##### 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 March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-14691
 
 WESTWOOD ONE, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    95-3980449
(I.R.S. Employer
Identification No.)
 1166 Avenue of the Americas, 10thFloor New York, NY
    
    10036(Address of principal executive offices)
    
    (Zip Code)
 (212) 641-2000  (Registrants telephone number, including area code)
 Yes þ No o
 Yes o No o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 Yes o No 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
    
    
    25Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    43Item 4. Controls and Procedures
    
    
    43PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    44Item 1A. Risk Factors
    
    
    44Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 3. Reserved
    
    
    44Item 4. Reserved
    
    
    44Item 5. Other Information
    
    
    44Item 6. Exhibits
    
    
    45SIGNATURES
    
    
    46Exhibit Index
    
    
    47Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 31.aExhibit 31.bExhibit 32.aExhibit 32.b
   2




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PART I. FINANCIAL INFORMATION
 WESTWOOD ONE, INC.
 
 CONSOLIDATED BALANCE SHEET
 (In thousands, except per share amounts)
 March 31, 2010
    
    
    December 31, 2009(unaudited)
    
    
    (audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    6,794
    
    
    $
    4,824Accounts receivable, net of allowance for doubtful accounts
of $1,006 (2010) and $2,723 (2009)
    
    
    86,487
    
    
    
    87,568Federal income tax receivable
    
    
    12,945
    
    
    
    12,355Prepaid and other assets
    
    
    19,467
    
    
    
    20,994Total current assets
    
    
    125,693
    
    
    
    125,741Property and equipment, net
    
    
    35,446
    
    
    
    36,265Intangible assets, net
    
    
    100,671
    
    
    
    103,400Goodwill
    
    
    38,945
    
    
    
    38,917Other assets
    
    
    3,276
    
    
    
    2,995TOTAL ASSETS
    
    $
    304,031
    
    
    $
    307,318LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    44,592
    
    
    $
    40,164Amounts payable to related parties
    
    
    490
    
    
    
    129Deferred revenue
    
    
    2,517
    
    
    
    3,682Accrued expenses and other liabilities
    
    
    30,183
    
    
    
    28,864Current maturity of long-term debt
    
    
    10,000
    
    
    
    13,500Total current liabilities
    
    
    87,782
    
    
    
    86,339Long-term debt
    
    
    126,967
    
    
    
    122,262Deferred tax liability
    
    
    46,981
    
    
    
    50,932Due to Gores
    
    
    10,984
    
    
    
    11,165Other liabilities
    
    
    20,067
    
    
    
    18,636TOTAL LIABILITIES
    
    
    292,781
    
    
    
    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
    
    
    81,171
    
    
    
    81,268Net unrealized gain
    
    
    197
    
    
    
    111Accumulated deficit
    
    
    (70,323
    )
    
    
    (63,600
    )TOTAL STOCKHOLDERS EQUITY
    
    
    11,250
    
    
    
    17,984TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    304,031
    
    
    $
    307,318
   3




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WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 (In thousands, except per share amounts)
 (unaudited)
 Successor Company
    
    
    
    Predecessor CompanyThree Months Ended
    
    
    
    Three Months EndedMarch 31, 2010
    
    
    
    March 31, 2009Revenue
    
    $
    92,842
    
    
    
    $
    85,867Operating costs
    
    
    89,341
    
    
    
    
    91,393Depreciation and amortization
    
    
    4,496
    
    
    
    
    2,063Corporate general and administrative expenses
    
    
    3,019
    
    
    
    
    2,766Restructuring charges
    
    
    743
    
    
    
    
    3,440Special charges
    
    
    1,823
    
    
    
    
    5,809Total operating costs
    
    
    99,422
    
    
    
    
    105,471Operating loss
    
    
    (6,580
    )
    
    
    
    (19,604
    )Interest expense
    
    
    5,376
    
    
    
    
    3,263Other expense (income)
    
    
    1
    
    
    
    
    (300
    )Loss before income tax
    
    
    (11,957
    )
    
    
    
    (22,567
    )Income tax benefit
    
    
    (5,234
    )
    
    
    
    (7,381
    )Net loss
    
    $
    (6,723
    )
    
    
    $
    (15,186
    )Net loss attributable to common stockholders
    
    $
    (6,723
    )
    
    
    $
    (16,650
    )Loss per share:Common StockBasic
    
    $
    (0.33
    )
    
    
    $
    (33.95
    )Diluted
    
    $
    (0.33
    )
    
    
    $
    (33.95
    )Class B stockBasic
    
    
    
    
    
    
    $
    Diluted
    
    
    
    
    
    
    $
    Weighted average shares outstanding:Common StockBasic
    
    
    20,544
    
    
    
    
    490Diluted
    
    
    20,544
    
    
    
    
    490Class B stockBasic
    
    
    
    
    
    
    
    1Diluted
    
    
    
    
    
    
    
    1
   4




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WESTWOOD ONE, INC.
 
 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
 (In thousands)
 (unaudited)
 Successor Company
    
    
    
    Predecessor CompanyThree Months Ended
    
    
    
    Three Months EndedMarch 31, 2010
    
    
    
    March 31, 2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (6,723
    )
    
    
    $
    (15,186
    )Adjustments to reconcile net loss to net cash provided by
operating activities:Depreciation and amortization
    
    
    4,496
    
    
    
    
    2,063Deferred taxes
    
    
    (5,107
    )
    
    
    
    (6,698
    )Non-cash equity-based compensation
    
    
    1,059
    
    
    
    
    1,352Amortization of deferred financing costs
    
    
    
    
    
    
    
    308Net change in assets and liabilities
    
    
    11,190
    
    
    
    
    20,295Net cash provided by operating activities
    
    
    4,915
    
    
    
    
    2,134CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (2,183
    )
    
    
    
    (1,169
    )Net cash used in investing activities
    
    
    (2,183
    )
    
    
    
    (1,169
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from Revolving Credit Facility
    
    
    3,000
    
    
    
    
    Repayments of Senior Notes
    
    
    (3,500
    )
    
    
    
    Payments of capital lease obligations
    
    
    (262
    )
    
    
    
    (203
    )Net cash used in financing activities
    
    
    (762
    )
    
    
    
    (203
    )Net increase in cash and cash equivalents
    
    
    1,970
    
    
    
    
    762Cash and cash equivalents at beginning of period
    
    
    4,824
    
    
    
    
    6,437Cash and cash equivalents at end of period
    
    $
    6,794
    
    
    
    $
    7,199
   5




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WESTWOOD ONE, INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (In thousands)
 (unaudited)
 UnrealizedAdditional
    
    
    
    
    
    
    Gain on
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    (Accumulated
    
    
    Available for
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    Sale Securities
    
    
    EquityBalance as of
January 1, 2010
    
    
    20,544
    
    
    $
    205
    
    
    $
    81,268
    
    
    $
    (63,600
    )
    
    $
    111
    
    
    $
    17,984Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,723
    )
    
    
    
    
    
    
    (6,723
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86
    
    
    
    86Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    1,059
    
    
    
    
    
    
    
    
    
    
    
    1,059Issuance common stock under
equity-based compensation plans
    
    
    1
    
    
    
    
    
    
    
    (449
    )
    
    
    
    
    
    
    
    
    
    
    (449
    )Cancellations of vested equity
grants
    
    
    
    
    
    
    
    
    
    
    (707
    )
    
    
    
    
    
    
    
    
    
    
    (707
    )Balance as of
March 31, 2010
    
    
    20,545
    
    
    $
    205
    
    
    $
    81,171
    
    
    $
    (70,323
    )
    
    $
    197
    
    
    $
    11,250
   6




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NOTE 1  Basis of Presentation:
        7




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##### Table of Contents



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 EndedMarch, 31, 2009Revenue
    
    $
    85,867Net Loss
    
    
    (22,889
    )
  8




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Financial Statement Presentation
  Reclassification and Revisions
   NOTE 2  Earnings Per Share:
    9




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10




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Successor Company
    
    
    
    Predecessor CompanyFor the Three Months
    
    
    
    For the Three MonthsEnded March 31, 2010
    
    
    
    Ended March 31, 2009Net loss
    
    $
    (6,723
    )
    
    
    $
    (15,186
    )Less: Accumulated Preferred Stock dividends
    
    
    
    
    
    
    
    (1,464
    )Undistributed earnings
    
    $
    (6,723
    )
    
    
    $
    (16,650
    )Earnings  Common stockBasicUndistributed earnings allocated to Common stockholders
    
    $
    (6,723
    )
    
    
    $
    (16,650
    )Total Earnings  Common stock, basic
    
    $
    (6,723
    )
    
    
    $
    (16,650
    )DilutedUndistributed earnings allocated to Common stockholders
    
    $
    (6,723
    )
    
    
    $
    (16,650
    )Total Earnings  Common stock, diluted
    
    $
    (6,723
    )
    
    
    $
    (16,650
    )Weighted average Common shares outstanding, basic
    
    
    20,544
    
    
    
    
    490Weighted average Common shares outstanding, diluted
    
    
    20,544
    
    
    
    
    490Loss per Common share, basicDistributed earnings, basic
    
    $
    
    
    
    
    $
    Undistributed earnings  basic
    
    
    (0.33
    )
    
    
    
    (33.95
    )Total
    
    $
    (0.33
    )
    
    
    $
    (33.95
    )Loss per Common share, dilutedDistributed earnings, diluted
    
    $
    
    
    
    
    $
    Undistributed earnings  diluted
    
    
    (0.33
    )
    
    
    
    (33.95
    )Total
    
    $
    (0.33
    )
    
    
    $
    (33.95
    )Loss per share  Class B StockBasicDistributed earnings to Class B stockholders
    
    
    
    
    
    
    $
    Undistributed earnings allocated to Class B stockholders
    
    
    
    
    
    
    
    Total loss  Class B Stock, basic
    
    
    
    
    
    
    $
    DilutedDistributed earnings to Class B stockholders
    
    
    
    
    
    
    $
    Undistributed earnings allocated to Class B stockholders
    
    
    
    
    
    
    
    Total loss  Class B Stock, diluted
    
    
    
    
    
    
    $
    Weighted average Class B shares outstanding, basic
    
    
    
    
    
    
    
    1Share-based compensation
    
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    
    Weighted average Class B shares outstanding, diluted
    
    
    
    
    
    
    
    1Earnings per Class B share, basicDistributed earnings, basic
    
    
    
    
    
    
    $
    Undistributed earnings  basic
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    $
    Earnings per Class B share, dilutedDistributed earnings, diluted
    
    
    
    
    
    
    $
    Undistributed earnings  diluted
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    $
    
  11




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NOTE 3  Related Party Transactions:
 Gores Radio Holdings
   Successor Company
    
    
    
    Predecessor CompanyThree Months Ended
    
    
    
    Three Months EndedMarch 31, 2010
    
    
    
    March 31, 2009Glendon Partners fees
    
    $
    312
    (1)
    
    
    $
    650Reimbursement of legal fees
    
    
    8
    
    
    
    
    1,063Reimbursement of letter-of-credit fees
    
    
    63
    (2)
    
    
    
    $
    383
    
    
    
    $
    1,713
 (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 CompanyThree Months Ended
    
    
    
    Three Months EndedMarch 31, 2010
    
    
    
    March 31, 2009Program commission expense
    
    $
    361
    
    
    
    $
    331
 CBS Radio
    12




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Successor Company
    
    
    
    Predecessor CompanyThree Months Ended
    
    
    
    Three Months EndedMarch 31, 2010
    
    
    
    March 31, 2009Operating costs
    
    $
    361
    
    
    
    $
    20,351Special charges
    
    
    320
    
    
    
    
    1,713Interest expense
    
    
    63
    
    
    
    
    $
    744
    
    
    
    $
    22,064
 NOTE 4  Property and Equipment:
  March 31, 2010
    
    
    December 31, 2009Land, buildings and improvements
    
    $
    9,900
    
    
    $
    10,830Recording, broadcasting and studio equipment
    
    
    22,411
    
    
    
    20,581Furniture, equipment and other
    
    
    11,467
    
    
    
    11,59243,778
    
    
    
    43,003Less: Accumulated depreciation and amortization
    
    
    8,332
    
    
    
    6,738Property and equipment, net
    
    $
    35,446
    
    
    $
    36,265
  NOTE 5  Intangible Assets:
   13




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As of March 31, 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
    
    
    
    (6,755
    )
    
    
    65,345
    
    
    
    72,100
    
    
    
    (4,953
    )
    
    
    67,147Software and technology
    
    5 years
    
    
    
    7,896
    
    
    
    (1,287
    )
    
    
    6,609
    
    
    
    7,896
    
    
    
    (890
    )
    
    
    7,006Client contracts
    
    5 years
    
    
    
    8,930
    
    
    
    (1,858
    )
    
    
    7,072
    
    
    
    8,930
    
    
    
    (1,363
    )
    
    
    7,567Leases
    
    7 years
    
    
    
    980
    
    
    
    (135
    )
    
    
    845
    
    
    
    980
    
    
    
    (100
    )
    
    
    880Insertion orders
    
    9 months
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,400
    
    
    
    (8,400
    )
    
    
    $
    110,706
    
    
    $
    (10,035
    )
    
    $
    100,671
    
    
    $
    119,106
    
    
    $
    (15,706
    )
    
    $
    103,400
  NOTE 6  Goodwill:
    Total
    
    
    Metro Traffic
    
    
    NetworkBalance January 1, 2010
    
    $
    38,917
    
    
    $
    13,005
    
    
    $
    25,912Adjustments to opening balance
    
    
    28
    
    
    
    144
    
    
    
    (116
    )Balance at March 31, 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 March 31, 2010
    
    
    (50,401
    )
    
    
    (50,401
    )
    
    
    Balance at March 31, 2010
    
    $
    38,945
    
    
    $
    13,149
    
    
    $
    25,796
  14




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NOTE 7  Debt:
     March 31, 2010
    
    
    December 31, 2009Senior Secured Notes due on July 15, 2012 (1)
    
    $
    108,967
    
    
    $
    110,762Due to Gores (1)
    
    
    10,984
    
    
    
    11,165Term Loan (2)
    
    
    20,000
    
    
    
    20,000Revolving Credit Facility (2)
    
    
    8,000
    
    
    
    5,000$
    147,951
    
    
    $
    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.(2)
    
    The applicable interest rate on such debt is 7.0% as of March 31, 2010 and December 31, 2009.
The interest rate is variable and is payable at the maximum 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.  15




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NOTE 8  Fair Value Measurements:
 Fair Value of Financial Instruments
  March 31, 2010
    
    
    December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueBorrowings (short and long term)
    
    $
    139,951
    
    
    $
    146,225
    
    
    $
    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.
  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 InputsMarch 31, 2010
    
    
    December 31, 2009
    
    
    March 31, 2010
    
    
    December 31, 2009
    
    
    March 31, 2010
    
    
    December 31, 2009Assets:Investments (1)
    
    $
    1,108
    
    
    $
    968
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    $
    1,108
    
    
    $
    968
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 (1)
    
    Included in other assets  16




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NOTE 9  Equity-Based Compensation:
   Stock Options
   Weighted AverageShares
    
    
    Exercise PriceOutstanding January 1, 2010
    
    
    28.6
    
    
    $
    1,345Granted
    
    
    1,998.0
    
    
    $
    6Exercised
    
    
    
    
    
    $
    Cancelled, forfeited or expired
    
    
    (0.6
    )
    
    $
    5,747Outstanding March 31, 2010
    
    
    2,026.0
    
    
    $
    23Options exercisable March 31, 2010
    
    
    15.6
    
    
    $
    2,081Aggregate estimated fair value of options vesting
during three months ended March 31, 2010
    
    $
    692
    17




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##### Table of Contents



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 March 31, 2010
    
    
    
    
    
    
    
 Restricted Stock Units
   Weighted AverageShares
    
    
    Grant Date Fair ValueOutstanding January 1, 2010
    
    
    0.1
    
    
    $
    1,314Granted
    
    
    
    
    
    
    Converted to common stock
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding March 31, 2010
    
    
    0.1
    
    
    $
    1,314
  18




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##### Table of Contents



Successor Company
    
    
    
    Predecessor CompanyFor the Three Months Ended
    
    
    
    For the Three Months EndedMarch 31, 2010
    
    
    
    March 31, 2009Operating costs
    
    $
    814
    
    
    
    $
    918General and administrative expense
    
    
    245
    
    
    
    
    434$
    1,059
    
    
    
    $
    1,352
 NOTE 10  Comprehensive Income (Loss):
  Successor Company
    
    
    
    Predecessor CompanyFor the Three Months
    
    
    
    For the Three MonthsEnded March 31, 2010
    
    
    
    Ended March 31, 2009Net loss
    
    $
    (6,723
    )
    
    
    $
    (15,186
    )Unrealized gain on marketable securities, net effect of income taxes
    
    
    86
    
    
    
    
    135Comprehensive loss
    
    $
    (6,637
    )
    
    
    $
    (15,051
    )
 NOTE 11 Income Taxes:
      19




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##### Table of Contents



NOTE 12  Restructuring Charges:
    Severance
    
    
    Facilities
    
    
    ContractTermination
    
    
    Consolidation
    
    
    TerminationCosts
    
    
    Related Costs
    
    
    Costs
    
    
    TotalBalance at January 1, 2009
    
    
    3,198
    
    
    
    790
    
    
    
    3,796
    
    
    
    7,784Charges from January 1, to April 23, 2009
    
    
    1,658
    
    
    
    2,318
    
    
    
    
    
    
    
    3,976Charges from April 24, to December 31, 2009
    
    
    1,941
    
    
    
    1,885
    
    
    
    150
    
    
    
    3,976Non-cash utilization
    
    
    
    
    
    
    (360
    )
    
    
    
    
    
    
    (360
    )Payments
    
    
    (5,260
    )
    
    
    (956
    )
    
    
    (2,196
    )
    
    
    (8,412
    )Balance at December 31, 2009
    
    
    1,537
    
    
    
    3,677
    
    
    
    1,750
    
    
    
    6,964Charges January 1, to March 31, 2010
    
    
    142
    
    
    
    601
    
    
    
    
    
    
    
    743Payments
    
    
    (693
    )
    
    
    (473
    )
    
    
    (150
    )
    
    
    (1,316
    )Balance at March 31, 2010
    
    $
    986
    
    
    $
    3,805
    
    
    $
    1,600
    
    
    $
    6,391Accumulated charges
    
    $
    10,506
    
    
    $
    5,635
    
    
    $
    6,654
    
    
    $
    22,795Accumulated payments
    
    
    (9,440
    )
    
    
    (1,470
    )
    
    
    (3,454
    )
    
    
    (14,364
    )Accumulated non-cash utilization
    
    
    (80
    )
    
    
    (360
    )
    
    
    (1,600
    )
    
    
    (2,040
    )Balance at March 31, 2010
    
    $
    986
    
    
    $
    3,805
    
    
    $
    1,600
    
    
    $
    6,391
  20




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##### Table of Contents



NOTE 13  Special Charges:
  Successor Company
    
    
    
    Predecessor CompanyFor the Quarter Ended
    
    
    
    For the Quarter EndedMarch 31, 2010
    
    
    
    March 31, 2009Senior Credit Agreement amendment costs
    
    $
    579
    
    
    
    $
    Employment claim settlements
    
    
    483
    
    
    
    
    Gores fees
    
    
    320
    
    
    
    
    1,713Fees related to the Refinancing
    
    
    114
    
    
    
    
    4,000Corporate development costs
    
    
    201
    
    
    
    
    Regionalization costs
    
    
    126
    
    
    
    
    96$
    1,823
    
    
    
    $
    5,809
  NOTE 14  Segment Information:
    21




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##### Table of Contents



Successor Company
    
    
    
    Predecessor CompanyFor the Quarter Ended
    
    
    
    For the Quarter EndedMarch 31, 2010
    
    
    
    March 31, 2009RevenueMetro Traffic
    
    $
    37,267
    
    
    
    $
    34,683Network
    
    
    55,575
    
    
    
    
    51,184$
    92,842
    
    
    
    $
    85,867
  Successor Company
    
    
    
    Predecessor CompanyFor the Quarter Ended
    
    
    
    For the Quarter EndedMarch 31, 2010
    
    
    
    March 31, 2009Segment OIBDAMetro Traffic (1)
    
    $
    (1,566
    )
    
    
    $
    (4,327
    )Network (1)
    
    
    4,897
    
    
    
    
    (1,884
    )Corporate
    
    
    (2,849
    )
    
    
    
    (2,081
    )Restructuring and special charges
    
    
    (2,566
    )
    
    
    
    (9,249
    )OIBDA
    
    
    (2,084
    )
    
    
    
    (17,541
    )Depreciation and amortization
    
    
    (4,496
    )
    
    
    
    (2,063
    )Operating loss
    
    
    (6,580
    )
    
    
    
    (19,604
    )Interest expense
    
    
    (5,376
    )
    
    
    
    (3,263
    )Other (expense) income
    
    
    (1
    )
    
    
    
    300Loss before income taxes
    
    
    (11,957
    )
    
    
    
    (22,567
    )Income tax benefit
    
    
    (5,234
    )
    
    
    
    (7,381
    )Net Loss
    
    $
    (6,723
    )
    
    
    $
    (15,186
    )
 (1)
    
    Segment operating (loss) income includes allocations of certain corporate overhead
expenses such as accounting and legal costs, bank charges, insurance, information technology
etc.   22




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##### Table of Contents



Successor Company
    
    
    
    Predecessor CompanyFor the Quarter Ended
    
    
    
    For the Quarter EndedMarch 31, 2010
    
    
    
    March 31, 2009Depreciation and amortization:Metro Traffic
    
    $
    3,100
    
    
    
    $
    1,185Network
    
    
    1,389
    
    
    
    
    871Corporate
    
    
    7
    
    
    
    
    7$
    4,496
    
    
    
    $
    2,063
 Successor Company
    
    
    
    Predecessor CompanyFor the Quarter Ended
    
    
    
    For the Quarter EndedMarch 31, 2010
    
    
    
    March 31, 2009Capital expenditures:Metro Traffic
    
    $
    1,592
    
    
    
    $
    675Network
    
    
    583
    
    
    
    
    494Corporate
    
    
    8
    
    
    
    
    $
    2,183
    
    
    
    $
    1,169
  March 31, 2010
    
    
    December 31, 2009Total assetsMetro Traffic
    
    $
    140,810
    
    
    $
    147,387Network
    
    
    125,827
    
    
    
    131,632Corporate
    
    
    37,394
    
    
    
    28,299$
    304,031
    
    
    $
    307,318
 NOTE 15  Recent Accounting Pronouncements:
    23




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24




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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
        25




---



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26




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##### Table of Contents



Results of Operations
     Three Months Ended March 31, 2010 Compared With Three Months Ended March 31, 2009
 Revenue
  Favorable / (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    37,267
    
    
    $
    34,683
    
    
    $
    2,584
    
    
    
    7.5
    %Network
    
    
    55,575
    
    
    
    51,184
    
    
    
    4,391
    
    
    
    8.6
    %Total (1)
    
    $
    92,842
    
    
    $
    85,867
    
    
    $
    6,975
    
    
    
    8.1
    %
 (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 commercial airtime
in both segments. Our objective is to optimize total revenue from those advertisers.  27




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##### Table of Contents



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
    
    $
    20,961
    
    
    $
    21,122
    
    
    $
    161
    
    
    
    0.8
    %Programming and production
    
    
    24,790
    
    
    
    27,482
    
    
    
    2,692
    
    
    
    9.8
    %Program and operating
    
    
    7,903
    
    
    
    4,570
    
    
    
    (3,333
    )
    
    
    (72.9
    )%Station compensation
    
    
    18,491
    
    
    
    19,769
    
    
    
    1,278
    
    
    
    6.5
    %Other operating expenses
    
    
    17,196
    
    
    
    18,450
    
    
    
    1,254
    
    
    
    6.8
    %$
    89,341
    
    
    $
    91,393
    
    
    $
    2,052
    
    
    
    2.2
    %
 %,
 Depreciation and Amortization
  Corporate General and Administrative Expenses
   28




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##### Table of Contents



Restructuring Charges
  Special Charges
  OIBDA
   Favorable / (Unfavorable)2010
    
    
    2009
    
    
    $ Amount
    
    
    %Metro Traffic
    
    $
    (1,566
    )
    
    $
    (4,327
    )
    
    $
    2,761
    
    
    
    63.8
    %Network
    
    
    4,897
    
    
    
    (1,884
    )
    
    
    6,781
    
    
    
    359.9
    %Corporate expenses
    
    
    (2,849
    )
    
    
    (2,081
    )
    
    
    (768
    )
    
    
    (36.9
    )%Special charges
    
    
    (2,566
    )
    
    
    (9,249
    )
    
    
    6,683
    
    
    
    72.3
    %OIBDA
    
    
    (2,084
    )
    
    
    (17,541
    )
    
    
    15,457
    
    
    
    88.1
    %Depreciation and amortization
    
    
    (4,496
    )
    
    
    (2,063
    )
    
    
    (2,433
    )
    
    
    (117.9
    )%Operating
loss
    
    $
    (6,580
    )
    
    $
    (19,604
    )
    
    $
    13,024
    
    
    
    66.4
    %
  Metro Traffic
   29




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##### Table of Contents



Network
  Operating Loss
   Interest Expense
  Provision for Income Taxes
  Net Loss
  Cash Flows
     30




---



##### Table of Contents



Liquidity and Capital Resources
       31




---



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Existing Indebtedness
         32




---



##### Table of Contents



Required LastPrincipal Amount of Senior Notes
    
    
    Twelve Months (LTM)Maximum Senior Leverage Ratio
    
    
    Estimated Outstanding (Includes
    
    
    Minimum AdjustedQuarter Ending
    
    Covenant
    
    
    PIK)*
    
    
    EBITDA*3/31/2010
    
    
    8.00 to 1.0
    
    
    $
    119,951
    
    
    $
    14,9946/30/2010
    
    
    7.50 to 1.0
    
    
    
    121,450
    
    
    
    16,1939/30/2010
    
    
    7.00 to 1.0
    
    
    
    112,911
    
    
    
    16,13012/31/2010
    
    
    6.50 to 1.0
    
    
    
    114,322
    
    
    
    17,5883/31/2011
    
    
    6.00 to 1.0
    
    
    
    115,751
    
    
    
    19,2926/30/2011
    
    
    5.50 to 1.0
    
    
    
    117,198
    
    
    
    21,3099/30/2011
    
    
    5.00 to 1.0
    
    
    
    118,663
    
    
    
    23,73312/31/2011
    
    
    4.50 to 1.0
    
    
    
    120,146
    
    
    
    26,6993/31/2012
    
    
    3.50 to 1.0
    
    
    
    121,648
    
    
    
    34,7576/30/2012
    
    
    3.50 to 1.0
    
    
    
    123,169
    
    
    
    35,191
      33




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##### Table of Contents



For the Quarters ended March 31,2010
    
    
    2009Net cash (used in) provided by operating activities
    
    $
    4,915
    
    
    $
    2,134Interest expense
    
    
    5,376
    
    
    
    3,263Income taxes (benefit)
    
    
    (5,234
    )
    
    
    (7,381
    )Restructuring
    
    
    743
    
    
    
    3,440Special charges and other (1)
    
    
    2,419
    
    
    
    5,809Other non-operating income
    
    
    1
    
    
    
    (300
    )Deferred taxes
    
    
    5,107
    
    
    
    6,698Amortization of deferred financing costs
    
    
    
    
    
    
    (308
    )Change in assets and liabilities
    
    
    (11,190
    )
    
    
    (20,295
    )Adjusted EBITDA
    
    $
    2,137
    
    
    $
    (6,940
    )
 (1)
    
    Special charges and other includes expense of $596 classified as corporate general and
administrative expenses on the Statement of Operations for the three months ended March 31,
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.
   35




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##### Table of Contents



We may require additional financing to fund our working capital, debt service, capital expenditures
or other capital requirements and the ongoing global credit market disruptions have reduced access
to credit and created higher costs of obtaining financing.
  Our present financial condition has caused us to obtain amendments to the agreements governing our
indebtedness and to institute certain cost saving measures. If our financial condition does not
improve, 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.
  If we are unable to achieve our financial forecast, we may require an amendment or additional
waiver of our debt leverage covenant, which amendment or waiver, if not obtained, could have a
material and adverse effect on our business continuity and financial condition.
   36




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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 expectations.
  Our Senior Credit Facility and Senior Notes contain various covenants which, if not complied with,
could accelerate repayment under such indebtedness, thereby materially and adversely affecting our
financial condition and results of operations.
  
    
    a maximum senior leverage ratio (expressed as the principal amount of Senior Notes over
our Adjusted EBITDA (as defined in our Senior Credit Facility) measured on a trailing,
four-quarter basis) which is 8.0 to 1.0 on March 31, 2010 but begins to decline on a
quarterly basis thereafter, including to a 6.5 to 1.0 ratio on December 31, 2010, a 4.50 to
1.0 ratio on December 31, 2011 and a 3.5 to 1.0 ratio on March 31, 2012; and
 
    
    restrictions on our ability to incur debt, incur liens, make investments, make capital
expenditures, consummate acquisitions, pay dividends, sell assets and enter into mergers
and similar transactions.
  The cost of our indebtedness has increased substantially, which further affects our liquidity and
could limit our ability to implement our business plan and respond competitively.
   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.
  We may not realize expected benefits from our cost cutting 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 ability to increase our revenue is significantly dependent on audience, which could be
negatively impacted by The Portable People Meter.
   38




---



##### 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.
  Our business is subject to increased competition resulting from new entrants into our business,
consolidated companies and new technology/platforms, each of which has the potential to adversely
affect our business.
   39




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##### Table of Contents



Our failure to obtain or retain the rights in popular programming could adversely affect our
revenue.
  If we are not able to integrate future acquisitions successfully, our operating results could be
harmed.
   
    
    difficulties in integrating and managing the operations, technologies and products of
the companies we acquire;
 
    
    diversion of our managements attention from normal daily operations of our business;
 
    
    our inability to maintain the key business relationships and reputations of the
businesses we acquire;
 
    
    uncertainty of entry into markets in which we have limited or no prior experience or in
which competitors have stronger market positions;
 
    
    our dependence on unfamiliar affiliates and partners of the companies we acquire;
 
    
    insufficient revenue to offset our increased expenses associated with the acquisitions;
 
    
    our responsibility for the liabilities of the businesses we acquire; and
 
    
    potential loss of key employees of the companies we acquire.
 Our success is dependent upon audience acceptance of our content, particularly our radio programs,
which is difficult to predict.
   40




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##### Table of Contents



Continued consolidation in the radio broadcast industry could adversely affect our operating
results.
  We may be required to recognize further impairment charges.
  Risks Related to Our Common Stock
 Our common stock may not maintain an active trading market which could affect the liquidity and
market price of our common stock.
  Sales of additional shares of common stock by Gores or our other lenders could adversely affect the
stock price.
   41




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##### Table of Contents



Gores will be able to exert significant influence over us and our significant corporate decisions
and may act in a manner that advances its best interest and not necessarily those of other
stockholders.
  
    
    delaying, deferring or preventing a change in control;
 
    
    impeding a merger, consolidation, takeover or other business combination;
 
    
    discouraging a potential acquirer from making a tender offer or otherwise attempting
obtain control; or
 
    
    causing us to enter into transactions or agreements that are not in the best interests
of all stockholders.
 Provisions in our restated certificate of incorporation and by-laws and Delaware law may
discourage, delay or prevent a change of control of our company or changes in our management and,
therefore, depress the trading price of our common stock.
  We do not anticipate paying dividends on our common stock.
  Any issuance of shares of preferred stock by us could delay or prevent a change of control of our
company, dilute the voting power of the common stockholders and adversely affect the value of our
common stock
   42




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4.
    
    Controls and Procedures
   43




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  Issuer Purchases of Equity Securities
 Total Number of
    
    
    Approximate DollarShares Purchased as
    
    
    Value of Shares thatTotal
    
    
    
    
    
    
    Part of Publicly
    
    
    May Yet BeNumber of Shares
    
    
    Average Price Paid
    
    
    Announced Plan or
    
    
    Purchased Under thePeriod
    
    Purchased in Period
    
    
    Per Share
    
    
    Program
    
    

Plans or Programs (A)1/1/10  1/31/10
    
    
    
    
    
    
    N/A2/1/10  2/28/10
    
    
    
    
    
    
    N/A3/1/10  3/31/10
    
    
    
    
    
    
    N/A
 (A)
    
    Represents remaining authorization from the $250 million repurchase authorization approved on
February 24, 2004 and the additional $300 million authorization approved on April 29, 2004,
all of which have expired. 
 Item 3.
    
    Reserved
  
 Item 4.
    
    Reserved
  
 Item 5.
    
    Other Information
   44




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##### Table of Contents



Item 6.
    
    Exhibits
 Exhibit 
Number (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)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)4.2
    
    
    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. (4)10.1
    *
    
    2010 Equity Compensation Plan +10.2
    *
    
    Form Stock Option Agreement under the Companys 2010
Equity Compensation Plan for employees +10.3
    *
    
    Form Restricted Stock Unit Agreement under the
Companys 2010 Equity Compensation Plan for
non-employee directors +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.+
    
    Indicates a compensatory plan(A)
    
    The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon
request.(1)
    
    Filed as an exhibit to Companys quarterly report on Form 10-Q for the quarter ended 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 Companys current report on Form 8-K dated April 27, 2009 and
incorporated herein by reference.(5)
    
    Filed as an exhibit to Amendment No. 5 of the Companys registration statement on Form S-1
filed with the SEC on November 13, 2009 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 5, 2008) 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: May 17, 2010  46




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##### Table of Contents



EXHIBIT INDEX
 
 Exhibit 
Number

    Description of Exhibit10.1
*
    
    Equity Compensation Plan +10.2
*
    
    Form Stock Option Agreement under the Companys 2010 Equity Compensation Plan for
employees +10.3
*
    
    Form Restricted Stock Unit Agreement under the Companys 2010 Equity Compensation Plan for
non-employee directors +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.+
    
    Indicates a compensatory plan  47