##### 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 June 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 0-14691
 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
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)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
    
    
    16Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4.
    
    Controls and Procedures
    
    
    29PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    29Item 1A.
    
    Risk Factors
    
    
    30Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3.
    
    Defaults Upon Senior Securities
    
    
    30Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    30Item 5.
    
    Other Information
    
    
    31Item 6.
    
    Exhibits
    
    
    31SIGNATURES
    
    
    33Exhibit Index
    
    
    34CERTIFICATIONSEX-3.1: RESTATED CERTIFICATE OF INCORPORATIONEX-31.A: CERTIFICATIONEX-31.B: CERTIFICATIONEX-32.A: CERTIFICATIONEX-32.B: CERTIFICATION
  2




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PART I. FINANCIAL INFORMATION
 
 WESTWOOD ONE, INC. CONSOLIDATED
BALANCE SHEETS
(In thousands, except per share amounts)
 June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    5,315
    
    
    $
    6,187Accounts receivable, net of allowance for
doubtful accounts
of $3,585 (2008) and $3,602 (2007)
    
    
    95,566
    
    
    
    108,271Warrants, current portion
    
    
    
    
    
    
    9,706Prepaid and other assets
    
    
    8,299
    
    
    
    13,990Total Current Assets
    
    
    109,180
    
    
    
    138,154Property and equipment, net
    
    
    34,702
    
    
    
    33,012Goodwill
    
    
    258,061
    
    
    
    464,114Intangible assets, net
    
    
    3,052
    
    
    
    3,443Other assets
    
    
    26,139
    
    
    
    31,034TOTAL ASSETS
    
    $
    431,134
    
    
    $
    669,757LIABILITIES, REDEEMABLE PREFERRED STOCK AND
SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    20,366
    
    
    $
    17,378Amounts payable to related parties
    
    
    14,466
    
    
    
    30,859Deferred revenue
    
    
    3,789
    
    
    
    5,815Income taxes payable
    
    
    1,964
    
    
    
    7,246Accrued expenses and other liabilities
    
    
    23,776
    
    
    
    29,562Current maturity of long-term debt
    
    
    60,000
    
    
    
    Total Current Liabilities
    
    
    124,361
    
    
    
    90,860Long-term debt
    
    
    199,495
    
    
    
    345,244Other Liabilities
    
    
    5,681
    
    
    
    6,022TOTAL LIABILITIES
    
    
    329,537
    
    
    
    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, 101,345 (2008)
and 87,105 (2007)
    
    
    1,014
    
    
    
    872Class B stock, $.01 par value: authorized, 3,000
shares; issued and outstanding, 292 (2008 and
2007)
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    293,363
    
    
    
    290,786Unrealized gain on available for sale securities
    
    
    8,551
    
    
    
    5,955Accumulated deficit
    
    
    (275,072
    )
    
    
    (69,985
    )TOTAL SHAREHOLDERS EQUITY
    
    
    101,597
    
    
    
    227,631TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK AND SHAREHOLDERS EQUITY
    
    $
    431,134
    
    
    $
    669,757
  3




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WESTWOOD ONE, INC
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007NET REVENUE
    
    $
    100,372
    
    
    $
    111,025
    
    
    $
    206,998
    
    
    $
    224,984Operating Costs (includes
related party expenses
of $18,445, $16,886, $36,320 and
$35,829 respectively)
    
    
    85,411
    
    
    
    83,633
    
    
    
    179,640
    
    
    
    181,068Depreciation and Amortization
(includes related party
warrant amortization of $0 ,
$2,427, $1,618 and
$4,853, respectively)
    
    
    2,421
    
    
    
    4,917
    
    
    
    6,397
    
    
    
    9,948Corporate General and
Administrative Expenses
(includes related party expenses
of $0, $861, $610
and $1,690, respectively)
    
    
    1,199
    
    
    
    3,575
    
    
    
    4,665
    
    
    
    7,451Goodwill Impairment
    
    
    206,053
    
    
    
    
    
    
    
    206,053
    
    
    
    Special Charges
    
    
    897
    
    
    
    2,282
    
    
    
    8,853
    
    
    
    2,637295,981
    
    
    
    94,407
    
    
    
    405,608
    
    
    
    201,104OPERATING (LOSS) INCOME
    
    
    (195,609
    )
    
    
    16,618
    
    
    
    (198,610
    )
    
    
    23,880Interest Expense
    
    
    4,352
    
    
    
    5,852
    
    
    
    9,751
    
    
    
    11,949Other Income
    
    
    (43
    )
    
    
    (150
    )
    
    
    (85
    )
    
    
    (150
    )(LOSS) INCOME BEFORE INCOME TAXES
    
    
    (199,918
    )
    
    
    10,916
    
    
    
    (208,276
    )
    
    
    12,081INCOME TAXES (BENEFIT) EXPENSE
    
    
    (174
    )
    
    
    4,019
    
    
    
    (3,194
    )
    
    
    4,469NET (LOSS) INCOME
    
    $
    (199,744
    )
    
    $
    6,897
    
    
    $
    (205,082
    )
    
    $
    7,612(LOSS) EARNINGS PER SHARECOMMON STOCKBASIC
    
    $
    (1.98
    )
    
    $
    0.08
    
    
    $
    (2.16
    )
    
    $
    0.09DILUTED
    
    $
    (1.98
    )
    
    $
    0.08
    
    
    $
    (2.16
    )
    
    $
    0.09CLASS B STOCKBASIC
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02DILUTED
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02WEIGHTED AVERAGE SHARES
OUTSTANDING:COMMON STOCKBASIC
    
    
    100,752
    
    
    
    86,094
    
    
    
    95,119
    
    
    
    86,084DILUTED
    
    
    100,752
    
    
    
    86,540
    
    
    
    95,119
    
    
    
    86,408CLASS 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)
 Six Months EndedJune 30,2008
    
    
    2007CASH FLOW FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (205,082
    )
    
    $
    7,612Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Depreciation and amortization
    
    
    6,397
    
    
    
    9,948Goodwill Impairment
    
    
    206,053
    
    
    
    Deferred taxes
    
    
    (7,196
    )
    
    
    (3,079
    )Non-cash stock compensation
    
    
    2,455
    
    
    
    5,572Amortization of deferred financing costs
    
    
    792
    
    
    
    2373,419
    
    
    
    20,290Changes in assets and liabilities:Accounts receivable
    
    
    12,705
    
    
    
    (47
    )Prepaid and other assets
    
    
    5,531
    
    
    
    5,264Deferred revenue
    
    
    (2,026
    )
    
    
    (1,861
    )Income taxes payable and prepaid income taxes
    
    
    (5,282
    )
    
    
    (5,455
    )Accounts payable and accrued expenses
and other liabilities
    
    
    (2,796
    )
    
    
    (23,269
    )Amounts payable to related parties
    
    
    (16,393
    )
    
    
    2,516Net Cash Used By Operating Activities
    
    
    (4,842
    )
    
    
    (2,562
    )CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (6,078
    )
    
    
    (2,114
    )Net Cash Used In Investing Activities
    
    
    (6,078
    )
    
    
    (2,114
    )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
    
    
    (85,343
    )
    
    
    (359
    )Dividend payments
    
    
    
    
    
    
    (1,663
    )Deferred financing costs
    
    
    (1,537
    )
    
    
    Net Cash Provided (Used) in Financing Activities
    
    
    10,048
    
    
    
    (2,022
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (872
    )
    
    
    (6,698
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    6,187
    
    
    
    11,528CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    5,315
    
    
    $
    4,830
  5




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 1 Basis of Presentation:
   NOTE 2 Income Taxes:
    NOTE 3 Issuance of Preferred Stock and Warrants
   6




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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 June 30,
    
    $
    258,061
 7




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 5
 Equity Compensation Activity
  2008
    
    Weighted AverageShares
    
    Exercise PriceUnvested at December 31, 2007
    
    
    3,888
    
    
    $
    21.86Granted during the period
    
    
    3,635
    
    
    
    1.80Forfeited during the period
    
    
    (1,122
    )
    
    
    18.81Unvested at June 30, 2008
    
    
    6,401
    
    
    $
    11.00
  NOTE 6 Comprehensive Income (Loss):
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net (loss) Income
    
    
    ($199,744
    )
    
    $
    6,897
    
    
    
    ($205,082
    )
    
    $
    7,612Other Comprehensive Income:Unrealized Gain
    
    
    48
    
    
    
    1,408
    
    
    
    2,596
    
    
    
    1,720Comprehensive (loss) income
    
    
    ($199,696
    )
    
    $
    8,305
    
    
    
    ($202,486
    )
    
    $
    9,332
 8




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 7 Special Charges:
  Three Months ended
    
    
    Six Months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Professional and
other fees related
to the new CBS
agreements and
Gores Investment
    
    $
    206
    
    
    $
    1,282
    
    
    $
    3,162
    
    
    $
    1,637Closing payment to CBS
related to the new CBS
agreements
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    Severance obligations
related to executive
officers changes
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000Re-engineering expenses
    
    
    691
    
    
    
    
    
    
    
    691
    
    
    
    $
    897
    
    
    $
    2,282
    
    
    $
    8,853
    
    
    $
    2,637
  NOTE 8 Earnings Per Common Share:
    9




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net (Loss) Income
    
    $
    (199,744
    )
    
    $
    6,897
    
    
    $
    (205,082
    )
    
    $
    7,612Less: Accumulated Preferred Stock dividends
    
    
    188
    
    
    
    
    
    
    
    188
    
    
    
    Less: distributed earnings to Common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,658Less: distributed earnings to Class B shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5(Loss)  Income available to Common shareholders
    
    $
    (199,932
    )
    
    $
    6,897
    
    
    $
    (205,270
    )
    
    $
    5,949(Loss) Earnings  Common stockBasicDistributed earnings to Common shareholders
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,658Undistributed
(loss) earnings available to common
shareholders
    
    
    (199,932
    )
    
    
    6,897
    
    
    
    (205,270
    )
    
    
    5,949Total (loss) earnings  Common stock, Basic
    
    $
    (199,932
    )
    
    $
    6,897
    
    
    $
    (205,270
    )
    
    $
    7,607DilutedDistributed earnings to Common shareholders
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,658Distributed earnings to Class B shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Accumulated Preferred Stock dividends
    
    
    188
    
    
    
    
    
    
    
    188
    
    
    
    Undistributed earnings (loss) available to common
shareholders
    
    
    (199,932
    )
    
    
    6,897
    
    
    
    (205,270
    )
    
    
    5,949Total (loss) earnings  Common stock, Diluted
    
    $
    (199,744
    )
    
    $
    6,897
    
    
    $
    (205,082
    )
    
    $
    7,612Weighted average Common shares outstanding, Basic
    
    
    100,752
    
    
    
    86,094
    
    
    
    95,119
    
    
    
    86,084Share-based compensation shares
    
    
    
    
    
    
    154
    
    
    
    
    
    
    
    33Weighted average Class B shares
    
    
    
    
    
    
    292
    
    
    
    
    
    
    
    292Weighted average Common shares outstanding, Diluted
    
    
    100,752
    
    
    
    86,540
    
    
    
    95,119
    
    
    
    86,409(Loss) Earnings per Common share, BasicDistributed earnings, Basic
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02Undistributed (loss) earnings  Basic
    
    
    (1.98
    )
    
    
    0.08
    
    
    
    (2.16
    )
    
    
    0.07Total (loss) earnings per Common share, Basic
    
    $
    (1.98
    )
    
    $
    0.08
    
    
    $
    (2.16
    )
    
    $
    0.09(Loss) Earnings per Common share, DilutedDistributed earnings, Diluted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.02Undistributed (loss) earnings  Diluted
    
    
    (1.98
    )
    
    
    0.08
    
    
    
    (2.16
    )
    
    
    0.07Total (loss) earnings per Common share, Diluted
    
    $
    (1.98
    )
    
    $
    0.08
    
    
    $
    (2.16
    )
    
    $
    0.09
 10




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 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
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Options
    
    
    7,298
    
    
    
    5,882
    
    
    
    7,586
    
    
    
    6,086Restricted Stock
    
    
    626
    
    
    
    244
    
    
    
    978
    
    
    
    1,026Restricted Stock Units
    
    
    244
    
    
    
    135
    
    
    
    257
    
    
    
    128Warrants
    
    
    10,000
    
    
    
    3,000
    
    
    
    10,000
    
    
    
    3,000Preferred Stock
    
    
    25,062
    
    
    
    
    
    
    
    25,062
    
    
    
    
 11




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
   NOTE 9 Debt:
  June 30, 2008
    
    
    December 31, 2007Revolving Credit Facility/Term Loan
    
    $
    60,000
    
    
    $
    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)
    
    
    (505
    )
    
    
    244259,495
    
    
    
    345,244Less current maturities
    
    
    (60,000
    )
    
    
    $
    199,495
    
    
    $
    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.    12




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
  NOTE 10 Related Party Transactions:
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Representation Agreement
    
    $
    
    
    
    $
    3,875
    
    
    $
    2,583
    
    
    $
    7,625News Agreement
    
    
    3,247
    
    
    
    3,115
    
    
    
    6,362
    
    
    
    6,115Programming and Affiliations
    
    
    15,198
    
    
    
    9,896
    
    
    
    27,375
    
    
    
    22,089Management Agreement
(excluding warrant amortization)
    
    
    
    
    
    
    861
    
    
    
    610
    
    
    
    1,690Warrant Amortization
    
    
    
    
    
    
    2,427
    
    
    
    1,618
    
    
    
    4,854Payment due upon closing of
Master Agreement
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    $
    18,445
    
    
    $
    20,174
    
    
    $
    43,548
    
    
    $
    42,373
   13




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 NOTE 11 Redeemable Preferred Stock and Shareholders Equity
  NOTE 12 Fair Value Measurements
    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
  14




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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (in thousands, except per share amounts)
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Investments (1)
    
    $
    14,367
    
    
    $
    
    
    
    $
    
    
    
    $
    14,367Derivative Assets (1)
    
    
    
    
    
    
    (505
    )
    
    
    
    
    
    
    (505
    )Total Assets
    
    $
    14,367
    
    
    
    ($505
    )
    
    $
    
    
    
    $
    13,862Liabilities:Derivative Liabilities (2)
    
    $
    
    
    
    
    ($505
    )
    
    $
    
    
    
    
    ($505
    )Total Liabilities
    
    $
    
    
    
    
    ($505
    )
    
    $
    
    
    
    
    ($505
    )
 
 (1)
    
    Included in Other Assets in the accompanying Balance Sheet(2)
    
    Included in Long-Term Debt in the accompanying Balance Sheet NOTE 13 Recent Accounting Pronouncements
     15




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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
       16




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17




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Results of Operations
 Three Months Ended June 30, 2008 Compared With Three Months Ended June 30, 2007
 Revenue
  Three Months Ended June 30,2008
    
    
    2007$
    
    
    % of total
    
    
    $
    
    
    % of totalLocal/Regional
    
    $
    53,203
    
    
    
    53
    %
    
    $
    63,943
    
    
    
    58
    %National
    
    
    47,169
    
    
    
    47
    %
    
    
    47,082
    
    
    
    42
    %Total (1)
    
    $
    100,372
    
    
    
    100
    %
    
    $
    111,025
    
    
    
    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. %
  Operating Costs
  18




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Three Months Ended June 30,2008
    
    
    2007$
    
    
    % of total
    
    
    $
    
    
    % of totalProgramming, production and
distribution expenses
    
    $
    69,849
    
    
    
    82
    %
    
    $
    64,668
    
    
    
    77
    %Selling expenses
    
    
    8,708
    
    
    
    10
    %
    
    
    8,110
    
    
    
    10
    %Stock-based compensation
    
    
    1,218
    
    
    
    1
    %
    
    
    1,553
    
    
    
    2
    %Other operating expenses
    
    
    5,636
    
    
    
    7
    %
    
    
    9,302
    
    
    
    11
    %$
    85,411
    
    
    
    100
    %
    
    $
    83,633
    
    
    
    100
    %
 %,
  Depreciation and Amortization
   Corporate General and Administrative Expenses
  Goodwill Impairment
  Special Charges
  19




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Operating (Loss) Income
   Interest Expense
   Provision for Income Taxes
  Net (Loss) Income
  Weighted Average Shares Outstanding
  Six Months Ended June 30, 2008 Compared With Six Months Ended June 30, 2007
 Revenue
  20




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Six Months Ended June 30,2008
    
    
    2007$
    
    
    % of total
    
    
    $
    
    
    % of totalLocal/Regional
    
    $
    100,645
    
    
    
    49
    %
    
    $
    117,366
    
    
    
    52
    %National
    
    
    106,353
    
    
    
    51
    %
    
    
    107,618
    
    
    
    48
    %Total (1)
    
    $
    206,998
    
    
    
    100
    %
    
    $
    224,984
    
    
    
    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. %,
 Operating Costs
  Six Months Ended June 30,2008
    
    
    2007$
    
    
    % of total
    
    
    $
    
    
    % of totalProgramming, production and
distribution expenses
    
    $
    144,590
    
    
    
    81
    %
    
    $
    141,618
    
    
    
    78
    %Selling expenses
    
    
    17,923
    
    
    
    10
    %
    
    
    18,091
    
    
    
    10
    %Stock-based compensation
    
    
    2,372
    
    
    
    1
    %
    
    
    2,929
    
    
    
    2
    %Other operating expenses
    
    
    14,755
    
    
    
    8
    %
    
    
    18,430
    
    
    
    10
    %$
    179,640
    
    
    
    100
    %
    
    $
    181,068
    
    
    
    100
    %
 %,
 Depreciation and Amortization
  21




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Corporate General and Administrative Expenses
  Special Charges
  Operating (Loss) Income
  Interest Expense
  Provision for Income Taxes
  Net (Loss) Income
  Weighted Average Shares Outstanding
  22




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Liquidity and Capital Resources
       23




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Recent Accounting Pronouncements
     Cautionary Statement Concerning Forward-Looking Statements and Factors Affecting Forward-Looking
Statements
  24




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Risks Related to Our Business
 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
  As a result of declining revenue and reduced liquidity, we may not be able to fully implement our
growth strategy or take advantage of certain business opportunities.
  We may not be able to obtain future capital on terms favorable to us or refinance the terms of our
senior loan agreement which could have a material and negative effect on our business .
  25




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Our audience and revenue may decline as a result of programming changes made by our affiliated
stations .
  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.
  26




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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
  Risks Relating to Our Common Stock
 Our stock price has been volatile, is likely to continue to be volatile, and could continue to
decline
  27




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
    
    actual or anticipated fluctuations in our quarterly and annual operating results;
    
    changes in expectations as to our future financial performance or changes in financial
estimates of securities analysts;
    
    conditions in the marketplace or changes in market projections by securities analysts;
    
    success or failure in our operating and growth strategies; and
    
    realization of any of the risks described in these risk factors.
  Risks Relating to the Industry and General Economy
 Our revenue could further decline as a result of general and industry-specific economic trends, and
resulting declines in consumer spending
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   28




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Item 4. Controls and Procedures
   
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  29




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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 SharesTotal
    
    
    
    
    
    Part of Publicly
    
    that May Yet BeNumber of Shares
    
    Average Price Paid
    
    Announced Plan or
    
    Purchased Under thePeriod
    
    Purchased in Period
    
    Per Share
    
    Program
    
    Plans or Programs (A)4/1/08  4/30/08
    
    
    
    
    
    
    N/A
    
    
    
    21,001,424
    
    
    $
    290,490,0005/1/08  5/31/08
    
    
    
    
    
    
    N/A
    
    
    
    21,001,424
    
    
    $
    290,490,0006/1/08  6/30/08
    
    
    
    
    
    
    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. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
 (a)
    
    A special meeting of the Companys shareholders was held on June 17, 2008.(b)
    
    The matters voted upon and the related voting results are as follows
(holders of common stock and Class B stock voted together on all matters). The
following vote totals reflect that each share of Class B stock is entitled to 50 votes
per share.
 (1)
    
    Issuance and sale to Gores Radio Holdings, LLC of 75,000
shares of 7.5% Series A Convertible Preferred Stock and four-year warrants to
purchase a total of 10,000,000 shares of common Stock:
 FOR
    
    
    60,794,670AGAINST
    
    
    40,462,492
 30




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ABSTAIN
    
    
    49,885NO VOTE
    
    
    0
 (2)
    
    Amendment of the Companys Restated Certificate of
Incorporation to delete Article Fourteenth:
 FOR
    
    
    79,273,616AGAINST
    
    
    21,919,110ABSTAIN
    
    
    114,321NO VOTE
    
    
    0
 (3)
    
    Amendment of the Companys Restated Certificate of
Incorporation to delete Article Fifteenth:
 FOR
    
    
    59,127,609AGAINST
    
    
    42,065,847ABSTAIN
    
    
    113,591NO VOTE
    
    
    0
 (4)
    
    Adjournment of the special meeting, if necessary, to solicit
additional proxies for approval of proposals 1, 2 and 3:
 FOR
    
    
    60,670,950AGAINST
    
    
    40,552,035ABSTAIN
    
    
    84,062NO VOTE
    
    
    0
 
 Item 5. Other Information
  
 Item 6. Exhibits
 ExhibitNumber (A)
    
    Description of Exhibit3.1*
    
    Restated Certificate of
Incorporation of the Company, as amended.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 July 7, 2008, by and between Registrant
and Steven Kalin. (1)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. 31




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+
    
    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 Registrants current report on Form 8-K dated July 11, 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.
 32




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SIGNATURES
  WESTWOOD ONE, INC.By:
    /S/ Thomas F.X. BeusseName:
    Thomas F.X. BeusseTitle:
    Chief Executive OfficerBy:
    /S/ Gary J. YuskoName:
    Gary J. YuskoTitle:
    Chief Financial OfficerDate: August 11, 2008 33




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EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit3.1*
    
    Restated Certificate of
Incorporation of the Company, as amended.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. 34