##### Table of Contents



United States
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 OR
 o
    
    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 0-14691
 
 WESTWOOD ONE, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    95-3980449
(I.R.S. Employer
Identification No.)1166 Avenue of the Americas, 10thFloor New York, NY
(Address of principal executive offices)
    
    10036
(Zip Code)
 (212) 641-2000
 
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




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##### 



WESTWOOD ONE, INC.
 INDEX
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Consolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Consolidated Statements of Stockholders Equity
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    45Item 4. Controls and Procedures
    
    
    45PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    46Item 1A. Risk Factors
    
    
    46Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    46Item 3. Reserved
    
    
    46Item 4. Removed and Reserved
    
    
    46Item 5. Other Information
    
    
    46Item 6. Exhibits
    
    
    47SIGNATURES
    
    
    48Exhibit Index
    
    
    49Exhibit 31.aExhibit 31.bExhibit 32.aExhibit 32.b
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 WESTWOOD ONE, INC.
 
 CONSOLIDATED BALANCE SHEET
 (In thousands, except per share amounts)
 September 30, 2010
    
    
    December 31, 2009(unaudited)
    
    
    (derived from audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    4,058
    
    
    $
    4,824Accounts receivable, net of allowance for doubtful accounts
of $840 (2010) and $2,723 (2009)
    
    
    86,382
    
    
    
    87,568Federal income tax receivable
    
    
    
    
    
    
    12,355Prepaid and other assets
    
    
    25,012
    
    
    
    20,994Total current assets
    
    
    115,452
    
    
    
    125,741Property and equipment, net
    
    
    36,925
    
    
    
    36,265Intangible assets, net
    
    
    95,215
    
    
    
    103,400Goodwill
    
    
    38,945
    
    
    
    38,917Other assets
    
    
    2,652
    
    
    
    2,995TOTAL ASSETS
    
    $
    289,189
    
    
    $
    307,318LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    42,677
    
    
    $
    40,164Amounts payable to related parties
    
    
    775
    
    
    
    129Deferred revenue
    
    
    3,249
    
    
    
    3,682Accrued expenses and other liabilities
    
    
    33,323
    
    
    
    28,864Current maturity of long-term debt
    
    
    
    
    
    
    13,500Total current liabilities
    
    
    80,024
    
    
    
    86,339Long-term debt
    
    
    135,631
    
    
    
    122,262Deferred tax liability
    
    
    39,358
    
    
    
    50,932Due to Gores
    
    
    10,144
    
    
    
    11,165Other liabilities
    
    
    19,203
    
    
    
    18,636TOTAL LIABILITIES
    
    
    284,360
    
    
    
    289,334Commitments and ContingenciesSTOCKHOLDERS EQUITYCommon stock, $.01 par value: authorized: 5,000,000 shares
issued and outstanding: 21,314 (2010) and 20,544 (2009)
    
    
    213
    
    
    
    205Class B stock, $.01 par value: authorized: 3,000 shares; issued and outstanding: 0
    
    
    
    
    
    
    Additional paid-in capital
    
    
    87,611
    
    
    
    81,268Net unrealized (loss) gain
    
    
    (15
    )
    
    
    111Accumulated deficit
    
    
    (82,980
    )
    
    
    (63,600
    )TOTAL STOCKHOLDERS EQUITY
    
    
    4,829
    
    
    
    17,984TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    289,189
    
    
    $
    307,318
   3




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##### Table of Contents



WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 (In thousands, except per share amounts)
 (unaudited)
 Successor Company
    
    
    
    PredecessorCompanyThree Months Ended
    
    
    
    
    
    
    
    
    
    
    
    For the PeriodSeptember 30,
    
    
    Nine Months Ended
    
    
    For the Period April
    
    
    
    January 1 to2010
    
    
    2009
    
    
    September 30, 2010
    
    
    24 to September 30, 2009
    
    
    
    April 23, 2009Revenue
    
    $
    87,952
    
    
    $
    78,474
    
    
    $
    264,238
    
    
    $
    136,518
    
    
    
    $
    111,474Operating costs
    
    
    82,156
    
    
    
    74,290
    
    
    
    247,312
    
    
    
    126,500
    
    
    
    
    111,309Depreciation and amortization
    
    
    4,506
    
    
    
    8,065
    
    
    
    13,691
    
    
    
    13,910
    
    
    
    
    2,584Corporate general and
administrative expenses
    
    
    2,346
    
    
    
    3,562
    
    
    
    9,174
    
    
    
    5,875
    
    
    
    
    4,519Goodwill impairment
    
    
    
    
    
    
    50,501
    
    
    
    
    
    
    
    50,501
    
    
    
    
    Restructuring charges
    
    
    561
    
    
    
    1,372
    
    
    
    2,422
    
    
    
    2,826
    
    
    
    
    3,976Special charges
    
    
    1,496
    
    
    
    820
    
    
    
    4,295
    
    
    
    1,188
    
    
    
    
    12,819Total expenses
    
    
    91,065
    
    
    
    138,610
    
    
    
    276,894
    
    
    
    200,800
    
    
    
    
    135,207Operating loss
    
    
    (3,113
    )
    
    
    (60,136
    )
    
    
    (12,656
    )
    
    
    (64,282
    )
    
    
    
    (23,733
    )Interest expense
    
    
    5,822
    
    
    
    4,925
    
    
    
    17,191
    
    
    
    9,617
    
    
    
    
    3,222Other expense
    
    
    1,920
    
    
    
    70
    
    
    
    1,918
    
    
    
    66
    
    
    
    
    (359
    )Loss before income tax
    
    
    (10,855
    )
    
    
    (65,131
    )
    
    
    (31,765
    )
    
    
    (73,965
    )
    
    
    
    (26,596
    )Income tax benefit
    
    
    (3,616
    )
    
    
    (11,581
    )
    
    
    (12,385
    )
    
    
    (14,231
    )
    
    
    
    (7,635
    )Net loss
    
    $
    (7,239
    )
    
    $
    (53,550
    )
    
    $
    (19,380
    )
    
    $
    (59,734
    )
    
    
    $
    (18,961
    )Net loss attributable to
common stockholders
    
    $
    (7,239
    )
    
    $
    (131,686
    )
    
    $
    (19,380
    )
    
    $
    (141,283
    )
    
    
    $
    (22,037
    )Loss per share:Common StockBasic
    
    $
    (0.35
    )
    
    $
    (10.03
    )
    
    $
    (0.94
    )
    
    $
    (18.19
    )
    
    
    $
    (43.64
    )Diluted
    
    $
    (0.35
    )
    
    $
    (10.03
    )
    
    $
    (0.94
    )
    
    $
    (18.19
    )
    
    
    $
    (43.64
    )Class B stockBasic
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    $
    Diluted
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    $
    Weighted average shares outstanding:Common StockBasic
    
    
    20,921
    
    
    
    13,135
    
    
    
    20,671
    
    
    
    7,769
    
    
    
    
    505Diluted
    
    
    20,921
    
    
    
    13,135
    
    
    
    20,671
    
    
    
    7,769
    
    
    
    
    505Class B stockBasic
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    1Diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    1
   4




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WESTWOOD ONE, INC.
 
 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
 (In thousands)
 (unaudited)
 Successor Company
    
    
    
    Predecessor
 CompanyFor the Nine Months
    
    
    
    
    
    
    
    For the PeriodEnded September 30,
    
    
    For the Period April 24
    
    
    
    January 1 to2010
    
    
    to September 30, 2009
    
    
    
    April 23, 2009Cash Flows from Operating Activities:Net loss
    
    $
    (19,380
    )
    
    $
    (59,734
    )
    
    
    $
    (18,961
    )Adjustments to reconcile net loss to net
cash provided by operating activities:Depreciation and amortization
    
    
    13,691
    
    
    
    13,910
    
    
    
    
    2,584Goodwill and intangible asset impairment
    
    
    
    
    
    
    50,501
    
    
    
    
    Loss on disposal of property and equipment
    
    
    
    
    
    
    173
    
    
    
    
    188Deferred taxes
    
    
    (12,167
    )
    
    
    (15,824
    )
    
    
    
    (6,873
    )Federal tax refund
    
    
    12,940
    
    
    
    
    
    
    
    
    Non-cash equity-based compensation
    
    
    2,671
    
    
    
    2,385
    
    
    
    
    2,110Paid-in-kind interest
    
    
    4,348
    
    
    
    2,922
    
    
    
    
    Change in fair value of derivative liability (see Note 7)
    
    
    1,920
    
    
    
    
    
    
    
    
    Amortization of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    331Net change in other assets and liabilities
    
    
    3,403
    
    
    
    (10,811
    )
    
    
    
    19,844Net cash provided by (used in) operating activities
    
    
    7,426
    
    
    
    (16,478
    )
    
    
    
    (777
    )Cash Flows from Investing Activities:Capital expenditures
    
    
    (7,058
    )
    
    
    (2,355
    )
    
    
    
    (1,384
    )Net cash used in investing activities
    
    
    (7,058
    )
    
    
    (2,355
    )
    
    
    
    (1,384
    )Cash Flows from Financing Activities:Proceeds from Revolving Credit Facility
    
    
    10,000
    
    
    
    
    
    
    
    
    Repayments of Senior Notes
    
    
    (15,500
    )
    
    
    
    
    
    
    
    Issuance of common stock to Gores
    
    
    5,000
    
    
    
    
    
    
    
    
    Payments of capital lease obligations
    
    
    (634
    )
    
    
    (376
    )
    
    
    
    (271
    )Deferred financing costs
    
    
    
    
    
    
    (228
    )
    
    
    
    Proceeds from term loan
    
    
    
    
    
    
    20,000
    
    
    
    
    Debt repayments
    
    
    
    
    
    
    (25,000
    )
    
    
    
    Issuance of Series B Convertible Preferred Stock
    
    
    
    
    
    
    25,000
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (1,134
    )
    
    
    19,396
    
    
    
    
    (271
    )Net increase in cash and cash equivalents
    
    
    (766
    )
    
    
    563
    
    
    
    
    (2,432
    )Cash and cash equivalents,beginning of period
    
    
    4,824
    
    
    
    4,005
    
    
    
    
    6,437Cash and cash equivalents, end of period
    
    $
    4,058
    
    
    $
    4,568
    
    
    
    $
    4,005Supplemental Schedule of Cash Flow Information:Non-cash financing activitiesCancellation of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    252,060Issuance of new long-term debt
    
    
    
    
    
    
    117,500
    
    
    
    
    Preferred stock  conversion to common stock
    
    
    
    
    
    
    (81,551
    )
    
    
    
    Class B  conversion to common stock
    
    
    
    
    
    
    (3
    )
    
    
    
    
   5




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##### Table of Contents



WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (In thousands)
 (unaudited)
 Unrealized
    
    
    TotalAdditional
    
    
    
    
    
    
    Gain (Loss) on
    
    
    Stock-Common Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Available for
    
    
    holdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Sale Securities
    
    
    EquityBalance as of
January 1, 2010
    
    
    20,544
    
    
    $
    205
    
    
    $
    81,268
    
    
    $
    (63,600
    )
    
    $
    111
    
    
    $
    17,984Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,380
    )
    
    
    
    
    
    
    (19,380
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (126
    )
    
    
    (126
    )Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    2,671
    
    
    
    
    
    
    
    
    
    
    
    2,671Issuance of common stock to
Gores
    
    
    770
    
    
    
    8
    
    
    
    4,992
    
    
    
    
    
    
    
    
    
    
    
    5,000Gores $10,000 equity
commitment
(see Note 7)
    
    
    
    
    
    
    
    
    
    
    442
    
    
    
    
    
    
    
    
    
    
    
    442Loss on issuance of common
stock
under equity-based
compensation plans
    
    
    
    
    
    
    
    
    
    
    (453
    )
    
    
    
    
    
    
    
    
    
    
    (453
    )Cancellations of vested equity
grants
    
    
    
    
    
    
    
    
    
    
    (1,309
    )
    
    
    
    
    
    
    
    
    
    
    (1,309
    )Balance as of
September 30, 2010
    
    
    21,314
    
    
    $
    213
    
    
    $
    87,611
    
    
    $
    (82,980
    )
    
    $
    (15
    )
    
    $
    4,829
   6




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##### Table of Contents



WESTWOOD ONE, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except per share data)
 NOTE 1  Basis of Presentation:
        7




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
   Current assets
    
    $
    104,641Goodwill
    
    
    86,414Intangibles
    
    
    116,910Property and equipment
    
    
    36,270Other assets
    
    
    21,913Current liabilities
    
    
    81,160Deferred income taxes
    
    
    77,879Due to Gores
    
    
    10,797Other liabilities
    
    
    10,458Long-term debt
    
    
    106,703Total Business Enterprise Value
    
    $
    79,151
   Unaudited Pro FormaNine Months EndedSeptember 30, 2009Revenue
    
    $
    247,992Net loss
    
    
    (87,853
    )
 Financial Statement Presentation
   8




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 Reclassification and Revisions
   NOTE 2  Earnings Per Share:
      9




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  PredecessorSuccessor Company
    
    
    
    CompanyThree Months Ended
    
    
    
    
    
    
    For the Period
    
    
    
    For the PeriodSeptember 30,
    
    
    Nine Months Ended
    
    
    April 24 to
    
    
    
    January 1 to2010
    
    
    2009
    
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    
    April 23, 2009Net loss
    
    $
    (7,239
    )
    
    $
    (53,550
    )
    
    $
    (19,380
    )
    
    $
    (59,734
    )
    
    
    $
    (18,961
    )Less: Accumulated
Preferred Stock dividends
    
    
    
    
    
    
    (78,136
    )
    
    
    
    
    
    
    (81,549
    )
    
    
    
    (3,076
    )Undistributed losses
    
    $
    (7,239
    )
    
    $
    (131,686
    )
    
    $
    (19,380
    )
    
    $
    (141,283
    )
    
    
    $
    (22,037
    )
 NOTE 3  Related Party Transactions:
 Gores Radio Holdings
   PredecessorSuccessor Company
    
    
    
    CompanyThree Months Ended
    
    
    
    
    
    
    For the Period
    
    
    
    For the PeriodSeptember 30,
    
    
    Nine Months Ended
    
    
    April 24 to
    
    
    
    January 1 to2010
    
    
    2009
    
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    
    April 23, 2009Gores and Glendon fees (1)
    
    $
    176
    
    
    $
    514
    
    
    $
    617
    
    
    $
    810
    
    
    
    $
    984Reimbursement of legal fees
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    
    1,533Reimbursement of letter-of-credit
fees (2)
    
    
    62
    
    
    
    
    
    
    
    188
    
    
    
    
    
    
    
    
    Interest on loan
    
    
    376
    
    
    
    408
    
    
    
    1,195
    
    
    
    711
    
    
    
    
    $
    614
    
    
    $
    922
    
    
    $
    2,008
    
    
    $
    1,521
    
    
    
    $
    2,517
 (1)
    
    These fees consist of payments for professional services rendered by various members of
Gores and Glendon to us in the areas of operational improvement, tax, finance, accounting,
legal and insurance/risk management.(2)
    
    Reimbursement of a standby letter-of-credit fee incurred and paid by Gores in connection
with its guarantee of the $20,000 revolving credit facility with Wells Fargo.  10




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 POP Radio
  PredecessorSuccessor Company
    
    
    
    CompanyThree Months Ended
    
    
    
    
    
    
    For the Period
    
    
    
    For the PeriodSeptember 30,
    
    
    Nine Months Ended
    
    
    April 24
    
    
    
    January 1 to2010
    
    
    2009
    
    
    September 30, 2010
    
    
    to September 30, 2009
    
    
    
    April 23, 2009Program commission expense
    
    $
    366
    
    
    $
    333
    
    
    $
    1,093
    
    
    $
    581
    
    
    
    $
    416
 CBS Radio
   PredecessorSuccessor Company
    
    
    
    CompanyFor the Period
    
    
    
    For the PeriodThree Months Ended
    
    
    April 24 to
    
    
    
    January 1 toSeptember 30, 2009
    
    
    September 30, 2009
    
    
    
    April 23, 2009Programming and affiliate arrangements
    
    $
    4,189
    
    
    $
    13,877
    
    
    
    $
    20,884News agreement
    
    
    1,121
    
    
    
    3,623
    
    
    
    
    4,107$
    5,310
    
    
    $
    17,500
    
    
    
    $
    24,991
  PredecessorSuccessor Company
    
    
    
    CompanyThree Months Ended
    
    
    
    
    
    
    
    
    
    
    
    For the PeriodSeptember 30,
    
    
    Nine Months Ended
    
    
    For the Period April 24
    
    
    
    January 1 to2010
    
    
    2009
    
    
    September 30, 2010
    
    
    to September 30, 2009
    
    
    
    April 23, 2009Operating costs
    
    $
    366
    
    
    $
    5,643
    
    
    $
    1,093
    
    
    $
    18,081
    
    
    
    $
    25,407Special charges
    
    
    176
    
    
    
    514
    
    
    
    625
    
    
    
    810
    
    
    
    
    2,517Interest expense
    
    
    438
    
    
    
    408
    
    
    
    1,383
    
    
    
    711
    
    
    
    
    $
    980
    
    
    $
    6,565
    
    
    $
    3,101
    
    
    $
    19,602
    
    
    
    $
    27,924
  11




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 NOTE 4  Property and Equipment:
  September 30, 2010
    
    
    December 31, 2009Land, buildings and improvements
    
    $
    11,397
    
    
    $
    10,830Recording, broadcasting and studio equipment
    
    
    23,880
    
    
    
    20,581Furniture, equipment and other
    
    
    14,799
    
    
    
    11,59250,076
    
    
    
    43,003Less: Accumulated depreciation and amortization
    
    
    13,151
    
    
    
    6,738Property and equipment, net
    
    $
    36,925
    
    
    $
    36,265
  NOTE 5  Intangible Assets
    12




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  As of September 30, 2010
    
    
    As of December 31, 2009Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetEstimated
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingLife
    
    
    Value
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    ValueTrademarks
    
    Indefinite
    
    $
    20,800
    
    
    $
    
    
    
    $
    20,800
    
    
    $
    20,800
    
    
    $
    
    
    
    $
    20,800Affiliate relationships
    
    10 years
    
    
    72,100
    
    
    
    (10,360
    )
    
    
    61,740
    
    
    
    72,100
    
    
    
    (4,953
    )
    
    
    67,147Software and technology
    
    5 years
    
    
    7,896
    
    
    
    (2,078
    )
    
    
    5,818
    
    
    
    7,896
    
    
    
    (890
    )
    
    
    7,006Client contracts
    
    5 years
    
    
    8,930
    
    
    
    (2,848
    )
    
    
    6,082
    
    
    
    8,930
    
    
    
    (1,363
    )
    
    
    7,567Leases
    
    7 years
    
    
    980
    
    
    
    (205
    )
    
    
    775
    
    
    
    980
    
    
    
    (100
    )
    
    
    880Insertion orders
    
    9 months
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,400
    
    
    
    (8,400
    )
    
    
    $
    110,706
    
    
    $
    (15,491
    )
    
    $
    95,215
    
    
    $
    119,106
    
    
    $
    (15,706
    )
    
    $
    103,400
  NOTE 6  Goodwill:
     Total
    
    
    Metro Traffic
    
    
    Network RadioBalance January 1, 2010
    
    $
    38,917
    
    
    $
    13,005
    
    
    $
    25,912Adjustments to opening balance
    
    
    28
    
    
    
    144
    
    
    
    (116
    )Balance at September 30, 2010
    
    $
    38,945
    
    
    $
    13,149
    
    
    $
    25,796
  13




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  Total
    
    
    Metro Traffic
    
    
    Network RadioGoodwill
    
    $
    89,346
    
    
    $
    63,550
    
    
    $
    25,796Accumulated impairment losses from
April 24, 2009 to September 30, 2010
    
    
    (50,401
    )
    
    
    (50,401
    )
    
    
    Balance at September 30, 2010
    
    $
    38,945
    
    
    $
    13,149
    
    
    $
    25,796
 NOTE 7  Debt:
     14




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
   September 30, 2010
    
    
    December 31, 2009Senior Secured Notes due July 15, 2012 (1)
    
    $
    100,631
    
    
    $
    110,762Due to Gores (1)
    
    
    10,144
    
    
    
    11,165Term Loan (2)
    
    
    20,000
    
    
    
    20,000Revolving Credit Facility (2)
    
    
    15,000
    
    
    
    5,000$
    145,775
    
    
    $
    146,927
 (1)
    
    The applicable interest rate on such debt is 15.0%, which includes 5.0% PIK interest which
accrues and is added to principal on a quarterly basis. For the nine months ended September
30, 2010, interest expense on the debt to Due to Gores was $1,195. The Due to Gores debt was
reduced by its pro-rata share of the $15,500 payments we made to pay down the Senior Notes.
PIK interest is not due until maturity.(2)
    
    The applicable interest rate on such debt was 7.0% as of September 30, 2010 and December 31,
2009. The interest rate is variable and is payable at the greater of (i) LIBOR plus 4.5% (with
a LIBOR floor of 2.5%) or (ii) the base rate plus 4.5% (with a base rate floor equal to the
greater of 3.75% or the one-month LIBOR rate), at our option. NOTE 8  Fair Value Measurements:
 Fair Value of Financial Instruments
  September 30, 2010
    
    
    December 31, 2009Carrying Amount
    
    
    Fair Value
    
    
    Carrying Amount
    
    
    Fair ValueBorrowings (short and long term)
    
    $
    130,775
    
    
    $
    131,789
    
    
    $
    141,927
    
    
    $
    148,425
   15




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 Fair Value Hierarchy
  
    
    Level 1  Quoted prices in active markets that are unadjusted and accessible at the
measurement date for identical, unrestricted assets or liabilities;
 
    
    Level 2  Quoted prices for identical assets and liabilities in markets that are not
active, quoted prices for similar assets and liabilities in active markets or financial
instruments for which significant inputs are observable, either directly or indirectly;
 
    
    Level 3  Prices or valuations that require inputs that are both significant to the fair
value measurement and unobservable.
  Items Measured at Fair Value on a Recurring Basis
  September 30, 2010
    
    
    December 31, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Investments (1)
    
    $
    754
    
    
    $
    
    
    
    $
    
    
    
    $
    968
    
    
    $
    
    
    
    $
    LiabilitiesDerivative liability
(2)
    
    $
    
    
    
    $
    1,478
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 (1)
    
    Included in other assets(2)
    
    Gores $10,000 equity commitment which is included in accrued expenses and other liabilities NOTE 9  Equity-Based Compensation:
   Stock Options
   16




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WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  WeightedAverage ExerciseShares
    
    
    Price Per shareOutstanding January 1, 2010
    
    
    28.6
    
    
    $
    1,345Granted
    
    
    1,998.0
    
    
    $
    6Exercised
    
    
    
    
    
    $
    Cancelled, forfeited or expired
    
    
    (146.9
    )
    
    $
    40Outstanding September 30, 2010
    
    
    1,879.7
    
    
    $
    24Options exercisable September 30, 2010
    
    
    18.6
    
    
    $
    1,709Aggregate estimated fair value of options vesting during
the nine months ended September 30, 2010
    
    $
    1,099
    Risk-free interest rate
    
    
    2.35
    %Expected term (years)
    
    
    5.0Expected volatility
    
    
    98.6
    %Expected dividend yield
    
    
    0.00
    %Weighted average fair value of options granted
    
    $
    4.47
 Restricted Stock
   Weighted AverageShares
    
    
    Grant Date Fair ValueOutstanding January 1, 2010
    
    
    0.8
    
    
    $
    1,504Granted
    
    
    
    
    
    
    Vested
    
    
    (0.8
    )
    
    $
    1,504Forfeited
    
    
    
    
    
    
    Outstanding September 30, 2010
    
    
    
    
    
    
    
  17




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WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 Restricted Stock Units
   Weighted Average GrantShares
    
    
    Date Fair ValueOutstanding January 1, 2010
    
    
    0.1
    
    
    $
    1,314Granted
    
    
    15.0
    
    
    
    7Converted to common stock
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding September 30, 2010
    
    
    15.1
    
    
    $
    22
  NOTE 10  Comprehensive Income (Loss):
  PredecessorSuccessor Company
    
    
    
    CompanyThree Months Ended
    
    
    
    
    
    
    For the Period
    
    
    
    For the PeriodSeptember 30,
    
    
    Nine Months Ended
    
    
    April 24 to
    
    
    
    January 1 to2010
    
    
    2009
    
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    
    April 23, 2009Net loss
    
    $
    (7,239
    )
    
    $
    (53,550
    )
    
    $
    (19,380
    )
    
    $
    (59,734
    )
    
    
    $
    (18,961
    )Unrealized gain (loss) on
marketable securities,
net of income taxes
    
    
    (225
    )
    
    
    57
    
    
    
    (126
    )
    
    
    (38
    )
    
    
    
    219Comprehensive loss
    
    $
    (7,464
    )
    
    $
    (53,493
    )
    
    $
    (19,506
    )
    
    $
    (59,772
    )
    
    
    $
    (18,742
    )
  18




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WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 NOTE 11  Income Taxes
    NOTE 12  Restructuring Charges:
  i.e.,
   19




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  Balance
    
    
    
    
    
    
    Changes in
    
    
    Utilization
    
    
    BalanceJanuary 1, 2010
    
    
    Additions
    
    
    Estimates
    
    
    Cash
    
    
    Non-Cash
    
    
    September 30, 2010Metro-TrafficSeverance
    
    $
    1,537
    
    
    $
    69
    
    
    $
    
    
    
    $
    (1,440
    )
    
    $
    
    
    
    $
    166Facilities Consolidation
    
    
    3,677
    
    
    
    352
    
    
    
    1,021
    
    
    
    (1,155
    )
    
    
    
    
    
    
    3,895Contract Terminations
    
    
    1,750
    
    
    
    97
    
    
    
    
    
    
    
    (1,820
    )
    
    
    
    
    
    
    27Total
    
    
    6,964
    
    
    
    518
    
    
    
    1,021
    
    
    
    (4,415
    )
    
    
    
    
    
    
    4,0882010 ProgramSeverance
    
    
    
    
    
    
    883
    
    
    
    
    
    
    
    (806
    )
    
    
    
    
    
    
    77Total
    
    
    
    
    
    
    883
    
    
    
    
    
    
    
    (806
    )
    
    
    
    
    
    
    77Total Restructuring
    
    $
    6,964
    
    
    $
    1,401
    
    
    $
    1,021
    
    
    $
    (5,221
    )
    
    $
    
    
    
    $
    4,165
 NOTE 13  Special Charges:
  PredecessorSuccessor Company
    
    
    
    CompanyThree Months Ended
    
    
    
    
    
    
    For the Period
    
    
    
    For the PeriodSeptember 30,
    
    
    Nine Months Ended
    
    
    April 24 to
    
    
    
    January 1 to2010
    
    
    2009
    
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    
    April 23, 2009Debt agreement costs
    
    $
    847
    
    
    $
    
    
    
    $
    1,662
    
    
    $
    
    
    
    
    $
    Employment claim
settlements
    
    
    
    
    
    
    
    
    
    
    493
    
    
    
    
    
    
    
    
    Gores and Glendon fees
    
    
    176
    
    
    
    
    
    
    
    625
    
    
    
    
    
    
    
    
    Fees related to the
Refinancing
    
    
    30
    
    
    
    661
    
    
    
    192
    
    
    
    957
    
    
    
    
    12,699Corporate development costs
    
    
    297
    
    
    
    
    
    
    
    906
    
    
    
    
    
    
    
    
    Regionalization costs
    
    
    146
    
    
    
    159
    
    
    
    417
    
    
    
    231
    
    
    
    
    120$
    1,496
    
    
    $
    820
    
    
    $
    4,295
    
    
    $
    1,188
    
    
    
    $
    12,819
 e.g.,
  20




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WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 NOTE 14  Segment Information:
    21




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  PredecessorSuccessor Company
    
    
    
    CompanyThree Months Ended
    
    
    
    
    
    
    For the Period
    
    
    
    For the PeriodSeptember 30,
    
    
    Nine Months Ended
    
    
    April 24 to
    
    
    
    January 1 to2010
    
    
    2009
    
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    
    April 23, 2009RevenueMetro Traffic
    
    $
    43,728
    
    
    $
    38,026
    
    
    $
    124,403
    
    
    $
    68,719
    
    
    
    $
    47,479Network Radio
    
    
    44,224
    
    
    
    40,448
    
    
    
    139,835
    
    
    
    67,799
    
    
    
    
    63,995$
    87,952
    
    
    $
    78,474
    
    
    $
    264,238
    
    
    $
    136,518
    
    
    
    $
    111,474Segment OIBDAMetro Traffic (1)
    
    $
    1,646
    
    
    $
    212
    
    
    $
    2,817
    
    
    $
    1,946
    
    
    
    $
    (613
    )Network Radio (1)
    
    
    3,167
    
    
    
    2,899
    
    
    
    11,157
    
    
    
    6,199
    
    
    
    
    (573
    )Corporate expenses
    
    
    (1,363
    )
    
    
    (2,489
    )
    
    
    (6,222
    )
    
    
    (4,002
    )
    
    
    
    (3,168
    )Goodwill and intangible impairment
    
    
    
    
    
    
    (50,501
    )
    
    
    
    
    
    
    (50,501
    )
    
    
    
    Restructuring and special
charges
    
    
    (2,057
    )
    
    
    (2,192
    )
    
    
    (6,717
    )
    
    
    (4,014
    )
    
    
    
    (16,795
    )OIBDA
    
    
    1,393
    
    
    
    (52,071
    )
    
    
    1,035
    
    
    
    (50,372
    )
    
    
    
    (21,149
    )Depreciation and amortization
    
    
    (4,506
    )
    
    
    (8,065
    )
    
    
    (13,691
    )
    
    
    (13,910
    )
    
    
    
    (2,584
    )Operating loss
    
    
    (3,113
    )
    
    
    (60,136
    )
    
    
    (12,656
    )
    
    
    (64,282
    )
    
    
    
    (23,733
    )Interest expense
    
    
    (5,822
    )
    
    
    (4,925
    )
    
    
    (17,191
    )
    
    
    (9,617
    )
    
    
    
    (3,222
    )Other (expense) income
    
    
    (1,920
    )
    
    
    (70
    )
    
    
    (1,918
    )
    
    
    (66
    )
    
    
    
    359Loss before income taxes
    
    
    (10,855
    )
    
    
    (65,131
    )
    
    
    (31,765
    )
    
    
    (73,965
    )
    
    
    
    (26,596
    )Income tax benefit
    
    
    (3,616
    )
    
    
    (11,581
    )
    
    
    (12,385
    )
    
    
    (14,231
    )
    
    
    
    (7,635
    )Net Loss
    
    $
    (7,239
    )
    
    $
    (53,550
    )
    
    $
    (19,380
    )
    
    $
    (59,734
    )
    
    
    $
    (18,961
    )Depreciation and amortization:Metro Traffic
    
    $
    3,039
    
    
    $
    5,437
    
    
    $
    9,378
    
    
    $
    9,794
    
    
    
    $
    1,480Network Radio
    
    
    1,461
    
    
    
    2,621
    
    
    
    4,293
    
    
    
    4,103
    
    
    
    
    1,096Corporate
    
    
    6
    
    
    
    7
    
    
    
    20
    
    
    
    13
    
    
    
    
    8$
    4,506
    
    
    $
    8,065
    
    
    $
    13,691
    
    
    $
    13,910
    
    
    
    $
    2,584Capital expenditures:Metro Traffic
    
    $
    818
    
    
    $
    100
    
    
    $
    3,410
    
    
    $
    1,093
    
    
    
    $
    878Network Radio
    
    
    1,686
    
    
    
    709
    
    
    
    3,606
    
    
    
    1,262
    
    
    
    
    506Corporate
    
    
    14
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    
    $
    2,518
    
    
    $
    809
    
    
    $
    7,058
    
    
    $
    2,355
    
    
    
    $
    1,384
 (1)
    
    Segment operating (loss) income includes allocations of certain corporate overhead expenses
such as accounting and legal costs, bank charges, insurance, information technology etc.  September 30, 2010
    
    
    December 31, 2009Metro Traffic
    
    $
    144,339
    
    
    $
    147,387Network Radio
    
    
    125,297
    
    
    
    131,632Corporate
    
    
    19,553
    
    
    
    28,299$
    289,189
    
    
    $
    307,318
  22




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WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 NOTE 15  Recent Accounting Pronouncements:
     23




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(In thousands except per share amounts)
 EXECUTIVE OVERVIEW
        24




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25




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##### Table of Contents



Successor Company
    
    
    Predecessor Company
    
    
    Combined TotalFor the Period April 24 to
    
    
    For the Period January 1 to
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    April 23, 2009
    
    
    September 30, 2009Revenue
    
    $
    136,518
    
    
    $
    111,474
    
    
    $
    247,992Operating costs
    
    
    126,500
    
    
    
    111,309
    
    
    
    237,809Depreciation and amortization
    
    
    13,910
    
    
    
    2,584
    
    
    
    16,494Corporate general and
administrative expenses
    
    
    5,875
    
    
    
    4,519
    
    
    
    10,394Goodwill and intangible
impairment
    
    
    50,501
    
    
    
    
    
    
    
    50,501Restructuring charges
    
    
    2,826
    
    
    
    3,976
    
    
    
    6,802Special charges
    
    
    1,188
    
    
    
    12,819
    
    
    
    14,007Total expenses
    
    
    200,800
    
    
    
    135,207
    
    
    
    336,007Operating loss
    
    
    (64,282
    )
    
    
    (23,733
    )
    
    
    (88,015
    )Interest expense
    
    
    9,617
    
    
    
    3,222
    
    
    
    12,839Other expense (income)
    
    
    66
    
    
    
    (359
    )
    
    
    (293
    )Loss before income tax
    
    
    (73,965
    )
    
    
    (26,596
    )
    
    
    (100,561
    )Income tax benefit
    
    
    (14,231
    )
    
    
    (7,635
    )
    
    
    (21,866
    )Net loss
    
    $
    (59,734
    )
    
    $
    (18,961
    )
    
    $
    (78,695
    )
 Results of Operations
      26




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##### Table of Contents



Three Months Ended September 30, 2010 Compared With Three Months Ended September 30, 2009
 Revenue
  Favorable (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    43,728
    
    
    $
    38,026
    
    
    $
    5,702
    
    
    
    15.0
    %Network Radio
    
    
    44,224
    
    
    
    40,448
    
    
    
    3,776
    
    
    
    9.3
    %Total (1)
    
    $
    87,952
    
    
    $
    78,474
    
    
    $
    9,478
    
    
    
    12.1
    %
 (1)
    
    As described above, we currently aggregate revenue based on the operating segment. A
number of advertisers purchase both local/regional and national commercial airtime in both
segments. Our objective is to optimize total revenue from those advertisers.    Operating Costs
  Favorable / (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Payroll and payroll related
    
    $
    21,425
    
    
    $
    19,629
    
    
    $
    (1,796
    )
    
    
    (9.1
    )%Programming and production
    
    
    21,528
    
    
    
    19,537
    
    
    
    (1,991
    )
    
    
    (10.2
    )%Program and operating
    
    
    9,059
    
    
    
    6,651
    
    
    
    (2,408
    )
    
    
    (36.2
    )%Station compensation
    
    
    19,328
    
    
    
    18,072
    
    
    
    (1,256
    )
    
    
    (6.9
    )%Other operating expenses
    
    
    10,816
    
    
    
    10,401
    
    
    
    (415
    )
    
    
    (4.0
    )%$
    82,156
    
    
    $
    74,290
    
    
    $
    (7,866
    )
    
    
    (10.6
    )%
  27




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##### Table of Contents



%,
 Depreciation and Amortization
  Corporate General and Administrative Expenses
  Restructuring Charges
  Special Charges
  Goodwill Impairment
  OIBDA
   28




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##### Table of Contents



Favorable (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    1,646
    
    
    $
    212
    
    
    $
    1,434
    
    
    
    676.4
    %Network Radio
    
    
    3,167
    
    
    
    2,899
    
    
    
    268
    
    
    
    9.2
    %Corporate expenses
    
    
    (1,363
    )
    
    
    (2,489
    )
    
    
    1,126
    
    
    
    45.2
    %Goodwill and intangible impairment
    
    
    
    
    
    
    (50,501
    )
    
    
    50,501
    
    
    
    n/aRestructuring and special charges
    
    
    (2,057
    )
    
    
    (2,192
    )
    
    
    135
    
    
    
    6.2
    %OIBDA
    
    
    1,393
    
    
    
    (52,071
    )
    
    
    53,464
    
    
    
    n/aDepreciation and amortization
    
    
    (4,506
    )
    
    
    (8,065
    )
    
    
    3,559
    
    
    
    44.1
    %Operating loss
    
    $
    (3,113
    )
    
    $
    (60,136
    )
    
    $
    57,023
    
    
    
    94.8
    %
  Metro Traffic
  Network Radio
  Operating Loss
  Interest Expense
  Other Expense
   29




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##### Table of Contents



Provision for Income Taxes
  Net Loss
  Nine Months Ended September 30, 2010 Compared With Nine Months Ended September 30, 2009
 Revenue
  Favorable (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    124,403
    
    
    $
    116,198
    
    
    $
    8,205
    
    
    
    7.1
    %Network Radio
    
    
    139,835
    
    
    
    131,794
    
    
    
    8,041
    
    
    
    6.1
    %Total (1)
    
    $
    264,238
    
    
    $
    247,992
    
    
    $
    16,246
    
    
    
    6.6
    %
 (1)
    
    As described above, we currently aggregate revenue based on the operating segment. A
number of advertisers purchase both local/regional and national commercial airtime in both
segments. Our objective is to optimize total revenue from those advertisers.     30




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##### Table of Contents



Operating Costs
  Favorable / (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Payroll and payroll related
    
    $
    63,317
    
    
    $
    60,344
    
    
    $
    (2,973
    )
    
    
    (4.9
    )%Programming and production
    
    
    69,169
    
    
    
    70,373
    
    
    
    1,204
    
    
    
    1.7
    %Program and operating
    
    
    25,231
    
    
    
    17,870
    
    
    
    (7,361
    )
    
    
    (41.2
    )%Station compensation
    
    
    56,427
    
    
    
    56,175
    
    
    
    (252
    )
    
    
    (0.4
    )%Other operating expenses
    
    
    33,168
    
    
    
    33,047
    
    
    
    (121
    )
    
    
    (0.4
    )%$
    247,312
    
    
    $
    237,809
    
    
    $
    (9,503
    )
    
    
    (4.0
    )%
 %,
 Depreciation and Amortization
  Corporate General and Administrative Expenses
  Restructuring Charges
  Special Charges
   31




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##### Table of Contents



Goodwill Impairment
  OIBDA
   Favorable (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    2,817
    
    
    $
    1,333
    
    
    $
    1,484
    
    
    
    111.3
    %Network Radio
    
    
    11,157
    
    
    
    5,626
    
    
    
    5,531
    
    
    
    98.3
    %Corporate expenses
    
    
    (6,222
    )
    
    
    (7,170
    )
    
    
    948
    
    
    
    13.2
    %Goodwill and intangible impairment
    
    
    
    
    
    
    (50,501
    )
    
    
    50,501
    
    
    
    n/aRestructuring and special charges
    
    
    (6,717
    )
    
    
    (20,809
    )
    
    
    14,092
    
    
    
    67.7
    %OIBDA
    
    
    1,035
    
    
    
    (71,521
    )
    
    
    72,556
    
    
    
    n/aDepreciation and amortization
    
    
    (13,691
    )
    
    
    (16,494
    )
    
    
    2,803
    
    
    
    17.0
    %Operating loss
    
    $
    (12,656
    )
    
    $
    (88,015
    )
    
    $
    75,359
    
    
    
    85.6
    %
  Metro Traffic
  Network Radio
  Operating Loss
   32




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##### Table of Contents



Interest Expense
  Other Expense
  Provision for Income Taxes
  Net Loss
  Cash Flows
     33




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Liquidity and Capital Resources
   Existing Indebtedness
     34




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##### Table of Contents



Required Last Twelve MonthsMaximum Senior Leverage Ratio
    
    
    Principal Amount of Senior Notes
    
    
    (LTM) Minimum AdjustedQuarter Ending
    
    Covenant
    
    
    Estimated Outstanding (Includes PIK)(1)
    
    
    EBITDA(1)9/30/2010
    
    
    11.25 to 1.0
    
    
    
    110,775
    
    
    
    9,84712/31/2010
    
    
    11.25 to 1.0
    
    
    
    112,160
    
    
    
    9,9703/31/2011
    
    
    11.25 to 1.0
    
    
    
    113,562
    
    
    
    10,0946/30/2011
    
    
    11.00 to 1.0
    
    
    
    114,981
    
    
    
    10,4539/30/2011
    
    
    10.00 to 1.0
    
    
    
    116,418
    
    
    
    11,64212/31/2011
    
    
    9.00 to 1.0
    
    
    
    117,874
    
    
    
    13,0973/31/2012
    
    
    8.00 to 1.0
    
    
    
    119,347
    
    
    
    14,9186/30/2012
    
    
    7.50 to 1.0
    
    
    
    120,839
    
    
    
    16,112
 (1)
    
    The above chart does not reflect any loan repayments from the proceeds from the sale of
investments, valued at $754 at September 30, 2010, as required by the terms of the August 17,
2010 amendments.   35




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##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net cash (used in) provided by
operating activities
    
    $
    (5,796
    )
    
    $
    (2,151
    )
    
    $
    7,426
    
    
    $
    (17,255
    )Interest expense
    
    
    5,822
    
    
    
    4,925
    
    
    
    17,191
    
    
    
    12,839Income taxes (benefit)
    
    
    (3,616
    )
    
    
    (11,581
    )
    
    
    (12,385
    )
    
    
    (21,866
    )Restructuring
    
    
    561
    
    
    
    1,372
    
    
    
    2,422
    
    
    
    6,802Special charges and other (1)
    
    
    1,496
    
    
    
    820
    
    
    
    4,891
    
    
    
    14,007Sigalert earn-out (2)
    
    
    250
    
    
    
    
    
    
    
    250
    
    
    
    Investment income
    
    
    
    
    
    
    (98
    )
    
    
    
    
    
    
    (361
    )Other non-operating income
    
    
    1,920
    
    
    
    70
    
    
    
    1,918
    
    
    
    (293
    )Deferred taxes
    
    
    3,545
    
    
    
    17,986
    
    
    
    12,167
    
    
    
    22,697Amortization of deferred
financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (331
    )Paid-in-kind interest
    
    
    (1,366
    )
    
    
    (1,453
    )
    
    
    (4,348
    )
    
    
    (2,922
    )Change in fair value of derivative liability
    
    
    (1,920
    )
    
    
    
    
    
    
    (1,920
    )
    
    
    Federal tax refund
    
    
    
    
    
    
    
    
    
    
    (12,940
    )
    
    
    Change in assets and liabilities
    
    
    3,594
    
    
    
    (7,736
    )
    
    
    (3,403
    )
    
    
    (9,033
    )Adjusted EBITDA
    
    $
    4,490
    
    
    $
    2,154
    
    
    $
    11,269
    
    
    $
    4,284
 (1)
    
    Special charges and other includes expense of $596 classified as corporate general and
administrative expenses on the Statement of Operations for the nine months ended September
30, 2010.(2)
    
    Sigalert earn-out refers to payments made to the members of Jaytu under the acquisition
agreements in connection with the delivery and acceptance of certain traffic products in
accordance with specifications mutually agreed upon by the parties. Recent Accounting Pronouncements
   36




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##### Table of Contents



Cautionary Statement Concerning Forward-Looking Statements and Factors Affecting Forward-Looking
Statements
   37




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##### Table of Contents



Risks Related to Our Business and Industry
 Our annual operating income has declined since 2005 and may continue to decline. We may not be able
to reverse this trend or reduce costs sufficiently to offset declines in revenue if such trends
continue and could lack sufficient funds to continue to operate our business in the ordinary
course.
  We have a significant amount of indebtedness and limited liquidity, which will affect our future
business operations if our future operating performance does not meet our financial
projections.
   38




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##### Table of Contents



If our operating results continue to fall short of our financial projections, we may require
additional funding to finance our working capital, debt service, capital expenditures and other
capital requirements or a further amendment and/or waiver of our debt leverage covenants, which if
not obtained, would have a material and adverse effect on our business continuity and our financial
condition.
  Our Senior Credit Facility and Senior Notes contain various covenants which, if not complied with,
could accelerate repayment under such indebtedness, thereby materially and adversely affecting our
financial condition and results of operations.
  
    
    a maximum senior leverage ratio (expressed as the principal amount of Senior Notes over
our Adjusted EBITDA (as defined in our Senior Credit Facility) measured on a trailing,
four-quarter basis) which is an 11.25 to 1.0 ratio for the LTM (last twelve months) period
to be measured on September 30, 2010, December 31, 2010 and March 31, 2011, and then
declines on a quarterly basis thereafter, to an 11.0 to 1 ratio on June 30, 2011, a 10.0 to
1.0 ratio on September 30, 2011, a 9.0 to 1.0 ratio on December 31, 2011, an 8.0 to 1.0
ratio on March 31, 2012, and a 7.5 to 1.0 ratio on June 30, 2012.
    
    restrictions on our ability to incur debt, incur liens, make investments, make capital
expenditures, consummate acquisitions, pay dividends, sell assets and enter into mergers
and similar transactions.
  The cost of our indebtedness has increased substantially, which further affects our liquidity and
could limit our ability to implement our business plan.
 i.e.,
  39




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##### Table of Contents



CBS Radio provides us with a significant portion of our commercial inventory and audience that we
sell to advertisers. A material reduction in the audience delivered by CBS Radio stations or a
material loss of commercial inventory from CBS Radio would have an adverse effect on our
advertising sales and financial results.
 i.e.,
 Our cost reduction initiatives and limited liquidity may limit our flexibility to reduce costs
going forward.
  Our ability to grow our Metro Traffic business revenue may be adversely affected by the increased
proliferation of free of charge traffic content to consumers.
   40




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##### Table of Contents



Our ability to increase our operating profits largely depends on the size of the audiences we
deliver to our advertisers, which has been negatively impacted by the introduction of The Portable
People Meter.
  If we fail to maintain an effective system of internal controls, we may not be able to continue to
accurately report our financial results.
  Our business is subject to increased competition from new entrants into our business, consolidated
companies and new technology/platforms, each of which has the potential to adversely affect our
business.
   41




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##### Table of Contents



Our failure to obtain or retain the rights in popular programming could adversely affect our
revenue.
  If we are not able to integrate future acquisitions successfully, our operating results could be
harmed.
   
    
    difficulties in integrating and managing the operations, technologies and products of
the companies we acquire;
    
    diversion of our managements attention from normal daily operations of our business;
    
    our inability to maintain the key business relationships and reputations of the
businesses we acquire;
    
    uncertainty of entry into markets in which we have limited or no prior experience or in
which competitors have stronger market positions;
    
    our dependence on unfamiliar affiliates and partners of the companies we acquire;
    
    insufficient revenue to offset our increased expenses associated with the acquisitions;
    
    our responsibility for the liabilities of the businesses we acquire; and
    
    potential loss of key employees of the companies we acquire.
  42




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##### Table of Contents



Our success is dependent upon audience acceptance of our content, particularly our radio programs,
which is difficult to predict.
  Continued consolidation in the radio broadcast industry could adversely affect our operating
results.
 e.g.
 We may be required to recognize further impairment charges.
  Risks Related to Our Common Stock
 Our common stock may not maintain an active trading market which could affect the liquidity and
market price of our common stock.
   43




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##### Table of Contents



Sales of additional shares of common stock by Gores or our other lenders could adversely affect the
stock price.
  Gores will be able to exert significant influence over us and our significant corporate decisions
and may act in a manner that advances its best interest and not necessarily those of other
stockholders.
  
    
    delaying, deferring or preventing a change in control;
    
    impeding a merger, consolidation, takeover or other business combination;
    
    discouraging a potential acquirer from making a tender offer or otherwise attempting
obtain control; or
    
    causing us to enter into transactions or agreements that are not in the best interests
of all stockholders.
 Provisions in our restated certificate of incorporation and by-laws and Delaware law may
discourage, delay or prevent a change of control of our company or changes in our management and,
therefore, depress the trading price of our common stock.
  We do not anticipate paying dividends on our common stock.
  Any issuance of shares of preferred stock by us could delay or prevent a change of control of our
company, dilute the voting power of the common stockholders and adversely affect the value of our
common stock
   44




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
   45




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1.  Legal Proceedings
 10-K
 
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Issuer Purchases of Equity Securities
 Total Number of
    
    
    Approximate DollarShares Purchased as
    
    
    Value of Shares thatTotal
    
    
    
    
    
    
    Part of Publicly
    
    
    May Yet BeNumber of Shares
    
    
    Average Price Paid
    
    
    Announced Plan or
    
    
    Purchased Under thePeriod
    
    Purchased in Period
    
    
    Per Share
    
    
    Program
    
    
    Plans or Programs (A)7/1/10  7/31/10
    
    
    
    
    
    
    N/A8/1/10  8/31/10
    
    
    
    
    
    
    N/A9/1/10  9/30/10
    
    
    
    
    
    
    N/A
 (A)
    
    Represents remaining authorization from the $250,000 repurchase authorization approved on
February 24, 2004 and the additional $300,000 authorization approved on April 29, 2004, all of
which have expired. 
 Item 3. Reserved
  
 Item 4. Removed and Reserved
  
 Item 5. Other Information
   46




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber (A)
    
    Description of Exhibit3.1
    
    
    Restated Certificate of Incorporation, as filed with the Secretary of State of the State of
Delaware. (1)3.1.1
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation of Westwood One, Inc., as
filed with the Secretary of the State of Delaware on August 3, 2009. (2)3.1.2
    
    
    Certificate of Elimination, filed with the Secretary of State of the State of Delaware on
November 18, 2009. (3)3.2
    
    
    Amended and Restated Bylaws of Registrant adopted on April 23, 2009 and currently in effect. (4)4.1
    
    
    Securities Purchase Agreement, dated as of April 23, 2009, by and among the Company and the
other parties thereto. (4)4.1.1
    
    
    Waiver and First Amendment, dated as of October 14, 2009, to Securities Purchase Agreement,
dated as of April 23, 2009, by and between the Company and the noteholders parties thereto. (5)4.1.2
    
    
    Second Amendment, dated as of March 30, 2010, to Securities Purchase Agreement, dated as of
April 23, 2009, by and between the Company and the noteholders parties thereto. (6)4.1.3
    
    
    Third Amendment, dated as of August 17, 2010, to Securities Purchase Agreement, dated as of
April 23, 2009, by and between the Company and the noteholders parties thereto. (7)4.2
    
    
    Shared Security Agreement, dated as of February 28, 2008, by and among the Company, the
Subsidiary Guarantors parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and
The Bank of New York, as Collateral Trustee (8)4.2.1
    
    
    First Amendment to Security Agreement, dated as of April 23, 2009, by and among the Company,
each of the subsidiaries of the Company and The Bank of New York Mellon, as collateral trustee.
(9)31.a*
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.b*
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.a**
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.b**
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 *
    
    Filed herewith.**
    
    Furnished herewith.(A)
    
    The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon
request.(1)
    
    Filed as an exhibit to Companys quarterly report on Form 10-Q for the quarter ended
September 30, 2008 and incorporated herein by reference.(2)
    
    Filed as an exhibit to Companys quarterly report on Form 10-Q for the quarter ended
September 30, 2009 and incorporated herein by reference.(3)
    
    Filed as an exhibit to Companys current report on Form 8-K dated November 20, 2009 and
incorporated herein by reference.(4)
    
    Filed as an exhibit to Companys current report on Form 8-K dated April 23, 2009 (filed April
27, 2009) and incorporated herein by reference.(5)
    
    Filed as an exhibit to Companys current report on Form 8-K dated February 28, 2008 (filed on
March 5, 2008) and incorporated herein by reference.(6)
    
    Filed as an exhibit to Companys current report on Form 8-K dated March 31, 2010 and
incorporated herein by reference.(7)
    
    Filed as an exhibit Companys current report on Form 10-Q for the quarter June 30, 2010 and
incorporated herein by reference.(8)
    
    Filed as an exhibit to Companys current report on Form 8-K dated February 28, 2008 (filed on
March 31, 20105, 2008) and incorporated herein by reference.(9)
    
    Filed as an exhibit Companys current report on Form 8-K dated April 27, 2009 and
incorporated herein by reference.  47




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##### Table of Contents



SIGNATURES
  WESTWOOD ONE, INC.By:
    /s/ Roderick M. Sherwood IIIName:
    Roderick M. Sherwood IIITitle:
    President and CFODate: November 15, 2010  48




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit31.a*
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.b*
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.a**
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.b**
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 *
    
    Filed herewith.**
    
    Furnished herewith.  49