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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 March 31, 2007
 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
    
    95-3980449(State or other jurisdiction of 
incorporation or organization)
    
    (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
  o þ 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
    
    
    13Item 3. Qualitative and Quantitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    22PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    24SIGNATURES
    
    
    25Exhibit Index
    
    
    26CERTIFICATIONSEX-10.1: AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT, DATED MAY 4, 2007EX-31.A: CERTIFICATIONEX-31.B: CERTIFICATIONEX-32.A: CERTIFICATIONEX-32.B: CERTIFICATION
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PART I. FINANCIAL INFORMATION
 WESTWOOD ONE, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share amounts)
 March 31
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    5,362
    
    
    $
    11,528Accounts receivable, net of allowance for doubtful accounts
of $5,053 (2007) and $4,387 (2006)
    
    
    99,042
    
    
    
    115,505Warrants, current portion
    
    
    9,706
    
    
    
    9,706Prepaid and other assets
    
    
    12,842
    
    
    
    12,483Total Current Assets
    
    
    126,952
    
    
    
    149,222PROPERTY AND EQUIPMENT, NET
    
    
    35,906
    
    
    
    37,353GOODWILL
    
    
    464,114
    
    
    
    464,114INTANGIBLE ASSETS, NET
    
    
    4,030
    
    
    
    4,225OTHER ASSETS
    
    
    37,994
    
    
    
    41,787TOTAL ASSETS
    
    $
    668,996
    
    
    $
    696,701LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    23,516
    
    
    $
    35,425Amounts payable to related parties
    
    
    34,902
    
    
    
    26,344Deferred revenue
    
    
    7,559
    
    
    
    8,150Income taxes payable
    
    
    
    
    
    
    6,149Accrued expenses and other liabilities
    
    
    45,898
    
    
    
    43,841Total Current Liabilities
    
    
    111,875
    
    
    
    119,909LONG-TERM DEBT
    
    
    347,121
    
    
    
    366,860OTHER LIABILITIES
    
    
    6,811
    
    
    
    7,001TOTAL LIABILITIES
    
    $
    465,807
    
    
    
    493,770COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITYPreferred stock: authorized 10,000,000 shares, none outstanding
    
    
    
    
    
    
    Common stock, $.01 par value: authorized, 300,000,000 shares;
issued and outstanding, 86,079,828 (2007) and 85,996,019 (2006)
    
    
    861
    
    
    
    860Class B stock, $.01 par value: authorized, 3,000,000 shares;
issued and outstanding, 291,796 (2007 and 2006)
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    291,081
    
    
    
    291,851Unrealized gain on available for sale securities
    
    
    4,882
    
    
    
    4,570Accumulated (deficit) earnings
    
    
    (93,638
    )
    
    
    (94,353
    )TOTAL SHAREHOLDERS EQUITY
    
    
    203,189
    
    
    
    202,931TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    668,996
    
    
    $
    696,701
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WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 (Unaudited)
 Three Months EndedMarch 312007
    
    
    2006NET REVENUES
    
    $
    109,373
    
    
    $
    120,772Operating Costs (includes related party expenses
of $18,943 and $21,396, respectively)
    
    
    92,850
    
    
    
    110,810Depreciation and Amortization (includes related party
warrant amortization of $2,427 and $2,427, respectively)
    
    
    5,031
    
    
    
    5,122Corporate General and Administrative Expenses
(includes related party expenses of $830 and $789,
respectively)
    
    
    4,230
    
    
    
    4,980102,111
    
    
    
    120,912OPERATING INCOME (LOSS)
    
    
    7,262
    
    
    
    (140
    )Interest Expense
    
    
    6,097
    
    
    
    5,988Other Income
    
    
    
    
    
    
    (109
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    1,165
    
    
    
    (6,019
    )INCOME TAXES
    
    
    450
    
    
    
    (2,492
    )NET INCOME (LOSS)
    
    $
    715
    
    
    $
    (3,527
    )EARNINGS (LOSS) PER SHARE:COMMON STOCKBASIC
    
    $
    0.01
    
    
    $
    (0.04
    )DILUTED
    
    $
    0.01
    
    
    $
    (0.04
    )CLASS B STOCKBASIC
    
    $
    0.02
    
    
    $
    0.08DILUTED
    
    $
    0.02
    
    
    $
    0.08WEIGHTED AVERAGE SHARES OUTSTANDING:COMMON STOCKBASIC
    
    
    86,072
    
    
    
    86,184DILUTED
    
    
    86,079
    
    
    
    86,184CLASS B STOCKBASIC
    
    
    292
    
    
    
    292DILUTED
    
    
    292
    
    
    
    292DIVIDENDS DECLARED PER SHARE:COMMON STOCK
    
    $
    0.02
    
    
    $
    0.10CLASS B STOCK
    
    $
    0.02
    
    
    $
    0.08
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WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three Months EndedMarch 31,2007
    
    
    2006CASH FLOW FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    715
    
    
    $
    (3,527
    )Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    5,031
    
    
    
    5,122Deferred taxes
    
    
    (257
    )
    
    
    (1,455
    )Non-cash stock compensation
    
    
    2,755
    
    
    
    3,385Amortization of deferred financing costs
    
    
    121
    
    
    
    848,365
    
    
    
    3,609Changes in assets and liabilities:Accounts receivable
    
    
    16,463
    
    
    
    26,682Prepaid and other assets
    
    
    624
    
    
    
    7,049Deferred revenue
    
    
    (591
    )
    
    
    (1,224
    )Income taxes payable and prepaid income taxes
    
    
    (7,167
    )
    
    
    (30,821
    )Accounts payable and accrued expenses
and other liabilities
    
    
    (9,603
    )
    
    
    11,004Amounts payable to related parties
    
    
    8,558
    
    
    
    714Net Cash Provided By Operating Activities
    
    
    16,649
    
    
    
    17,013CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (906
    )
    
    
    (1,532
    )Acquisition of companies and other
    
    
    
    
    
    
    55Net Cash Used in Investing Activities
    
    
    (906
    )
    
    
    (1,477
    )CASH FLOW FROM FINANCING ACTIVITIES:Issuance of common stock under equity based compensation plans
    
    
    
    
    
    
    302Borrowings under bank and other long-term obligations
    
    
    10,000
    
    
    
    Debt repayments and payments of capital lease obligations
    
    
    (30,178
    )
    
    
    (167
    )Dividend payments
    
    
    (1,731
    )
    
    
    (8,616
    )Repurchase of common stock
    
    
    
    
    
    
    (11,044
    )Net Cash Used in Financing Activities
    
    
    (21,909
    )
    
    
    (19,525
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (6,166
    )
    
    
    (3,989
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    11,528
    
    
    
    10,399CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    5,362
    
    
    $
    6,410
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WESTWOOD ONE, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (In thousands, except share and per share data)
 NOTE 1 Basis of Presentation:
  NOTE
2 Income Taxes:
    NOTE
3 Equity Based Compensation:
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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands, except share and per share data)
 Equity Compensation Activity
  WeightedAverageGrant Date2007
    
    
    Grant Date
    
    
    Fair ValueShares
    
    
    Fair Value
    
    
    Per ShareRestricted Stock:Unvested at December 31, 2006
    
    
    326,326
    
    
    $
    4,265
    
    
    $
    13.06Granted during the period (1)
    
    
    792,736
    
    
    
    4,891
    
    
    
    6.17Vested during the period
    
    
    (66,500
    )
    
    
    (936
    )
    
    
    14.07Forfeited during the period
    
    
    (5,563
    )
    
    
    (77
    )
    
    
    13.91Unvested at March 31, 2007
    
    
    1,046,999
    
    
    $
    8,143
    
    
    $
    7.81
 
 (1)
    
    Amount includes dividend equivalents on unvested shares.  NOTE 4 Investments:
  NOTE 5 Comprehensive Income:
  Three Months EndedMarch 31,2007
    
    
    2006Net Income (Loss)
    
    $
    715
    
    
    $
    (3,527
    )Other Comprehensive Income:Unrealized Gain
    
    
    312
    
    
    
    5,379Comprehensive Income
    
    $
    1,027
    
    
    $
    1,852
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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands, except share and per share data)
 NOTE 6- Earnings Per Share:
    Three Months EndedMarch 31,2007
    
    
    2006Net Income (Loss)
    
    $
    715
    
    
    $
    (3,527
    )Less: distributed earnings to Common shareholders
    
    
    1,726
    
    
    
    8,593Less: distributed earnings to Class B shareholders
    
    
    5
    
    
    
    23Undistributed earnings (loss)
    
    $
    (1,016
    )
    
    $
    (12,143
    )Earnings  Common stockBasicDistributed earnings to Common shareholders
    
    $
    1,726
    
    
    $
    8,593Undistributed earnings (loss) allocated to
Common shareholders
    
    
    (1,016
    )
    
    
    (12,143
    )Total Earnings (loss)  Common stock, basic
    
    $
    710
    
    
    $
    (3,550
    )DilutedDistributed earnings to Common shareholders
    
    $
    1,726
    
    
    $
    8,593Distributed earnings to Class B shareholders
    
    
    
    
    
    
    Undistributed earnings (loss) allocated to
Common shareholders
    
    
    (1,016
    )
    
    
    (12,143
    )Total Earnings (loss)  Common stock, diluted
    
    $
    710
    
    
    $
    (3,550
    )Weighted average Common shares outstanding,
basic
    
    
    86,072,204
    
    
    
    86,183,990Share-based compensation shares
    
    
    6,716
    
    
    
    Warrants
    
    
    
    
    
    
    Weighted average Class B shares
    
    
    
    
    
    
    Weighted average Common shares outstanding, diluted
    
    
    86,078,920
    
    
    
    86,183,990
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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands, except share and per share data)
 Three Months EndedMarch 31,2007
    
    
    2006Earnings per Common share, basicDistributed earnings, basic
    
    $
    0.02
    
    
    $
    0.10Undistributed earnings (loss)  basic
    
    
    (0.01
    )
    
    
    (0.14
    )Total
    
    $
    0.01
    
    
    $
    (0.04
    )Earnings per Common share, dilutedDistributed earnings, diluted
    
    $
    0.02
    
    
    $
    0.10Undistributed earnings (Loss)  diluted
    
    
    (0.01
    )
    
    
    (0.14
    )Total
    
    $
    0.01
    
    
    $
    (0.04
    )Earnings Class B stockBasicDistributed earnings to Class B shareholders
    
    $
    5
    
    
    $
    23Undistributed earnings allocated to Class B
shareholders
    
    
    
    
    
    
    Total Earnings  Class B stock, basic
    
    $
    5
    
    
    $
    23DilutedDistributed Earnings to Class B shareholders
    
    
    5
    
    
    
    23Undistributed earnings allocated to Class B
shareholders
    
    
    
    
    
    
    Total Earnings Class B stock, diluted
    
    $
    5
    
    
    $
    23Weighted average Class B shares outstanding, basic
    
    
    291,796
    
    
    
    291,796Share-based compensation
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    Weighted average Class B shares outstanding, diluted
    
    
    291,796
    
    
    
    291,796Earnings per Class B share, basicDistributed earnings, basic
    
    $
    0.02
    
    
    $
    0.08Undistributed earnings  basic
    
    
    
    
    
    
    Total
    
    $
    0.02
    
    
    $
    0.08Earnings per Class B share, dilutedDistributed earnings, diluted
    
    $
    0.02
    
    
    $
    0.08Undistributed earnings  diluted
    
    
    
    
    
    
    Total
    
    $
    0.02
    
    
    $
    0.08
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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands, except share and per share data)
 Three Months EndedMarch 31,2007
    
    2006Options
    
    
    5,906,947
    
    
    
    8,230,949Restricted Stock
    
    
    1,011,900
    
    
    
    291,673Restricted Stock Units
    
    
    209,760
    
    
    
    183,792Warrants
    
    
    3,000,000
    
    
    
    3,500,000
  NOTE 7- Debt:
  March 31, 2007
    
    
    December 31, 2006Revolving Credit Facility/Term Loan
    
    $
    150,000
    
    
    $
    170,0004.64% Senior Unsecured Notes due 2009
    
    
    50,000
    
    
    
    50,0005.26% Senior Unsecured Notes due 2012
    
    
    150,000
    
    
    
    150,000Fair market value of Swap (a)
    
    
    (2,879
    )
    
    
    (3,140
    )$
    347,121
    
    
    $
    366,860
 
 (a)
    
    write-up (write-down) to market value adjustments for debt with qualifying hedges that are
recorded as debt on the balance sheet.   NOTE 8 Related Party Transactions:
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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands, except share and per share data)
    Three Months EndedMarch 31,2007
    
    
    2006Representation Agreement
    
    $
    6,750
    
    
    $
    6,491Programming and Affiliations
    
    
    12,193
    
    
    
    14,905Management Agreement (excluding
warrant amortization)
    
    
    830
    
    
    
    789Warrant Amortization
    
    
    2,427
    
    
    
    2,427$
    22,200
    
    
    $
    24,612
   NOTE 9 Shareholders Equity
  NOTE 10 Recent Accounting Pronouncements
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WESTWOOD ONE, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands, except share and per share data)
  12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(In thousands except for share and per share amounts)
 EXECUTIVE OVERVIEW
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Results of Operations
 Three Months Ended March 31, 2007 Compared With Three Months Ended March 31, 2006
 Revenues
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Three Months EndedMarch 31,2007
    
    
    2006$
    
    
    % of total
    
    
    $
    
    
    % of totalLocal/Regional
    
    
    51,420
    
    
    
    47
    %
    
    $
    55,854
    
    
    
    46
    %National
    
    
    57,953
    
    
    
    53
    %
    
    
    64,918
    
    
    
    54
    %Total (1)
    
    
    109,373
    
    
    
    100
    %
    
    
    120,772
    
    
    
    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
  Three Months EndedMarch 31,2007
    
    
    2006$
    
    
    % of total
    
    
    $
    
    
    % of totalProgramming, production
and distribution
expenses
    
    $
    72,213
    
    
    
    78
    %
    
    $
    83,744
    
    
    
    76
    %Selling expenses
    
    
    9,981
    
    
    
    11
    %
    
    
    14,572
    
    
    
    13
    %Stock-based compensation
    
    
    1,376
    
    
    
    1
    %
    
    
    1,763
    
    
    
    1
    %Other operating expenses
    
    
    9,280
    
    
    
    10
    %
    
    
    10,731
    
    
    
    10
    %$
    92,850
    
    
    
    100
    %
    
    $
    110,810
    
    
    
    100
    %
 %,
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Depreciation and Amortization
  Corporate General and Administrative Expenses
  Operating Income (Loss)
  Interest Expense
  Provision for Income Taxes
  Net
Income (Loss)
  Earnings Per Share
  Liquidity and Capital Resources
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Recent Accounting Pronouncements
   Cautionary Statement Concerning Forward-Looking Statements and Factors Affecting Forward-Looking
Statements
   
    
    The Company is party to a Management Agreement, a Representation Agreement and other
related programming agreements and arrangements with CBS Radio, which expire on March 31,
2009. While the Company provides programming to all major radio station groups, the
Company has affiliation agreements
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with most of the radio stations owned and operated by
CBS Radio which, in the aggregate, provide the Company with a significant portion of the
audience and/or commercial inventory that it sells to advertisers.
While the Company is currently involved in discussions with CBS Radio regarding the
modification and/or extension of such agreements and arrangements, there can be no assurance
the Company and CBS Radio will be able to agree on extensions or modifications to such
agreements on similar economic terms. If the Company is unable to secure agreements with
CBS Radio beyond March 31, 2009, the Companys operations and financial condition could be
materially affected.
    
    Under the terms of the Management Agreement, CBS Radio manages the business and
operations of the Company, including by providing individuals to serve as the CEO and CFO
of the Company (CBS Radio employs the CEO and reimburses to the Company the cash
compensation of the CFO, who is employed directly by the Company). CBS Radio receives a
management fee for its management services. The Management Agreement also includes certain
non-competition provisions in favor the Company and a right of first refusal on syndication
opportunities to the Company where CBS Radio determines, in its sole discretion, to
syndicate programming. An executive of CBS Radio serves on the Companys Board of
Directors, and CBS Radio owns approximately 18.4% of the Companys Common stock. In
addition, CBS Radio competes with the Company in advertising sales and most of the radio
stations owned and operated by CBS Radio have affiliation agreements with the Company. The
foregoing could create, or appear to create, potential conflicts of interest for CBS Radio
in its decisions regarding the day-to-day operation of its business and in providing its
management services to the Company under the Management Agreement. The foregoing could
materially adversely impact the Companys future business, financial condition and
operating performance.
    
    While the Company provides programming to all major radio station groups, the Company
has affiliation agreements with most of CBS Radios owned and operated radio stations
which, in the aggregate, provide the Company with a significant portion of the audience
and/or commercial inventory that it sells to advertisers. In addition, the Company
operates the CBS Radio Network and syndicates and/or distributes several other programs
from CBS and its affiliates. In 2006, the Company experienced a material decline in the
amount of audience and quantity and quality of commercial inventory delivered by the CBS
Radio owned and operated radio stations. Reasons for the decline include: (1) the
cancellation of, and loss of syndication opportunities associated with, key national
programming; (2) the sale of CBS radio stations as described in more detail below and (3)
the reduction of commercial inventory levels, including certain RADAR inventory, provided
to the Company under affiliation agreements. At the same time, other than for reductions
in compensation paid to CBS Radio to reflect reduced commercial inventory levels the
economic arrangement between the Company and CBS Radio has remained substantially fixed
pursuant to the terms of many of the existing agreements between the Company and CBS Radio.
At this time, it is unclear whether such decline is permanent. To the extent the decline
is permanent or new economic terms to its agreements with CBS Radio and its affiliates
cannot be negotiated, the Companys operating performance could be materially adversely
impacted by this decline in audience and commercial inventory.
    
    As a result of deterioration in the Companys operating performance, the Company amended
its senior loan agreement in October 2006 with a syndicate of banks in order to remain in
compliance with the covenants under such agreement, including the total debt ratio covenant
which was amended to 4.00 to 1 through March 31, 2008. Further changes in the Companys
operating performance may cause the Company to seek further amendments to the covenants
under the senior loan agreement or to seek to replace the senior loan agreement, which
matures on February 28, 2009. The Companys ability and timing to obtain, if needed,
additional amendments or additional financing, or to refinance the existing senior loan
agreement, may be adversely impacted by the timing of the Companys ability, if at all, to
extend its relationship with CBS Radio beyond the March 31, 2009 expiration of the
Management Agreement and related agreements.
    
    In connection with its agreements with CBS Radio dating back to 1994, the Company has
benefited from the historical practice of long-term distribution relationships for its
programming, including pursuant to affiliation agreements with most of CBSs owned and
operated radio stations, many of which operate on a month-to-month basis or contain 90-day
termination provisions which historically have not been exercised
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by the CBS radio
stations. During 2006, CBS Radio reached agreements to sell 39 radio stations in ten of
its smaller markets; to date, the sale of 22 of those stations have been completed. To the
extent CBS Radio continues
to sell and/or restructure its portfolio of radio assets and these existing distribution
arrangements are terminated and/or not continued on a long-term basis by the new owners of
the former CBS radio stations, as was the case with certain of the radio stations sold by
CBS in 2006, there is a greater likelihood that the Company will not be able to continue to
benefit from the long-term distribution relationship it has with CBS Radio on substantially
similar economic terms and conditions or at all. If a significant number of additional
radio stations or radio stations in key markets affiliated with the Company are sold by CBS
Radio, and the new owners of such stations terminate and/or do not continue the affiliation
agreements with the Company on a long-term basis, or if the Company cannot enter into new
affiliation agreements with other radio stations in such markets on similar terms and
conditions, the Companys operating performance would be materially and adversely impacted.
    
    The Company and CBS Radio are presently seeking to resolve a dispute as to whether the
manner of sale of certain short duration commercial inventory conducted by or on behalf of
radio stations owned by CBS Radio is permitted under the terms of existing agreements
between the parties, including the non-competition provisions of the Management Agreement.
If this dispute cannot be resolved, the Companys relationship with CBS Radio could be
adversely affected, which could, in turn, have a material and adverse impact on the
Company.
    
    The Company competes in a highly competitive business. Its radio programming competes
for audiences and advertising revenues directly with radio and television stations and
other syndicated programming, as well as with such other media as newspapers, magazines,
cable television, outdoor advertising and direct mail. Audience ratings and
performance-based revenue arrangements are subject to change and any adverse change in a
particular geographic area could have a material and adverse effect on the Companys
ability to attract not only advertisers in that region, but national advertisers as well.
Future operations are further subject to many factors, which could have an adverse effect
upon the Companys financial performance. These factors include:
 
    
    economic conditions, both generally and relative to the broadcasting industry;
    
    advertiser spending patterns, including the notion that orders are being placed
in close proximity to air, limiting visibility of demand;
    
    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 recently announced proposed merger between XM Satellite Radio and Sirius
Satellite Radio;
    
    lower than anticipated market acceptance of new or existing products;
    
    technological changes and innovations;
    
    fluctuations in programming costs;
    
    shifts in population and other demographics;
    
    changes in labor conditions; and
    
    changes in governmental regulations and policies and actions of federal and
state regulatory bodies.
  
    
    The radio broadcasting industry has continued to experience significant change,
including as a result of a significant amount of consolidation in recent years, and
increased business transactions in 2006 by key players in the radio industry (e.g.,Clear
Channel, Citadel, ABC, CBS Radio). In connection therewith, certain major station groups
have: (1) recently modified overall amounts of commercial inventory broadcast on their
radio stations, (2) experienced significant declines in audience and (3) increased their
supply of shorter duration advertisements which is directly competitive to the Company. To
the extent similar initiatives are adopted by other major station groups, this could
adversely impact the amount of commercial
 20




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##### Table of Contents



inventory made available to the Company or
increase the cost of such commercial inventory at the time of renewal of
existing affiliate agreements. Additionally, if the size and financial resources of certain
station groups continue to increase, the station groups may be able to develop their own
programming as a substitute to that offered by the Company or, alternatively, they could
seek to obtain programming from the Companys competitors. Any such occurrences, or merely
the threat of such occurrences, could adversely affect the Companys ability to negotiate
favorable terms with its station affiliates, to attract audiences and to attract
advertisers.
    
    Changes in U.S. financial and equity markets, including market disruptions and
significant interest rate fluctuations, could impede the Companys access to, or increase
the cost of, external financing for its operations and investments.
   
 Item 3. Qualitative and Quantitative Disclosures about Market Risk
     21




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Item 4. Disclosure Controls and Procedures
   22




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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
 Total Number of
    
    Approximate DollarShares Purchased as
    
    Value of Shares thatTotal
    
    
    
    
    
    Part of Publicly
    
    May Yet Be PurchasedNumber of Shares
    
    Average Price Paid
    
    Announced Plan or
    
    Under the Plans orPeriod
    
    Purchased in Period
    
    Per Share
    
    Program
    
    Programs (A)1/1/07  1/31/07
    
    
    
    
    
    
    N/A
    
    
    
    21,001,424
    
    
    $
    290,490,0002/1/07  2/28/07
    
    
    
    
    
    
    N/A
    
    
    
    21,001,424
    
    
    $
    290,490,0003/1/07  3/31/07
    
    
    
    
    
    
    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. 23




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##### Table of Contents



Items 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 ExhibitNumber (A)
    
    Description of Exhibit3.1
    
    Restated Certificate of Incorporation of the Company, as filed on October 25, 2002. (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)10.1* +
    
    Amendment No. 2 to Employment Agreement, dated May 4, 2007, between Registrant and Paul
Gregrey31.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.+
    
    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 quarterly report on Form 10-Q for the quarter ended
September 30, 2002 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. 24




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##### Table of Contents



SIGNATURES
  WESTWOOD ONE, INC.By:
    
    /S/ Peter KosannName:
    
    Peter KosannTitle:
    
    Chief Executive OfficerBy:
    
    /S/ Andrew ZarefName:
    
    Andrew ZarefTitle:
    
    Chief Financial OfficerDate: May 8, 2007
 25




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber (A)
    
    Description of Exhibit3.1
    
    Restated Certificate of Incorporation of the Company, as filed on October 25, 2002. (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)10.1* +
    
    Amendment No. 2 to Employment Agreement, dated May 4, 2007, between Registrant and Paul
Gregrey31.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.+
    
    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 quarterly report on Form 10-Q for the quarter ended
September 30, 2002 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. 26