##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 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 001-14691
 WESTWOOD ONE, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    95-3980449
(I.R.S. Employer
Identification No.)40 West 57thStreet, 5thFloor, New York, NY
(Address of principal executive offices)
    
    10019
(Zip Code)
 (212) 641-2000
 
 þ o
 non-accelerated filer.
 Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company o
 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
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures
About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    34Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds
    
    
    34Item 3. Defaults Upon Senior Securities
    
    
    35Item 4. Submission of Matters to a Vote of
Security Holders
    
    
    35Item 5. Other Information
    
    
    35Item 6. Exhibits
    
    
    36SIGNATURES
    
    
    37Exhibit Index
    
    
    38Exhibit 31.aExhibit 32.a
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 WESTWOOD ONE, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except per share amounts)
 September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    3,609
    
    
    $
    6,187Accounts receivable, net of allowance for doubtful accounts
of $3,593 (2008) and $3,602 (2007)
    
    
    88,678
    
    
    
    108,271Warrants, current portion
    
    
    
    
    
    
    9,706Prepaid and other assets
    
    
    11,081
    
    
    
    13,990Total Current Assets
    
    
    103,368
    
    
    
    138,154Property and equipment, net
    
    
    32,673
    
    
    
    33,012Goodwill
    
    
    258,061
    
    
    
    464,114Intangible assets, net
    
    
    2,856
    
    
    
    3,443Other assets
    
    
    19,105
    
    
    
    31,034TOTAL ASSETS
    
    $
    416,063
    
    
    $
    669,757LIABILITIES, REDEEMABLE PREFERRED STOCK AND
SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    23,542
    
    
    $
    17,378Amounts payable to related parties
    
    
    16,020
    
    
    
    30,859Deferred revenue
    
    
    4,277
    
    
    
    5,815Income taxes payable
    
    
    6,356
    
    
    
    7,246Accrued expenses and other liabilities
    
    
    33,592
    
    
    
    29,562Current maturity of long-term debt
    
    
    32,000
    
    
    
    Total Current Liabilities
    
    
    115,787
    
    
    
    90,860Long-term debt
    
    
    200,889
    
    
    
    345,244Other Liabilities
    
    
    5,460
    
    
    
    6,022TOTAL LIABILITIES
    
    
    322,136
    
    
    
    442,126Commitments and ContingenciesRedeemable preferred stock: $.01 par value, authorized 10,000 shares,
issued and outstanding, 75 as Series A Convertible Preferred Stock;
liquidation preference $1,000 per share, plus accumulated dividends
    
    
    73,738
    
    
    
    SHAREHOLDERS EQUITYCommon stock, $.01 par value: authorized, 300,000 shares;
issued and outstanding, 101,308 (2008) and 87,105 (2007)
    
    
    1,013
    
    
    
    871Class B stock, $.01 par value: authorized, 3,000 shares;
issued and outstanding, 292 (2008 and 2007)
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    293,785
    
    
    
    290,787Unrealized gain on available for sale securities
    
    
    469
    
    
    
    5,955Accumulated deficit
    
    
    (275,081
    )
    
    
    (69,985
    )TOTAL SHAREHOLDERS EQUITY
    
    
    20,189
    
    
    
    227,631TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK AND SHAREHOLDERS EQUITY
    
    $
    416,063
    
    
    $
    669,757
   3




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WESTWOOD ONE, INC
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 (In thousands, except per share amounts)
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007NET REVENUE
    
    $
    96,299
    
    
    $
    108,083
    
    
    $
    303,298
    
    
    $
    333,067Operating Costs (includes related party expenses
of $17,691, $15,408, $54,012 and $51,238 respectively)
    
    
    86,142
    
    
    
    79,351
    
    
    
    265,782
    
    
    
    260,419Depreciation and Amortization (includes related party
warrant amortization of $0 , $2,427, $1,618 and
$7,281, respectively)
    
    
    2,366
    
    
    
    4,791
    
    
    
    8,763
    
    
    
    14,739Corporate General and Administrative Expenses
(includes related party expenses of $75, $861, $610
and $2,551, respectively)
    
    
    4,049
    
    
    
    2,867
    
    
    
    8,510
    
    
    
    10,318Goodwill Impairment
    
    
    
    
    
    
    
    
    
    
    206,053
    
    
    
    Restructuring Charges
    
    
    10,598
    
    
    
    
    
    
    
    10,598
    
    
    
    Special Charges (includes related party expenses
of $175, $0, $5,000 and $0, respectively)
    
    
    699
    
    
    
    1,388
    
    
    
    9,756
    
    
    
    4,025103,854
    
    
    
    88,397
    
    
    
    509,462
    
    
    
    289,501OPERATING (LOSS) INCOME
    
    
    (7,555
    )
    
    
    19,686
    
    
    
    (206,164
    )
    
    
    43,566Interest Expense
    
    
    3,758
    
    
    
    5,790
    
    
    
    13,509
    
    
    
    17,739Other Income
    
    
    (12,453
    )
    
    
    (4
    )
    
    
    (12,538
    )
    
    
    (154
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    1,140
    
    
    
    13,900
    
    
    
    (207,135
    )
    
    
    25,981INCOME TAXES EXPENSE (BENEFIT)
    
    
    1,150
    
    
    
    5,448
    
    
    
    (2,044
    )
    
    
    9,917NET (LOSS) INCOME
    
    $
    (10
    )
    
    $
    8,452
    
    
    $
    (205,091
    )
    
    $
    16,064NET (LOSS) INCOME attributable to Common Shareholders
    
    $
    (1,451
    )
    
    $
    8,452
    
    
    $
    (206,720
    )
    
    $
    16,064(LOSS) EARNINGS PER SHARECOMMON STOCKBASIC
    
    $
    (0.01
    )
    
    $
    0.10
    
    
    $
    (2.13
    )
    
    $
    0.19DILUTED
    
    $
    (0.01
    )
    
    $
    0.10
    
    
    $
    (2.13
    )
    
    $
    0.19CLASS B STOCKBASIC
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02DILUTED
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02WEIGHTED AVERAGE SHARES OUTSTANDING:COMMON STOCKBASIC
    
    
    100,836
    
    
    
    86,137
    
    
    
    97,045
    
    
    
    86,101DILUTED
    
    
    100,836
    
    
    
    86,481
    
    
    
    97,045
    
    
    
    86,434CLASS B STOCKBASIC
    
    
    292
    
    
    
    292
    
    
    
    292
    
    
    
    292DILUTED
    
    
    292
    
    
    
    292
    
    
    
    292
    
    
    
    292
   4




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WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Nine Months EndedSeptember 30,2008
    
    
    2007CASH FLOW FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (205,091
    )
    
    $
    16,064Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Depreciation and amortization
    
    
    8,763
    
    
    
    14,739Goodwill Impairment
    
    
    206,053
    
    
    
    Deferred taxes
    
    
    (10,149
    )
    
    
    (5,055
    )Non-cash stock compensation
    
    
    4,240
    
    
    
    7,808Gain on sale of marketable securities
    
    
    (12,420
    )
    
    
    Amortization of deferred financing costs
    
    
    1,272
    
    
    
    358(7,332
    )
    
    
    33,914Changes in assets and liabilities:Accounts receivable
    
    
    19,593
    
    
    
    6,698Prepaid and other assets
    
    
    4,038
    
    
    
    3,286Deferred revenue
    
    
    (1,538
    )
    
    
    (2,968
    )Income taxes payable and prepaid income taxes
    
    
    (890
    )
    
    
    (2,188
    )Accounts payable and accrued expenses
and other liabilities
    
    
    10,169
    
    
    
    (20,660
    )Amounts payable to related parties
    
    
    (14,839
    )
    
    
    2,584Net Cash Provided By Operating Activities
    
    
    9,201
    
    
    
    20,666CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (6,222
    )
    
    
    (4,031
    )Proceeds from sale of marketable securities
    
    
    12,741
    
    
    
    Net Cash Provided (Used) In Investing Activities
    
    
    6,519
    
    
    
    (4,031
    )CASH FLOW FROM FINANCING ACTIVITIES:Issuance of common stock
    
    
    22,750
    
    
    
    Issuance of series A convertible preferred stock and warrants
    
    
    74,178
    
    
    
    Debt repayments and payments of capital lease obligations
    
    
    (113,538
    )
    
    
    (13,044
    )Dividend payments
    
    
    
    
    
    
    (1,663
    )Deferred financing costs
    
    
    (1,688
    )
    
    
    Net Cash Used in Financing Activities
    
    
    (18,298
    )
    
    
    (14,707
    )NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (2,578
    )
    
    
    1,928CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    6,187
    
    
    
    11,528CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    3,609
    
    
    $
    13,456
   5




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WESTWOOD ONE, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except per share amounts)
 NOTE 1 Basis of Presentation
        6




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 2 Income Taxes
     NOTE 3 Issuance of Preferred Stock and Warrants
     7




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
   NOTE 4 Goodwill Impairment
     2008Balance at January 1,
    
    $
    464,114Impairment
    
    
    (206,053
    )Balance at September 30,
    
    $
    258,061
  8




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 5 Equity Based Compensation
 Equity Compensation Activity
  WeightedAverage2008
    
    
    ExerciseShares
    
    
    PriceUnvested at December 31, 2007
    
    
    3,888
    
    
    $
    21.86Granted during the period
    
    
    5,055
    
    
    
    1.52Forfeited during the period
    
    
    (1,868
    )
    
    
    16.78Unvested at September 30, 2008
    
    
    7,075
    
    
    $
    8.67
  NOTE 6 Comprehensive Income (Loss)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net (loss Income
    
    $
    (10
    )
    
    $
    8,452
    
    
    $
    (205,091
    )
    
    $
    16,064Unrealized gain (loss) on marketable securities
    
    
    (847
    )
    
    
    939
    
    
    
    3,478
    
    
    
    3,634Effect of income taxes
    
    
    323
    
    
    
    (422
    )
    
    
    (1,407
    )
    
    
    (1,397
    )Adjustment for gains included in net income
    
    
    (12,420
    )
    
    
    
    
    
    
    (12,420
    )
    
    
    Effect of income taxes
    
    
    4,863
    
    
    
    
    
    
    
    4,863
    
    
    
    Comprehensive (loss) Income
    
    $
    (8,091
    )
    
    $
    8,969
    
    
    $
    (210,577
    )
    
    $
    18,301
  9




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 7 Restructuring Charges
     FacilitySeverance &
    
    
    Consolidation
    
    
    ContractTermination
    
    
    & Related costs
    
    
    Termination
    
    
    TotalCharge taken during third Quarter 2008
    
    $
    4,094
    
    
    $
    
    
    
    $
    6,504
    
    
    $
    10,598Payments made during third Quarter 2008
    
    
    (820
    )
    
    
    
    
    
    
    
    
    
    
    (820
    )Non-cash utilization
    
    
    (75
    )
    
    
    
    
    
    
    (1,600
    )
    
    
    (1,675
    )Balance remaining as of September 30, 2008
    
    $
    3,199
    
    
    $
    
    
    
    $
    4,904
    
    
    $
    8,103
   10




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 8 Special Charges
  Three Months ended
    
    
    Nine Months endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Professional and other
fees related to the
new CBS agreements and
Gores Investment
    
    $
    164
    
    
    $
    1,388
    
    
    $
    3,530
    
    
    $
    3,025Closing payment to CBS
related to the new CBS
agreements
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    Severance obligations
related to executive
officers changes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000Re-engineering expenses
    
    
    535
    
    
    
    
    
    
    
    1,226
    
    
    
    $
    699
    
    
    $
    1,388
    
    
    $
    9,756
    
    
    $
    4,025
   NOTE 9 Other Income/(Loss)
  NOTE 10 Earnings Per Common Share
    11




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net (Loss) Income
    
    $
    (10
    )
    
    $
    8,452
    
    
    $
    (205,091
    )
    
    $
    16,064Less: Accumulated Preferred Stock dividends
    
    
    (1,441
    )
    
    
    
    
    
    
    (1,629
    )
    
    
    Less: distributed earnings to Common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,658
    )Less: distributed earnings to Class B shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )(Loss) Income available to Common shareholders
    
    $
    (1,451
    )
    
    $
    8,452
    
    
    $
    (206,720
    )
    
    $
    14,401(Loss) Earnings  Common stockBasicDistributed earnings to Common shareholders
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,658Undistributed (loss) earnings available to Common
shareholders
    
    
    (1,451
    )
    
    
    8,452
    
    
    
    (206,720
    )
    
    
    14,401Total (loss) earnings  Common stock, Basic
    
    $
    (1,451
    )
    
    $
    8,452
    
    
    $
    (206,720
    )
    
    $
    16,059DilutedDistributed earnings to Common shareholders
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,658Distributed earnings to Class B shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Accumulated Preferred Stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Undistributed (loss) earnings available to Common
shareholders
    
    
    (1,451
    )
    
    
    8,452
    
    
    
    (206,720
    )
    
    
    14,401Total (loss) earnings  Common stock, Diluted
    
    $
    (1,451
    )
    
    $
    8,452
    
    
    $
    (206,720
    )
    
    $
    16,064Weighted average Common shares outstanding, Basic
    
    
    100,836
    
    
    
    86,137
    
    
    
    97,045
    
    
    
    86,101Share-based compensation shares
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    41Weighted average Class B shares
    
    
    
    
    
    
    292
    
    
    
    
    
    
    
    292Weighted average Common shares outstanding, Diluted
    
    
    100,836
    
    
    
    86,481
    
    
    
    97,045
    
    
    
    86,434(Loss) Earnings per Common share, BasicDistributed earnings, Basic
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02Undistributed (loss) earnings  Basic
    
    
    (0.01
    )
    
    
    0.10
    
    
    
    (2.13
    )
    
    
    0.17Total (loss) earnings per Common share, Basic
    
    $
    (0.01
    )
    
    $
    0.10
    
    
    $
    (2.13
    )
    
    $
    0.19(Loss) Earnings per Common share, DilutedDistributed earnings, Diluted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02Undistributed (loss) earnings  Diluted
    
    
    (0.01
    )
    
    
    0.10
    
    
    
    (2.13
    )
    
    
    0.17Total (loss) earnings per Common share, Diluted
    
    $
    (0.01
    )
    
    $
    0.10
    
    
    $
    (2.13
    )
    
    $
    0.19
  12




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Earnings  Class B stockBasicDistributed earnings to Class B shareholders
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5Undistributed earnings allocated to Class B shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total earnings  Class B shareholders, Basic
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5DilutedDistributed earnings to Class B shareholders
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5Undistributed earnings allocated to Class B shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total earnings  Class B shareholders, Diluted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5Weighted average Class B shares outstanding, Basic
    
    
    292
    
    
    
    292
    
    
    
    292
    
    
    
    292Share-based compensation shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average Class B shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average Class B shares outstanding, Diluted
    
    
    292
    
    
    
    292
    
    
    
    292
    
    
    
    292(Loss) Earnings per Class B share, BasicDistributed earnings, Basic
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02Undistributed (loss) earnings  Basic
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total (loss) earnings per Class B share, Basic
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02(Loss) Earnings per Class B share, DilutedDistributed earnings, Diluted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02Undistributed (loss) earnings  Diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total (loss) earnings per Class B share, Diluted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02
 Note
12 -
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Options
    
    
    7,821
    
    
    
    4,953
    
    
    
    9,006
    
    
    
    6,326Restricted Stock
    
    
    614
    
    
    
    970
    
    
    
    1,019
    
    
    
    954Restricted Stock Units
    
    
    1,215
    
    
    
    220
    
    
    
    926
    
    
    
    203Warrants
    
    
    10,000
    
    
    
    3,000
    
    
    
    10,000
    
    
    
    3,000Preferred Stock
    
    
    25,062
    
    
    
    
    
    
    
    25,543
    
    
    
    
  13




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
   NOTE 11 Debt
  September 30, 2008
    
    
    December 31, 2007Bank Term Loan/Revolving Credit Facility
    
    $
    32,000
    
    
    $
    145,0004.64% Senior Notes due 2009
    
    
    50,000
    
    
    
    50,0005.26% Senior Notes due 2012
    
    
    150,000
    
    
    
    150,000Fair market value of Swap (a)
    
    
    889
    
    
    
    244232,889
    
    
    
    345,244Less current maturities
    
    
    (32,000
    )
    
    
    $
    200,899
    
    
    $
    345,244
 (a)
    
    write-up (write-down) to market value adjustments for debt with qualifying hedges that are
recorded as debt on the balance sheet.  10-K
  14




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
   NOTE 12 Related Party Transactions
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Representation Agreement
    
    $
    
    
    
    $
    6,590
    
    
    $
    2,583
    
    
    $
    20,330News Agreement
    
    
    3,247
    
    
    
    
    
    
    
    9,609
    
    
    
    Programming and Affiliations
    
    
    14,444
    
    
    
    8,818
    
    
    
    41,819
    
    
    
    30,908Management Agreement
(excluding warrant amortization)
    
    
    
    
    
    
    861
    
    
    
    610
    
    
    
    2,551Warrant Amortization
    
    
    
    
    
    
    2,427
    
    
    
    1,618
    
    
    
    7,281Payment due upon closing of
Master Agreement
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    $
    17,691
    
    
    $
    18,696
    
    
    $
    61,239
    
    
    $
    61,070
  15




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##### Table of Contents



WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
    NOTE 13 Redeemable Preferred Stock and Shareholders Equity
  NOTE 14 Fair Value Measurements
     16




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 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
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Investments (1)
    
    $
    760
    
    
    $
    
    
    
    $
    
    
    
    $
    760Derivative Assets (1)
    
    
    
    
    
    
    889
    
    
    
    
    
    
    
    889Total Assets
    
    $
    760
    
    
    $
    889
    
    
    $
    
    
    
    $
    1,649
 (1)
    
    Included in Other Assets in the accompanying Balance Sheet. NOTE 15 Subsequent Events
   17




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 16 Recent Accounting Pronouncements
       18




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(In thousands except per share amounts)
 EXECUTIVE OVERVIEW
 Form 10-K/A
     19




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20




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long-term
  Results of Operations
 Three Months Ended September 30, 2008 Compared With Three Months Ended September 30, 2007
 Revenue
  Three Months Ended September 30,2008
    
    
    2007$
    
    
    % of total
    
    
    $
    
    
    % of totalLocal/Regional
    
    $
    48,162
    
    
    
    50
    %
    
    $
    57,763
    
    
    
    53
    %National
    
    
    48,137
    
    
    
    50
    %
    
    
    50,320
    
    
    
    47
    %Total (1)
    
    $
    96,299
    
    
    
    100
    %
    
    $
    108,083
    
    
    
    100
    %
 (1)
    
    As described above, the Company currently aggregates revenue data based on the type or
duration of commercial airtime sold. A number of advertisers purchase both local/regional and
national commercial airtime. Accordingly, this factor should be considered in evaluating the
relative revenues generated on a local/regional versus national basis. Our objective is to
optimize total revenues from those advertisers.  21




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##### Table of Contents



%
  Operating Costs
  Three Months Ended September 30,2008
    
    
    2007$
    
    
    % of total
    
    
    $
    
    
    % of totalProgramming, production
and distribution
expenses
    
    $
    70,871
    
    
    
    82
    %
    
    $
    61,052
    
    
    
    77
    %Selling expenses
    
    
    8,814
    
    
    
    10
    %
    
    
    8,035
    
    
    
    10
    %Stock-based compensation
    
    
    1,245
    
    
    
    2
    %
    
    
    1,555
    
    
    
    2
    %Other operating expenses
    
    
    5,212
    
    
    
    6
    %
    
    
    8,709
    
    
    
    11
    %$
    86,142
    
    
    
    100
    %
    
    $
    79,351
    
    
    
    100
    %
 %,
  Depreciation and Amortization
   Corporate General and Administrative Expenses
   22




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Goodwill Impairment
  Restructuring Charges
  Special Charges
  Operating (Loss) Income
   Interest Expense
   Other Income
  Provision for Income Taxes
   23




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Net (Loss) Income
  Weighted Average Shares Outstanding
  Nine Months Ended September 30, 2008 Compared With Nine Months Ended September 30, 2007
 Revenue
  Nine Months Ended September 30,2008
    
    
    2007$
    
    
    % of total
    
    
    $
    
    
    % of totalLocal/Regional
    
    $
    148,808
    
    
    
    49
    %
    
    $
    175,129
    
    
    
    53
    %National
    
    
    154,490
    
    
    
    51
    %
    
    
    157,938
    
    
    
    47
    %Total (1)
    
    $
    303,298
    
    
    
    100
    %
    
    $
    333,067
    
    
    
    100
    %
 (1)
    
    As described above, the Company currently aggregates revenue data based on the type or
duration of commercial airtime sold. A number of advertisers purchase both local/regional and
national commercial airtime. Accordingly, this factor should be considered in evaluating the
relative revenues generated on a local/regional versus national basis. Our objective is to
optimize total revenues from those advertisers. %,
  24




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##### Table of Contents



Operating Costs
  Nine Months Ended September 30,2008
    
    
    2007$
    
    
    % of total
    
    
    $
    
    
    % of totalProgramming, production
and distribution
expenses
    
    $
    215,463
    
    
    
    81
    %
    
    $
    202,307
    
    
    
    78
    %Selling expenses
    
    
    26,729
    
    
    
    10
    %
    
    
    26,142
    
    
    
    10
    %Stock-based compensation
    
    
    3,618
    
    
    
    1
    %
    
    
    4,484
    
    
    
    2
    %Other operating expenses
    
    
    19,972
    
    
    
    8
    %
    
    
    27,486
    
    
    
    10
    %$
    265,782
    
    
    
    100
    %
    
    $
    260,419
    
    
    
    100
    %
 %,
 Depreciation and Amortization
  Corporate General and Administrative Expenses
  Goodwill Impairment
  Restructuring Charges
  Special Charges
   25




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Operating (Loss) Income
  Interest Expense
  Other Income
  Provision for Income Taxes
  Net (Loss) Income
  Weighted Average Shares Outstanding
  Liquidity and Capital Resources
   26




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27




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Recent Accounting Pronouncements
      Cautionary Statement Concerning Forward-Looking Statements and Factors Affecting Forward-Looking
Statements
   28




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Risks Related to Our Business
 We may not be able to obtain future capital on terms favorable to us or refinance the terms of our
Bank Facility and Senior Notes as necessary which would impact our ability to continue as a going
concern .
  Our operating income has declined since 2002. We may not be able to reverse this trend or reduce
costs sufficiently to offset declines in revenue if such trends continue
   29




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##### Table of Contents



If we are unable to reverse our recent performance of declining revenue, we may not be able to
fully implement our growth strategy or take advantage of certain business opportunities even if we
are successful in our negotiations with our lenders.
  Our revenue could further decline if the general economy and broadcast industry continues to
worsen, and could result in further declines in consumer spending
  Our audience and revenue may decline as a result of programming changes made by our affiliated
stations .
   30




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##### Table of Contents



Our business is subject to increased competition resulting from new entrants into our business,
consolidated companies and new technology/platforms, each of which has the potential to adversely
affect our business.
  
    
    advertiser spending patterns, including the notion that orders are placed in
close proximity to the time such ads are broadcast, which could affect spending
patterns and limit our visibility of demand for our products;
 
    
    the level of competition for advertising dollars, including by new entrants into
the radio advertising sales market, including Google;
 
    
    new competitors or existing competitors with expanded resources, including as a
result of consolidation (as described below), NAVTEQs purchase of Traffic.com or
the merger between XM Satellite Radio and Sirius Satellite Radio; and
 
    
    lower than anticipated market acceptance of new or existing products.
  Gores Radio Holdings, LLC exercises significant influence and control over the management and
affairs of the Company.
  Continued consolidation in the radio broadcast industry could adversely affect our operating
results
 e.g.,
 We may be required to recognize further impairment charges
   31




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##### Table of Contents



Risks Relating to Our Common Stock
 Our stock price has declined to a level which makes any equity financing by the Company highly
dilutive to existing shareholders and will likely result in the Company being delisted from the New
York Stock Exchange
  Risks Related to the Broader Economy
 The global credit market disruptions and economic slowdown which significantly worsened in the
third quarter of 2008 have created a difficult and uncertain market in which to finance, which
could materially and negatively affect the Companys ability to restructure and/or refinance its
debt.
   32




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
       
 Item 4. Controls and Procedures
   33




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Issuer Purchases of Equity Securities
 Approximate DollarTotal Number of
    
    Value of Shares thatTotal
    
    
    
    Shares Purchased as
    
    May Yet BeNumber of Shares
    
    
    
    Part of Publicly
    
    Purchased UnderPurchased in
    
    Average Price Paid
    
    Announced Plan or
    
    the Plans orPeriod
    
    Period
    
    Per Share
    
    Program
    
    Programs (A)7/1/08  7/31/08
    
    
    
    N/A
    
    21,001,424
    
    $290,490,0008/1/08  8/31/08
    
    
    
    N/A
    
    21,001,424
    
    $290,490,0009/1/08  9/30/08
    
    
    
    N/A
    
    21,001,424
    
    $290,490,000
 (A)
    
    Represents remaining authorization from the $250 million repurchase authorization approved on
February 24, 2004 and the additional $300 million authorization approved on April 29, 2004.  34




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##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
 (a)
    
    The annual meeting of the Companys shareholders was held on September 22,
2008.
 (b)
    
    The matters voted upon and the related voting results are listed below.
Holders of common stock, representing 101,408,811 eligible votes, voted alone on the
election of Messrs. Ming and Nunez. Holders of common stock, Class B stock and the
Preferred Stock, collectively representing 140,994,286 eligible votes, voted together
on the ratification of PricewaterhouseCooopers LLP. Holders of the Preferred Stock,
representing 24,999,975 eligible votes, voted alone on the election of Mr. Weingarten.
The following vote totals reflect that each share of Class B stock is entitled to 50
votes per share and that the 75,000 shares of Preferred Stock represented 24,999,975
eligible votes on the record date for the annual meeting.
 (1)
    
    Election of Class III Directors:
 FOR
    
    
    WITHHELDH. Melvin Ming
    
    
    109,123,064
    
    
    
    10,993,083Emanuel Nunez
    
    
    114,350,673
    
    
    
    5,705,474Ian Weingarten
    
    
    24,999,975
    
    
    
    0
  (2)
    
    Ratification of the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for the fiscal year
ending December 31, 2008:
 FOR
    
    
    134,316,228AGAINST
    
    
    162,945ABSTAIN
    
    
    162,474
 
 Item 5. Other Information
   35




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber (A)
    
    Description of Exhibit3.1
    
    
    Restated Certificate of Incorporation of the Company, as filed
with the Secretary of State of the State of Delaware. (1)3.2
    
    
    Bylaws of Company as currently in effect. (2)4.1
    
    
    Note Purchase Agreement, dated as of December 3, 2002, between
the Company and the Purchasers parties thereto. (3)4.1.1
    
    
    First Amendment, dated as of February 28, 2008, to Note
Purchase Agreement, dated as of December 3, 2002, by and
between Registrant and the noteholders parties thereto. (4)10.1
    +
    
    Employment Agreement, effective as of September 17, 2008, by
and between Registrant and Roderick M. Sherwood, III. (5)10.2
    +
    
    Employment Agreement, effective as of October 20, 2008, by and
between Registrant and Gary Schonfeld. (6)10.3
    +
    
    Separation Agreement, effective as of October 31, 2008, by and
between Registrant and Thomas F.X. Beusse. (7)31.a
    *
    
    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.
 *
    
    Filed herewith.**
    
    Furnished herewith.+
    
    Indicates a management contract or compensatory plan.(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 current report on Form 10-Q/A for the quarter ended June 30,
2008 and incorporated herein by reference.(2)
    
    Filed as an exhibit to Companys annual report on Form 10-K for the year ended December 31,
1994 and incorporated herein by reference.(3)
    
    Filed as an exhibit to Companys current report on Form 8-K dated December 3, 2002 and
incorporated herein by reference.(4)
    
    Filed as an exhibit to Registrants current report on Form 8-K dated February 28, 2008 and
incorporated herein by reference.(5)
    
    Filed as an exhibit to Registrants current report on Form 8-K dated September 18, 2008 and
incorporated herein by reference.(6)
    
    Filed as an exhibit to Registrants current report on Form 8-K dated October 24, 2008 and
incorporated herein by reference.(7)
    
    Filed as an exhibit to Registrants current report on Form 8-K dated October 30, 2008 and
incorporated herein by reference.  36




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SIGNATURES
  WESTWOOD ONE, INC.By:
    /S/ Roderick M. Sherwood IIIName:
    Roderick M. Sherwood IIITitle:
    President and CFODate:
    November 10, 2008  37




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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 2002.32.a**
    
    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.  38