##### Table of Contents



United States
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-14691
 
 WESTWOOD ONE, INC.
  Delaware
    
    95-3980449(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1166 Avenue of the Americas, 10th Floor New York, NY
    
    10036(Address of principal executive offices)
    
    (Zip Code)
 (212) 641-2000
 
 þ o
 o o
 Rule 12b-2
 Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




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##### 



WESTWOOD ONE, INC.
 INDEX
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Consolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Consolidated Statements of Stockholders Equity
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 4. Controls and Procedures
    
    
    43PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    43Item 1A. Risk Factors
    
    
    43Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 3. Reserved
    
    
    44Item 4. Removed and Reserved
    
    
    44Item 5. Other Information
    
    
    44Item 6. Exhibits
    
    
    45SIGNATURES
    
    
    46Exhibit Index
    
    
    47Exhibit 4.1Exhibit 10.1Exhibit 10.2Exhibit 31.AExhibit 31.BExhibit 32.AExhibit 32.B
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 WESTWOOD ONE, INC.
 
 CONSOLIDATED BALANCE SHEET  (In thousands, except per share amounts)
 June 30, 2010
    
    
    December 31, 2009(unaudited)
    
    
    (audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    4,394
    
    
    $
    4,824Accounts receivable, net of allowance for doubtful accounts
of $598 (2010) and $2,723 (2009)
    
    
    87,012
    
    
    
    87,568Federal income tax receivable
    
    
    
    
    
    
    12,355Prepaid and other assets
    
    
    17,004
    
    
    
    20,994Total current assets
    
    
    108,410
    
    
    
    125,741Property and equipment, net
    
    
    36,481
    
    
    
    36,265Intangible assets, net
    
    
    97,943
    
    
    
    103,400Goodwill
    
    
    38,945
    
    
    
    38,917Other assets
    
    
    3,042
    
    
    
    2,995TOTAL ASSETS
    
    $
    284,821
    
    
    $
    307,318LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    43,237
    
    
    $
    40,164Amounts payable to related parties
    
    
    900
    
    
    
    129Deferred revenue
    
    
    2,511
    
    
    
    3,682Accrued expenses and other liabilities
    
    
    27,070
    
    
    
    28,864Current maturity of long-term debt
    
    
    
    
    
    
    13,500Total current liabilities
    
    
    73,718
    
    
    
    86,339Long-term debt
    
    
    131,390
    
    
    
    122,262Deferred tax liability
    
    
    43,490
    
    
    
    50,932Due to Gores
    
    
    10,019
    
    
    
    11,165Other liabilities
    
    
    19,560
    
    
    
    18,636TOTAL LIABILITIES
    
    
    278,177
    
    
    
    289,334Commitments and ContingenciesSTOCKHOLDERS EQUITYCommon stock, $.01 par value: authorized: 5,000,000 shares
issued and outstanding: 20,544 (2010) and 20,544 (2009)
    
    
    205
    
    
    
    205Class B stock, $.01 par value: authorized: 3,000 shares; issued and outstanding: 0
    
    
    
    
    
    
    Additional paid-in capital
    
    
    81,970
    
    
    
    81,268Net unrealized gain
    
    
    210
    
    
    
    111Accumulated deficit
    
    
    (75,741
    )
    
    
    (63,600
    )TOTAL STOCKHOLDERS EQUITY
    
    
    6,644
    
    
    
    17,984TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    284,821
    
    
    $
    307,318
   3




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##### Table of Contents



WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENT OF OPERATIONS  (In thousands, except per share amounts)
 (unaudited)
 Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Revenue
    
    $
    83,444
    
    
    $
    176,286
    
    
    $
    58,044
    
    
    
    $
    25,607
    
    
    $
    111,474Operating costs
    
    
    76,708
    
    
    
    165,156
    
    
    
    52,210
    
    
    
    
    20,402
    
    
    
    111,309Depreciation and amortization
    
    
    4,689
    
    
    
    9,185
    
    
    
    5,845
    
    
    
    
    521
    
    
    
    2,584Corporate general and
administrative expenses
    
    
    2,916
    
    
    
    6,828
    
    
    
    2,313
    
    
    
    
    1,267
    
    
    
    4,519Restructuring charges
    
    
    1,118
    
    
    
    1,861
    
    
    
    1,454
    
    
    
    
    536
    
    
    
    3,976Special charges
    
    
    976
    
    
    
    2,799
    
    
    
    368
    
    
    
    
    7,010
    
    
    
    12,819Total expenses
    
    
    86,407
    
    
    
    185,829
    
    
    
    62,190
    
    
    
    
    29,736
    
    
    
    135,207Operating loss
    
    
    (2,963
    )
    
    
    (9,543
    )
    
    
    (4,146
    )
    
    
    
    (4,129
    )
    
    
    (23,733
    )Interest expense
    
    
    5,993
    
    
    
    11,369
    
    
    
    4,692
    
    
    
    
    (41
    )
    
    
    3,222Other expense (income)
    
    
    (3
    )
    
    
    (2
    )
    
    
    (4
    )
    
    
    
    (59
    )
    
    
    (359
    )Loss before income tax
    
    
    (8,953
    )
    
    
    (20,910
    )
    
    
    (8,834
    )
    
    
    
    (4,029
    )
    
    
    (26,596
    )Income tax benefit
    
    
    (3,535
    )
    
    
    (8,769
    )
    
    
    (2,650
    )
    
    
    
    (254
    )
    
    
    (7,635
    )Net loss
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (6,184
    )
    
    
    $
    (3,775
    )
    
    $
    (18,961
    )Net loss attributable to
common stockholders
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (9,595
    )
    
    
    $
    (5,387
    )
    
    $
    (22,037
    )Loss per share:Common StockBasic
    
    $
    (0.26
    )
    
    $
    (0.59
    )
    
    $
    (18.85
    )
    
    
    $
    (10.67
    )
    
    $
    (43.64
    )Diluted
    
    $
    (0.26
    )
    
    $
    (0.59
    )
    
    $
    (18.85
    )
    
    
    $
    (10.67
    )
    
    $
    (43.64
    )Class B stockBasic
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Diluted
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Weighted average shares outstanding:Common StockBasic
    
    
    20,544
    
    
    
    20,544
    
    
    
    509
    
    
    
    
    505
    
    
    
    505Diluted
    
    
    20,544
    
    
    
    20,544
    
    
    
    509
    
    
    
    
    505
    
    
    
    505Class B stockBasic
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    1
    
    
    
    1Diluted
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    1
    
    
    
    1
   4




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WESTWOOD ONE, INC.
 
 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS  (In thousands)
 (unaudited)
 Successor Company
    
    
    
    Predecessor CompanyFor the Six
    
    
    For the Period
    
    
    
    For the PeriodMonths Ended
    
    
    April 24 to
    
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009Cash Flows from Operating Activities:Net loss
    
    $
    (12,141
    )
    
    $
    (6,184
    )
    
    
    $
    (18,961
    )Adjustments to reconcile net loss to net
cash provided by operating activities:Depreciation and amortization
    
    
    9,185
    
    
    
    5,845
    
    
    
    
    2,584Loss on disposal of property and equipment
    
    
    
    
    
    
    76
    
    
    
    
    188Deferred taxes
    
    
    (8,622
    )
    
    
    2,162
    
    
    
    
    (6,873
    )Non-cash equity-based compensation
    
    
    1,881
    
    
    
    852
    
    
    
    
    2,110Amortization of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    331Federal tax refund
    
    
    12,940
    
    
    
    
    
    
    
    
    Net change in other assets and liabilities
    
    
    9,979
    
    
    
    (17,078
    )
    
    
    
    19,844Net cash provided by (used in) operating
activities
    
    
    13,222
    
    
    
    (14,327
    )
    
    
    
    (777
    )Cash Flows from Investing Activities:Capital expenditures
    
    
    (4,540
    )
    
    
    (1,546
    )
    
    
    
    (1,384
    )Net cash used in investing activities
    
    
    (4,540
    )
    
    
    (1,546
    )
    
    
    
    (1,384
    )Cash Flows from Financing Activities:Proceeds from Revolving Credit Facility
    
    
    7,000
    
    
    
    
    
    
    
    
    Repayments of Senior Notes
    
    
    (15,500
    )
    
    
    
    
    
    
    
    Payments of capital lease obligations
    
    
    (612
    )
    
    
    (152
    )
    
    
    
    (271
    )Proceeds from term loan
    
    
    
    
    
    
    20,000
    
    
    
    
    Debt repayments
    
    
    
    
    
    
    (25,000
    )
    
    
    
    Issuance of Series B Convertible Preferred
Stock
    
    
    
    
    
    
    25,000
    
    
    
    
    Net cash (used in) provided by financing
activities
    
    
    (9,112
    )
    
    
    19,848
    
    
    
    
    (271
    )Net increase in cash and cash equivalents
    
    
    (430
    )
    
    
    3,975
    
    
    
    
    (2,432
    )Cash and cash equivalents,beginning of
period
    
    
    4,824
    
    
    
    4,005
    
    
    
    
    6,437Cash and cash equivalents, end of period
    
    $
    4,394
    
    
    $
    7,980
    
    
    
    $
    4,005Supplemental Schedule of Cash Flow Information:Non-cash financing activitiesCancellation of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    252,060Issuance of new long-term debt
    
    
    
    
    
    
    117,500
    
    
    
    
    
   5




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##### Table of Contents



WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY  (In thousands)
 (unaudited)
 Unrealized
    
    
    TotalAdditional
    
    
    
    
    
    
    Gain on
    
    
    Stock-Common Stock
    
    
    Paid-in
    
    
    (Accumulated
    
    
    Available for
    
    
    holdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    Sale Securities
    
    
    EquityBalance as of
January 1, 2010
    
    
    20,544
    
    
    $
    205
    
    
    $
    81,268
    
    
    $
    (63,600
    )
    
    $
    111
    
    
    $
    17,984Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,141
    )
    
    
    
    
    
    
    (12,141
    )Other comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    99Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    1,881
    
    
    
    
    
    
    
    
    
    
    
    1,881Issuance of common stock
under
equity-based
compensation plans
    
    
    
    
    
    
    
    
    
    
    (449
    )
    
    
    
    
    
    
    
    
    
    
    (449
    )Cancellations of vested
equity
grants
    
    
    
    
    
    
    
    
    
    
    (730
    )
    
    
    
    
    
    
    
    
    
    
    (730
    )Balance as of
June 30, 2010
    
    
    20,544
    
    
    $
    205
    
    
    $
    81,970
    
    
    $
    (75,741
    )
    
    $
    210
    
    
    $
    6,644
   6




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##### Table of Contents



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




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
   Current assets
    
    $
    104,641Goodwill
    
    
    86,414Intangibles
    
    
    116,910Property and equipment
    
    
    36,270Other assets
    
    
    21,913Current liabilities
    
    
    81,160Deferred income taxes
    
    
    77,879Due to Gores
    
    
    10,797Other liabilities
    
    
    10,458Long-term debt
    
    
    106,703Total Business Enterprise Value
    
    $
    79,151
   Unaudited Pro FormaThree Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2009Revenue
    
    $
    83,651
    
    
    $
    169,518Net loss
    
    
    (11,414
    )
    
    
    (34,303
    )
 Financial Statement Presentation
  Reclassification and Revisions
   8




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##### Table of Contents



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




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Net loss
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (6,184
    )
    
    
    $
    (3,775
    )
    
    $
    (18,961
    )Less: Accumulated Preferred Stock dividends
    
    
    
    
    
    
    
    
    
    
    (3,411
    )
    
    
    
    (1,612
    )
    
    
    (3,076
    )Undistributed (losses) earnings
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (9,595
    )
    
    
    $
    (5,387
    )
    
    $
    (22,037
    )Earnings  Common stockBasicUndistributed (losses) allocated to Common stockholders
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (9,595
    )
    
    
    $
    (5,387
    )
    
    $
    (22,037
    )Total (losses) earnings  Common stock, basic
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (9,595
    )
    
    
    $
    (5,387
    )
    
    $
    (22,037
    )DilutedUndistributed (losses) allocated to Common stockholders
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (9,595
    )
    
    
    $
    (5,387
    )
    
    $
    (22,037
    )Total (losses) earnings  Common stock, diluted
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (9,595
    )
    
    
    $
    (5,387
    )
    
    $
    (22,037
    )Weighted average Common shares outstanding, basic
    
    
    20,544
    
    
    
    20,544
    
    
    
    509
    
    
    
    
    505
    
    
    
    505Weighted average Common shares outstanding, diluted
    
    
    20,544
    
    
    
    20,544
    
    
    
    509
    
    
    
    
    505
    
    
    
    505Loss per Common share, basicDistributed earnings, basic
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Undistributed (losses) earnings  basic
    
    
    (0.26
    )
    
    
    (0.59
    )
    
    
    (18.85
    )
    
    
    
    (10.67
    )
    
    
    (43.64
    )Total
    
    $
    (0.26
    )
    
    $
    (0.59
    )
    
    $
    (18.85
    )
    
    
    $
    (10.67
    )
    
    $
    (43.64
    )Loss per Common share, dilutedDistributed earnings, diluted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Undistributed (losses) earnings  diluted
    
    
    (0.26
    )
    
    
    (0.59
    )
    
    
    (18.85
    )
    
    
    
    (10.67
    )
    
    
    (43.64
    )Total
    
    $
    (0.26
    )
    
    $
    (0.59
    )
    
    $
    (18.85
    )
    
    
    $
    (10.67
    )
    
    $
    (43.64
    )Loss per share  Class B StockBasicDistributed earnings to Class B stockholders
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Undistributed (losses) allocated to Class B stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loss  Class B Stock, basic
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    DilutedDistributed earnings to Class B stockholders
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Undistributed (losses) allocated to Class B stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total loss  Class B Stock, diluted
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Weighted average Class B shares outstanding, basic
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    1
    
    
    
    1Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average Class B shares outstanding, diluted
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    1
    
    
    
    1Earnings per Class B share, basicDistributed earnings, basic
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Undistributed (losses)  basic
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Earnings per Class B share, dilutedDistributed earnings, diluted
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Undistributed (losses)  diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    $
    
    
    
    $
    
  10




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 NOTE 3  Related Party Transactions:
 Gores Radio Holdings
   Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Glendon Partners fees (1)
    
    $
    129
    
    
    $
    441
    
    
    $
    296
    
    
    
    $
    104
    
    
    $
    754Reimbursement of legal fees
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    
    470
    
    
    
    1,533Reimbursement of letter-of-credit fees (2)
    
    
    63
    
    
    
    126
    
    
    
    
    
    
    
    
    
    
    
    
    Gores Radio Holdings, LLC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230
    
    
    
    230Interest on loan
    
    
    400
    
    
    
    819
    
    
    
    303
    
    
    
    
    
    
    
    
    $
    592
    
    
    $
    1,394
    
    
    $
    599
    
    
    
    $
    804
    
    
    $
    2,517
 (1)
    
    These fees consist of payments for professional services rendered by various members of
Glendon to us in the areas of operational improvement, tax, finance, accounting, legal and
insurance/risk management.(2)
    
    Reimbursement of a standby letter-of-credit fee incurred and paid by Gores in connection
with its guarantee of the $15,000 revolving credit facility with Wells Fargo. POP Radio
  Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Program commission expense
    
    $
    366
    
    
    $
    727
    
    
    $
    248
    
    
    
    $
    85
    
    
    $
    416
 CBS Radio
    11




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
   Successor Company
    
    
    
    Predecessor CompanyFor the Period
    
    
    
    For the Period
    
    
    For the PeriodApril 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Programming and affiliate arrangements
    
    $
    9,689
    
    
    
    $
    4,112
    
    
    $
    20,884News agreement
    
    
    2,502
    
    
    
    
    859
    
    
    
    4,107$
    12,191
    
    
    
    $
    4,971
    
    
    $
    24,991
  Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Operating costs
    
    $
    366
    
    
    $
    727
    
    
    $
    12,439
    
    
    
    $
    5,056
    
    
    $
    25,407Special charges
    
    
    192
    
    
    
    575
    
    
    
    296
    
    
    
    
    804
    
    
    
    2,517Interest expense
    
    
    400
    
    
    
    819
    
    
    
    303
    
    
    
    
    
    
    
    
    $
    958
    
    
    $
    2,121
    
    
    $
    13,038
    
    
    
    $
    5,860
    
    
    $
    27,924
 NOTE 4  Property and Equipment:
  June 30, 2010
    
    
    December 31, 2009Land, buildings and improvements
    
    $
    11,400
    
    
    $
    10,830Recording, broadcasting and studio equipment
    
    
    23,076
    
    
    
    20,581Furniture, equipment and other
    
    
    13,161
    
    
    
    11,59247,637
    
    
    
    43,003Less: Accumulated depreciation and amortization
    
    
    11,156
    
    
    
    6,738Property and equipment, net
    
    $
    36,481
    
    
    $
    36,265
   12




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 NOTE 5  Intangible Assets
    As of June 30, 2010
    
    
    As of December 31, 2009Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetEstimated
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingLife
    
    Value
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    ValueTrademarks
    
    Indefinite
    
    $
    20,800
    
    
    $
    
    
    
    $
    20,800
    
    
    $
    20,800
    
    
    $
    
    
    
    $
    20,800Affiliate relationships
    
    10 years
    
    
    72,100
    
    
    
    (8,558
    )
    
    
    63,542
    
    
    
    72,100
    
    
    
    (4,953
    )
    
    
    67,147Software and technology
    
    5 years
    
    
    7,896
    
    
    
    (1,682
    )
    
    
    6,214
    
    
    
    7,896
    
    
    
    (890
    )
    
    
    7,006Client contracts
    
    5 years
    
    
    8,930
    
    
    
    (2,353
    )
    
    
    6,577
    
    
    
    8,930
    
    
    
    (1,363
    )
    
    
    7,567Leases
    
    7 years
    
    
    980
    
    
    
    (170
    )
    
    
    810
    
    
    
    980
    
    
    
    (100
    )
    
    
    880Insertion orders
    
    9 months
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,400
    
    
    
    (8,400
    )
    
    
    $
    110,706
    
    
    $
    (12,763
    )
    
    $
    97,943
    
    
    $
    119,106
    
    
    $
    (15,706
    )
    
    $
    103,400
  NOTE 6  Goodwill:
     13




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  Total
    
    
    Metro Traffic
    
    
    NetworkBalance January 1, 2010
    
    $
    38,917
    
    
    $
    13,005
    
    
    $
    25,912Adjustments to opening balance
    
    
    28
    
    
    
    144
    
    
    
    (116
    )Balance at June 30, 2010
    
    $
    38,945
    
    
    $
    13,149
    
    
    $
    25,796
  Total
    
    
    Metro Traffic
    
    
    NetworkGoodwill at April 24, 2009
    
    $
    89,346
    
    
    $
    63,550
    
    
    $
    25,796Accumulated impairment losses from April 24, 2009 to June 30, 2010
    
    
    (50,401
    )
    
    
    (50,401
    )
    
    
    Balance at June 30, 2010
    
    $
    38,945
    
    
    $
    13,149
    
    
    $
    25,796
 NOTE 7  Debt:
      14




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  June 30, 2010
    
    
    December 31, 2009Senior Secured Notes due July 15, 2012 (1)
    
    $
    99,390
    
    
    $
    110,762Due to Gores (1)
    
    
    10,019
    
    
    
    11,165Term Loan (2)
    
    
    20,000
    
    
    
    20,000Revolving Credit Facility (2)
    
    
    12,000
    
    
    
    5,000$
    141,409
    
    
    $
    146,927
 (1)
    
    The applicable interest rate on such debt is 15.0%, which includes 5.0% PIK interest which
accrues and is added to principal on a quarterly basis. For the six months ended June 30,
2010, interest expense on the debt to Due to Gores was $819. The Due to Gores debt was reduced
by its pro-rata share of the $15,500 payments made by us to pay down the Senior Notes that are
described in more detail above. PIK interest is not due until maturity.(2)
    
    The applicable interest rate on such debt was 7.0% as of June 30, 2010 and December 31, 2009.
The interest rate is variable and is payable at the greater of (i) LIBOR plus 4.5% (with a
LIBOR floor of 2.5%) or (ii) the base rate plus 4.5% (with a base rate floor equal to the
greater of 3.75% or the one-month LIBOR rate), at our option. NOTE 8  Fair Value Measurements:
 Fair Value of Financial Instruments
  June 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueBorrowings (short and long term)
    
    $
    129,409
    
    
    $
    134,768
    
    
    $
    141,927
    
    
    $
    148,425
  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.
  15




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WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  Items Measured at Fair Value on a Recurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3Quoted Prices in Active
    
    
    Significant Other
    
    
    SignificantMarkets for Identical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsJune 30, 2010
    
    
    December 31, 2009
    
    
    June 30, 2010
    
    
    December 31, 2009
    
    
    June 30, 2010
    
    
    December 31, 2009Assets:Investments (1)
    
    $
    1,129
    
    
    $
    968
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    $
    1,129
    
    
    $
    968
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 (1)
    
    Included in other assets NOTE 9  Equity-Based Compensation:
   Stock Options
   WeightedAverageShares
    
    
    Exercise PriceOutstanding January 1, 2010
    
    
    28.6
    
    
    $
    1,345Granted
    
    
    1,998.0
    
    
    $
    6Exercised
    
    
    
    
    
    $
    Cancelled, forfeited or expired
    
    
    (5.1
    )
    
    $
    598Outstanding June 30, 2010
    
    
    2,021.5
    
    
    $
    23Options exercisable June 30, 2010
    
    
    17.0
    
    
    $
    1,950Aggregate
estimated fair value of options vesting during
the six months ended June 30, 2010
    
    $
    937
  16




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
    Risk-free interest rate
    
    
    2.35
    %Expected term (years)
    
    
    5.0Expected volatility
    
    
    98.6
    %Expected dividend yield
    
    
    0.00
    %Weighted average fair value of options granted
    
    $
    4.47
 Restricted Stock
   Weighted AverageShares
    
    
    Grant Date Fair ValueOutstanding January 1, 2010
    
    
    0.8
    
    
    $
    1,504Granted
    
    
    
    
    
    
    Converted to common stock
    
    
    (0.8
    )
    
    $
    1,504Forfeited
    
    
    
    
    
    
    Outstanding June 30, 2010
    
    
    
    
    
    
    
 Restricted Stock Units
   17




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  Weighted Average GrantShares
    
    
    Date Fair ValueOutstanding January 1, 2010
    
    
    0.1
    
    
    $
    1,314Granted
    
    
    
    
    
    
    Converted to common stock
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding June 30, 2010
    
    
    0.1
    
    
    $
    1,314
  NOTE 10  Comprehensive Income (Loss):
  Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Net loss
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (6,184
    )
    
    
    $
    (3,775
    )
    
    $
    (18,961
    )Unrealized gain (loss) on marketable securities, net of income taxes
    
    
    13
    
    
    
    99
    
    
    
    (95
    )
    
    
    
    85
    
    
    
    219Comprehensive loss
    
    $
    (5,405
    )
    
    $
    (12,042
    )
    
    $
    (6,279
    )
    
    
    $
    (3,690
    )
    
    $
    (18,742
    )
 NOTE 11  Income Taxes
     18




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 NOTE 12  Restructuring Charges:
  i.e.,
    Balance
    
    
    
    
    
    
    Changes in
    
    
    Utilization
    
    
    BalanceJanuary 1, 2010
    
    
    Additions
    
    
    Estimates
    
    
    Cash
    
    
    Non-Cash
    
    
    June 30, 2010Metro-TrafficSeverance
    
    $
    1,537
    
    
    $
    142
    
    
    $
    
    
    
    $
    (1,285
    )
    
    $
    
    
    
    $
    394Facilities Consolidation
    
    
    3,677
    
    
    
    352
    
    
    
    620
    
    
    
    (786
    )
    
    
    
    
    
    
    3,863Contract Terminations
    
    
    1,750
    
    
    
    97
    
    
    
    
    
    
    
    (1,820
    )
    
    
    
    
    
    
    27Total
    
    
    6,964
    
    
    
    591
    
    
    
    620
    
    
    
    (3,891
    )
    
    
    
    
    
    
    4,2842010 ProgramSeverance
    
    
    
    
    
    
    650
    
    
    
    
    
    
    
    (453
    )
    
    
    
    
    
    
    197Total
    
    
    
    
    
    
    650
    
    
    
    
    
    
    
    (453
    )
    
    
    
    
    
    
    197Total Restructuring
    
    $
    6,964
    
    
    $
    1,241
    
    
    $
    620
    
    
    $
    (4,344
    )
    
    $
    
    
    
    $
    4,481
  19




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
 NOTE 13  Special Charges:
  Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Debt Agreement costs
    
    $
    236
    
    
    $
    815
    
    
    $
    
    
    
    
    $
    
    
    
    $
    Employment claim settlements
    
    
    10
    
    
    
    493
    
    
    
    
    
    
    
    
    
    
    
    
    Gores fees
    
    
    129
    
    
    
    449
    
    
    
    
    
    
    
    
    
    
    
    
    Fees related to the Refinancing
    
    
    48
    
    
    
    162
    
    
    
    296
    
    
    
    
    6,985
    
    
    
    12,699Corporate development costs
    
    
    408
    
    
    
    609
    
    
    
    
    
    
    
    
    
    
    
    
    Regionalization costs
    
    
    145
    
    
    
    271
    
    
    
    72
    
    
    
    
    25
    
    
    
    120$
    976
    
    
    $
    2,799
    
    
    $
    368
    
    
    
    $
    7,010
    
    
    $
    12,819
 e.g.,
 NOTE 14  Segment Information:
    20




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009RevenueMetro Traffic
    
    $
    43,408
    
    
    $
    80,675
    
    
    $
    30,693
    
    
    
    $
    12,796
    
    
    $
    47,479Network Radio
    
    
    40,036
    
    
    
    95,611
    
    
    
    27,351
    
    
    
    
    12,811
    
    
    
    63,995$
    83,444
    
    
    $
    176,286
    
    
    $
    58,044
    
    
    
    $
    25,607
    
    
    $
    111,474Segment OIBDAMetro Traffic (1)
    
    $
    2,737
    
    
    $
    1,171
    
    
    $
    1,734
    
    
    
    $
    3,714
    
    
    $
    (613
    )Network Radio (1)
    
    
    3,014
    
    
    
    7,990
    
    
    
    3,300
    
    
    
    
    1,311
    
    
    
    (573
    )Corporate expenses
    
    
    (1,931
    )
    
    
    (4,859
    )
    
    
    (1,513
    )
    
    
    
    (1,087
    )
    
    
    (3,168
    )Restructuring and special charges
    
    
    (2,094
    )
    
    
    (4,660
    )
    
    
    (1,822
    )
    
    
    
    (7,546
    )
    
    
    (16,795
    )OIBDA
    
    
    1,726
    
    
    
    (358
    )
    
    
    1,699
    
    
    
    
    (3,608
    )
    
    
    (21,149
    )Depreciation and amortization
    
    
    (4,689
    )
    
    
    (9,185
    )
    
    
    (5,845
    )
    
    
    
    (521
    )
    
    
    (2,584
    )Operating loss
    
    
    (2,963
    )
    
    
    (9,543
    )
    
    
    (4,146
    )
    
    
    
    (4,129
    )
    
    
    (23,733
    )Interest expense
    
    
    (5,993
    )
    
    
    (11,369
    )
    
    
    (4,692
    )
    
    
    
    41
    
    
    
    (3,222
    )Other (expense) income
    
    
    3
    
    
    
    2
    
    
    
    4
    
    
    
    
    59
    
    
    
    359Loss before income taxes
    
    
    (8,953
    )
    
    
    (20,910
    )
    
    
    (8,834
    )
    
    
    
    (4,029
    )
    
    
    (26,596
    )Income tax benefit
    
    
    (3,535
    )
    
    
    (8,769
    )
    
    
    (2,650
    )
    
    
    
    (254
    )
    
    
    (7,635
    )Net Loss
    
    $
    (5,418
    )
    
    $
    (12,141
    )
    
    $
    (6,184
    )
    
    
    $
    (3,775
    )
    
    $
    (18,961
    )
 (1)
    
    Segment operating (loss) income includes allocations of certain corporate overhead expenses
such as accounting and legal costs, bank charges, insurance, information technology etc.  Successor Company
    
    
    
    Predecessor CompanyFor the Three
    
    
    For the Six
    
    
    For the Period
    
    
    
    For the Period
    
    
    For the PeriodMonths Ended
    
    
    Months Ended
    
    
    April 24 to
    
    
    
    April 1 to
    
    
    January 1 toJune 30, 2010
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 23, 2009
    
    
    April 23, 2009Depreciation and amortization:Metro Traffic
    
    $
    3,239
    
    
    $
    6,339
    
    
    $
    4,357
    
    
    
    $
    295
    
    
    $
    1,480Network Radio
    
    
    1,443
    
    
    
    2,832
    
    
    
    1,483
    
    
    
    
    225
    
    
    
    1,096Corporate
    
    
    7
    
    
    
    14
    
    
    
    5
    
    
    
    
    1
    
    
    
    8$
    4,689
    
    
    $
    9,185
    
    
    $
    5,845
    
    
    
    $
    521
    
    
    $
    2,584Capital expenditures:Metro Traffic
    
    $
    1,000
    
    
    $
    2,592
    
    
    $
    993
    
    
    
    $
    204
    
    
    $
    879Network Radio
    
    
    1,337
    
    
    
    1,920
    
    
    
    553
    
    
    
    
    12
    
    
    
    506Corporate
    
    
    20
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,357
    
    
    $
    4,540
    
    
    $
    1,546
    
    
    
    $
    216
    
    
    $
    1,385
  21




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##### Table of Contents



WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
  June 30, 2010
    
    
    December 31, 2009Metro Traffic
    
    $
    147,162
    
    
    $
    147,387Network Radio
    
    
    119,279
    
    
    
    131,632Corporate
    
    
    18,380
    
    
    
    28,299$
    284,821
    
    
    $
    307,318
 NOTE 15  Recent Accounting Pronouncements:
    NOTE 16  Subsequent Event:
   22




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(In thousands except per share amounts)
 EXECUTIVE OVERVIEW
         23




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24




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##### Table of Contents



Successor Company
    
    
    Predecessor Company
    
    
    Combined TotalFor the Period April 24 to
    
    
    For the Period April 1 to
    
    
    For the Three MonthsJune 30, 2009
    
    
    April 23, 2009
    
    
    Ended June 30, 2009Revenue
    
    $
    58,044
    
    
    $
    25,607
    
    
    $
    83,651Operating costs
    
    
    52,210
    
    
    
    20,402
    
    
    
    72,612Depreciation and amortization
    
    
    5,845
    
    
    
    521
    
    
    
    6,366Corporate general and
administrative expenses
    
    
    2,313
    
    
    
    1,267
    
    
    
    3,580Restructuring charges
    
    
    1,454
    
    
    
    536
    
    
    
    1,990Special charges
    
    
    368
    
    
    
    7,010
    
    
    
    7,378Total expenses
    
    
    62,190
    
    
    
    29,736
    
    
    
    91,926Operating loss
    
    
    (4,146
    )
    
    
    (4,129
    )
    
    
    (8,275
    )Interest expense
    
    
    4,692
    
    
    
    (41
    )
    
    
    4,651Other expense (income)
    
    
    (4
    )
    
    
    (59
    )
    
    
    (63
    )Loss before income tax
    
    
    (8,834
    )
    
    
    (4,029
    )
    
    
    (12,863
    )Income tax benefit
    
    
    (2,650
    )
    
    
    (254
    )
    
    
    (2,904
    )Net loss
    
    $
    (6,184
    )
    
    $
    (3,775
    )
    
    $
    (9,959
    )
 Successor Company
    
    
    Predecessor Company
    
    
    Combined TotalFor the Period April 24 to
    
    
    For the Period January 1 to
    
    
    For the Six MonthsJune 30, 2009
    
    
    April 23, 2009
    
    
    Ended June 30, 2009Revenue
    
    $
    58,044
    
    
    $
    111,474
    
    
    $
    169,518Operating costs
    
    
    52,210
    
    
    
    111,309
    
    
    
    163,519Depreciation and amortization
    
    
    5,845
    
    
    
    2,584
    
    
    
    8,429Corporate general and
administrative expenses
    
    
    2,313
    
    
    
    4,519
    
    
    
    6,832Restructuring charges
    
    
    1,454
    
    
    
    3,976
    
    
    
    5,430Special charges
    
    
    368
    
    
    
    12,819
    
    
    
    13,187Total expenses
    
    
    62,190
    
    
    
    135,207
    
    
    
    197,397Operating loss
    
    
    (4,146
    )
    
    
    (23,733
    )
    
    
    (27,879
    )Interest expense
    
    
    4,692
    
    
    
    3,222
    
    
    
    7,914Other expense (income)
    
    
    (4
    )
    
    
    (359
    )
    
    
    (363
    )Loss before income tax
    
    
    (8,834
    )
    
    
    (26,596
    )
    
    
    (35,430
    )Income tax benefit
    
    
    (2,650
    )
    
    
    (7,635
    )
    
    
    (10,285
    )Net loss
    
    $
    (6,184
    )
    
    $
    (18,961
    )
    
    $
    (25,145
    )
  25




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##### Table of Contents



Results of Operations
     Three Months Ended June 30, 2010 Compared With Three Months Ended June 30, 2009
 Revenue
  For the Three Months Ended June 30,Favorable (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    43,408
    
    
    $
    43,489
    
    
    $
    (81
    )
    
    
    -0.2
    %Network Radio
    
    
    40,036
    
    
    
    40,162
    
    
    
    (126
    )
    
    
    -0.3
    %Total (1)
    
    $
    83,444
    
    
    $
    83,651
    
    
    $
    (207
    )
    
    
    -0.2
    %
 (1)
    
    As described above, we currently aggregate revenue based on the operating segment. A number
of advertisers purchase both local/regional and national or Network Radio commercial airtime in
both segments. Our objective is to optimize total revenue from those advertisers.   26




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##### Table of Contents



Operating Costs
  Favorable / (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Payroll and payroll related
    
    $
    21,021
    
    
    $
    19,457
    
    
    $
    (1,564
    )
    
    
    (8.0
    )%Programming and production
    
    
    17,575
    
    
    
    17,868
    
    
    
    293
    
    
    
    1.6
    %Program and operating
    
    
    8,618
    
    
    
    6,727
    
    
    
    (1,891
    )
    
    
    (28.1
    )%Station compensation
    
    
    18,608
    
    
    
    18,334
    
    
    
    (274
    )
    
    
    (1.5
    )%Other operating expenses
    
    
    10,886
    
    
    
    10,226
    
    
    
    (660
    )
    
    
    (6.5
    )%$
    76,708
    
    
    $
    72,612
    
    
    $
    (4,096
    )
    
    
    (5.6
    )%
 %,
 Depreciation and Amortization
  Corporate General and Administrative Expenses
  Restructuring Charges
  Special Charges
   27




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##### Table of Contents



OIBDA
   For the Three Months Ended June 30,Favorable (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    2,737
    
    
    $
    5,448
    
    
    $
    (2,711
    )
    
    
    (49.8
    )%Network Radio
    
    
    3,014
    
    
    
    4,611
    
    
    
    (1,597
    )
    
    
    (34.6
    )%Corporate expenses
    
    
    (1,931
    )
    
    
    (2,600
    )
    
    
    669
    
    
    
    25.7
    %Restructuring and special charges
    
    
    (2,094
    )
    
    
    (9,368
    )
    
    
    7,274
    
    
    
    77.6
    %OIBDA
    
    
    1,726
    
    
    
    (1,909
    )
    
    
    3,635
    
    
    
    190.4
    %Depreciation and amortization
    
    
    (4,689
    )
    
    
    (6,366
    )
    
    
    1,677
    
    
    
    26.3
    %Operating loss
    
    $
    (2,963
    )
    
    $
    (8,275
    )
    
    $
    5,312
    
    
    
    64.2
    %
  Metro Traffic
  Network Radio
  Operating Loss
  Interest Expense
  Provision for Income Taxes
   28




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##### Table of Contents



Net Loss
  Six Months Ended June 30, 2010 Compared With Six Months Ended June 30, 2009
 Revenue
  For the Six Months Ended June 30,Favorable (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    80,675
    
    
    $
    78,172
    
    
    $
    2,503
    
    
    
    3.2
    %Network Radio
    
    
    95,611
    
    
    
    91,346
    
    
    
    4,265
    
    
    
    4.7
    %Total (1)
    
    $
    176,286
    
    
    $
    169,518
    
    
    $
    6,768
    
    
    
    4.0
    %
 (1)
    
    As described above, we currently aggregate revenue based on the operating segment. A number
of advertisers purchase both local/regional and national or Network Radio commercial airtime in
both segments. Our objective is to optimize total revenue from those advertisers.   Air America Radio, The Radio Factor Hosted by Bill
OReilly The Adam Carolla Show
 Operating Costs
  Favorable / (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Payroll and payroll related
    
    $
    41,892
    
    
    $
    40,716
    
    
    $
    (1,176
    )
    
    
    (2.9
    )%Programming and production
    
    
    47,415
    
    
    
    50,679
    
    
    
    3,264
    
    
    
    6.4
    %Program and operating
    
    
    16,399
    
    
    
    11,377
    
    
    
    (5,022
    )
    
    
    (44.1
    )%Station compensation
    
    
    37,098
    
    
    
    38,103
    
    
    
    1,005
    
    
    
    2.6
    %Other operating expenses
    
    
    22,352
    
    
    
    22,644
    
    
    
    292
    
    
    
    1.3
    %$
    165,156
    
    
    $
    163,519
    
    
    $
    (1,637
    )
    
    
    (1.0
    )%
 %,
  29




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##### Table of Contents



Depreciation and Amortization
  Corporate General and Administrative Expenses
  Restructuring Charges
  Special Charges
  OIBDA
   For the Six Months Ended June 30,Favorable (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    1,171
    
    
    $
    1,121
    
    
    $
    50
    
    
    
    4.5
    %Network Radio
    
    
    7,990
    
    
    
    2,727
    
    
    
    5,263
    
    
    
    193.0
    %Corporate expenses
    
    
    (4,859
    )
    
    
    (4,681
    )
    
    
    (178
    )
    
    
    (3.8
    )%Restructuring and special charges
    
    
    (4,660
    )
    
    
    (18,617
    )
    
    
    13,957
    
    
    
    75.0
    %OIBDA
    
    
    (358
    )
    
    
    (19,450
    )
    
    
    19,092
    
    
    
    98.2
    %Depreciation and amortization
    
    
    (9,185
    )
    
    
    (8,429
    )
    
    
    (756
    )
    
    
    (9.0
    )%Operating loss
    
    $
    (9,543
    )
    
    $
    (27,879
    )
    
    $
    18,336
    
    
    
    65.8
    %
  30




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##### Table of Contents



Metro Traffic
  Network Radio
  Operating Loss
  Interest Expense
  Provision for Income Taxes
  Net Loss
  Cash Flows
    31




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##### Table of Contents



Liquidity and Capital Resources
 We continually project anticipated cash requirements, which may include potential acquisitions, capital expenditures,
and principal and interest payments on our outstanding indebtedness, dividends and working capital requirements. To
date, funding requirements have been financed through cash flows from operations, the issuance of equity and the
issuance of long-term debt. Our available liquidity on June 30, 2010 was $6,175. At August 17, 2010, after giving effect to the amendments to our debt agreements entered
into on such date (See Note 16  Subsequent Events), but not
taking into account either of the stock purchases by Gores, our principal sources of liquidity were our cash and cash
equivalents of $4,468 and amounts available to us under our revolving
credit facility of $6,750 as described in Note 7  Debt, which collectively totaled $11,218 of available liquidity. As part of these amendments, Gores agreed to
purchase an additional $15,000 of common stock, $5,000 of which shall be purchased no later than September 7, 2010 and
$10,000 of which shall be purchased on February 28,
2011 or sooner depending on the Companys needs. Notwithstanding the foregoing, if the Company shall have received net
cash proceeds of at least $10,000 from the issuance and sale of
Company qualified equity interests (as such term is defined in the
Securities Purchase Agreement) to any person, other than in
connection with (1) Gores $5,000 investment in 2010, and (2)
any stock or option grant to a Company employee under a stock option
plan or other similar incentive or compensation plan of the Company
or upon the exercise thereof, Gores shall not be required to invest
the aforementioned $10,000. While all of our businesses (Network Radio, Metro Traffic radio and Metro Television) are currently performing in
accordance with our third quarter projections, our liquidity level was adversely affected by our second quarter
performance. As a result of the foregoing, management believed it was prudent to renegotiate amendments to our debt
agreements to enhance our available liquidity and to modify our debt leverage covenants. These negotiations resulted
in the August 17, 2010 amendment described in Note 16  Subsequent Events above. If we were to underperform against
our future financial projections, we may need to take additional actions designed to respond to or improve our
financial condition and we cannot assure you that any such actions would be successful in improving our financial
position. While we understood there was an inherent unpredictability in the economy and our business in 2010 as
described in our 10-Q for the first quarter ending March 31, 2010, our performance in the second half of the second
quarter demonstrated a greater unpredictability than we anticipated. As a result of the foregoing, management believed
it was advisable to negotiate an agreement with our lenders and Gores to enhance our available liquidity. These
negotiations resulted in the August 17, 2010 amendments described in Note 16- Subsequent Events above. Existing Indebtedness
    32




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##### Table of Contents



Required Last Twelve MonthsMaximum Senior Leverage Ratio
    
    
    Principal Amount of Senior Notes
    
    
    (LTM) Minimum AdjustedQuarter Ending
    
    Covenant
    
    
    Estimated Outstanding (Includes PIK)(1)(2)
    
    
    EBITDA(1)(2)6/30/2010
    
    
    7.50 to 1.0
    
    
    
    109,409
    
    
    
    14,5889/30/2010
    
    
    11.25 to 1.0
    
    
    
    110,777
    
    
    
    9,84712/31/2010
    
    
    11.25 to 1.0
    
    
    
    112,161
    
    
    
    9,9703/31/2011
    
    
    11.25 to 1.0
    
    
    
    113,563
    
    
    
    10,0956/30/2011
    
    
    11.00 to 1.0
    
    
    
    114,983
    
    
    
    10,4539/30/2011
    
    
    10.00 to 1.0
    
    
    
    116,420
    
    
    
    11,64212/31/2011
    
    
    9.00 to 1.0
    
    
    
    117,875
    
    
    
    13,0973/31/2012
    
    
    8.00 to 1.0
    
    
    
    119,349
    
    
    
    14,9196/30/2012
    
    
    7.50 to 1.0
    
    
    
    120,841
    
    
    
    16,112
 (1)
    
    The above chart reflects loan repayments in the aggregate of $15,500 as described in more
detail in Note 7  Debt as well as the modified debt leverage covenants amended on August 17, 2010.(2)
    
    The above chart does not reflect any loan repayments from the proceeds from the sale of
investments, valued at $1,129 at June 30, 2010, as required by
the terms of the August 17, 2010 amendments.  33




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##### Table of Contents



For the Three Months ended June 30,
    
    
    For the Six Months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net loss
    
    $
    (5,418
    )
    
    $
    (9,959
    )
    
    $
    (12,141
    )
    
    $
    (25,145
    )Plus:Interest expense
    
    
    5,993
    
    
    
    4,651
    
    
    
    11,369
    
    
    
    7,914Income taxes provision (benefit)
    
    
    (3,535
    )
    
    
    (2,904
    )
    
    
    (8,769
    )
    
    
    (10,285
    )Depreciation and amortization
    
    
    4,689
    
    
    
    6,366
    
    
    
    9,185
    
    
    
    8,429Restructuring and special charges
    
    
    2,094
    
    
    
    9,368
    
    
    
    5,256
    
    
    
    18,617Other non-operating losses (gains)
    
    
    (3
    )
    
    
    (62
    )
    
    
    (2
    )
    
    
    (362
    )Stock-based compensation
    
    
    822
    
    
    
    1,610
    
    
    
    1,881
    
    
    
    2,962Consolidated Adjusted EBITDA
    
    $
    4,642
    
    
    $
    9,070
    
    
    $
    6,779
    
    
    $
    2,130
 (1)
    
    Special charges and other includes expense of $596 classified as corporate general and
administrative expenses on the Statement of Operations for the six months ended June 30,
2010. Recent Accounting Pronouncements
   34




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##### Table of Contents



Cautionary Statement Concerning Forward-Looking Statements and Factors Affecting Forward-Looking
Statements
   Risks Related to Our Business and Industry
 Our annual operating income has declined since 2005 and may continue to decline. We may not be able to reverse this
trend or reduce costs sufficiently to offset declines in revenue if such trends continue and could lack sufficient
funds to continue to operate our business in the ordinary course. Since 2005, our annual operating income has declined from operating income of $143,978 to an operating loss of $97,582,
which included impairment charges of approximately $50,501, for the year ended December 31, 2009. For the six months
ended June 30, 2010, our operating loss was $9,543. Since 2005, our operating income declined as a result of increased
competition in our local and regional markets and an increase in the sale of short-form inventory being sold by radio
stations. The decline also occurred as a result of lower commercial clearance, a decline in our sales force and
reductions in national audience levels across the industry, as well as locally at our affiliated stations. We reduced
our sales force beginning in mid-2006 and only recently began expanding it again in 2009. In 2008 and 2009, our
operating income was affected by the weakness in the United States economy and advertising market, where the recovery
in 2010 has been slower than expected. During the economic downturn, advertisers and the agencies that represent them,
increased pressure on advertising rates, and in some cases, requested steep percentage discounts on ad buys, demanded
increased levels of inventory and re-negotiated booked orders. Although there has been a modest improvement in the
economy, advertisers demands and budgets for advertising have not recovered as much as we anticipated which impacted
our financial results for the first half of 2010 (in particular late May and June of the second quarter). If a
double-dip recession were to occur or if the economic climate does not improve sufficiently for us to generate
advertising revenue to meet our projections, our financial position could worsen to the point where we would lack
sufficient liquidity to continue to operate our business in the ordinary course.  35




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##### Table of Contents



We have a significant amount of indebtedness and limited

liquidity, which will affect our future business operations if
our future operating performance does not meet our financial projections. As of June 30, 2010, we had $109,409 in aggregate principal

amount of Senior Notes outstanding (of which approximately
$7,409 is PIK), which bear interest at a rate of 15.0%, and a Senior Credit Facility consisting of a $20,000

term loan
and a $15,000 revolving credit facility under which $12,000 was drawn (not including $1,219 used for letters

of credit
as security on various leased properties). Loans under our Senior Credit Facility bear interest at LIBOR

plus 4.5%
(with a LIBOR floor of 2.5%) or a base rate plus 4.5% (with a base rate floor equal to the greater of 3.75%

or the
one-month LIBOR rate).  As described above in Note 16  Subsequent Events, on August 17,

2010, we entered into an
amendment with our lenders to modify our debt leverage covenants.  As part of such amendments, Gores

agreed to provide
us with $20,000 in additional liquidity, in the form of: (1) a guarantee of an additional $5,000 for

our revolving
credit facility, (2) an additional $5,000 cash investment for 769,231 shares of Company common stock on

or prior to
September 7, 2010 and (3) an additional $10,000 cash investment for Company common stock on February 28,
2011, or sooner depending on the Companys needs. Notwithstanding the foregoing, if the Company shall have received net
cash proceeds of at least $10,000 from the issuance and sale of
Company qualified equity interests (as such term is defined in the
Securities Purchase Agreement) to any person, other than in
connection with (1) Gores $5,000 investment in 2010, and (2)
any stock or option grant to a Company employee under a stock option
plan or other similar incentive or compensation plan of the Company
or upon the exercise thereof, Gores shall not be required to invest
the aforementioned $10,000.   In connection with Gores agreement to

increase its guarantee,
Wells Fargo agreed to increase the amount of the Companys revolving credit facility from $15,000 to

$20,000 which will
provide the Company with necessary additional liquidity for working capital purposes.  Our ability to

service our debt
for the rest of 2010 and beyond depends on our financial performance in an uncertain and unpredictable

economic
environment as well as on competitive pressures.  In the first two quarters of 2010, we met our debt

covenants but did
not meet our financial projections.  If we were to significantly underperform against our financial

projections for the
second half of 2010 or beyond, we might need to raise additional funds or amend our agreements with our

lenders.
Despite having successfully negotiated such amendments in the past, we may be unable to further amend our

debt agreements on terms that are acceptable to us or at all.  Further, our Senior Notes and Senior

Credit Facility restrict
our ability to incur additional indebtedness beyond certain minimum baskets.  If our operating income

declines or does
not meet our financial projections, and we are unable to obtain a waiver to increase our indebtedness or

successfully
raise funds through an issuance of equity, we would lack sufficient liquidity to operate our business in the

ordinary
course, which would have a material adverse effect on our business, financial condition and results of

operations. If
we were then unable to meet our debt service and repayment obligations under the Senior Notes or the Senior

Credit
Facility, we would be in default under the terms of the agreements governing our debt, which if uncured,

would allow
our creditors at that time to declare all outstanding indebtedness to be due and payable and materially

impair our
financial condition and liquidity. If our operating results continue to fall short of our

financial projections, we may require additional funding to
finance our working capital, debt service, capital expenditures and other capital requirements or a further

amendment
and/or waiver of our debt leverage covenants, which if not obtained, would have a material and adverse

effect on our
business continuity and our financial condition. As discussed above, we are operating in an uncertain economic

environment, where the pace of an advertising recovery is
unclear.  As further described in Note 5  Intangible Assets, our financial results were lower

than our projections for
the first two quarters of 2010 and management deemed it advisable to negotiate an amendment with our lenders

and Gores
to amend our debt leverage covenants and enhance our available liquidity.  These negotiations resulted

in the August
17, 2010 amendment we entered into with our lenders and Gores.  If our operating results fall short of

our financial
projections, we may need additional funds or a further amendment and/or waiver of our debt leverage

covenants.  If
financing is limited or unavailable to us or if we are forced to fund our operations at a higher cost, these

conditions
could require us to curtail our business activities or increase our cost of financing, both of which could

reduce our
profitability or increase our losses.  If we were to require additional financing or a further

amendment or waiver of
our debt leverage covenants, which could not then be obtained, it would have a material adverse effect on

our financial
condition and on our ability to meet our obligations.  36




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##### Table of Contents



Our Senior Credit Facility and Senior Notes contain various

covenants which, if not complied with, could accelerate
repayment under such indebtedness, thereby materially and adversely affecting our financial condition and

results of
operations. Our Senior Credit Facility and Senior Notes require us to comply

with certain financial and operational covenants.
These covenants (as amended on August 17, 2010) include, without limitation:  
    
    a maximum senior leverage ratio (expressed as the principal amount

of Senior Notes over our Adjusted
EBITDA (as defined in our Senior Credit Facility) measured on a trailing, four-quarter basis) which is an
11.25 to 1.0 ratio for the LTM (last twelve months) period to be measured on September 30, 2010,

December 31,
2010 and March 31, 2011, and then declines on a quarterly basis thereafter, to an 11.0 to 1 ratio on

June 30,
2011, a 10.0 to 1.0 ratio on September 30, 2011, a 9.0 to 1.0 ratio on December 31, 2011, an 8.0

to 1.0 ratio
on March 31, 2012; and a 7.5 to 1.0 ratio on June 30, 2012.  
    
    restrictions on our ability to incur debt, incur liens, make

investments, make capital expenditures,
consummate acquisitions, pay dividends, sell assets and enter into mergers and similar

transactions. As described above, we waived and/or amended our debt leverage

covenants on October 14, 2009, March 30, 2010, and most
recently on August 17, 2010. As a result of these amendments, our debt leverage covenants have been

significantly
eased. We believe we will generate sufficient Adjusted EBITDA to comply with our new debt leverage

covenants.
However, failure to comply with any of our covenants would result in a default under our Senior Credit

Facility and
Senior Notes that, if we were unable to obtain a waiver from the lenders or holders thereof, could

accelerate repayment
under the Senior Credit Facility and Senior Notes and thereby have a material adverse impact on our

business. The cost of our indebtedness has increased substantially,

which further affects our liquidity and could limit our
ability to implement our business plan. As a result of our Refinancing, the interest payments on our debt

(on an annualized basis  i.e.,from April 23, 2009
to April 23, 2010 and subsequent annual periods thereafter) have increased from approximately $12,000

to $19,000,
$6,000 of which is PIK interest. Our interest payments will be increased further if we utilize the

additional amount
available to us under the revolving credit facility which was increased from $15,000 to $20,000 as part of

the
amendments to our debt agreements entered into on August 17, 2010. If the economy does not improve more

significantly
and advertisers continue to maintain reduced budgets such that our financial results continue to come under

pressure in
2010 and beyond, we may be required to delay the implementation or reduce the scope of our business plan and

our
ability to develop or enhance our services or programs could be impacted. Without additional revenue and

capital, we
may be unable to take advantage of business opportunities, such as acquisition opportunities or securing

rights to
name-brand or popular programming, or respond to competitive pressures. If any of the foregoing should

occur, this
could have a material and adverse effect on our business.  37




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##### Table of Contents



CBS Radio provides us with a significant portion of our

commercial inventory and audience that we sell to advertisers.
A material reduction in the audience delivered by CBS Radio stations or a material loss of commercial

inventory from
CBS Radio would have an adverse effect on our advertising sales and financial results. While we provide programming to all major radio station groups,

we have affiliation agreements with most of CBS Radios
owned and operated radio stations which, in the aggregate, provide us with a significant portion of the

audience and
commercial inventory that we sell to advertisers, much of which is in the more desirable top 10 radio

markets.
Although the compensation we pay to CBS Radio under our March 2008 arrangement is adjustable for

audience levels and
commercial clearance (i.e.,the percentage of commercial inventory broadcast by CBS Radio stations),

any significant
loss of audience or inventory delivered by CBS Radio stations, including, by way of example only, as a

result of a
decline in station audience, commercial clearance levels or station sales that resulted in lower audience

levels, would
have a material adverse impact on our advertising sales and revenue. Since implementing the new arrangement

in early
2008 and continuing through the end of 2009, CBS Radio has delivered improved audience levels and broadcast

more
advertising inventory than it had under our previous arrangement. However, there can be no assurance that

CBS Radio
will be able to maintain these higher levels in particular, with the introduction of The Portable People

Meter, or
PPM, which to date has reported substantially lower audience ratings for certain of our radio station

affiliates,
including our CBS Radio station affiliates, in those markets in which PPM has been implemented as

described below. As
part of our recent cost reduction actions to reduce station compensation expense, we and CBS Radio mutually

agreed to
enter into an arrangement, which became effective on February 15, 2010, to give back approximately 15%

of the audience
delivered by CBS Radio. This resulted in a commensurate reduction in cash compensation payable to them. To

help
deliver consistent RADAR audience levels over time, we have added incremental non-CBS inventory. We actively

manage our
inventory, including by purchasing additional inventory for cash. We have also added Metro Traffic inventory

from CBS Radio through various stand-alone agreements. While our arrangement with CBS Radio is
scheduled to terminate in 2017, there can be no assurance that such arrangement will not be breached by

either party.
If our agreement with CBS Radio were terminated as a result of such breach, our results of operations could

be
materially impacted. Our cost reduction initiatives and limited liquidity may

limit our flexibility to reduce costs going forward. In order to improve the efficiency of our operations, we have

implemented certain cost reduction initiatives, including
headcount and salary reductions and, in the last half of 2009, a furlough of participating full-time

employees. We
cannot assure you that our cost reduction activities will not adversely affect our ability to retain key

employees, the
significant loss of whom could adversely affect our operating results. As a result of our cost reduction

activities
and limited liquidity, we may not have an adequate level of resources and personnel to appropriately react

to
significant changes or fluctuations in the market and in the level of demand for our programming and

services. If our
operating losses continue, our ability to further decrease costs may be more limited as a result of our

previously
enacted cost reduction initiatives. Our ability to grow our Metro Traffic business revenue may

be adversely affected by the increased proliferation of free
of charge traffic content to consumers. Our Metro Traffic business produces and distributes traffic and

other local information reports to approximately 2,250
radio and 165 television affiliates and we derive the substantial majority of the revenue attributed to this

business
from the sale of commercial advertising inventory embedded within these reports. Recently, the US Department

of
Transportation and other regional and local departments of transportation have significantly increased their

direct
provision of real-time traffic and traveler information to the public free of charge. The ability to obtain

this
information free of charge may result in our radio and television affiliates electing not to utilize the

traffic and
local information reports produced by our Metro Traffic business, which in turn could adversely affect our

revenue from
the sale of advertising inventory embedded in such reports. Our ability to increase our revenue depends on the size of

the audiences we deliver to advertisers, which has been
negatively impacted by the introduction of The Portable People Meter. Arbitron Inc., the supplier of ratings data for United States

radio markets, rolled out new electronic audience
measurement technology to collect data for its ratings service known as The Portable People Meter, or

PPM, in 2007.
PPM measures the audience of radio stations remotely without requiring listeners to keep a manual

diary of the
stations they listen to. In 2007, 2008, 2009, 2, 9 and 19 markets converted to PPM, respectively, and

in the second
half of 2010, 15 markets will convert to PPM. As of the date of this report, PPM has been

implemented in 30 markets
(including all top 10 markets and 3 markets whose MSAs overlap). Unlike our Metro Traffic inventory, which

is fully
reflected in ratings books that are released semi-annually, our Network Radio inventory is reflected in

ratings books
on an incremental basis over time (i.e.,over a rolling four-quarter period), which means we and our

advertisers cannot
view audience levels that give full weight to PPM for our Radios All Dimension Audience Research

(RADAR) inventory
(which comprises half of our Network Radio inventory) for over a year after a market converts to PPM.

In the RADAR
ratings book released in June 2010, approximately half of the inventory (measured by the revenue

generated by such
inventory) published in such ratings books shows the effect of PPM in those markets which have

converted to PPM. In
the three most recent periods published by RADAR, July 2009 to September 2009, October 2009

to December 2009 and
January 2010 to March 2010, the audience (measured by Persons 12+) for our 12 RADAR networks

declined by 0.8%, 5.8% and
0.8%, respectively, which also reflects our decision to reduce the number of our RADAR networks from 14 to

12 in the
fourth quarter of 2009. Because audience levels can decline for several reasons, including changes in the

radio
stations included in a RADAR network, clearance levels by those stations and general radio listening trends,

it is
difficult to isolate the effects PPM is having on our audience with a high level of certainty. While

annual ad
revenue in our Network Radio and Metro Traffic businesses has declined over time, we are unable to determine

how much
of the decline is a result of the general economic environment as opposed to our decline in audience. While

most major
markets have converted to PPM (only 15 markets have yet to convert), it is unclear whether our

audience levels will
continue to decline in future ratings books. In 2009, we were able to offset the impact of audience declines

by using
excess inventory; however, in 2010 we anticipate that this option will be limited and that to offset

declines in
audience will generally require that we purchase additional inventory which must be obtained well in advance

of our
having definitive data on future audience levels. If we do not accurately predict how much additional

inventory will
be required to offset any declines in audience, or cannot purchase comparable inventory to our current

inventory at
efficient prices, our results of operations in 2010 and beyond could be materially and adversely affected.  38




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##### Table of Contents



If we fail to maintain an effective system of internal

controls, we may not be able to continue to accurately report
our financial results. Effective internal controls are necessary for us to provide

reliable financial reporting. During 2009, we identified a
material weakness related to accounting for income taxes which resulted in adjustments to the 2009 annual

consolidated
financial statements, as described in Item 9A  Controls and Procedures of our Annual Report on

Form 10-K for the year
ended December 31, 2009. We also identified certain immaterial errors in our financial statements,

which we have
corrected in subsequent interim periods. Such items have been reported and disclosed in the financial

statements for
the periods ended March 31, 2010 and December 31, 2009. We do not believe these adjustments are

material to our current
period consolidated financial statements or to any prior periods consolidated financial statements and

no prior
periods have been restated. We intend to further enhance our internal control environment and we may be

required to
enhance our personnel or their level of experience, among other things, in order to continue to maintain

effective
internal controls. No assurances can be provided that we will be able to continue to maintain effective

internal
controls over financial reporting, enhance our personnel or their level of experience or prevent a material

weakness
from occurring. Our failure to maintain effective internal controls could have a material adverse effect on

us, could
cause us to fail to timely meet our reporting obligations or could result in material adjustments in our

financial
statements. Our business is subject to increased competition from new

entrants into our business, consolidated companies and new
technology/platforms, each of which has the potential to adversely affect our business. Our business segments operate in a highly competitive

environment. Our radio and television programming competes for
audiences and advertising revenue directly with radio and television stations and other syndicated

programming. We
also compete for advertising dollars with other media such as television satellite radio, newspapers,

magazines, cable
television, outdoor advertising, direct mail and, more increasingly, digital media. The proliferation of new

media
platforms, including the Internet, video-on-demand, and portable digital devices, has increased audience

fragmentation.
These new media platforms have gained an increased share of advertising dollars and their introduction could

lead to
further decreasing revenue for traditional media. Further, as we expend resources to expand our programming

and
services in new digital distribution channels, our operating results could be negatively impacted until we

begin to
gain traction in these emerging businesses. New or existing competitors may have resources significantly

greater than
our own. In particular, the consolidation of the radio industry has created opportunities for large radio

groups, such
as Clear Channel Communications, CBS Radio and Citadel Broadcasting Corporation to gather information and

produce radio
and television programming on their own. Increased competition has, in part, resulted in reduced market

share over the
last several years, and could result in lower audience levels, advertising revenue and cash flow. There can

be no
assurance that we will be able to maintain or increase our market share, audience ratings or advertising

revenue given
this competition. To the extent we experience a further decline in audience for our programs,

advertisers willingness
to purchase our advertising could be further reduced. Additionally, audience ratings and performance-based

revenue
arrangements are subject to change based on the competitive environment and any adverse change in a

particular
geographic area could have a material and adverse effect on our ability to attract not only advertisers in

that region,
but national advertisers as well. In recent years, digital media platforms and the offerings

thereon have increased significantly and consumers are
playing an increasingly large role in dictating the content received through such mediums. We face

increasing pressure
to adapt our existing programming as well as to expand the programming and services we offer to address

these new and
evolving digital distribution channels. Advertising buyers have the option to filter their messages through

various
digital platforms and as a result, many are adjusting their advertising budgets downward with respect to

traditional
advertising mediums such as radio and television or utilizing providers who offer one-stop

shopping access to both
traditional and alternative distribution channels. If we are unable to offer our broadcasters and

advertisers an
attractive full suite of traditional and new media platforms and address the industry shift to new digital

mediums, our
operating results may be negatively impacted. Our failure to obtain or retain the rights in popular

programming could adversely affect our revenue. Revenue from our radio programming and television business

depends in part on our continued ability to secure and
retain the rights to popular programming. We obtain a significant portion of our programming from third

parties. For
example, some of our most widely heard broadcasts, including certain NFL and NCAA games, are made available

based upon
programming rights of varying duration that we have negotiated with third parties. Competition for popular

programming
that is licensed from third parties is intense, and due to increased costs of such programming or potential

capital
constraints, we may be outbid by our competitors for the rights to new, popular programming or to renew

popular
programming currently licensed by us. Our failure to obtain or retain rights to popular content could

adversely affect
our revenue.  39




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##### Table of Contents



If we are not able to integrate future acquisitions

successfully, our operating results could be harmed. We evaluate acquisitions on an ongoing basis and intend to pursue

acquisitions of businesses in our industry and
related industries that can assist us in achieving our growth strategy. The success of our future

acquisition strategy
will depend on our ability to identify, negotiate, complete and integrate acquisitions and, if necessary, to

obtain
satisfactory debt or equity financing to fund those acquisitions. Mergers and acquisitions are inherently

risky, and
any mergers and acquisitions we do complete may not be successful. Any mergers and acquisitions we do may involve certain risks,

including, but not limited to, the following:  
    
    difficulties in integrating and managing the operations,

technologies and products of the companies we
acquire;  
    
    diversion of our managements attention from normal daily

operations of our business;  
    
    our inability to maintain the key business relationships and

reputations of the businesses we acquire;  
    
    uncertainty of entry into markets in which we have limited or no

prior experience or in which competitors
have stronger market positions;  
    
    our dependence on unfamiliar affiliates and partners of the

companies we acquire;  
    
    insufficient revenue to offset our increased expenses associated

with the acquisitions;  
    
    our responsibility for the liabilities of the businesses we

acquire; and  
    
    potential loss of key employees of the companies we

acquire. Our success is dependent upon audience acceptance of our

content, particularly our radio programs, which is difficult
to predict. Revenue from our radio and television businesses is dependent on

our continued ability to anticipate and adapt to
changes in consumer tastes and behavior on a timely basis. Because consumer preferences are consistently

evolving,
the commercial success of a radio program is difficult to predict. It depends on the quality and acceptance

of other
competing programs, the availability of alternative forms of entertainment, general economic conditions and

other
tangible and intangible factors, all of which are difficult to predict. An audiences acceptance of

programming is
demonstrated by rating points which are a key factor in determining the advertising rates that we receive.

Poor ratings
can lead to a reduction in pricing and advertising revenue. Consequently, low public acceptance of our

content,
particularly our radio programs, could have an adverse effect on our results of operations. Continued consolidation in the radio broadcast industry

could adversely affect our operating results. The radio broadcasting industry has continued to experience

significant change, including a significant amount of
consolidation in recent years and increased business transactions by other key players in the radio industry

(e.g.,
Clear Channel, Citadel and CBS Radio). Certain major station groups have: (1) 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, in particular the amount of 10 second inventory, which is

directly
competitive to us. To the extent similar initiatives are adopted by other major station groups, this could

adversely
impact the amount of commercial inventory made available to us 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 us or, alternatively, they could seek to obtain programming from our competitors. Any such

occurrences, or
merely the threat of such occurrences, could adversely affect our ability to negotiate favorable terms with

our station
affiliates, attract audiences and attract advertisers. If we do not succeed in these efforts, our operating

results
could be adversely affected. We may be required to recognize further impairment

charges. On an annual basis and upon the occurrence of certain events, we

are required to perform impairment tests on our
identified intangible assets with indefinite lives, including goodwill, which testing could impact the value

of our
business. We have a history of recognizing impairment charges related to our goodwill. In connection with

our
Refinancing and our requisite adoption of the acquisition method of accounting, we recorded new values of

certain
assets such that as of April 24, 2009, our revalued goodwill was $86,414 (an increase of $52,426) and

intangible assets
were $116,910 (an increase of $114,481). In September 2009, we believe a triggering event occurred as a

result of
forecasted results for 2009 and 2010 and therefore we conducted a goodwill impairment analysis. Metro

Traffic results
indicated impairment in our Metro Traffic segment. As a result of our Metro Traffic analysis, we recorded an

impairment
charge of $50,501. Most recently, on June 30, 2010, we believe a triggering event occurred as described

in Note 6 
Goodwill and accordingly conducted an impairment analysis. Such analysis showed that there was no

indication of an
impairment as of June 30, 2010. The majority of the impairment charges related to our goodwill have not

been
deductible for income tax purposes.  40




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##### Table of Contents



Risks Related to Our Common Stock
 Our common stock may not maintain an active trading market which could affect the liquidity and
market price of our common stock.
  Sales of additional shares of common stock by Gores or our other lenders could adversely affect the
stock price.
  Gores will be able to exert significant influence over us and our significant corporate decisions
and may act in a manner that advances its best interest and not necessarily those of other
stockholders.
  
    
    delaying, deferring or preventing a change in control;
 
    
    impeding a merger, consolidation, takeover or other business combination;
 
    
    discouraging a potential acquirer from making a tender offer or otherwise attempting
obtain control; or
 
    
    causing us to enter into transactions or agreements that are not in the best interests
of all stockholders.
 Provisions in our restated certificate of incorporation and by-laws and Delaware law may
discourage, delay or prevent a change of control of our company or changes in our management and,
therefore, depress the trading price of our common stock.
   41




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##### Table of Contents



We do not anticipate paying dividends on our common stock.
  Any issuance of shares of preferred stock by us could delay or prevent a change of control of our
company, dilute the voting power of the common stockholders and adversely affect the value of our
common stock
     
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
    42




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##### Table of Contents



Item 4. Controls and Procedures
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   43




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Issuer Purchases of Equity Securities
 Total Number of
    
    
    Approximate DollarShares Purchased as
    
    
    Value of Shares thatTotal
    
    
    
    
    
    
    Part of Publicly
    
    
    May Yet BeNumber of Shares
    
    
    Average Price Paid
    
    
    Announced Plan or
    
    
    Purchased Under thePeriod
    
    Purchased in Period
    
    
    Per Share
    
    
    Program
    
    
    Plans or Programs (A)4/1/10  4/30/10
    
    
    
    
    
    
    N/A5/1/10  5/31/10
    
    
    
    
    
    
    N/A6/1/10  6/30/10
    
    
    
    
    
    
    N/A
 (A)
    
    Represents remaining authorization from the $250,000 repurchase authorization approved on
February 24, 2004 and the additional $300,000 authorization approved on April 29, 2004, all of
which have expired. 
 Item 3. Reserved
  
 Item 4. Removed and Reserved
  
 Item 5. Other Information
   44




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber (A)
    
    Description of Exhibit3.1
    
    
    Restated Certificate of Incorporation, as filed with the Secretary of State of the State of
Delaware. (1)3.1.1
    
    
    Certificate of Amendment to the Restated Certificate of Incorporation of Westwood One, Inc., as
filed with the Secretary of the State of Delaware on August 3, 2009. (2)3.1.2
    
    
    Certificate of Elimination, filed with the Secretary of State of the State of Delaware on
November 18, 2009. (3)3.2
    
    
    Amended and Restated Bylaws of Registrant adopted on April 23, 2009 and currently in effect. (4)4.1
    
    
    Securities Purchase Agreement, dated as of April 23, 2009, by and among the Company and the
other parties thereto. (4)4.1.1
    
    
    Waiver and First Amendment, dated as of October 14, 2009, to Securities Purchase Agreement,
dated as of April 23, 2009, by and between the Company and the noteholders parties thereto. (5)4.1.2
    
    
    Second Amendment, dated as of March 30, 2010, to Securities Purchase Agreement, dated as of
April 23, 2009, by and between the Company and the noteholders parties thereto. (6)4.1.3
    *
    
    Third Amendment, dated as of August 17, 2010, to Securities Purchase Agreement, dated as of
April 23, 2009, by and between the Company and the noteholders parties thereto.4.2
    
    
    Shared Security Agreement, dated as of February 28, 2008, by and among the Company, the
Subsidiary Guarantors parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and
The Bank of New York, as Collateral Trustee (7)4.2.1
    
    
    First Amendment to Security Agreement, dated as of April 23, 2009, by and among the Company,
each of the subsidiaries of the Company and The Bank of New York Mellon, as collateral trustee.
(8)10.1
    *
    

Third Amendment, dated as of August 17, 2010, to Credit Agreement, dated as of April 23, 2009,
by and between Registrant, the lenders party thereto and Wells Fargo Foothill, LLC, as
administrative agent for the lenders.10.2
    *
    
    Purchase Agreement, dated August 17, 2010, between Registrant and Gores Radio Holdings, LLC.31.a
    *
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.b
    *
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.a
    **
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.b
    **
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 *
    
    Filed herewith.**
    
    Furnished herewith.(A)
    
    The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon
request.(1)
    
    Filed as an exhibit to Companys quarterly report on Form 10-Q for the quarter ended June 30,
2008 and incorporated herein by reference.(2)
    
    Filed as an exhibit to Companys quarterly report on Form 10-Q for the quarter ended June 30,
2009 and incorporated herein by reference.(3)
    
    Filed as an exhibit to Companys current report on Form 8-K dated November 20, 2009 and
incorporated herein by reference.(4)
    
    Filed as an exhibit to Companys current report on Form 8-K dated April 23, 2009 (filed April
27, 2009) and incorporated herein by reference.(5)
    
    Filed as an exhibit to Companys current report on Form 8-K dated February 28, 2008 (filed on
March 5, 2008) and incorporated herein by reference.(6)
    
    Filed as an exhibit to Companys current report on Form 8-K dated March 31, 2010 and
incorporated herein by reference.(7)
    
    Filed as an exhibit to Companys current report on Form 8-K dated February 28, 2008 (filed on
March 31, 20105, 2008) and incorporated herein by reference.(8)
    
    Filed as an exhibit Companys current report on Form 8-K dated April 27, 2009 and incorporated
herein by reference  45




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##### Table of Contents



SIGNATURES
  WESTWOOD ONE, INC.By:
    /S/ Roderick M. Sherwood IIIName:
    Roderick M. Sherwood IIITitle:
    President and CFODate: August 19, 2010  46




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit4.1
    *
    
    Third Amendment, dated as of August 17, 2010, to Securities Purchase Agreement, dated as
of April 23, 2009, by and between the Company and the noteholders parties thereto.10.1
    *
    
    Third Amendment, dated as of August 17, 2010, to Credit Agreement, dated as of April 23,
2009, by and between Registrant, the lenders party thereto and Wells Fargo Foothill, LLC,
as administrative agent for the lenders.10.2
    *
    
    Purchase Agreement, dated August 17, 2010, between Registrant and Gores Radio Holdings,
LLC.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.  47