with respect to the accounting
for discontinued operations. The impact of the statement is currently being
studied, and the effect of the new statement on the financial statements has not
yet been determined.


                                       46

<PAGE>

               ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

        Our interest income and expense are most sensitive to changes in the
general level of interest rates. In this regard, changes in LIBOR and U.S.
interest rates affect the interest earned on our cash equivalents as well as
interest paid on our debt. To mitigate the impact of fluctuations in interest
rates, we generally maintain a portion of our debt as fixed rate in nature.

        The table below provides information about our financial instruments
that are sensitive to changes in interest rates, which consist of debt
obligations for the years ended December 31, 2001 and 2000. The table presents
principal cash flows and related weighted average interest rates by maturity
dates.

                           INTEREST RATE SENSITIVITY
                     PRINCIPAL AMOUNT BY EXPECTED MATURITY
                             AVERAGE INTEREST RATE

                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                            Fair
                                                                                                            Value
                              2002         2003       2005       2005       2006   Thereafter    Total    12/31/01
                            --------       ----       ----       ----       ----   ----------    -----    --------
<S>                         <C>            <C>        <C>        <C>        <C>    <C>           <C>       <C>
2001:
Long-term debt, including
  current portion

   Fixed rate               $200,000         --        --         --         --        --       $200,000   $211,000
   Average interest rate        9.0%         --        --         --         --        --
   Variable rate             $91,271         --        --         --         --        --       $ 91,271   $ 91,271
   Average Interest Rate         (a)
</TABLE>

<TABLE>
<CAPTION>
                                                                                                            Fair
                                                                                                            Value
                              2001         2002       2003       2004       2005   Thereafter    Total    12/31/00
                              ----         ----       ----       ----       ----   ----------    -----    --------
<S>                         <C>            <C>        <C>       <C>         <C>    <C>           <C>      <C>
2000:
Long-term debt,
  including current
  portion

Fixed rate                      --           --           --         --         --     $200,000   $200,000     $176,000
Average interest rate           --           --           --         --         --        9.00%
Variable rate               $5,400      $29,588      $40,375    $50,468    $50,469           --   $176,300     $176,300
Average Interest Rate          (a)          (a)          (a)        (a)        (a)           --
</TABLE>


(a) The interest rate is based on a base rate or LIBOR plus defined margins
    which vary based on our total leverage ratio.


                                       47

<PAGE>

              ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        Information called for by this item is included in Item 14, pages F-1
through F-25

             ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                       ON ACCOUNTING AND FINANCIAL DISCLOSURE

                                      None.



                                       48

<PAGE>

                                    PART III

          ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

BOARD OF DIRECTORS

        Our Board of Directors cannot consist of less than one (1) director and
cannot consist of more than fifteen (15) directors. Our Certificate of
Incorporation provides that the presently sitting Board may change the number of
directors from time to time. Once elected, Board members serve terms of one (1)
year, and until their successors are elected and qualified. Our Board of
Directors is currently fixed at ten (10) members, and the following persons are
our current directors.

<TABLE>
<CAPTION>
                                   Company
                                   Director
      Nominee               Age     Since    Principal Occupation and Professional Experience
      -------               ---    --------  ------------------------------------------------
<S>                         <C>    <C>       <C>
 Barry A. Ackerley          67      1975     Mr. Ackerley, one of our founders, has been the
                                             Chief Executive Officer and a director of The
                                             Ackerley Group and its predecessor and subsidiary
                                             companies since 1975. He also currently serves as
                                             our Chairman.

 Gail A. Ackerley           64      1995     Ms. Ackerley was elected to our Board of Directors
                                             in May 1995. She became Co-Chairman in September
                                             1996, in February 2001 was appointed Co-Chief
                                             Executive Officer. From November 1996 until
                                             February 15, 2000, she served as one of our
                                             Co-Presidents. Ms. Ackerley has served as
                                             Chairman of Ackerley Corporate Giving since 1986,
                                             supervising our charitable activities, and during
                                             2000 served as Chairman of the Seattle Storm.

 Christopher H. Ackerley    32      2000     Mr. Ackerley was named President on July 31, 2001,
                                             with principal responsibility for overseeing our
                                             operating segments and corporate functions.  As
                                             Co-President, he was responsible for overseeing
                                             our marketing, investor relations, information
                                             technology, and technology-ventures investments.
                                             He joined The Ackerley Group in 1995, and was
                                             elected Vice President for Marketing and
                                             Development in May 1998.  He also served as
                                             Executive Vice President, Operations and
                                             Development from December 1998 until his election
                                             as Co-President in 2000.
</TABLE>



<PAGE>

<TABLE>
<CAPTION>
                                   Company
                                   Director
      Nominee               Age     Since    Principal Occupation and Professional Experience
      -------               ---    --------  ------------------------------------------------
<S>                         <C>    <C>       <C>
 Edward G. Ackerley         32      2000     Mr. Ackerley was elected to our Board of Directors
                                             in February 2000 and joined the Company as Vice
                                             President of Ackerley Ventures, Inc. in December
                                             2000. He was a founder of VictoryCigars.com, a
                                             custom cigar company, and has served as its
                                             President since its inception in June 1997 until
                                             December, 2000. From June 1995 until May 1997,
                                             Mr. Ackerley served as President of Jet City
                                             Entertainment, an in-flight entertainment company.

 Deborah L. Bevier          50      1998     Ms. Bevier was elected to our Board of Directors
                                             in November 1998. She is the Chief Executive
                                             Officer and President of the Laird Norton
                                             Financial Group and The Laird Norton Trust
                                             Company, a personal investment and trust services
                                             company. She also serves as the Chief Executive
                                             Officer of Wentworth, Houser and Violich, Inc. (a
                                             registered investment adviser). She also serves
                                             as a member of the Board of Directors of Laird
                                             Norton Trust Company, the Laird Norton Financial
                                             Group, and Wentworth, Houser and Violich, Inc.
                                             Prior to joining Laird Norton in 1996, Ms. Bevier
                                             served as Chairman and Chief Executive Officer of
                                             Key Bank of Washington and Northwest Region
                                             Executive for Key Private Bank.

 Chris W. Birkeland         33      2000     Mr. Birkeland was elected to our Board of
                                             Directors in February 2000. He has been a
                                             managing member of Cedar Grove Investments, LLC, a
                                             private venture capital firm, since January 1,
                                             2000. Prior to joining Cedar Grove Investments,
                                             he was self-employed as a consultant and
                                             technology-venture investor. Mr. Birkeland was a
                                             founding member of PhotoDisc, Inc. (now Getty
                                             Images) and served as their Vice President of
                                             Finance and Operations from 1992 to October 1998.

 Kimberly A. Cleworth      38       2000     Ms. Cleworth was elected to our Board of Directors
                                             in February 2000. She has served as the President
                                             and Executive Director of The Ginger and Barry
                                             Ackerley Foundation since June 1997. From
                                             February 1994 to June 1997, Ms. Cleworth served as
                                             The Ackerley Group's Vice President of Marketing.
</TABLE>


                                       50

<PAGE>

<TABLE>
<CAPTION>
                                   Company
                                   Director
      Nominee               Age     Since    Principal Occupation and Professional Experience
      -------               ---    --------  ------------------------------------------------
<S>                         <C>    <C>       <C>
 Keith D. Grinstein         41      2000     Mr. Grinstein was elected to our Board of
                                             Directors in February 2000. He has served as Vice
                                             Chairman of Nextel International, Inc., a wireless
                                             telecommunications company, since March 1999.
                                             Previously, he held the title of President and CEO
                                             of Nextel International, from November 1995 until
                                             March 1999. From 1994 until he joined Nextel, he
                                             served as President of the Aviation Communications
                                             division of AT&T. Prior to that, Mr. Grinstein
                                             held a number of executive positions at McCaw
                                             Cellular Communications, Inc. and subsidiaries.

 Michael T. Lennon          39      2000     Mr. Lennon was elected to our Board of Directors
                                             in February 2000. He is Managing Director of
                                             Lennon Smith Advisors, LLC, a mergers and
                                             acquisitions advisors firm. Previously, he was a
                                             Managing Director of Emerge Corporation, a mergers
                                             and acquisitions advisory firm from March 1999
                                             until January 2000. From September 1995 to March
                                             1999, Mr. Lennon was a principal of Olympic
                                             Capital Partners LLC, an investment banking and
                                             mergers and acquisitions advisory firm, prior to
                                             which he served as Chief Operating Officer of The
                                             MWW Group, Inc., a full-service marketing,
                                             communications and public relations firm.

 Michel C. Thielen          67      1979     Mr. Thielen has served as one of our directors
                                             since 1979. Mr. Thielen has been President and
                                             Chief Executive Officer of Thielen & Associates,
                                             an advertising agency, since 1969. He is also
                                             Vice President of Executive Wings, Inc., an
                                             airport operations company.
</TABLE>

        Barry A. Ackerley and Gail A. Ackerley are husband and wife, and
Christopher H. Ackerley, Edward G. Ackerley, and Kimberley A. Cleworth are their
children. Additional information regarding transactions involving our operations
and the Ackerley family is set forth under "Certain Relationships and Related
Transactions" in Item 13 below.

SECTION 16(a) -- BENEFICIAL OWNERSHIP COMPLIANCE

        Our directors and executive officers, and persons holding more than ten
percent (10%) of our outstanding Common Stock and Class B Common Stock, are
required to report their share ownership to the Securities and Exchange
Commission. In general, those parties must report their share ownership (1) when
they become directors, executive officers or ten percent shareholders, and (2)
whenever they engage in share transactions involving our Common Stock and Class
B Common Stock.


                                       51

<PAGE>

        Based upon the written representations of our directors and executive
officers, and copies of the reports that they have filed with the Securities and
Exchange Commission, we have determined that our directors and executive
officers have timely filed all of the reports that they were required to file
during 2001, with the following exceptions:

        1. Kimberly Cleworth did not report the ownership of 3,240 shares of
           Class B Stock that should have been reported on her Form 3, filed on
           February 15, 2000. She received the shares December 23, 1999, as a
           gift. The shares were reported on a Form 4 filed on March 11, 2002.

        2. Michel C. Thielen inadvertently reported late the receipt of 409
           shares of Common Stock received on May 1, 2001. The report, which was
           due on June 10, 2001, was reported on June 18, 2001.

                        ITEM 11 -- EXECUTIVE COMPENSATION

        All of our executive officers receive compensation for their services.
Compensation information concerning the Chief Executive Officer and concerning
the four most highly compensated executive officers who received aggregate cash
compensation in excess of $100,000 during the last fiscal year ("Named
Executives") is set forth in this Item 11.

SUMMARY COMPENSATION INFORMATION

        The following table sets forth compensation information concerning the
Chief Executive Officer and concerning the four most highly compensated
executive officers who received aggregate cash compensation in excess of
$100,000 during the last fiscal year ("Named Executives"). The table covers
compensation paid or accrued during the fiscal years ended December 31, 2001,
2000 and 1999.


                                       52

<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                          Long Term
                                                                        Compensation
                                                                    -------------------          All Other
                                                                      Awards    Payouts        Compensation
                                  Annual Compensation               ----------  -------    --------------------
                      --------------------------------------------  Securities              Savings
                                                      Other Annual  Underlying   LTIP         and
Name and Principal                                    Compensation   Options    Payouts    Retirement     Other($)
Position              Year    Salary($)    Bonus($)      ($)(1)        (#)        ($)      Plan($)(2)       (3)
--------------------- -----   ---------   ---------   ------------  ----------  -------    ----------     --------
<S>                   <C>     <C>          <C>        <C>           <C>         <C>        <C>            <C>
Barry A. Ackerley,    2001     699,519       -0-           N/A          -0-       -0-         6,800         32,317
Chairman and Chief    2000     750,000     203,400         N/A          -0-       -0-         6,800         18,984
Executive Officer
                      1999     750,000     225,900         N/A          -0-       -0-         6,400        139,885

Gail A. Ackerley,     2001     296,154       -0-           N/A          -0-       -0-         6,800          7,392
Co-Chairman and
Co-Chief Executive    2000     400,000       -0-           N/A          -0-       -0-         6,800          7,524
Officer (4)
                      1999     400,000      90,360         N/A          -0-       -0-          -0-           9,261

Christopher H.        2001     489,135     375,000         N/A          -0-       -0-         6,800          4,127
Ackerley, President
(5)                   2000     400,000      81,375         N/A          -0-       -0-         6,800          1,783

                      1999     160,000      12,048         N/A          -0-       -0-         5,939            711

Kevin E. Hylton,      2001     163,221     145,000         N/A          -0-       -0-         6,529            793
Senior Vice
President and Chief   2000      95,086      17,566         N/A          -0-       -0-         1,650            299
Financial Officer,
(6)

Sean M. Tallarico,    2001     107,797      52,500         N/A          -0-       -0-         4,030            168
Corporate
Controller (7)
</TABLE>


--------------------------------------
(1)     None of the Named Executives received perquisites or other personal
        benefits, in any of the years shown, in an aggregate amount equal to or
        exceeding the lesser of (i) $50,000 or (ii) 10% of the executive's total
        annual salary and bonus for each year.

(2)     The amounts appearing in this column are our contributions and credits
        on behalf of each Named Executive under our Savings and Retirement Plan.

(3)     Includes value of life insurance in excess of $50,000 for each of the
        Named Executives. Includes imputed interest of $4,505, and $871 in 2000
        and $122,776, and $508 in 1999, respectively, on indebtedness to us
        incurred by Messrs. Barry Ackerley and Christopher Ackerley and imputed
        interest of $14,478 on indebtedness to us incurred by Mr. Barry Ackerley
        in 2001.

(4)     Ms. Ackerley was named Co-Chief Executive Officer as of February 22,
        2001. She also served as Co-President from November 3, 1997 to February
        15, 2000.

(5)     Mr. Christopher Ackerley was elected Vice President for Marketing and
        Development on May 1, 1998; Executive Vice President, Operations and
        Development in December 1998; Co-President on February 15, 2000; and
        President on July 31, 2001. The 2001 bonus consists of a payment under
        the retention and severance program implemented in connection with our
        merger with Clear Channel, as discussed in greater detail later.

(6)     Mr. Hylton was hired as the Chief Financial Officer on June 5, 2000. The
        2001 bonus includes of a payment under the retention and severance
        program implemented in connection with our merger with Clear Channel, as
        discussed in greater detail later.

(7)     Mr. Tallarico was named an executive officer on February 22, 2001. The
        2001 bonus consists of a payment under the retention and severance
        program implemented in connection with our merger with Clear Channel, as
        discussed in greater detail later.


                                       53

<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

        Pursuant to our Stock Option Plan, we have, from time to time, granted
options to acquire shares of our Common Stock to some of the Named Executives.
There were no options granted to our Named Executives in the last fiscal year.

OPTION EXERCISES IN LAST FISCAL YEAR

        This table includes the number of shares covered by both exercisable and
non-exercisable stock options held by each of the Named Executives as of
December 31, 2001. Also reported are the values for "in-the-money" options,
which represent the positive spread between the exercise price of any such
existing stock options and the year-end price of the Common Stock.

               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                         FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                                No. of Shares      Value of
                                                                 Underlying       Unexercised
                                                                 Unexercised      In-the-Money
                                                                 Options at       Options at
                                                                    Fiscal           Fiscal
                                                                   Year-End         Year-End
                                Shares Acquired     Value        exercisable/      exercisable/
Name                              on Exercise     Realized($)  unexercisable(#)  unexercisable($)
----                            ---------------   -----------  ----------------  ----------------
<S>                             <C>               <C>          <C>               <C>
Barry A. Ackerley                      N/A             N/A            N/A              N/A
Gail A. Ackerley                       N/A             N/A            N/A              N/A
Christopher H. Ackerley                -0-             -0-        -0-/35,000       -0-/20,145
Kevin E. Hylton                        -0-             -0-          -0-/-0-         -0-/-0-
Sean M. Tallarico                      -0-             -0-          -0-/-0-         -0-/-0-
</TABLE>


LONG TERM INCENTIVE PLANS

        We did not grant any long-term incentive compensation to any of our
Named Executives during 2001.

DEFINED BENEFIT OR ACTUARIAL PLANS

        We do not have a defined benefit or actuarial plan.

COMPENSATION OF DIRECTORS

        Those directors who we do not employ as officers receive a quarterly fee
of $5,000. In addition, we reimburse each nonemployee director up to $1,500 per
quarter for his or her out-of-pocket expenses in connection with attendance at
meetings of the Board of Directors. The following directors received additional
compensation of $10,000 each in recognition of services performed as board
members in connection with our proposed merger with Clear Channel: Edward G.
Ackerley, Deborah L. Bevier, Chris W. Birkeland, Kimberly A. Cleworth, Keith D.
Grinstein, Michael T. Lennon, and Michel C. Thielen. Nonemployee directors are
eligible to receive their


                                       54

<PAGE>

directors' fees in the form of shares of our Common Stock, as discussed in
"Nonemployee-- Directors' Equity Compensation Plan" below.

NONEMPLOYEE-DIRECTORS' EQUITY COMPENSATION PLAN

        Our Nonemployee-Directors' Equity Compensation Plan was approved by our
Board of Directors in 1995, and by our shareholders in 1996. Directors who do
not also serve as employees are eligible to participate in the plan. The plan's
purpose is to allow nonemployee directors to elect to receive directors' fees in
the form of shares of our Common Stock instead of in cash. There are a total of
100,000 shares of Common Stock authorized and reserved for issuance under the
plan.

        Nonemployee directors who want to receive their directors' fees in
shares of Common Stock must submit a written election to us before their
quarterly directors' fees become due and payable. We issue a number of shares to
each nonemployee director as calculated against the closing price on the last
trading day of the quarter, as quoted on the New York Stock Exchange. Thus, a
nonemployee director receives the number of shares that he could have purchased
for $5,000 on the open market as of closing on the last trading day of the
quarter.

        As of December 31, 2001, we had 70,346 shares available for issuance
under the Plan. At December 31, 2001, we had issued 21,793 shares of Common
Stock under the Plan to the following directors in the following amounts:

<TABLE>
<CAPTION>
                                                          SHARES ISSUED
DIRECTOR                                  TOTAL SHARES       IN 2001
--------                                  ------------    -------------
<S>                                       <C>             <C>
Edward G. Ackerley........................    1,260              --
Deborah L. Bevier.........................    4,256           1,507
Chris W. Birkeland........................    2,767           1,507
Kimberly A. Cleworth......................    1,164           1,164
Keith D. Grinstein........................    1,986             726
Michael T. Lennon.........................    2,767           1,507
Michel C. Thielen.........................    7,593           1,507
</TABLE>

RETENTION AND SEVERANCE PROGRAM

        In connection with the proposed merger with Clear Channel, in order to
foster the continued employment of key employees, we have entered into
agreements with employees that provide for retention and/or severance benefits,
including agreements with each of the following executive officers: Christopher
Ackerley, Kevin Hylton and Sean Tallarico. Mr. Barry Ackerley and Mrs. Gail
Ackerley are not parties to any severance or retention agreements.

        Except for Mr. Christopher Ackerley, whose agreement is described below,
the program provides that if the employee remains employed by The Ackerley Group
until December 31, 2001, the employee will receive a lump sum retention bonus
payment based on a percentage of


                                       55

<PAGE>

their annual compensation for 2001 ($105,000 for Mr. Hylton and $52,500 for Mr.
Tallarico). If the employee remains employed until the closing date of the
merger in the case of Mr. Hylton, or until 45 days after the closing date of the
merger, in the case of Mr. Tallarico, the employee will receive an additional
retention bonus payment of the same amount.

        Under this program, Mr. Hylton and Mr. Tallarico are also eligible for
the following severance benefits if employment is terminated other than for
"cause," or if employment is terminated as a result of a "constructive
termination":

        -  a lump sum cash payment equal to a percentage of their annual
           compensation for 2001 ($315,000 for Mr. Hylton and $13,552 for Mr.
           Tallarico);

        -  continued medical and dental insurance coverage under COBRA for 12
           months following the date of termination, subject to earlier
           termination if substitute coverage is obtained;

        -  transfer of title of company automobile for Mr. Hylton and
           compensation for the tax liability resulting from the transfer;

        -  a gross-up payment for certain employees of any excise tax imposed on
           the employee as a result of section 280G of the Internal Revenue
           Code; and

        -  any unpaid retention bonus and any accrued but unpaid salary, bonus
           or other amounts.

        Under these agreements, "cause" is defined generally to include criminal
convictions, material and willful misconduct, and deliberate non-performance of
duties, and "constructive termination" is defined generally to include a
reduction in position or authority, a reduction in compensation or benefits, a
relocation of work location by more than 25 miles, or a failure to offer
continued employment on comparable terms for two years following the completion
of the merger.

        Mr. Hylton is subject to non-competition covenants for one year
following termination of employment, and has agreed to provide consulting
services for 45 days following termination of employment.

        The Agreement with Mr. Ackerley provides that in the event he remains in
the service of The Ackerley Group until December 31, 2001, he will receive a
retention bonus payment of $375,000, and an additional retention bonus payment
of $375,000 if he remains in the service of The Ackerley Group until the closing
date. If Mr. Ackerley's service with The Ackerley Group is terminated prior to a
payment date by his death or disability or by The Ackerley Group other than for
"cause," the agreement provides that the retention bonus payment will be
accelerated.

        The agreement with Mr. Ackerley also requires him to provide consulting
services to The Ackerley Group as an independent consultant for a period of five
years following the closing date of the merger. Mr. Ackerley has also agreed to
a non-competition restriction covering such five-year period. As consideration
for the consulting services and the non-competition agreement,


                                       56

<PAGE>

Mr. Ackerley will receive an annual fee of $350,000. The agreement also provides
for a gross-up payment equal to any excise tax imposed on Mr. Ackerley as a
result of section 280G of the Internal Revenue Code.

REPRICING, REPLACEMENT OR CANCELLATION AND REGRANT OF OPTIONS

        We did not adjust or amend the exercise price of stock options
previously awarded to any of our Named Executives at any time during 2001.

BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION

        We did not have any Compensation Committee interlocks or insiders
participating in compensation decisions at any time during 2001.

COMPENSATION COMMITTEE REPORT OF EXECUTIVE COMPENSATION

        In determining the compensation paid to our executive officers in 2001,
the Committee employed compensation policies designed to align the compensation
with our overall business strategy, values and management initiatives. These
policies are intended to reward executives for enhancing the long-term value of
our assets, to support a performance-oriented environment that rewards
achievement of internal goals and recognizes our performance compared to
performance levels of companies in its industries, and to attract and retain
executives whose abilities are critical to the long-term success and
competitiveness of our operations. The Committee believes that by striving to
best obtain these goals the executive officers should enhance shareholder value
for the long-term.

        The key components of executive officer compensation are (1) salary,
which is based on factors such as the individual officer's level of
responsibility and comparisons to similar positions in our subsidiaries and
comparable media and advertising companies; (2) cash bonus awards, which are
based on individual performance and the performance of our operations, measured
primarily in terms of increases in our EBITDA and accomplishment of our
strategic goals; and (3) stock option awards which are intended to increase the
motivation for an interest in our long-term success as measured by our share
price.

        The Committee based the 2001 compensation of the executive officers on
the policies described above. The executives' salaries in 2001 were based on a
variety of factors including the salaries of the executive officers of
comparable media advertising companies. Individual performance was also taken
into account.

        The Committee based the 2001 compensation of the Chief Executive Officer
on the policies described above. The Chief Executive Officer's salary in 2001
decreased to $699,519 from $750,000 in 2000. This decrease was part of a salary
reduction program including all executive officers and senior management. This
program was implemented in connection with an overall cost reduction initiative
throughout the company in response to the decline in the Company's financial
results due to the decline in the national economy. Based on comparisons to
other media companies and other publicly-traded companies based in Washington,
the Chief Executive


                                       57

<PAGE>


Officer's 2001 salary was in the range of salaries of the chief executive
officers of comparable media advertising and Washington-based public companies.

SHAREHOLDER RETURN PERFORMANCE PRESENTATION

        The following line-graph presentation compares cumulative, five-year
shareholder returns on an indexed basis with the S&P 500 Stock Index or other
broad market index performance and either a nationally recognized industry
standard or an index of peer companies that we select. We have selected the S&P
500 Stock Index and the mutual fund, Fidelity Select Multimedia Portfolio, as an
index of peer companies.

        The following chart compares total cumulative shareholder return for
$100 invested in the Company's Common Stock on December 31, 1996 with the
cumulative total return of the S&P 500 Stock Index and Fidelity Select
Multimedia Portfolio for the five most recently completed fiscal years.

                              [PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
                              BASE      1997      1998      1999      2000      2001
<S>                           <C>       <C>       <C>       <C>       <C>       <C>
The Ackerley Group, Inc.      $100      $144      $155      $154       $77      $149
S&P 500 Index                 $100      $131      $166      $198      $178      $155
Fidelity Select Multimedia    $100      $124      $158      $221      $155      $153
</TABLE>


                                       58

<PAGE>

                    ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

        As of March 1, 2002, Barry A. Ackerley and Gabelli Funds, Inc. were the
only persons, to our knowledge, owning beneficially more than 5% of the
outstanding shares of Common Stock and Class B Common Stock. All of our
directors and executive officers own shares of our Common Stock; some of our
directors and executive officers also own shares of our Class B Common Stock.
Barry A. Ackerley beneficially owns in excess of five percent (5%) of the
outstanding shares of our Common Stock and Class B Common Stock.

         The following table sets forth information regarding the share
ownership of our nominees for director, current directors, executive officers
and principal shareholders, as well as information for our directors and
executive officers as a group. The information in the following table is current
as of March 1, 2002.

<TABLE>
<CAPTION>
                                                     Shares of the Company's Common Stock
Name, Age and                                        and Class B Common Stock and Percent
Position with The Ackerley Group, Inc.                  of Class Beneficially Owned (1)
----------------------------------------- ------------------------------------------------------
                                                                            Class B
                                            Common Stock      Percent     Common Stock   Percent
                                            ------------      -------     ------------   -------
<S>                                         <C>               <C>         <C>            <C>
Barry A. Ackerley, 67                        8,929,043(2)       36.7      10,949,299(2)    99.4
Chairman, Chief Executive Officer,
and Director

Gail A. Ackerley, 64                         8,929,043(3)       36.7      10,949,299(3)    99.4
Co-Chairman, Co-Chief Executive Officer
and Director

Christopher H. Ackerley, 32                     18,928            *           13,698         *
President and Director

Edward G. Ackerley, 32                          16,845            *           13,530         *
Director

Deborah L. Bevier, 50                            6,068            *             -0-          *
Director

Chris W. Birkeland, 37                           3,079            *             -0-          *
Director

Kimberley A. Cleworth, 38                       24,614(4)         *           30,569         *
Director

Keith D. Grinstein, 41                           2,298            *             -0-          *
Director

Michael T. Lennon, 39                            3,079            *             -0-          *
Director
</TABLE>


                                       59

<PAGE>

<TABLE>
<CAPTION>
                                                     Shares of the Company's Common Stock
Name, Age and                                        and Class B Common Stock and Percent
Position with The Ackerley Group, Inc.                  of Class Beneficially Owned (1)
----------------------------------------- ------------------------------------------------------
                                                                            Class B
                                            Common Stock      Percent     Common Stock   Percent
                                            ------------      -------     ------------   -------
<S>                                         <C>               <C>         <C>            <C>
Michel C. Thielen, 67                            8,255            *             -0-          *
Director

Kevin E. Hylton, 45                                740            *             -0-          *
Senior Vice President and Chief
Financial
Officer

Sean M. Tallarico, 36                            2,891            *             -0-          *
Corporate Controller

Gabelli Funds, Inc.                          5,147,220          21.2            -0-          *
One Corporate Center
Rye, NY 10580-1434

All Directors and Executive                  9,089,652          37.4      11,007,096       99.9
Officers as a group (13 persons)
</TABLE>

----------
(1)  Unless otherwise indicated, represents shares over which each nominee
     exercises sole voting or investment power.
(2)  Mr. Barry Ackerley and Ms. Ackerley are husband and wife. Includes 7,264
     shares of Common Stock and 264 shares of Class B Common Stock held by Ms.
     Ackerley, of which Mr. Ackerley disclaims beneficial ownership.
(3)  Mr. Barry Ackerley and Ms. Ackerley are husband and wife. The amount shown
     includes 8,921,779 shares of Common Stock and 10,949,035 shares of Class B
     Common Stock held by Mr. Ackerley, of which Ms. Ackerley disclaims
     beneficial ownership.
(4)  Includes 4,000 shares of Common Stock held by Ms. Cleworth's husband and
     14,675 shares of Class B Common Stock owned by Ms. Cleworth's children, of
     which Ms. Cleworth disclaims beneficial ownership.
 *   Indicates amounts equal to less than 1% of the outstanding shares.

            ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

FAMILY RELATIONSHIPS

        During 2001, we continued to employ Christopher H. Ackerley, who is the
son of Barry A. Ackerley and Gail A. Ackerley. Christopher H. Ackerley was
elected Vice President on May 1, 1998, Executive Vice President on December 28,
1998, Co-President and a director on February 15, 2000, and President on July
31, 2001.

        In addition, Kimberley A. Cleworth and Edward G. Ackerley, who are also
children of Barry A. Ackerley and Gail A. Ackerley, were elected as directors on
February 15, 2000. Effective December 18, 2000, Edward G. Ackerley joined the
Company as Vice President of Ackerley Ventures, Inc., our technology ventures
subsidiary, and receives an annual salary of $100,000. Details regarding their
compensation, stock ownership, and related matters are set forth above.

        Kathy Savitt, the wife of Michael T. Lennon, is President of MWW/Savitt,
our public relations firm. In 2001, we paid $1,056,204 in fees to MWW/Savitt.


                                       60

<PAGE>

ADVANCES

        From time to time we have advanced funds to certain executive officers
for their personal use. Interest on that indebtedness accrues at the same rate
as that charged to us on our senior bank debt, which is presently 6.9%.

        Since January 1, 1999, the highest aggregate amount of such loans to
Barry A. Ackerley was $2,871,642. At December 31, 2001, 2000, and 1999, the
aggregate outstanding principal amounts of such loans were $117,846, $67,230,
and $23,608, respectively.


                                       61

<PAGE>

                                     PART IV

               ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
                             AND REPORTS ON FORM 8-K

(a)(1) and (2)  Financial Statements and Schedules.

        The following documents are being filed as part of this Report:

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                         Number
                                                                         ------
<S>                                                                      <C>
Report of Ernst & Young LLP, Independent Auditors.........................F-1

Consolidated balance sheets as of December 31, 2001 and 2000..............F-2

Consolidated statements of income for the years ended
December 31, 2001, 2000 and 1999..........................................F-3

Consolidated statements of stockholders' equity for
the years ended December 31, 2001, 2000 and 1999..........................F-4

Consolidated statements of cash flows for the years ended
December 31, 2001, 2000 and 1999..........................................F-5

Notes to Consolidated Financial Statements................................F-7
</TABLE>

Schedules are omitted for the reason that they are not required or are not
applicable, or the required information is shown in the Consolidated Financial
Statements or notes thereto. Columns omitted from schedules filed have been
omitted because the information is not applicable.

(3)  Exhibits:

  Exhibit
    No.       Exhibit
  -------     -------
    2.1       Agreement and Plan of Merger dated October 5, 2001, among Clear
              Channel Communications, Inc., CCMM Sub, Inc. and The Ackerley
              Group, Inc.(1)

    3.1       Fourth Restated Certificate of Incorporation.(2)

    3.2       Amended and Restated Bylaws.(3)

    9.1       Stockholder Voting and Support Agreement, dated as of October 5,
              2001, by and between Clear Channel Communications, Inc. and Barry
              A. Ackerley.(4)


                                       62

<PAGE>

  Exhibit
    No.       Exhibit
  -------     -------
   10.1       Credit Agreement dated September 7, 2001 among The Ackerley Group,
              Inc., certain lenders named therein, and Credit Suisse First
              Boston and General Electric Capital Corporation, as agents.(5)

   10.2       Limited Waiver regarding Financial Covenants, dated March 18, 2002
              among The Ackerley Group, Inc., certain lenders named therein, and
              Credit Suisse First Boston and General Electric Capital
              Corporation, as agents.

   10.3       Limited Waiver regarding Financial Covenant Calculations, dated
              October 31, 2001 among The Ackerley Group, Inc., certain lenders
              named therein, and Credit Suisse First Boston and General Electric
              Capital Corporation, as agents.

   10.4       Retirement Agreement, effective August 13, 2001 between Denis
              Curley and The Ackerley Group, Inc.(6)

   10.5       Consulting Agreement, dated July 24, 2001 between Denis Curley and
              The Ackerley Group, Inc.(7)

   10.6       Asset Purchase Agreement dated as of January 11, 2001 between The
              Ackerley Group, Inc., Ackerley Media Group, Inc., SSI, Inc., and
              T.C. Aviation, Inc., as seller, and The Basketball Club of
              Seattle, LLC, as buyer.(8)

   10.7       Amendment No. 1 to Asset Purchase Agreement dated as of March 22,
              2001 between The Ackerley Group, Inc., Ackerley Media Group, Inc.,
              SSI, Inc., and T.C. Aviation, Inc., as seller, and The Basketball
              Club of Seattle, LLC, as buyer.(9)

   10.8       Amendment No. 2 to Asset Purchase Agreement dated as of March 30,
              2001 between The Ackerley Group, Inc., Ackerley Media Group, Inc.,
              SSI, Inc., and T.C. Aviation, Inc., as seller, and The Basketball
              Club of Seattle, LLC, as buyer.(10)

   10.9       Indenture dated December 14, 1998 between The Ackerley Group, Inc.
              and The Bank of New York, as Trustee, relating to the 9% Senior
              Subordinated Notes due 2009.(11)

   10.10      First Supplemental Indenture dated as of April 8, 1999 between The
              Ackerley Group, Inc., the guarantors named therein, and The Bank
              of New York, as Trustee.(12)

   10.11      Employees Stock Option Plan, as amended and restated on May 11,
              1999.(13)

   10.12      Nonemployee-Director's Equity Compensation Plan, as amended and
              restated on March 12, 1997.(14)

   10.13      Credit Agreement dated January 22, 1999, by and among The Ackerley
              Group, Inc., certain lenders named therein, and First Union
              National Bank, Fleet Bank, N.A., Union Bank of California, N.A.,
              KeyBank National Association, and Bank of Montreal, Chicago
              Branch, as agents.(15)

   10.14      First Amendment to Credit Agreement, dated as of June 11, 1999,
              among The Ackerley Group, Inc., certain lenders named therein, and
              First Union National Bank, Fleet Bank, N.A., Union Bank of
              California, N.A. and KeyBank National Association, as agents.(16)


                                       63

<PAGE>

  Exhibit
    No.       Exhibit
  -------     -------
   10.15      Second Amendment to Credit Agreement, dated as of September 10,
              1999, among The Ackerley Group, Inc., certain lenders named
              therein, and First Union National Bank, Fleet Bank, N.A., Union
              Bank of California, N.A. and KeyBank National Association, as
              agents.(17)

   10.16      Third Amendment to Credit Agreement, dated as of January 7, 2000,
              among The Ackerley Group, Inc., certain lenders named therein, and
              First Union National Bank, Fleet Bank, N.A., Union Bank of
              California, N.A. and KeyBank National Association, as agents.(18)

   10.17      Fourth Amendment to Credit Agreement, dated as of February 11,
              2000, among The Ackerley Group, Inc., certain lenders named
              therein, and First Union National Bank, Fleet Bank, N.A., Union
              Bank of California, N.A. and KeyBank National Association, as
              agents.(19)

   10.18      Fifth Amendment to Credit Agreement dated as of July 31, 2000,
              among The Ackerley Group, Inc., certain lenders named therein, and
              First Union National Bank, Fleet Bank, N.A., Union Bank of
              California, N.A. and KeyBank National Association, as agents.(20)

   10.19      Sixth Amendment to Credit Agreement dated as of December 15, 2000,
              among The Ackerley Group, Inc., certain lenders named therein, and
              First Union National Bank, Fleet Bank, N.A., Union Bank of
              California, N.A. and KeyBank National Association, as agents.(21)

   10.20      Seventh Amendment to Credit Agreement dated as of February 28,
              2001, among The Ackerley Group, Inc., certain lenders named
              therein, and First Union National Bank, Fleet Bank, N.A., Union
              Bank of California, N.A. and KeyBank National Association, as
              agents.(22)

   10.21      Purchase Agreement dated as of May 8, 2000 between AK Media Group,
              Inc., Fisher Broadcasting Inc. and Fisher Broadcasting--Fresno,
              L.L.C.(23)

   21         Subsidiaries of The Ackerley Group.

   23         Consent of Independent Auditors

   24         Powers of Attorney.

-----------------
 (1)  Incorporated by reference to Exhibit 2.1 to The Ackerley Group's Current
      Report on Form 8-K, filed on October 9, 2001.

 (2)  Incorporated by reference to Exhibit 3.0 to The Ackerley Group's Quarterly
      Report on Form 10-Q for the quarter ended March 31, 1998.

 (3)  Incorporated by reference to Exhibit 3.2 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 2000.

 (4)  Incorporated by reference to Exhibit 2.2 to The Ackerley Group's Current
      Report on Form 8-K, filed on October 9, 2001.


                                       64

<PAGE>

 (5)  Incorporated by reference to Exhibit 99.1 to The Ackerley Group's Current
      Report on Form 8-K, filed on September 14, 2001.

 (6)  Incorporated by reference to Exhibit 10.1 to The Ackerley Group's
      Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.

 (7)  Incorporated by reference to Exhibit 10.2 to The Ackerley Group's
      Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.

 (8)  Incorporated by reference to Exhibit 10.21 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 2000.

 (9)  Incorporated by reference to Exhibit 10.2 to The Ackerley Group's Current
      Report on Form 8-K, filed on April 16, 2001.

(10)  Incorporated by reference to Exhibit 10.3 to The Ackerley Group's Current
      Report on Form 8-K, filed on April 16, 2001.

(11)  Incorporated by reference to Exhibit 4.1 to The Ackerley Group's
      Registration Statement on Form S-4 (Registration No. 333-71583), filed
      February 2, 1999.

(12)  Incorporated by reference to Exhibit 10.9 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 1999.

(13)  Incorporated by reference to Exhibit 10 to The Ackerley Group's Quarterly
      Report on Form 10-Q for the quarter ended March 31, 1999.

(14)  Incorporated by reference to Exhibit 10.14 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 2000.

(15)  Incorporated by reference to Exhibit 10.1 to The Ackerley Group's
      Registration Statement on Form S-4/A (Registration No. 333-71583), filed
      March 10, 1999.

(16)  Incorporated by reference to Exhibit 10.2 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 1999.

(17)  Incorporated by reference to Exhibit 10.3 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 1999.

(18)  Incorporated by reference to Exhibit 10.4 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 1999.

(19)  Incorporated by reference to Exhibit 10.5 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 1999.

(20)  Incorporated by reference to Exhibit 10.6 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 2000.

(21)  Incorporated by reference to Exhibit 10.7 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 2000.

(22)  Incorporated by reference to Exhibit 10.8 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 2000.

(23)  Incorporated by reference to Exhibit 10.20 to The Ackerley Group's Annual
      Report on Form 10-K for the year ended December 31, 2000.

(b)   Reports on Form 8-K.

      Current Report on Form 8-K, filed October 9, 2001, announcing the
      Company's proposed merger with Clear Channel Communications, Inc.


                                       65

<PAGE>

      Current Report on Form 8-K, filed November 6, 2001, regarding the press
      release and conference call transcript with respect to the Company's
      financial results for the quarter ended September 30, 2001.

(c)   Exhibits required by Item 601 of Regulation S-K are being filed herewith.
      See Item 14(a)(3) above.

(d)   Financial statements required by Regulation S-X are being filed herewith.
      See Item 14(a)(1) and (2) above.


                                       66

<PAGE>

                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, The Ackerley Group has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the 28th
day of March, 2002.

                                          THE ACKERLEY GROUP, INC.

                                          By: /s/ Kevin E. Hylton
                                              ----------------------------------
                                              Kevin E. Hylton, Senior Vice
                                              President, Chief Financial Officer
                                              and Assistant Secretary

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of The
Ackerley Group and in the capacities on the 28th day of March, 2001.

A Majority of the Board of Directors:     Principal Executive Officer:


/s/ Barry A. Ackerley *                   By: /s/ Barry A. Ackerley *.
------------------------------------          ----------------------------------
Barry A. Ackerley, Chairman               Barry A. Ackerley, Chairman and
                                          Chief Executive Officer


/s/ Gail A. Ackerley *                    Principal Financial Officer:
------------------------------------
Gail A. Ackerley, Co-Chairman


/s/ Christopher H. Ackerley *             /s/ Kevin E. Hylton
------------------------------------      --------------------------------------
Christopher H. Ackerley, Director         Kevin E. Hylton, Senior Vice
                                          President, Chief Financial Officer and
                                          Assistant Secretary

/s/ Edward G Ackerley *                   Principal Accounting Officer:
------------------------------------
Edward G. Ackerley, Director


/s/ Deborah L. Bevier *                   /s/ Sean M. Tallarico
------------------------------------      --------------------------------------
Deborah L. Bevier, Director               Sean M. Tallarico, Corporate
                                          Controller

/s/ Chris W. Birkeland *
------------------------------------
Chris W. Birkeland, Director


                                       67

<PAGE>


/s/ Kimberley A. Cleworth *
------------------------------------
Kimberley A. Cleworth, Director


/s/ Keith D. Grinstein *
------------------------------------
Keith D. Grinstein, Director


/s/ Michael T. Lennon *
------------------------------------
Michael T. Lennon, Director


/s/ Michel C. Thielen *
------------------------------------
Michel C. Thielen, Director


*By: /s/ Kevin E. Hylton
     ---------------------------------
     Kevin E. Hylton, Attorney-in-Fact



                                       68

<PAGE>

                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
The Ackerley Group, Inc.


We have audited the accompanying consolidated balance sheets of The Ackerley
Group, Inc. (the Company) as of December 31, 2001 and 2000, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company at
December 31, 2001 and 2000, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2001, in conformity with accounting principles generally accepted in the United
States.


                                                  /s/ Ernst & Young LLP
                                                  ------------------------------

Seattle, Washington
February 8, 2002 except for Note 9 as to which
  the date is March 18, 2002


                                      F-1

<PAGE>

                            THE ACKERLEY GROUP, INC.

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                               December 31,
                                                                       ---------------------------
                                                                          2001              2000
                                                                       ---------         ---------
<S>                                                                    <C>               <C>
(In thousands, except share amounts)

Current assets:
    Cash and cash equivalents                                          $  16,794         $   4,687
    Restricted cash                                                        9,000                --
    Accounts receivable, net of allowance (2001-$1,075,
      2000-$1,903)                                                        42,607            60,742
    Current portion of broadcast rights                                    8,591             9,023
    Prepaid expenses                                                       5,347            13,569
    Deferred tax asset                                                     1,573             1,619
    Other current assets                                                   6,835             7,655
                                                                       ---------         ---------
        Total current assets                                              90,747            97,295

Property and equipment, net                                              121,794           170,473
Goodwill, net                                                            194,207           210,961
Other intangibles, net                                                   131,069           142,171
Investments                                                               19,278            19,896
Other assets                                                              19,746            26,511
                                                                       ---------         ---------
        Total assets                                                   $ 576,841         $ 667,307
                                                                       =========         =========

                                            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                   $   4,332         $   7,426
    Accrued interest                                                       8,491             8,950
    Accrued wages and commissions                                          1,967             6,398
    Other accrued liabilities                                             12,697            21,595
    Deferred revenue                                                         558            19,022
    Current portion of broadcasting obligations                            7,607             9,564
    Current portion of long-term debt                                    289,086             9,030
                                                                       ---------         ---------
        Total current liabilities                                        324,738            81,985
Long-term debt, less current portion                                       1,493           385,641
Deferred tax liabilities                                                  11,874            14,469
Other long-term liabilities                                               15,731             9,232
                                                                       ---------         ---------
        Total liabilities                                                353,836           491,327

Commitments and contingencies

Stockholders' equity

    Common stock, par value $.01 per share--authorized
      50,000,000 shares; issued 2001-25,582,269 and
      2000-25,342,929 shares; and outstanding 2001-24,207,323                256               253
      and 2000-23,967,983 shares

    Class B common stock, par value $.01 per share--authorized
      11,406,510 shares; issued and outstanding 2001-11,020,622
      and 2000-11,051,200 shares                                             110               111

    Capital in excess of par value                                        59,455            57,967
    Retained earnings                                                    173,273           127,738
    Less common stock in treasury, at cost (1,374,946 shares)            (10,089)          (10,089)
                                                                       ---------         ---------
      Total stockholders' equity                                         223,005           175,980
                                                                       ---------         ---------
        Total liabilities and stockholders' equity                     $ 576,841         $ 667,307
                                                                       =========         =========
</TABLE>

See accompanying notes

                                      F-2


<PAGE>

                            THE ACKERLEY GROUP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                    ---------------------------------------
                                                       2001           2000           1999
                                                    ---------      ---------      ---------
<S>                                                 <C>            <C>            <C>
(In thousands, except per share amounts)
Revenue                                             $ 231,425      $ 263,305      $ 243,130
Less agency commissions and discounts                  32,568         38,741         35,547
                                                    ---------      ---------      ---------
Net revenue                                           198,857        224,564        207,583

Expenses (other income):
    Operating expenses                                179,715        181,644        157,065
    Workforce reduction costs                           2,442             --             --
    Restructuring expenses                                 --           (178)         1,125
    Amortization expense                               26,867         23,713         14,175
    Depreciation expense                               18,326         15,448         11,867
    Interest expense                                   28,834         27,687         33,510
    Interest Income                                      (348)        (1,892)          (551)
    Net loss (gain) on dispositions of assets           2,202       (277,650)       (28,999)
    Other                                               2,056            901            733
                                                    ---------      ---------      ---------
Total expenses (other income)                         260,094        (30,327)       188,925

Income (loss) from continuing operations before
    income taxes and extraordinary items              (61,237)       254,891         18,658
Income tax benefit (expense)                           21,206        (96,284)        (7,917)
                                                    ---------      ---------      ---------
Income (loss) from continuing operations before
    extraordinary items                               (40,031)       158,607         10,741
Gain (loss) from discontinued operations, net
    of taxes 2001-$(49,905) and 2000-$5,892            92,681         (9,707)        (2,778)
                                                    ---------      ---------      ---------

Income before extraordinary items                      52,650        148,900          7,963
Extraordinary items:  loss on debt
    extinguishment and merger costs, net of
    taxes 2001-$1,589 and 1999-$842                    (7,115)            --         (1,373)
                                                    ---------      ---------      ---------
Net income                                          $  45,535      $ 148,900      $   6,590
                                                    =========      =========      =========
Earnings per common share:
Income (loss) from continuing operations,
    before extraordinary items                      $   (1.14)     $    4.54      $    0.33
Discontinued operations                                  2.64           (.28)          (.09)
Extraordinary items                                      (.20)            --           (.04)
                                                    ---------      ---------      ---------
Net income                                          $    1.30      $    4.26      $     .20
                                                    =========      =========      =========

Earnings per common share -- assuming dilution:
Income (loss) from continuing operations,
    before extraordinary items                      $   (1.14)     $    4.52      $    0.32
Discontinued operations                                  2.64           (.28)          (.08)
Extraordinary items                                      (.20)            --           (.04)
                                                    ---------      ---------      ---------
Net income -- assuming dilution                     $    1.30      $    4.24      $     .20
                                                    =========      =========      =========

Weighted average number of shares                      35,088         34,994         32,932
Weighted average number of shares --
  assuming dilution                                    35,088         35,122         33,110
</TABLE>

                             See accompanying notes

                                      F-3

<PAGE>

                            THE ACKERLEY GROUP, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    (In thousands, except share information)

<TABLE>
<CAPTION>
                                                             Class B                                   Common
                                     Common Stock          Common Stock       Capital in  Retained    Stock in
                                  -------------------   -------------------   Excess of   Earnings    Treasury
                                    Shares     Amount     Shares     Amount   Par Value   (Deficit)   (at cost)    Total
                                  ----------   ------   ----------   ------   ---------   ---------   ---------  ---------
<S>                               <C>          <C>      <C>          <C>      <C>         <C>         <C>        <C>
Balance, January 1, 1999          21,951,380     219    11,051,230    111       10,339      (26,421)   (10,089)    (25,841)

Stock compensation, exercise
of stock options and stock
conversions                           50,039      --        37,500     --          693           --         --         693

Stock issued at $15.25 per
share, net of stock issuance
costs of $3,084                    3,250,000      33            --     --       46,446           --         --      46,479

Cash dividend, $0.02 per share            --      --            --     --         --           (632)        --        (632)

Net income                                --      --            --     --        --           6,590         --       6,590
                                 -----------    ----    ----------   ----      -------     --------   --------    --------
Balance, December 31, 1999        25,251,419     252    11,088,730    111       57,478      (20,463)   (10,089)     27,289

Stock compensation, exercise
of stock options and stock
conversions                           52,455       1       (37,530)    --           76           --         --          77

Stock issued at $10.58 per
share under Employee Stock
Purchase Plan                         39,055      --            --     --          413           --         --         413

Cash dividend, $0.02 per share            --      --            --     --           --         (699)        --        (699)


Net income                                --      --            --     --           --      148,900         --     148,900
                                 -----------    ----    ----------   ----      -------     --------   --------    --------
Balance, December 31, 2000        25,342,929    $253    11,051,200   $111      $57,967     $127,738   $(10,089)   $175,980

Stock compensation, exercise
of stock options and stock
conversions                          165,487       2       (30,578)    (1)         898           --         --         899

Stock issued under Employee
Stock Purchase Plan: 39,424
shares at $8.10 and 34,429
shares at $7.88                       73,853       1            --     --          590           --         --         591

Net income                                --      --            --     --           --       45,535         --      45,535
                                 -----------    ----    ----------   ----      -------     --------   --------    --------
Balance, December 31, 2001       $25,582,269    $256    11,020,622   $110      $59,455     $173,273   $(10,089)   $223,005
                                 ===========    ====    ==========   ====      =======     ========   =========   ========
</TABLE>

                             See accompanying notes

                                      F-4

<PAGE>

                            THE ACKERLEY GROUP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                    ---------------------------------------
                                                       2001           2000           1999
                                                    ---------      ---------      ---------
                                                                  (In thousands)
<S>                                                 <C>            <C>            <C>
Cash flows from operating activities:
    Net income                                      $  45,535      $ 148,900      $   6,590
    Adjustment to reconcile net income to net
      cash provided (used in) by operating
      activities:
        Depreciation and amortization                  45,648         41,695         28,348
        Net (gain) loss on dispositions of
            assets                                      2,202       (276,849)       (28,999)
        Amortization of broadcast rights               11,300          9,935         11,094
        Deferred tax expense (benefit)                 (2,534)        19,938          5,453
        Stock compensation expense                        330            100            559
        Equity in losses of affiliates                     --            801            174
        Amortization of deferred financing
           costs, discount and premium                  2,454          1,972          1,648
        Net income from barter transactions              (902)        (1,022)        (1,785)
        Amortization of deferred gain on
           termination of interest rate swap
           agreements                                  (2,157)        (1,087)          (371)
        Loss on debt extinguishment, net of
           taxes                                        1,245             --          1,373
        Gain on disposal of discontinued
           operations, net of taxes                   (92,681)            --             --
        Investment impairment charge                    1,726             --             --
    Change in assets and liabilities:
        Accounts receivable                             4,808         (1,853)       (13,184)
        Prepaid expenses                                5,498         (3,165)        (5,353)
        Other current assets and other assets          (7,402)        (2,485)         1,239
        Accounts payable, accrued interest, and
          accrued wages and commissions                (7,984)          (825)        13,154
        Other accrued liabilities and other
         long-term liabilities                        (45,095)         6,507         (2,560)
        Litigation accrual                                 --         (7,911)            --
        Deferred revenue                              (13,147)        (2,045)        (6,669)
        Broadcast obligations                         (12,039)       (10,855)       (10,878)
                                                    ---------      ---------      ---------
        Net cash used in operating activities         (63,195)       (78,249)          (167)

Cash flows from investing activities:
    Proceeds from dispositions of assets                  833        306,986         13,933
    Proceeds from sale of discontinued
        operations                                    195,429             --             --
    Payments for acquisitions                              --       (147,173)      (166,625)
    Capital expenditures                               (8,273)       (41,360)       (29,114)
    Payments for investments                           (1,050)       (19,925)        (5,000)
                                                    ---------      ---------      ---------
        Net cash provided by (used in)
           investing activities                       186,939         98,528       (186,806)
Cash flows from financing activities:
    Borrowings under credit agreements                129,400        194,000        309,063
    Repayments under credit agreements               (238,537)      (210,704)      (163,704)
    Payments under capital lease obligations             (251)        (3,106)          (903)
    Note redemption prepayment fees                        --             --         (1,208)
    Dividends paid                                         --           (699)          (632)
    Payments of deferred financing costs               (3,473)          (487)        (6,083)
    Net proceeds from stock issuance                    1,224            447         46,613
    Proceeds from termination of interest rate
      swap agreements                                      --          2,149          2,005
                                                    ---------      ---------      ---------
        Net cash provided by (used in)
           financing activities                      (111,637)       (18,400)       185,151
                                                    ---------      ---------      ---------
</TABLE>


                                      F-5

<PAGE>

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                    ---------------------------------------
                                                       2001           2000           1999
                                                    ---------      ---------      ---------
                                                                  (In thousands)
<S>                                                 <C>            <C>            <C>
Net increase (decrease) in cash and cash
    equivalents                                        12,107          1,879         (1,822)

Cash and cash equivalents at beginning of period        4,687          2,808          4,630
                                                    ---------      ---------      ---------
Cash and cash equivalents at end of period          $  16,794      $   4,687      $   2,808
                                                    =========      =========      =========
</TABLE>



                                      F-6

<PAGE>

                            THE ACKERLEY GROUP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                                    -------------------------------
                                                     2001        2000        1999
                                                    -------     -------     -------
                                                            (In thousands)
<S>                                                 <C>         <C>         <C>
Supplemental cash flow information:
    Interest paid, net of capitalized interest      $32,121     $27,072     $22,073
    Income taxes paid                                35,824      70,669         670
    Noncash transactions:
        Broadcast rights acquired and broadcast
            obligations assumed                     $11,778     $12,732     $ 7,531
        Property and equipment acquired through
            barter                                      443         330         969

        Exchange of television station assets            --          --      24,000
</TABLE>


                             See accompanying notes


                                      F-7

<PAGE>

                            THE ACKERLEY GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.      Summary of significant accounting policies

        (a) Organization -- The Ackerley Group, Inc. and its subsidiaries (the
"Company") is a diversified media and entertainment company that engages in four
principal business segments: (i) outdoor media, (ii) television broadcasting;
(iii) radio broadcasting; and (iv) interactive media. The Company currently
conducts its outdoor media advertising operations principally in the markets of
Seattle-Tacoma, Washington; Portland, Oregon; and Boston-Worcester,
Massachusetts and New York, New York. In New York, California, Oregon,
Washington, and Alaska, the Company currently owns sixteen television stations
and provides programming and sales services to two television stations. The
Company currently owns two AM and two FM radio stations and provides sales and
other services to a third FM radio station in the Seattle-Tacoma market. The
interactive media segment commenced in the second half of 2000. It consists of
the iKnow Network, a group of local news and information portal sites. At
December 31, 2000, the portal sites in Bakersfield and Salinas, California and
Rochester, New York were operational.

        (b) Principles of consolidation -- The accompanying financial statements
consolidate the accounts of The Ackerley Group, Inc. and its subsidiaries, all
of which are wholly-owned. All significant intercompany transactions have been
eliminated in consolidation.

        (c) Revenue recognition -- Outdoor media advertising revenue is
recognized ratably on a monthly basis over the period in which advertisement
displays are posted on the advertising structures or in the display units.
Broadcast revenue is recognized in the period in which the advertisements are
aired. Payments from clients received in excess of one month's advertising are
recorded as deferred revenue.

        (d) Barter transactions -- The Company also accepts nonmonetary
compensation, such as goods and services, for its advertising space or time.
These barter transactions are recorded at the estimated fair value of the asset
or service received. Revenue is recognized when the advertising is provided and
assets or expenses are recorded when assets are received or services are used.
Goods and services due to the Company in excess of advertising provided are
recorded in other current assets. Advertising to be provided in excess of goods
and services received are recorded in other accrued liabilities. Barter revenue
was $4.5 million, $4.3 million, and $5.0 million in 2001, 2000, and 1999,
respectively. Barter expenses were $4.1 million, $3.3 million, and $3.1 million
in 2001, 2000 and 1999, respectively.

        (e) Property and equipment -- Property and equipment are carried at
cost. The Company depreciates large groups of assets with homogeneous
characteristics and useful lives. Under group depreciation, no gain or loss on
disposals is recognized unless the asset group is fully depreciated. For assets
accounted for under group depreciation, the Company recognizes gains on
disposals primarily from proceeds received from condemnations of
fully-depreciated advertising structures. The Company recognizes gains and
losses on disposals of individual, non-homogeneous assets. Depreciation of
property and equipment, including the cost of assets recorded under capital
lease agreements, is provided on the straight-line and accelerated methods over
the estimated useful lives of the assets or lease terms.


                                      F-8

<PAGE>

        (f) Intangible assets -- Intangible assets are carried at cost and
amortized principally on the straight-line method over estimated useful lives.
Goodwill represents the cost of acquired businesses in excess of amounts
assigned to certain tangible and intangible assets at the dates of acquisition.
Long-lived assets (including related goodwill and other intangible assets) are
reviewed on a regular basis for the existence of facts or circumstances that may
suggest impairment. If such impairment is identified, the impairment loss will
be measured by comparing the estimated future undiscounted cash flows to the
asset's carrying value.

        (g) Investments -- The Company holds investments in several closely held
companies. These investments are carried at cost, less adjustments to reflect
any impairment deemed to be other than temporary. The investments are reviewed
on a regular basis for the existence of facts or circumstances that may suggest
impairment. If such impairment is identified, the impairment loss is measured by
comparing the estimated fair value to the carrying value of the investment.
During the fourth quarter of 2001, impairment charges of $1.7 million were
recorded with respect to these investments.

        (h) Broadcast rights and obligations -- Television films and syndication
rights acquired under license agreements (broadcast rights) and the related
obligations incurred are recorded as assets and liabilities for the gross amount
of the contract at the time the rights are available for broadcasting. Broadcast
rights are amortized on an accelerated basis over the contract period or the
estimated number of showings, whichever results in the greater aggregate monthly
amortization. Broadcast rights are carried at the lower of unamortized cost or
net realizable value. The estimated cost of broadcast rights to be amortized
during the next year has been classified as a current asset. Broadcast
obligations are stated at contractual amounts and balances due within one year
are reported as current obligations.

        (i) Stock based compensation -- The Company generally grants stock
options for a fixed number of shares to employees with an exercise price equal
to the fair value of the shares at the date of grant. The Company has elected to
account for stock option grants in accordance with APB Opinion No. 25,
Accounting for Stock Issued to Employees and related Interpretations, and
recognizes compensation expense for incentive stock option grants using the
intrinsic method.

        (j) Earnings per share -- Basic earnings per share excludes dilution and
is computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflect the potential dilution that could occur if options and rights to
purchase common stock were exercised.

        The dilutive effects of the weighted-average number of shares
representing options and rights included in the calculation of diluted earnings
per share were 128,431 shares and 177,587 shares in 2000 and 1999, respectively.
Due to the loss from continuing operations in 2001, the dilutive effects of
options were excluded from diluted earnings per share in 2001 as the effect
would be antidilutive. There were no differences between net income amounts used
to calculate basic and diluted earnings per share for any of the periods
presented.

        (k) Cash equivalents -- The Company considers investments in highly
liquid debt instruments with a maturity of three months or less when purchased
to be cash equivalents.

        (l) Concentration of credit risk and financial instruments -- The
Company sells advertising to local and national companies throughout the United
States. The Company


                                      F-9

<PAGE>

performs ongoing credit evaluations of its customers and generally does not
require collateral. The Company maintains an allowance for doubtful accounts at
a level which management believes is sufficient to cover potential credit
losses. The Company invests its excess cash in short-term investments with major
banks. The carrying value of financial instruments, which include cash and cash
equivalents, receivables, investments, payables, and senior debt, approximates
fair value at December 31, 2001. The trading price of our Senior Subordinated
Notes, based on quoted market prices, was 105.5% at December 31, 2001.

        (m) Use of estimates -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.

        (n) Reclassifications -- Certain prior years' amounts have been
reclassified to conform to the 2001 presentation.

2.      New accounting standards

        In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, Business
Combinations, effective for business combinations occurring after June 30, 2001,
and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill (and intangible
assets deemed to have indefinite lives) will no longer be amortized, but will be
subject to annual impairment tests in accordance with the Statements. Other
intangible assets will continue to be amortized over their useful lives.

        The Company will apply the new rules on accounting for goodwill and
other intangible assets beginning in the first quarter of 2002. Application of
the no amortization provisions of SFAS No. 142 is expected to result in an
increase in pre-tax income of approximately $19 million per year. During 2002,
the Company will perform the first of the required impairment tests of goodwill
and indefinite lived intangible assets as of January 1, 2002. The Company has
not yet determined what the effect of these tests will be on its earnings and
financial position.

        In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, effective for fiscal years
beginning after December 15, 2001. SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, providing a single model for long-lived assets to be disposed
of. In addition, SFAS No. 144 amends certain provisions of Accounting Principles
Board Opinion No. 30 Reporting the Results of Operations -- Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions with respect to the accounting
for discontinued operations. The impact of the statement is currently being
studied, and the effect of the new statement on the financial statements has not
yet been determined.

3.      Merger

        On October 5, 2001, the Company entered into a merger agreement (the
"Merger Agreement") with Clear Channel Communications, Inc. ("Clear Channel").
Under the terms of the Merger Agreement, each share of the common stock and the
Class B common stock of the


                                      F-10

<PAGE>

Company will be converted into the right to receive 0.35 of a share of the
common stock of Clear Channel. The transaction is intended to be tax-free to the
Company's stockholders. The Company's stockholders approved the transaction on
January 24, 2002. The transaction, which is expected to be consummated in the
second quarter of 2002, is subject to customary regulatory approvals and closing
conditions. In connection with the merger, as of December 31, 2001 the Company
had incurred costs of $5.8 million, net of applicable taxes of $0.9 million,
consisting primarily of legal and financial advisory fees and termination
benefits. These costs were recorded in extraordinary items.

4.      Acquisitions and dispositions

        Sale of Airport Advertising Operations. On June 30, 1998, the Company
sold substantially all of the assets of its airport advertising operations to
Sky Sites, Inc., a subsidiary of Havas, S.A., pursuant to an agreement dated May
19, 1998. The sale price consisted of a base cash price of $40.0 million,
received on the closing date of the transaction, and an additional cash receipt
of approximately $2.8 million, of which $1.2 million was received in December
1998 and the remainder was received in January 1999. The pre-tax gain recognized
from this transaction was approximately $33.5 million in 1998 and approximately
$1.6 million in 1999.

        Acquisition of Outdoor Advertising Company in Boston-Worcester,
Massachusetts. On February 19, 1999, the Company purchased substantially all of
the assets of an outdoor advertising company in the Boston-Worcester,
Massachusetts market for approximately $11.0 million. The Company recorded net
tangible assets with estimated fair values aggregating $0.6 million and goodwill
of $10.4 million in connection with the transaction.

        Acquisition of KMTR(TV). On March 16, 1999, the Company purchased
substantially all of the assets of KMTR(TV), the NBC affiliate licensed to
Eugene, Oregon, together with two satellite stations licensed to Roseburg and
Coos Bay, Oregon, and a low power station licensed to Eugene. The purchase price
was approximately $26.0 million. From December 1, 1998 until closing of the
transaction, the Company provided programming and sales services under a local
marketing agreement with the previous owner. The Company recorded net tangible
assets with estimated fair values aggregating $3.0 million and goodwill of $23.0
million in connection with the transaction.

        Acquisition of WOKR(TV). On April 12, 1999, the Company purchased
substantially all of the assets of WOKR(TV), the ABC affiliate licensed to
Rochester, New York, for approximately $128.2 million. In September 1998, the
Company paid $12.5 million of the purchase price into an escrow account, with
the balance paid at closing. The Company initially recorded net tangible assets
with estimated fair values aggregating $10.4 million and goodwill of $117.8
million in connection with the transaction. In 2000, the Company finalized the
allocation of the purchase price with the end result that the Company recorded
net tangible assets of $10.4 million, goodwill of $59.3 million, and other
intangible assets, consisting principally of an FCC license and network
affiliation agreement, of $58.5 million. The effect on net income from the
adjustment to amortization expense was not material.

        The following table summarizes, on an unaudited pro forma basis, the
consolidated results of operations of the Company for the year ended December
31, 1999, giving pro forma effect to the acquisition of WOKR(TV) as if the
acquisition had been made at the beginning of


                                      F-11

<PAGE>

the period presented. These pro forma consolidated statements do not necessarily
reflect the results of operations which would have occurred had such an
acquisition taken place as of the beginning of the period indicated (in
thousands, except per share amounts).

        Net revenue                                           $ 211,481
        Operating expenses                                     (159,617)
        Income from continuing operations before
          extraordinary item                                     10,856
        Net income                                                6,705
        Net income per common share                                 .20
        Net income per common share, assuming dilution              .20

        Exchange of KKTV(TV) for KCOY(TV). On May 1, 1999, the Company exchanged
substantially all of the assets plus certain liabilities of KKTV(TV), the CBS
affiliate licensed to Colorado Springs, Colorado, for substantially all of the
assets plus certain liabilities of KCOY(TV), the CBS affiliate licensed to Santa
Maria, California. In conjunction with the transaction, the Company received a
cash payment of approximately $9.0 million. The Company recorded net tangible
assets with estimated fair values aggregating $7.2 million, intangible assets of
$16.8 million, and a gain of $28.6 million in the second quarter of 1999.
Pending closing of the transaction, the Company programmed KCOY(TV) and the
previous owner of KCOY(TV) programmed KKTV(TV) under local marketing agreements.

        Investment in KFNK(FM). On September 13, 1999, the Company entered into
a joint sales agreement with the owner of radio station KFNK(FM) in Eatonville,
Washington. Under the agreement, the Company pays the owner a monthly fee for
the right to sell advertising on the station. In connection with the
transaction, the Company paid $4.0 million under a put and call agreement
whereby the Company may elect, or be required by the owner, to purchase the
station's assets any time after November 2002. The gross purchase price of the
station's assets, which is primarily based on the station's ratings at the time
of the sale, ranges from $4.5 million to $11.7 million. The gross purchase price
would be reduced by the Company's $4.0 million payment under the put and call
agreement plus accrued interest.

        Sale of Florida Outdoor Advertising Operations. On January 5, 2000, the
Company sold substantially all of the assets of its outdoor advertising
operations serving the Miami-Fort Lauderdale and West Palm Beach-Fort Pierce,
Florida markets to Eller Media Company, a subsidiary of Clear Channel
Communications, Inc., for approximately $300.0 million in cash, plus the
assumption of certain liabilities. The Company recognized a gain on the
transaction of $269.3 million.

        Sale of KCBA(TV) and Acquisition of KION(TV). On January 12, 2000, the
Company sold substantially all of the assets of KCBA(TV), the FOX affiliate
licensed to Monterey, California, for approximately $11.0 million and entered
into a local marketing agreement with the purchaser to provide programming and
sales services. The Company recorded a gain on the sale of KCBA(TV) of
approximately $8.8 million. Concurrent with this sale, the Company exercised its
option to purchase substantially all the assets of KION(TV), the CBS affiliate
licensed to Salinas, California. The Company paid approximately $6.3 million in
1996 and 1997 for the option, plus the purchase price for the station's assets
of approximately $7.7 million. The


                                      F-12

<PAGE>

Company recorded net tangible assets with estimated fair values aggregating $1.9
million, goodwill of $4.8 million, and other intangible assets, consisting
principally of an FCC license and network affiliation agreement, of $7.3 million
in connection with the transaction. From April 24, 1996 until closing of the
transaction, the Company provided programming and sales services under a local
marketing agreement with the previous owner.

        Acquisition of Outdoor Advertising Company in Washington and Oregon. On
January 13, 2000, the Company entered into agreements to purchase substantially
all of the assets of an outdoor advertising company serving portions of
Washington and Oregon for approximately $14.6 million plus the assumption of
certain liabilities. The Company paid $7.5 million of the purchase price on
February 1, 2000 and the remaining balance on March 1, 2000. The Company
recorded net tangible assets with estimated fair values aggregating $2.9 million
and goodwill of $11.7 million in connection with the transaction.

        Investment in WETM(TV). On February 1, 2000, the Company entered into a
local marketing agreement with Smith Television of New York, Inc. ("STNY") to
provide programming and sales services to WETM(TV), the NBC affiliate licensed
to Elmira, New York. The Company also purchased a minority non-voting equity
interest in STNY for approximately $17.0 million. Beginning in August 2003, STNY
may require the Company to exchange the interest in STNY, plus $11.0 million in
cash, for all the assets of WETM(TV). Under certain circumstances, the Company
may have an option to purchase all or a controlling interest in STNY.

        Acquisition of Outdoor Advertising Company in New Jersey and New York
City. On March 31, 2000, the Company acquired substantially all of the assets of
an outdoor advertising company in New Jersey and New York City for approximately
$19.8 million. The Company recorded net tangible assets with fair values
aggregating $4.9 million and goodwill of $14.9 million in connection with the
transaction.

        Acquisition of KKFX-CA. On May 9, 2000, the Company purchased
substantially all of the assets of a low-power television station KKFX-CA, the
FOX affiliate licensed to the Santa Barbara-Santa Maria-San Luis Obispo,
California market for approximately $15.4 million. From April 1, 2000 until
closing of the transaction, the Company provided programming and sales services
under a local marketing agreement with the previous owner. The Company recorded
net tangible assets with fair values aggregating $0.4 million, goodwill of $6.0
million and other intangible assets, consisting principally of an FCC license
and network affiliation agreement, of $9.0 million in connection with the
transaction.

        Acquisition of KGPE(TV). On August 1, 2000, the Company purchased the
membership interests of Fisher Broadcasting -- Fresno, LLC, which owned
television station KGPE(TV), the CBS affiliate licensed to Fresno, California,
for approximately $60.0 million. The Company recorded net tangible assets with
estimated fair values aggregating $5.9 million, goodwill of $13.3 million, and
other intangible assets, consisting principally of an FCC license and network
affiliation agreement, of $40.8 million in connection with the transaction.

        Other Acquisitions. In addition to the acquisitions described above, the
Company purchased two television stations in 1999, three stations in 2000, and
three outdoor advertising companies in 2000. The aggregate purchase price and
estimated fair values of the assets for


                                      F-13

<PAGE>

these transactions were as follows (in millions):

                                            Year Ended December 31,
                                             2000            1999
                                            -----           -----

         Net tangible assets                $ 5.9           $ 2.3
         Goodwill                            12.4             9.9
         Other intangible assets             16.5              --
                                            -----           -----
                                            $34.8           $12.2
                                            =====           =====

5.      Discontinued Operations

        On December 8, 2000, the Company executed a letter of intent to sell
substantially all of the assets of its sports & entertainment operations to The
Basketball Club of Seattle LLC for approximately $200.0 million in cash and the
assumption of certain liabilities. These operations consist principally of the
Seattle SuperSonics National Basketball Association franchise, operating rights
to the Seattle Storm, a Woman's National Basketball Association franchise, and
Full House Sports & Entertainment, the Company's sports marketing business. A
definitive purchase agreement was signed on January 11, 2001 and the transaction
closed on April 2, 2001 (Sonics Sale). In addition, the Company sold separately
its Boeing 727 aircraft used by the Seattle Supersonics for transportation to
and from away games.

        Operating results of the discontinued sports & entertainment operations
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                      2001             2000            1999
                                                    ---------      ---------       ---------
<S>                                                 <C>            <C>             <C>
Loss from discontinued operations                   $      --      $ (15,599)      $ (4,832)
Gain on disposal of discontinued operations           142,586             --             --
Income tax (expense) benefit                          (49,905)         5,892          2,054
                                                    ---------      ---------      ---------
Net income (loss) from discontinued operations      $  92,681      $  (9,707)     $   2,778
                                                    =========      =========      =========
Net revenue included in loss from discontinued
operations                                          $      --      $  67,527      $  70,605
Interest expense included in loss from
discontinued operations                             $      --      $   2,167      $   2,673
</TABLE>

        The loss from operations of the sports & entertainment operations from
December 8, 2000 through December 31, 2001 was $10.6 million, which included
$43.8 million in net revenue and $0.9 million of interest expense. These losses
from operations were recognized in the second quarter of 2001 as a reduction of
the combined net gain from the Sonics Sale and the sale of the Boeing 727
aircraft.

        Interest expense included in discontinued operations is comprised of
interest on obligations related to the assets sold as well as interest allocated
to the sports & entertainment operations. Such interest is allocated based on
the Company's incremental borrowing rate applied to the initial acquisition
price of the Seattle SuperSonics franchise.


                                      F-14

<PAGE>

6.      Accounts receivable and allowance for doubtful accounts

        As of December 31, 2001 and 2000, accounts receivable includes employee
receivables of $0.3 million and $0.5 million, respectively.

        The activity in the allowance for doubtful accounts is summarized as
follows (in thousands):

<TABLE>
<CAPTION>
                                                          2001          2000        1999
                                                         -------      -------      -------
<S>                                                      <C>          <C>          <C>
        Balance at beginning of year                     $ 1,903      $ 1,865      $ 1,435
        Additions charged to operating expense             1,960        2,155        1,611
        Write-offs of receivables, net of recoveries      (2,788)      (2,117)      (1,181)
                                                         -------      -------      -------
        Balance at end of year                           $ 1,075      $ 1,903      $ 1,865
                                                         =======      =======      =======
</TABLE>

7.      Property and equipment

        At December 31, 2001 and 2000, property and equipment consisted of the
following (in thousands):

<TABLE>
<CAPTION>
                                                                         Estimated
                                                 2001         2000      Useful Life
                                               --------     --------    ------------
<S>                                            <C>          <C>         <C>
        Land                                   $  8,741     $  8,741
        Advertising structures                   54,485       53,716     6-20 years
        Broadcast equipment                      87,857       70,300     6-20 years
        Building and improvements                42,421       57,546     3-40 years
        Office furniture and equipment           39,054       42,667     5-10 years
        Transportation and other equipment       11,596       28,764     5-6 years
        Equipment under capital leases               --        8,008     10 years
        Construction in progress                    155       22,032
                                                --------    --------
                                                244,309      291,774
        Less accumulated depreciation           122,515      121,301
                                               ---------    --------
                                               $121,794     $170,473
                                               =========    ========
</TABLE>

8.      Intangible Assets

        At December 31, 2001 and 2000, intangible assets consisted of the
following (in thousands):

<TABLE>
<CAPTION>
                                                                      Estimated
                                             2001         2000       Useful Life
                                           --------     --------     -----------
<S>                                        <C>          <C>          <C>
        Goodwill                           $246,927     $248,222     15-40 years
        Broadcasting licenses                58,453       58,453     15-30 years
        Network affiliation agreements       91,881       91,881     15-30 years
        Favorable leases and contracts        4,797        4,797     20-40 years
        Other                                 3,730        4,323     5-30 years
                                           --------     --------
                                            405,788      407,676
        Less accumulated amortization        80,512       54,544
                                           --------     --------
                                           $325,276     $353,132
                                           ========     ========
</TABLE>

9.      Debt

Credit Agreements


                                      F-15

<PAGE>

        On January 22, 1999, the Company replaced its previous credit agreement
with a $325.0 million credit agreement (the "1999 Credit Agreement"). The
transaction resulted in a charge of $0.6 million, net of applicable taxes of
$0.4 million, consisting of the write-off of deferred financing costs.

        On September 7, 2001, the Company replaced its 1999 Credit Agreement
with a new $120.0 million credit agreement (the "2001 Credit Agreement"),
consisting of a $100.0 million term loan (the "2001 Term Loan") and a $20.0
million revolving credit facility (the "2001 Revolver"). The 2001 Revolver
includes up to $5.0 million in standby letters of credit. The transaction
resulted in a charge of $1.6 million, net of applicable taxes of $0.9 million,
consisting of the write-off of deferred financing costs. In addition, the
transaction included a discount of $3.6 million, which is being amortized to
interest expense over the term of the 2001 Credit Agreement.

        At closing of the 2001 Credit Agreement, a portion of the 2001 Term Loan
was placed in escrow to fund the Company's estimated federal income tax payments
due in October and December of 2001 and the Company's interest payment on its
senior subordinated notes due in January 2002. The estimated federal income tax
payments were funded, leaving $9.0 million in escrow to fund the January 15,
2002 interest payment. The $9.0 million is classified as restricted cash on the
consolidated balance sheet.

        Principal payments under the 2001 Term Loan are due in quarterly
installments of $250,000 each for the period commencing on December 31, 2001 and
ending on September 30, 2005, and $24.0 million each for the period commencing
on December 31, 2005 and ending on September 30, 2006. Any outstanding
borrowings under the 2001 Revolver will be due on August 31, 2004. At December
31, 2001, outstanding borrowings under the 2001 Term loan were $91.3 million.
The unamortized discount at December 31, 2001, was $3.3 million. There were no
outstanding borrowings under the 2001 Revolver at December 31, 2001.

        The Company can choose to have interest calculated at rates based on
either LIBOR or a base rate plus defined margins. The interest rate applicable
to the 2001 Revolver will be subject to certain reductions based on the
Company's interest coverage ratio. Commitment fees on the unused portion of the
2001 Revolver are payable quarterly at an annual rate of 1.5%.

        At December 31, 2001 and 2000, outstanding standby letter of credit
agreements totaled $2.3 million and $1.3 million, respectively.

        The Company has obtained waivers of compliance with certain restrictive
covenants effective for the period December 31, 2001 through May 31, 2002.
Pursuant to the terms of the waivers, the Company cannot access the 2001
Revolver during the waiver period. After May 31, 2002, the Company's lenders
would have the right to accelerate the payment of the Company's indebtedness,
unless the Company were to obtain an extension of the waivers. In addition, an
acceleration of indebtedness under the 2001 Credit Agreement could cause an
acceleration of the Company's indebtedness under the 9% Senior Subordinated
Notes (discussed below). As these waivers currently expire prior to December 31,
2002, all outstanding borrowings under the 2001 Credit Agreement and the 9%
Senior Subordinated Notes have been classified as current at December 31, 2001.
If the merger does not close by May 31, 2002, the Company will likely need to
obtain extensions of the waivers or make other financing arrangements. Under the
change of


                                      F-16

<PAGE>

control provisions of the 2001 Credit Agreement, all outstanding borrowings
thereunder will be repaid fully upon closing of the merger discussed in Note 3.

9% Senior Subordinated Notes

        On December 14, 1998, the Company issued 9% Senior Subordinated Notes
due 2009 (the "9% Senior Subordinated Notes") in the aggregate principal amount
of $175.0 million. These notes bear interest at 9% which is payable
semi-annually in January and July. Principal is payable in full in January 2009.
These notes were issued under an indenture (the "Indenture"), which allows for
an aggregate principal amount of up to $250.0 million and on February 24, 1999,
the Company issued additional notes in the aggregate amount of $25.0 million. In
connection with the transaction, the Company recorded a premium of $1.1 million,
which is being amortized over the remaining term of the notes. At December 31,
2001, the total aggregate amount of 9% Senior Subordinated Notes issued and
outstanding was $200.0 million. The unamortized premium at December 31, 2001,
was $0.9 million.

        Under the change of control provisions of the Indenture, within 30 days
after the closing of the merger with Clear Channel, the Company will be required
to make an offer to repurchase all of the outstanding 9% Senior Subordinated
Notes at a price of 101% plus accrued interest to the date of repurchase. Such
repurchase must occur no less than 30 days and no later than 45 days after the
date of the repurchase offer.

        On March 15, 1999, the Company redeemed its $20.0 million outstanding
principal of the 10.48% Senior Subordinated Notes due 2000 with borrowings under
the 1999 Credit Agreement. This transaction resulted in a charge of
approximately $0.8 million, net of applicable taxes of $0.5 million, consisting
of prepayment fees and the write-off of deferred financing costs.

Other

        On August 6, 1999, the Company received proceeds of $2.0 million upon
the termination of an interest rate swap agreement with a notional principal
amount of $70.0 million. On December 8, 2000, the Company received proceeds of
$2.1 million upon the termination of its three remaining interest rate swap
agreements with notional principal amounts aggregating $130.0 million. In
connection with these transactions, the gains on the termination of these
agreements were deferred and amortized as an adjustment to interest expense over
the remaining terms of the original contract lives, until the 1999 Credit
Agreement was replaced in September 2001. At that time, the remaining
unamortized gain of $0.3 million, net of applicable taxes of $0.2 million, was
recorded in extraordinary items in connection with the write-off of deferred
financing costs related to the 1999 Credit Agreement.

        At December 31, 2001 and 2000, long-term debt consisted of the following
(in thousands):

<TABLE>
<CAPTION>
                                                                         2001         2000
                                                                       --------     --------
<S>                                                                    <C>          <C>
        Credit agreements, net of unamortized discount                 $ 87,950     $176,300
        Senior subordinated notes and unamortized premium               200,872      200,953
        Notes payable for Seattle SuperSonics aircraft                       --       11,508
        Capital lease obligation (net of imputed interest of $370)           --        3,736
        Deferred compensation agreements                                  1,757        2,174
                                                                       --------     --------
                                                                        290,579      394,671
        Less amounts classified as current                              289,086        9,030
                                                                       --------     --------
                                                                       $  1,493     $385,641
                                                                       ========     ========
</TABLE>


                                      F-17

<PAGE>

        Approximately $0.2 million of interest was capitalized in 2000. There
was no capitalized interest in 2001 or 1999.

        Future aggregate annual payments of long-term debt for the years ending
December 31 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                   Senior          Deferred
                                  Credit        Subordinated     Compensation
                                 Agreement           Notes        Agreements         Total
                                 ---------      ------------     ------------      --------
<S>                              <C>            <C>              <C>               <C>
        2002                      $87,950         $200,872            $264         $289,086
        2003                          ---               --             371              371
        2004                          ---               --             333              333
        2005                          ---               --             147              147
        2006                          ---               --             161              161
        Later years                   ---               --             481              481
                                  -------         --------          ------         --------
        Total                     $87,950         $200,872          $1,757         $290,579
                                  =======         ========          ======         ========
</TABLE>

        Substantially all of the outstanding stock and material assets of the
Company's subsidiaries are pledged as collateral under the 2001 Credit
Agreement. In addition, the 2001 Credit Agreement and the indenture under the 9%
Senior Subordinated Notes restrict, among other things, the Company's
borrowings, dividend payments, stock repurchases, sales or transfers of assets
and contain certain other restrictive covenants which require the Company to
maintain certain debt coverage and other financial ratios.

10.     Income taxes

        Significant components of income tax expense (benefit) are as follows
(in thousands):

<TABLE>
<CAPTION>
                                           2001          2000         1999
                                         --------      --------     --------
<S>                                      <C>           <C>          <C>
        Current:
            Federal                      ($18,393)     $ 72,072     $    554
            State                            (379)        2,974           --
                                         --------      --------     --------
                                          (18,772)       75,046          554

        Deferred:
            Federal                        (1,496)       18,437        6,846
            State                            (938)        2,801          517
                                         --------      --------     --------
                                           (2,434)       21,238        7,363
                                         --------      --------     --------
        Income tax expense (benefit)     $(21,206)     $ 96,284     $  7,917
                                         ========      ========     ========
</TABLE>

        The reconciliation of income taxes computed at the U.S. federal
statutory tax rate to income tax expense (benefit) is as follows (in thousands):


                                      F-18

<PAGE>

<TABLE>
<CAPTION>
                                         2001          2000         1999
                                       --------      --------     --------
<S>                                    <C>           <C>          <C>
        Tax at U.S. statutory rate     $(21,433)     $ 89,292     $  6,530
        Non-deductible expenses           1,544         1,138          659
        State taxes and other            (1,317)        5,854          728
                                       --------      --------     --------
        Income tax expense             $(21,206)     $ 96,284     $  7,917
                                       ========      ========     ========
</TABLE>

        At December 31, 1999, the Company had net operating loss carryforwards
for federal income tax purposes of approximately $17.7 million and alternative
minimum tax credit carryforwards of approximately $2.8 million. Due to the gain
on the sale of the Florida outdoor advertising operations in 2000, all of the
net operating loss carryforwards and alternative minimum tax credit
carryforwards for federal income taxes were utilized on the 2000 federal tax
return. At December 31, 2001, the Company had net operating loss carryforwards
for state income tax purposes of $78.6 million, which expire in 2006 through
2026.

        Income taxes paid were $35.8 million, $70.7 million, and $0.7 million in
2001, 2000 and 1999, respectively. The amounts in 2001 and 2000 are
substantially greater than 1999 as they include income taxes paid on the gains
from the sale of the Sports & Entertainment operations in 2001 and the sale of
the Florida outdoor advertising operations in 2000. Under SFAS No. 95, Statement
of Cash Flows, the cash received from these sales are reported as an investing
cash flow. However, all income tax payments, including those resulting from the
gains from these sales, must be reported as an operating cash flow.

        Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. At December 31,
2001 and 2000 significant components of the Company's deferred tax assets and
liabilities are as follows (in thousands):

<TABLE>
<CAPTION>
                                                        2001          2000
                                                      --------      --------
<S>                                                   <C>           <C>
        Deferred tax assets:
           State net operating loss carryforwards     $    998      $     --
           Investment impairment charge                    626            --
           Accrued retirement benefits                     692            --
           Capital lease obligation                         --         1,355
           Deferred compensation agreements                637           788
           Other                                         1,973         3,855
                                                      --------      --------
        Total deferred tax assets                        4,926         5,998

        Deferred tax liabilities:
           Basis difference in depreciable assets        9,834        12,040
           Basis difference in intangible assets         5,393         5,734
           Other                                            --         1,074
                                                      --------      --------
        Total deferred tax liabilities                  15,227        18,848
                                                      --------      --------

        Net deferred tax liability                    $(10,301)     $(12,850)
                                                      ========      ========
</TABLE>

11.     Employee benefit plan

        The Company has a voluntary defined contribution 401(k) savings and
retirement plan for the benefit of its nonunion employees, who may contribute
from 1% to 15% of their


                                      F-19

<PAGE>

compensation up to a limit imposed by the Internal Revenue Code. The Company
matches participating employee contributions up to 4% of their compensation and
may also make an additional voluntary contribution to the plan. The Company's
contributions totaled $1.4 million in 2001, $1.8 million in 2000, and $1.3
million in 1999.

12.     Stockholders' equity

        The Class B common stock has the same rights as common stock, except
that the Class B common stock has ten times the voting rights of common stock
and is restricted as to its transfer. Each outstanding share of Class B common
stock may be converted into one share of common stock at any time at the option
of the stockholder.

        During the third quarter of 1999, the Company issued 3,250,000 shares of
common stock at $15.25 per share pursuant to an underwritten public offering. In
conjunction with the transaction, the Company received net proceeds of
approximately $46.5 million.

        The Company had various stock purchase agreements to sell shares of its
common stock and Class B common stock to key employees and officers at fair
market value. These agreements expired in 1999. The agreements provided for
distribution of one share of Class B common stock at no extra cost to the holder
for each share of common stock at the time the shares were purchased. In 1999,
the remaining 37,500 shares of common stock and 37,500 shares of Class B common
stock were purchased under these agreements.

        The Company's Nonemployee-Directors' Equity Compensation Plan (the
"Directors' Plan") was approved by the Board of Directors in 1995 and the
stockholders of the Company in 1996. The Directors Plan's purpose is to allow
nonemployee directors to elect to receive directors' fees in the form of common
stock instead of cash. There are 100,000 shares of common stock authorized under
the Directors' Plan.

        At December 31, 2001, the Company had an aggregate of 13,843,770 shares
of common stock reserved for future issuance, consisting of 11,020,622 shares
reserved for conversion of Class B common stock, 1,387,902 reserved for issuance
under the 2000 Employee Stock Purchase Plan, 1,364,900 shares reserved under the
Fifth Amended and Restated Employees Stock Option Plan, and 70,346 shares
reserved under the Directors' Plan.

13.     Stock Option Plan

        The Company's Employees Stock Option Plan (the "Plan") was approved by
the Board of Directors and the stockholders of the Company in 1983. The Plan has
been amended from time to time to extend the term of the Plan and to increase
the amount of common stock reserved for issuance to 2,000,000 shares. As of
December 31, 2001, there were 898,000 shares of common stock available for
future grants under the Plan.

        Under the Plan, the exercise price of the options equals the market
price of the Company's stock on the date of grant and the options' maximum life
is 10 years. The options vest at the end of five years of continuous employment.


                                      F-20

<PAGE>

        In 2001, 2000 and 1999, the Company recognized stock compensation
expense of $0.3 million, $0.1 million and $0.6 million, respectively. The 1999
amount is higher primarily due to the amendment of certain stock option
agreements.

        A summary of the Company's stock option activity and related information
for the years ended December 31 is as follows:

<TABLE>
<CAPTION>
                                    2001                    2000                    1999
                          ----------------------   ---------------------   --------------------
                                        Weighted                Weighted               Weighted
                                         Average                 Average                Average
                                        Exercise                Exercise               Exercise
                           Options        Price    Options        Price    Options       Price
                          --------      --------   -------      --------   -------     --------
<S>                       <C>           <C>        <C>          <C>        <C>         <C>
Options outstanding at
  beginning of year        647,000       $13.71    450,000       $11.95    250,000      $ 5.69
Granted                         --           --    212,000        16.69    210,000       19.50
Cancelled                  (35,000)       17.89     (5,000)       19.50         --          --
Exercised                 (145,100)        6.04    (10,000)        3.44    (10,000)       7.63
                          --------                 -------                 -------
Options outstanding at
  end of year              466,900       $15.78    647,000       $13.71    450,000      $11.95

Exercisable at end of
  year                      84,900        $5.41    110,000        $3.44         --          --

Weighted average fair
  value of options
  granted during year           --                   $8.07                  $12.05
</TABLE>

        Exercise prices for options outstanding at December 31, 2001 ranged from
$3.44 to $19.50. A summary of options outstanding as of December 31, 2001 is as
follows:

<TABLE>
<CAPTION>
                                     Weighted-Average
                                        Remaining           Weighted-
      Range of          Options      Contractual Life        Average
   Exercise Price     Outstanding        (Years)          Exercise Price   Exercisable
  ----------------    -----------    ----------------     --------------   -----------
<S>                   <C>            <C>                  <C>              <C>
   $0.00 - $ 3.44        45,000            3.1                 $3.44         45,000
   $3.45 - $ 7.63        39,900            4.0                  7.63         39,900
   $7.64 - $16.69       192,000            8.1                 16.69             --
  $16.70 - $19.50       190,000            7.5                 19.50             --
                        -------                                              ------
   $0.00 - $19.50       466,900            7.0                 15.78         84,900
                        =======                                              ======
</TABLE>

        As required by Financial Accounting Standards Board Statement No. 123,
the pro forma information regarding net income and earnings per share has been
calculated as if the Company had accounted for its employee stock options under
the fair value method of that statement. The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted-average assumptions used for grants in 2000 and 1999,
respectively (there were no grants in 2001) and dividend yield of 0%; expected
volatility of

                                      F-21

<PAGE>


29% and 52%; risk-free interest rate of 6.6% and 5.7%; and a weighted-average
expected life of the options of 7.5 years.

        For purposes of pro forma disclosures, the estimated fair value of the
options is amortized over the options' vesting period. The Company's pro forma
net income and earnings per common share follows (in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                             2001         2000        1999
                                            -------     --------     ------
<S>                                         <C>         <C>          <C>
        Pro forma net income                $44,853     $147,962     $6,122
        Pro forma net income per common
           share                            $  1.28     $   4.23     $ 0.19
        Pro forma net income per common
           share -- assuming dilution       $  1.28     $   4.21     $ 0.18
</TABLE>

        The pro forma amounts above may not be representative of the pro forma
effect on reported net income in future years because options vest over several
years, additional options may be granted each year, and assumptions can change.

        In connection with the merger discussed in Note 3, all previously
unexercisable options will become exercisable upon the closing of the merger.
In addition, each outstanding option to purchase one share of the Company's
common stock will be converted to an option to purchase 0.35 shares of Clear
Channel common stock.

14.     Commitments and contingencies

        The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its operations, including such
matters as contract and lease disputes and complaints alleging employment
discrimination. In addition, the Company participates in various governmental
and administrative proceedings relating to, among other things, condemnation of
outdoor advertising structures without payment of just compensation and matters
affecting the operation of broadcasting facilities. The Company believes that
the outcome of any such pending claims or proceedings individually or in the
aggregate, will not have a material adverse effect upon its business or
financial condition.

        The Company has employment contracts with certain employees extending
beyond December 31, 2001. Some of these contracts require that payments continue
to be made if the individual should be unable to perform because of death or
disability.

        In addition, the Company is required to make payments for equipment,
facilities, and television programming under non-cancelable operating lease and
broadcast agreements. Future minimum payments under such contracts that expire
in more than one year for the years ending December 31 are as follows (in
thousands):

<TABLE>
                Equipment/Facilities    Broadcast Obligations   Employment
                --------------------    ---------------------   ----------
<S>             <C>                     <C>                     <C>
        2002         $ 5,601                   $9,104            $ 5,572
        2003           5,123                    5,188              4,087
        2004           4,630                    3,179              2,563
        2005           4,011                      563                671
        2006           3,302                       14                320
    Later years        8,427                       --              1,020
                     -------                  -------             -------
                     $31,094                  $18,048             $14,233
                     =======                  =======             =======
</TABLE>

                                      F-22

<PAGE>


        Included in the operating leases is a lease for a high-definition mobile
television broadcast unit which contains renewal and purchase options in 2002,
2003 and 2004, and a purchase option in 2005. In the event the Company elects
not to exercise a renewal option, the Company must guarantee a minimum residual
value to the lessor of $3.0 million in 2002, $2.5 million in 2003, $1.7 million
in 2004, and $0.8 million in 2005. These amounts would be reduced by any
proceeds received by the lessor from the sale of the broadcast unit.

        Rent expense for operating leases aggregated $9.3 million in 2001, $9.1
million in 2000, and $5.8 million in 1999. Broadcasting film and programming
expense aggregated $12.6 million in 2001, $11.4 million in 2000, and $11.2
million in 1999.

        Principal amounts outstanding on loans to the Company's major
stockholder was approximately $0.1 million at December 31, 2001 and 2000.

15.     Television Broadcasting Group Restructuring

        On April 6, 1999, the Company announced the launch of Digital
CentralCasting(TM), a digital broadcasting system which allows the Company to
consolidate back-office functions such as operations, programming, advertising
scheduling, and accounting for all of the television stations within a regional
group at one station. To implement this strategy, the Company organized 16 of
the television stations it owns and/or programs into the following three
regional station groups: New York (WIXT, WOKR, WIVT, WBGH-CA, WUTR, WETM, and
WWTI), Central California (KCOY, KKFX-CA, KGPE, and KGET), and North Coast
(KCBA, KION, KMTR, KVIQ, and KFTY).

        The Company completed the implementation of Digital CentralCasting(TM)
for all of its television station groups in the first quarter of 2001. The
Company recorded a $1.1 million restructuring charge in the second quarter of
1999 relating to the implementation of Digital CentralCasting(TM). This
restructuring charge consisted primarily of costs associated with employee staff
reductions, contract terminations, legal, and other costs associated directly
with the restructuring. As of December 31, 2001, termination benefits of
approximately $0.5 million, representing approximately 50 employees, had been
paid and charged to the restructuring accrual. At December 31, 2001, the
remaining accrual was approximately $30,000, which consists of an obligation
under a noncancellable software system contract expiring in December 2002.

16.     Workforce Reduction Costs

In the second quarter of 2001, the Company implemented a cost reduction
initiative in all of its business segments and the corporate office in order to
mitigate decreases in national advertising revenue due to the slowing national
economy. The Company recorded a charge of $2.4 million in the second quarter
consisting of termination benefits for employees whose positions were eliminated
in connection with this cost reduction initiative. Seventy-five positions
representing a wide variety of functions across all business segments and the
corporate office were eliminated. As of December 31, 2001, all of the
termination benefits had been paid and charged to the workforce reduction
accrual.

                                      F-23

<PAGE>

17.     Industry segment information

        The Company organizes its segments based on the products and services
from which revenues are generated. The Company evaluates segment performance and
allocates resources based on Segment Operating Cash Flow. The Company defines
EBITDA as net revenue less operating expenses, workforce reduction costs, and
restructuring expenses before amortization, depreciation, interest, net gain
(loss) on dispositions of assets, and other expenses. Segment Operating Cash
Flow is defined as EBITDA before corporate overhead and workforce reduction
costs.

        Selected financial information for these segments for the years ended
December 31, 2001, 2000 and 1999 is presented as follows (in thousands):

<TABLE>
<CAPTION>
                                    Outdoor         Television          Radio           Interactive
                                     Media         Broadcasting      Broadcasting          Media            Total
                                   ---------         ---------         ---------         ---------         ---------
<S>                                <C>               <C>               <C>               <C>               <C>
2001

Net revenue                        $  77,912         $  98,222         $  22,509         $     214         $ 198,857
Segment operating expenses           (48,927)          (92,307)          (20,058)           (1,376)         (162,668)
                                   ---------         ---------         ---------         ---------         ---------
Segment Operating Cash Flow        $  28,985         $   5,915         $   2,451         $  (1,162)           36,189
                                   =========         =========         =========         =========         =========
Segment assets                     $ 100,337         $ 363,875         $  55,341         $   1,226         $ 520,779
Capital expenditures               $   1,515         $   3,973         $     586         $     585         $   6,659

2000

Net revenue                        $  89,309         $ 107,615         $  27,589         $      51         $ 224,564
Segment operating expenses           (51,364)          (86,841)          (19,018)             (451)         (157,674)
                                   ---------         ---------         ---------         ---------         ---------
Segment Operating Cash Flow        $  37,945         $  20,774         $   8,571         $    (400)        $  66,890
                                   =========         =========         =========         =========         =========
Segment assets                     $ 109,294         $ 392,230         $  62,684         $   1,156         $ 565,364
Capital expenditures               $   4,235         $  17,535         $   7,461         $     978         $  30,209

1999

Net revenue                        $  98,751         $  81,669         $  27,163         $      --         $ 207,583
Segment operating expenses           (56,877)          (69,608)          (15,563)               --          (142,048)
                                   ---------         ---------         ---------         ---------         ---------
Segment Operating Cash Flow        $  41,874         $  12,061         $  11,600         $      --         $  65,535
                                   =========         =========         =========         =========         =========
Segment assets                     $  92,911         $ 273,072         $  59,873         $      --         $ 425,856
Capital expenditures               $   7,346         $   7,765         $   3,780         $      --         $  18,891
</TABLE>


A reconciliation from the segment information to the consolidated balances for
Segment Operating Cash Flow, segment assets, and segment capital expenditures is
set forth below (in thousands):

<TABLE>
<CAPTION>
                                                   2001           2000            1999
                                                 ---------      ---------      ---------
<S>                                              <C>            <C>            <C>
        Segment Operating Cash Flow              $  36,189      $  66,890      $  65,535
        Corporate overhead                         (17,047)       (23,792)       (16,142)
        Workforce reduction costs                   (2,442)            --             --
                                                 ---------      ---------      ---------
        EBITDA                                      16,700         43,098         49,393
        Depreciation and amortization              (45,193)       (39,161)       (26,042)
        Interest expense                           (28,486)       (25,795)       (32,959)
        Net gain (loss) on dispositions of
        assets                                      (2,202)       227,650         28,999
        Other                                       (2,056)          (901)          (733)
                                                 ---------      ---------      ---------
        Income (loss) from continuing
          operations before income taxes and
          extraordinary items                    $ (61,237)     $ 254,891      $  18,658
                                                 =========      =========      =========
        Segment assets                           $ 520,779      $ 565,364      $ 425,856
</TABLE>

                                      F-24


<PAGE>

<TABLE>
<CAPTION>
                                                   2001           2000            1999
                                                 ---------      ---------      ---------
<S>                                              <C>            <C>            <C>
        Corporate assets                            55,376         34,996         40,551
        Assets of discontinued operations              686         66,947         62,029
                                                 ---------      ---------      ---------
        Consolidated total assets                $ 576,841      $ 667,307      $ 528,436
                                                 =========      =========      =========
        Segment capital expenditures                 6,659      $  30,209      $  18,891
        Corporate capital expenditures                 534          7,548          4,545
        Capital expenditures of discontinued
          operations                                 1,080          3,601          5,678
                                                 ---------      ---------      ---------
        Consolidated capital expenditures        $   8,273      $  41,358      $  29,114
                                                 =========      =========      =========
</TABLE>

18.     Summary of quarterly financial data (unaudited)

        The Company's results of operations may vary from quarter to quarter due
in part to the timing of acquisitions and to seasonal variations in the
operations of the outdoor media and television broadcasting segments. In
particular, the Company's net revenue and EBITDA historically have been affected
positively by increased advertising activity in the second and fourth quarters.

        The following table sets forth a summary of the quarterly results of
operations for the years ended December 31, 2001 and 2000 (in thousands, except
per share amounts). Net revenue, EBITDA, and income (loss) from continuing
operations have been adjusted from amounts reported previously to reflect the
accounting for the sports & entertainment operations as a discontinued
operation.

<TABLE>
<CAPTION>
                                            First          Second          Third        Fourth
        2001                               Quarter         Quarter         Quarter      Quarter
        ----                              ---------       ---------       ---------    ---------
<S>                                       <C>             <C>             <C>          <C>
        Net revenue                       $  44,873       $  55,566       $  48,489    $  49,929
        EBITDA                               (3,005)          6,442           6,746        6,517
        Loss from continuing operations
          before extraordinary items        (15,236)         (7,136)(1)      (7,897)      (9,762)
        Gain (loss) from discontinued
        operations                               --          90,808           1,881           (8)
        Extraordinary items                      --(2)           --          (2,650)      (4,465)
        Net income (loss)                   (15,236)         83,672          (8,666)     (14,235)
        Net income (loss) per share            (.43)           2.39            (.25)        (.41)
        Net income (loss) per share --
          assuming dilution                    (.43)           2.39            (.25)        (.41)

        2000
        ----
        Net revenue                       $  46,769       $  60,226       $  57,296    $  60,273
        EBITDA                                6,480          14,354          10,963       11,301
        Income (loss) from continuing       164,677(1)         (131)(1)      (3,494)      (2,445)(1)
        operations
        Income (loss) from discontinued         574          (2,107)         (2,744)      (5,430)
           operations
        Net income (loss)                   165,251          (2,238)         (6,238)      (7,875)
        Net income (loss) per share            4.73            (.06)           (.18)        (.22)
        Net income (loss) per share --         4.72            (.06)           (.18)        (.22)
          assuming dilution
</TABLE>

(1)  Includes net gain on dispositions of assets, as discussed in Note 4.

(2)  Represents merger costs and loss on debt extinguishment, as discussed in
     Notes 3 and 9.


                                      F-25