<PAGE>
<PAGE>
________________________________________________________________________________

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
 
                            ------------------------

                                   FORM 10-K
 
(MARK ONE)
 
              [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                           THE SECURITIES EXCHANGE ACT OF 1934
                                 (FEE REQUIRED)
 
                 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR
 
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                          THE SECURITIES EXCHANGE ACT OF 1934
                               (NO FEE REQUIRED)
 
FOR THE TRANSITION PERIOD FROM ____________________ TO ____________________
 
                         COMMISSION FILE NUMBER 0-16841
 
                            ------------------------
 
                       OSBORN COMMUNICATIONS CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                            ------------------------
 
<TABLE>
<S>                                                       <C>
                        DELAWARE                                                 06-1142367
            (STATE OR OTHER JURISDICTION OF                                    (IRS EMPLOYER
             INCORPORATION OR ORGANIZATION)                                 IDENTIFICATION NO.)
 
            130 MASON STREET, GREENWICH, CT                                        06830
        (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                 (ZIP CODE)
</TABLE>
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 629-0905
 
                            ------------------------

          SECURITIES REGISTERED PURSUANT TO SECTION L2(b) OF THE ACT:
                                      None
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                          Common Stock, $.01 par value
                                (TITLE OF CLASS)
 
                            ------------------------

     Indicate  by check  mark whether the  registrant (1) has  filed all reports
required to be filed by  Section 13 or 15(d) of  the Securities Exchange Act  of
1934  during  the preceding  12  months (or  for  such shorter  period  that the
registrant was required to file such reports), and (2) has been subject to  such
filing requirements for the past 90 days. Yes X  No __

     Indicate  by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (SS229.405 of  this chapter) is not contained herein,  and
will  not be  contained, to  the best  of registrant's  knowledge, in definitive
proxy or information statements  incorporated by reference in  Part III of  this
Form 10-K or any amendment to this Form 10-K. [x]
 
     The  aggregate market value  of the voting stock  held by non-affiliates of
the registrant was approximately $32,491,494 as of March 13, 1996.
 
     The number  of shares  outstanding of  the registrant's  classes of  common
stock  as of March  13, 1996 was  as follows: Common  Stock -- 5,276,847 shares;
Non-Voting Common Stock -- none.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     Portions of Part III are incorporated herein by reference to the definitive
Proxy Statement for the annual meeting of shareholders on May 22, 1996.
 
________________________________________________________________________________

<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
                               DECEMBER 31, 1995
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                                                             PAGE
<S>        <C>                                                                                               <C>
PART I
 
Item 1.    Business.......................................................................................     2
 
Item 2.    Properties.....................................................................................    11
 
Item 3.    Legal Proceedings..............................................................................    12
 
Item 4.    Submission of Matters to a Vote of Security Holders............................................    12
 
Executive Officers of the Registrant......................................................................    12
 
PART II
 
Item 5.    Market for the Registrant's Common Equity and Related Stockholder Matters......................    13
 
Item 6.    Selected Financial Data........................................................................    13
 
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations..........    14
 
Item 8.    Financial Statements and Supplementary Data....................................................    21
 
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........    38
 
PART III
 
Item 10.   Directors and Executive Officers of the Registrant.............................................    38
 
Item 11.   Executive Compensation.........................................................................    38
 
Item 12.   Security Ownership of Certain Beneficial Owners and Management.................................    38
 
Item 13.   Certain Relationships and Related Transactions.................................................    38
 
PART IV
 
Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K................................    38
</TABLE>

<PAGE>
<PAGE>
                                     PART I
 
ITEM 1. BUSINESS
 
     Osborn Communications Corporation (the 'Company') was organized in 1984 and
is  a broadcasting company primarily engaged  in the operation of radio stations
in medium and small  markets throughout the United  States. In conjunction  with
several  of its radio stations, the Company promotes country music festivals and
concerts  through  Company-owned  entertainment  properties.  The  Company  also
distributes  programmed music, primarily Muzak,  through exclusive franchises in
Florida  and  Georgia,  and  provides  cable  television  entertainment   and/or
interactive educational services to hospitals throughout the United States.
 
     At  December 31, 1995, the Company  owned sixteen radio stations (eleven FM
and five AM) in medium-sized and small markets, primarily in the eastern  United
States. These stations feature a variety of music formats of which country music
is  the most prevalent.  The Company also  owns four programmed  music and sound
equipment distributorships, a concert hall  and certain country music shows  and
festivals, and a hospital cable television company. In addition, the Company has
a  50% non-voting ownership interest (without control) of an FM radio station in
San Carlos  Park/Ft.  Myers,  Florida,  a 25%  ownership  interest  in  Fairmont
Communications  Corporation ('Fairmont'), and an  economic interest in Northstar
Television Group,  Inc. ('Northstar')  (see  Fairmont and  Northstar  Management
Agreements).
 
     The  Company  derives  revenue from  broadcasting  and  related businesses,
programmed  music  and   sound  equipment  distribution,   and  hospital   cable
television. The gross revenue contributed by each is as follows:
 
<TABLE>
<CAPTION>
                                                                             GROSS REVENUE
                                                                        -----------------------
                                                                        1995     1994     1993
                                                                        -----    -----    -----
                                                                             (IN MILLIONS)
<S>                                                                     <C>      <C>      <C>
Broadcasting and related businesses..................................   $30.3    $25.1    $19.3
Programmed music and sound equipment distribution....................   $ 9.4    $ 8.3    $ 7.2
Hospital cable television............................................   $ 1.7    $ 1.8    $ 1.8
</TABLE>
 
     Since  its inception, the Company has  used a variety of sources, including
bank and institutional borrowings,  sales of common  stock to private  investors
and  to the public, the  sale of publicly-traded notes,  and seller financing to
finance its  acquisitions.  The  Company  has  used  leverage  to  maximize  the
potential returns on its investments.
 
     In August 1995, the Company entered into a credit facility of $56.0 million
with Society National Bank (the 'Credit Facility'). The Credit Facility consists
of  a $46.0 million revolving credit facility and a $10.0 million facility which
may be used for acquisitions. The initial drawdown of $44.5 million, along  with
the  Company's internally  generated funds,  was used  to repay  loans totalling
$50.0 million,  at  101% of  par  value  under the  Company's  outstanding  debt
facilities and to pay transaction costs.
 
     In July 1994, the Company effected a 1-for-2 reverse stock split. All share
data  contained in Part I of this Annual Report on Form 10-K reflect the reverse
stock split.
 
     Acquisitions and Dispositions. The  Company has made numerous  acquisitions
and dispositions, primarily of radio stations. The acquisitions and dispositions
for  1995 and 1994 are  more fully described in Part  II, Item 7 -- Management's
Discussion and Analysis of Financial Condition and Results of Operations.
 
BROADCASTING
 
     Radio Operating Strategy. The Company's  operating strategy is designed  to
capitalize  on competitive  dynamics unique to  medium and  small radio markets.
Typically,  these  markets  are  characterized  by  lower  revenues  and   fewer
competitors  than large  markets. In  addition, because  of the  greater revenue
potential in larger markets, the Company believes medium and small markets  tend
to  attract  small,  local  operators,  rather  than  experienced,  large market
broadcasting companies with sizable station portfolios and significant  capital.
As a result, medium and small markets tend to be
 
                                       2
 
<PAGE>
<PAGE>
dominated  by a few stations targeting the most profitable demographic segments.
In markets  where  the Company  operates  the leading  stations,  its  operating
strategy  is designed  to maintain  ratings dominance  and enhance profitability
through a combination of an aggressive sales effort, strict cost control and, in
more competitive markets, audience research  to ensure that programming  appeals
to  the preferences of its target demographic groups. By contrast, in markets in
which the Company  has acquired a  station that  is not the  market leader,  its
operating   strategy  relies  primarily   on  management's  extensive  operating
experience to achieve increased market share and profitability. This strategy is
implemented by  focusing  on profitable  demographic  niches within  the  market
through  appealing formats and aggressive promotional campaigns. The Company has
successfully utilized these  strategies in medium  and small markets  throughout
the United States over the past decade.
 
     Programming  is central to the  Company's operating strategy because format
determines the  demographics  of  the  station's listeners  and,  in  part,  the
station's  market share. These factors, in turn, largely determine the perceived
value of commercial air time to advertisers. The Company operates in each of its
radio markets with a format that has the potential either to capture a  dominant
position  in the  most commercially  desirable segment  of listener demographics
(adults age 25-54) or to obtain a dominant position with regard to a  profitable
market niche. The Company's stations are programmed in a variety of formats, the
most  prevalent of which is country music, that both attracts audiences in those
demographics desirable to advertisers and accommodates relatively large  amounts
of advertising.
 
     The   Company  emphasizes  programming  instead  of  high  profile,  highly
compensated personalities to attract audience share as a lower cost, lower  risk
strategy.  The costs of on-air programming  are relatively inexpensive because a
large  portion  of  the  Company's  programming  is  music  produced  by  record
companies,  and  the  royalties payable  to  copyright  holders are  fixed  at a
relatively low percentage of revenues.  In addition, several stations  broadcast
network  originated programs  and receive  compensation in  return for providing
airtime for which the network can solicit advertising.
 
     The Company believes that the listening public's awareness of a station  is
crucial and that focused promotional spending is directly related to a station's
success  in adding  and retaining  new listeners.  Management's goal  is for the
Company to be the most marketing oriented competitor in each of its markets, and
its promotions are designed to attract and secure the largest share of listeners
in its  targeted demographic  group. A  key factor  in the  Company's  marketing
strategy  is multimedia promotions. For  example, the Company's stations sponsor
contests through  direct  mail  to  listeners  with  key  demographics,  thereby
promoting  both  the station  and the  advertisers included  in the  mailer. The
Company's mobile  units  occasionally  broadcast live  at  high  traffic  retail
centers frequented by its targeted listeners, such as shopping malls. Promotions
of  this type are  cost effective for the  Company because advertisers generally
provide prizes and  contract for  additional advertising time  on the  Company's
stations.  The Company also capitalizes  on cross-promotional opportunities with
its other  businesses, such  as its  country music  entertainment properties  in
Wheeling, West Virginia.
 
     Pricing  strategy  and inventory  management  are critical  aspects  of the
Company's radio station management.  The Company seeks  to maximize revenues  by
continually  monitoring inventory (i.e., available advertising time) and demand.
As available advertising  time is  sold, station  general managers  are able  to
increase  rates  for remaining  time. General  managers also  are able  to react
quickly to a shift in demand between national and local advertising by directing
sales efforts to the appropriate markets.
 
     Integral to the  Company's pricing strategy  is strong decentralized  local
management.  Local management  is responsible  for day-to-day  operations of the
station while  corporate  management is  responsible  for long  range  strategic
planning  and  resource allocation.  Local  management is  also  responsible for
building a sales team  capable of turning the  station's audience rankings  into
revenues.  Members of the  Company's sales force are  encouraged to forge strong
relationships with local advertisers.
 
     Advertising Sales. The Company's primary source  of revenue is the sale  of
broadcasting  time  for local,  regional and  national advertising.  The Company
believes that  radio is  one of  the most  efficient, cost-effective  means  for
advertisers  to reach specific demographic groups.  The station's format, and in
some cases the content of specific programs, enable the potential advertiser  to
determine which demographic groups its advertising will reach. Advertising rates
are  based upon a program's popularity  among the listeners an advertiser wishes
to   attract   (as   measured   principally   by   periodic   Arbitron    rating
 
                                       3
 
<PAGE>
<PAGE>
surveys  that quantify the number  of listeners tuned to  the station at various
times), the number of advertisers competing for the available time, the size and
demographic makeup of the market served  by the station and the availability  of
alternative  advertising media in the market  area. Rates are the highest during
morning and evening drive-time hours.
 
     Advertising time on the  Company's radio stations is  sold locally by  each
station's sales staff, and nationally by sales representatives employed by firms
specializing  in radio  advertising sales  on a  national level.  These national
sales representatives obtain advertising  principally from advertising  agencies
located  outside  the Company's  markets and  receive  commissions based  on the
revenues from  the advertising  obtained. Each  station's sales  staff  directly
solicits  advertising from local advertising  agencies and businesses. The local
sales staff  is  also  compensated  on  a  commission  basis.  Most  advertising
contracts  are short-term, generally  running for only a  few weeks. The Company
determines the number  of advertisements  broadcast per hour  that can  maximize
revenue   without  jeopardizing   listening  levels.  Although   the  number  of
advertisements broadcast during a given time  period may vary, the total  number
of  advertisements broadcast  on a  particular station  generally does  not vary
significantly from year to year.
 
     Marketing and Promotion. For each station, the Company develops and pursues
a marketing  strategy  designed to  attract  and  secure the  largest  share  of
listeners within its targeted demographic group.
 
     A  radio station's  listenership and  competitive position  in a  market is
measured principally  through periodic  ratings surveys  conducted by  Arbitron.
Ratings provide a quantitative measure of a station's audience size and are used
by most advertisers in considering advertising with a station and by the Company
to track audience growth, establish advertising rates and adjust programming.
 
     Each  of the  Company's stations  makes its  own marketing  and promotional
determinations regarding the best  method to reach  its targeted audience.  From
time  to time, stations in more competitive markets conduct qualitative research
regarding the  specific  preferences  of such  station's  target  audience.  The
station  relies on the research to  create and conduct marketing and promotional
campaigns, utilizing  such  media  as direct  mail,  telemarketing  and  outdoor
advertising.
 
     Acquisition  Strategy. The Company seeks  to acquire radio stations located
in medium and small  markets with positive operating  cash flow and  competitive
technical  facilities. The  Company looks  for properties  selling at reasonable
multiples of operating  cash flow that  have not been  managed aggressively.  To
maximize  management  and operational  efficiency, higher  priority is  given to
potential  acquisitions  of  properties  in  proximity  to  existing  areas   of
operation.  The Company has primarily focused  on the southeastern United States
as an area  of primary  interest, given  the region's  economic and  demographic
growth potential, although it considers potential acquisitions in all regions of
the United States.
 
     As  a result of  revisions to its rules  mandated by the Telecommunications
Act of 1996, the Federal Communications Commission ('FCC') now permits a company
to own, depending on the number of stations in a particular market, a maximum of
between five  and eight  stations in  the same  geographic market  (see  Federal
Regulation  of Broadcasting).  The Company  intends to  seek the  acquisition of
additional radio stations  in markets  in which it  has an  existing station  or
multiple  stations  in other  markets. The  Company  believes that  ownership of
multiple stations in a market achieves significant savings through consolidation
of administrative, engineering and management expenses and has the potential for
increasing revenues. By acquiring an additional  station in a given market,  the
Company  can improve its  market share and  capture a larger  share of the prime
advertising time  available  for  sale  in  that  market  while  minimizing  the
possibility  of direct  format competition.  In addition,  ownership of multiple
stations in  a  market would  allow  the Company  to  capitalize on  its  market
expertise and existing relationships with advertisers, consequently lowering the
Company's  acquisition risk. In addition, the  Company would be at a competitive
disadvantage if its competitors  acquire multiple stations  in markets in  which
the Company operates.
 
     The Company has focused on medium and small markets because generally there
has  been less competition to acquire  broadcasting properties in those markets,
which has meant that  relative acquisition costs have  been lower than in  large
markets. The Company believes that medium and small
 
                                       4
 
<PAGE>
<PAGE>
markets  offer a reasonable  rate of return on  well-managed properties and that
generally there  is  less  competition  for  advertising  revenues  within  such
markets.  Although the Company intends to continue  to focus on medium and small
markets, it has considered, and  expects to consider, acquisition  opportunities
for radio stations in large markets.
 
     Local  Marketing  Agreements. The  Company has  entered into  certain local
marketing agreements ('LMAs') whereby it provides programming to a station owned
by a third party and pays a monthly  fee for the right to air such  programming.
The  Company receives the  right to solicit advertising  and to receive payments
from the advertisers. In  addition, the Company has  entered into certain  other
LMAs  whereby  a third  party provides  programming  to a  station owned  by the
Company and pays a monthly fee for the right to air such programming. The  third
party receives the right to solicit advertising and to receive payments from the
advertisers. The LMAs that the Company is a party to are more fully described in
Note  4  to the  consolidated financial  statements contained  in Part  II, Item
8 -- Financial Statements and Supplementary Data.
 
     Television. In December 1995, the Company entered into an option  agreement
with  Allbritton  Communications  Company  for the  sale  of  television station
WJSU-TV, Anniston, Alabama, and an  associated 10-year LMA. This transaction  is
more  fully described in Part II, Item 7 -- Management's Discussion and Analysis
of Financial  Condition and  Results of  Operations. The  Company has  no  other
television  stations and has  no current intention to  own and operate broadcast
television properties in the future.
 
                                       5
 
<PAGE>
<PAGE>
     Broadcasting  Properties.   The  following   table  sets   forth   markets,
frequencies,  transmitter power and other station details of the Company's radio
broadcasting properties:
 
<TABLE>
<CAPTION>
                                                                     
                                                                    METRO
                                                                 STATION POWER        MARKET       FCC LICENSE
                MARKET                    STATION     FREQUENCY   DAY/NIGHT(1)        RANK(2)    EXPIRATION DATE
--------------------------------------  ------------  ---------  -------------       -------   ------------------
                                                                       (IN 
                                                                    KILOWATTS)
 
<S>                                     <C>           <C>        <C>                 <C>      <C>
Jackson, TN...........................  WTNV(FM)      104.1MHz       100.0           255     August 1, 1996
                                        WTJS(AM)       1390kHz      5.0/1.0                  August 1, 1996
Wheeling, WV..........................  WOVK(FM)       98.7MHz       50.0            212     October 1, 2002
                                        WWVA(AM)       1170kHz       50.0                    October 1, 2002
Dayton/Springfield, OH................  WING(FM)      102.9MHz       50.0             52     October 1, 1996
Asheville, NC.........................  WKSF(FM)       99.9MHz       48.0            179     December 1, 2002
                                        WWNC(AM)       570kHz         5.0                    December 1, 2002
Fort Myers, FL........................  WOLZ(FM)       95.3MHz       100.0            77     February 1, 2003
Gadsden, AL...........................  WQEN(FM)      103.7MHz       100.0            *      April 1, 1996(3)
                                        WAAX(AM)       570kHz       5.0/.5                   April 1, 1996(3)
Fort Myers/San Carlos Park, FL(4).....  WDRR(FM)       98.5MHz        2.2            77      February 1, 2003
 
Pending Dispositions
Syracuse, NY(5).......................  WNTQ(FM)       93.1MHz       97.0            68      June 1, 1998
                                        WNDR(AM)       1260kHz        5.0                    June 1, 1998
Jacksonville, FL/Brunswick, GA(5).....  WWRD(FM)      100.7MHz       36.0            53      April 1, 1996
Raleigh/Tarboro, NC...................  WFXK(FM)      104.3MHz       100.0           50      December 1, 2002
Atlantic City, NJ.....................  WAYV(FM)       95.1MHz       50.0           136      June 1, 1998
Daytona Beach/Palatka, FL.............  WFKS(FM)       99.9MHz       100.0           93      February 1, 2003
 
Pending Acquisitions
Port Charlotte, FL....................  WEEJ(FM)      100.1MHz       100.0           *       February 1, 2003
                                        WKII(AM)(6)    1070kHz     3.1/0.26                  May 11, 1996
Fresno, CA............................  KNAX(FM)       97.9MHz        2.1           65       December 1, 1997
                                        KRBT(FM)      101.1MHz       10.0                    December 1, 1997
Wheeling/Bethlehem, WV................  WHLX(FM)      105.5MHz       13.5          212       October 1, 2002
Wheeling, WV..........................  WKWK(FM)       97.3MHz       50.0          212       October 1, 2002
                                        WKWK(AM)       1400kHz        1.0                    October 1, 2002
</TABLE>
 
------------
 
(1) Many AM radio  stations are licensed  to operate at  a reduced power  during
    nighttime  broadcasting  hours;  where applicable,  both  power  ratings are
    shown.
 
(2) Metro Market Rank  is based  on determination  by Arbitron  of the  market's
    number of persons aged 12 years and over.
 
(3) Renewal application pending.
 
(4) The Company has a 50% non-voting ownership interest in WDRR-FM.
 
(5) The sales of the Jacksonville, Florida and Syracuse, New York radio stations
    were closed in January and February of 1996, respectively.
 
(6) WKII-AM has been operating pursuant to Special Temporary Authority issued to
    it by the FCC.
 
 * These markets are not assigned a Metro Market Rank by Arbitron.
 
BROADCAST-RELATED BUSINESSES
 
     The  Company's broadcast-related businesses provide extensive marketing and
promotional opportunities  for  its nearby  radio  stations. In  Wheeling,  West
Virginia,  the  Company enhances  and capitalizes  on  its ratings  dominance in
country music by the integration of its stations with its country  music-related
entertainment  businesses. The Company-owned Capitol Music  Hall is a 2,500 seat
theater that hosts  approximately 100  music, comedy  and dramatic  performances
each  year,  including Jamboree  USA,  a live  country  music concert  and radio
program heard weekly  throughout the northeastern  United States featuring  such
country  music stars as  John Michael Montgomery,  Trisha Yearwood, Alan Jackson
and Lorrie  Morgan. Each  July, the  Company stages  Jamboree in  the Hills,  an
outdoor festival featuring
 
                                       6
 
<PAGE>
<PAGE>
20  or more country  music stars held  on a 200  acre site owned  by the Company
outside of Wheeling. This four day  event attracts tens of thousands of  country
music  fans  each  year  from  throughout the  United  States  and  Canada. Past
performers at Jamboree in the Hills  include Vince Gill, Loretta Lynn, Brooks  &
Dunn,  Tim McGraw, and Travis Tritt. Jamboree in the Hills won the Country Music
Association's 1991 award for Festival of the Year and was featured in a one-hour
special on The Nashville Network in 1992.
 
     Besides Jamboree  USA,  the Capitol  Music  Hall also  hosts,  among  other
events,  musical acts other than  country, comedians, dramatic presentations and
symphonies. Attendance  varies  based upon  the  popularity of  each  particular
event.  The Company also promotes shows in  the 7,500 seat Wheeling Civic Center
and has begun promoting shows in markets outside of Wheeling.
 
PROGRAMMED MUSIC
 
     The Company distributes programmed music, primarily Muzak, in the  Atlanta,
Macon and Albany, Georgia and Ft. Myers, Florida markets. As the exclusive Muzak
franchisee   in   these   markets,  the   Company   provides   subscribers  with
commercial-free Muzak programming ranging  from traditional background music  to
newer  formats including country  and soft rock, and  sells, leases and installs
the equipment required to receive the programming via satellite and other media.
 
     The franchisor,  Muzak  L.P., provides  the  programming, and  the  Company
remits  to Muzak  a fee based  upon the  gross revenues from  Muzak service. The
Company, and  not  the  franchisor, is  the  owner  of the  contracts  with  the
individual  users  of  the  Muzak programming.  These  contracts  generally have
five-year terms with an automatic renewal provision. In most cases, the  Company
owns the equipment at the customers' sites and charges a lease fee for its use.
 
     As  part of its programmed music  business, the Company also designs, sells
and installs sound, closed-circuit video  and security systems and equipment  in
locations  such  as offices,  schools, hospitals,  shopping malls  and stadiums.
Examples  of  such  systems  include  shopping  mall  paging,  public   address,
closed-circuit  video, and fire/security systems. In addition, the Company is an
authorized distributor of the Rauland-Borg line of communications equipment  for
schools  and hospitals  in various  markets. The  Company believes  the sale and
installation of such sound equipment will  continue to be an area of  increasing
growth in revenues for the Company.
 
OSBORN HEALTHCARE
 
     Osborn  Healthcare was started by the Company in 1988 and offers a range of
education and entertainment  services to hospitals.  Osborn Healthcare  operates
The  Patient  Network in  9  hospitals in  the  southeastern United  States. The
Patient Network  is  a  proprietary closed-circuit  television  system  offering
patients  premium cable  television services  such as  movies, news  and sports.
Separately, the  Company distributes  fully automated  On-Demand Video  systems,
which provide educational videos to physicians, patients and hospital staff. The
Company  also offers The Automated Testing  System, which is linked to On-Demand
Video and  is  proprietary software  that  allows viewer  interaction  with  the
educational  videos. These  systems permit  physicians to  inform patients about
medical procedures  via video  with follow-up  interactive question  and  answer
sessions.  The Company is exploring expanded  applications for these systems. In
addition,  Osborn  Healthcare  distributes  cable  television  programming   via
satellite to 45 hospitals.
 
     The  sources of the movies shown by Osborn Healthcare are film distributors
licensed by  major  movie studios  and  the  sources of  The  Patient  Network's
programming  are major cable  networks and film  distributors. Osborn Healthcare
generally pays a subscription fee based upon  the number of beds in each of  the
hospitals serviced.
 
EMPLOYEES
 
     At   December  31,  1995,  the  Company  had  approximately  288  full-time
employees, of whom 7 employees were on the corporate staff, and the balance were
employed at the operating subsidiary level in connection with the operation  and
management    of    the   Company's    properties.    One   employee    of   the
 
                                       7
 
<PAGE>
<PAGE>
programmed music franchise in  Atlanta is a union  member. The Company  believes
its relations with its employees are good.
 
COMPETITION
 
     Radio. Radio is a highly competitive business. The Company's radio stations
compete  with radio stations in  their respective market areas,  as well as with
other advertising  media  such  as  newspapers,  television,  cable  television,
magazines,  outdoor advertising, transit advertising  and direct mail marketing.
Competition  within  the  radio   broadcasting  industry  occurs  primarily   in
individual  market areas,  so that  a station in  one market  generally does not
compete with stations in other markets  for local advertising, although it  does
compete   indirectly  for  national  advertising.   In  addition  to  management
experience,  factors  material  to  competitive  position  include  a  station's
audience rank in its market, authorized power, quality of equipment, location of
transmitter,   assigned  frequency,  audience   characteristics,  local  program
acceptance and the number  and characteristics of other  stations in the  market
area.
 
     Technological  advances  may  have  an  impact  on  the  competitive  radio
broadcasting  environment.   Several  companies   have  begun   offering   radio
programming  by cable to  subscribers of cable television.  In addition, the FCC
has allocated spectrum for, and  various companies have sought authorization  to
provide,   the  direct  transmission  of  radio  programming  to  listeners  via
satellite. The FCC is also  considering permitting the broadcast of  terrestrial
digital  radio programming.  The effect  that these  technological advances will
have on the Company's operations is uncertain.
 
     In 1996,  the FCC,  in  response to  the  Telecommunications Act  of  1996,
relaxed  its rules regarding ownership by  one entity of multiple radio stations
in the same market.  The effect that  these changes will  have on the  Company's
business  is  unclear. However,  to  the extent  that  the Company  can purchase
additional stations  or  enter  into  LMAs in  markets  where  it  has  existing
stations,  the  Company's stations  may have  a  competitive advantage  in their
markets; conversely, the Company's stations may be at a competitive disadvantage
to the extent other broadcasters  in their markets purchase additional  stations
or enter into LMAs.
 
     Broadcast-Related  Businesses.  The Company's  broadcast-related businesses
generally compete regionally for audiences  with other live concerts and  sports
and  entertainment events as  well as other  media such as  films, broadcast and
cable television, videocassettes and radio. Competition for talent may come from
national or regional sources and is primarily from other concert venues.
 
     Programmed Music. The Company's competition in the programmed music markets
is the  ready availability  of low-cost,  nonprogrammed music,  such as  regular
radio  broadcasts,  audio  cassettes  and compact  discs  as  well  as competing
programmed music services. The Company competes in the sale and installation  of
sound  systems with  numerous other  sources of  such equipment,  including both
local and national distributors.
 
     Hospital Cable  Television.  Competition  for  viewers  for  the  Company's
hospital  cable television  service comes  from broadcast  television. The cable
television operations compete nationally  for hospitals with  a small number  of
companies  involved  in supplying  cable programming  to hospitals,  local cable
distributors and  with companies  which sell  or lease  television equipment  to
hospitals.  In addition, many  hospitals choose to  provide their own television
entertainment and education services.
 
FEDERAL REGULATION OF BROADCASTING
 
     Introduction. Radio broadcasting is subject to regulation by the FCC  under
the Communications Act of 1934, as amended (the 'Communications Act'). Under the
Communications  Act, the  FCC, among other  things, assigns  frequency bands for
broadcasting, determines  the  frequencies,  location  and  power  of  stations,
issues,  renews, revokes and modifies station licenses, regulates equipment used
by stations, and adopts and  implements regulations and policies which  directly
or  indirectly  affect the  ownership,  operations and  employment  practices of
broadcasting stations.  In  particular,  the Communications  Act  prohibits  the
assignment of a broadcasting license or the transfer of control of a corporation
holding  a broadcasting license without prior  approval of the FCC. In addition,
modification of the facilities  of television and radio  stations is subject  to
FCC approval. The Telecommunications Act of
 
                                       8
 
<PAGE>
<PAGE>
1996  (the '1996 Act'), which was signed  into law in February 1996, amended the
Communications Act in several key respects.
 
     License Renewal.  As  a result  of  amendments to  the  Communications  Act
brought  about through the 1996 Act, the  FCC must grant the renewal application
filed on behalf of a station if it finds that, during the preceding term of that
station's license, the station has served the public interest, convenience,  and
necessity;  there  have  been  no  serious violations  by  the  licensee  of the
Communications Act or the rules and regulations of the FCC; and there have  been
no  other violations by the licensee of  the Communications Act or the rules and
regulations of the  FCC which,  taken together,  would constitute  a pattern  of
abuse.  If the FCC is unable to make  such findings with respect to the station,
it can grant the station's renewal application, but on terms and conditions that
the FCC  considers to  be appropriate,  or,  the FCC  can, after  providing  the
licensee  with notice and an opportunity for  hearing, and if the FCC determines
that no mitigating factors justify the imposition of a lesser sanction, deny the
renewal application. The terms and conditions  that could be imposed by the  FCC
in granting the renewal include requiring the payment of a forfeiture, requiring
the  licensee to make periodic reports to the  FCC or granting the renewal for a
period of time less  than a normal  license term. Only upon  the issuance of  an
order   denying  the  renewal  application  may  the  FCC  accept  and  consider
applications specifying the  channel or  broadcasting facilities  of the  former
licensee,  whereas, prior  to the  amendments brought about  by the  1996 Act, a
license was subject to competing  applications being filed whenever the  license
was  due for renewal. In  making its determination as  to whether the licensee's
renewal application can be  granted, the FCC may  consider facts brought to  its
attention by parties filing petitions seeking denial of the renewal application.
 
     Also  as a result of the 1996 Act, the FCC now has the authority to renew a
broadcast station license  for a maximum  term of eight  years. Previously,  the
Communications Act permitted the FCC to grant broadcast station license renewals
for  a maximum  term of seven  years. The FCC  has announced that  it intends to
initiate a  rulemaking  in March  1996  looking  toward the  adoption  of  rules
consistent with the renewal term prescribed by the 1996 Act, and that it intends
to adopt such rules in the third quarter of 1996.
 
     Ownership  Matters.  As a  result  of the  1996  Act, the  FCC  revised its
ownership rule effective  March 15, 1996,  to remove the  national limit on  the
number  of stations that any one entity may own or in which that entity may have
an attributable  interest. The  FCC also  revised its  ownership rule  so as  to
provide  that (a) in a radio market with 45 or more commercial radio stations, a
party may own, operate, or control up  to 8 commercial radio stations, not  more
than  5 of which  may be in  the same service (i.e.,  AM or FM);  (b) in a radio
market with between 30 and 44 (inclusive) commercial radio stations, a party may
own, operate, or control up to 7  commercial radio stations, not more than 4  of
which  may be in the same service; (c) in  a radio market with between 15 and 29
(inclusive) commercial radio stations, a party  may own, operate, or control  up
to  6 commercial radio  stations, not more  than 4 of  which may be  in the same
service; and (d) in a radio market with 14 or fewer commercial radio stations, a
party may own, operate, or control up  to 5 commercial radio stations, not  more
than  3 of which  are in the  same service, except  that the party  may not own,
operate, or control more than 50 percent of the stations in such market.
 
     Parties  subject  to  the   multiple  ownership  rules  include   officers,
directors,  and  holders of  5%  or more  of  the voting  stock  of broadcasting
companies. Holders of debt and non-voting stock, however, are not subject to the
multiple ownership rules.  Passive investments of  less than 10%  of the  voting
stock  of  a  broadcasting  company  held  by  certain  categories  of financial
institutions are also not recognized for purposes of these rules.
 
     The multiple  ownership rules  could preclude  the Company  from  acquiring
radio  or TV  stations in areas  where its officers,  directors, or stockholders
have such an interest.
 
     Under the Communications Act,  as amended by the  1996 Act, no FCC  license
may  be granted  to any alien,  to a corporation  organized under the  laws of a
foreign government, or to any corporation of which more than 20% of its  capital
stock  is owned of record or voted  (i) by aliens or their representatives, (ii)
by a foreign government or representative  thereof, or (iii) by any  corporation
organized  under  the laws  of a  foreign  country (collectively,  'Aliens'). In
addition, no one corporation may hold  the capital stock of another  corporation
owning broadcast licenses if more than 25% of the
 
                                       9
 
<PAGE>
<PAGE>
capital  stock of such parent corporation is  owned of record or voted by Aliens
or is  subject  to control  by  Aliens,  unless specific  FCC  authorization  is
obtained.
 
     The  Company's Restated Certificate of  Incorporation and By-Laws authorize
the Board of Directors to prohibit ownership, voting, or transfer of its capital
stock which would  cause the Company  to violate the  Communications Act or  FCC
regulations.
 
     Local  Marketing Agreements.  A number of  broadcasting stations, including
several of the  Company's stations, have  entered into what  have commonly  been
referred  to as  'Time Brokerage  Agreements', 'Local  Marketing Agreements', or
'LMAs'. While these  agreements may  take varying  forms, under  a typical  LMA,
separately-owned  and licensed  radio stations  agree to  enter into cooperative
arrangements, subject to compliance with the requirements of antitrust laws  and
with   the  FCC's  rules  and  policies.  Under  these  types  of  arrangements,
separately-owned stations  could agree  to function  cooperatively in  terms  of
programming,  advertising sales, etc.,  subject to the  licensee of each station
maintaining independent control over the  programming and station operations  of
its  own station. One typical  type of LMA is  a programming agreement among two
separately-owned radio  stations  serving a  common  service area,  whereby  the
licensee  of one station  programs substantial portions of  the broadcast day on
the other licensee's station, subject  to ultimate editorial and other  controls
being  exercised by the latter licensee,  and sells advertising time during such
program segments.
 
     The  FCC  has  held   that  such  agreements  are   not  contrary  to   the
Communications  Act, or  the FCC's policies,  provided that the  licensee of the
station which  is being  substantially programmed  by another  entity  maintains
complete responsibility for and control over operations of its broadcast station
and assures compliance with applicable FCC rules and policies.
 
     The  FCC's rules provide  that a station brokering  time on another station
serving the same  market may  be considered  to have  an attributable  ownership
interest  in the brokered station for  purposes of the multiple ownership rules.
As a result,  under the  rules, a  broadcast station  will not  be permitted  to
program more than 15% of the broadcast time, on a weekly basis, of another local
station  which it could  not own under  the multiple ownership  rules. The FCC's
rules also prohibit a broadcast licensee from simulcasting more than 25% of  its
programming  on another  station in the  same broadcast service  (i.e., AM/AM or
FM/FM) whether  it  owns  the  stations  or through  a  time  brokerage  or  LMA
arrangement,  where the brokered and  brokering stations serve substantially the
same geographic area.
 
     Proposed Changes. The Congress  and the FCC  have under consideration,  and
may  in  the  future consider  and  adopt,  new laws,  regulations  and policies
regarding a wide variety of matters  that could, directly or indirectly,  affect
the  operation  and  ownership  of  the Company  and  its  radio  and television
broadcast properties. Such  matters include,  for example,  the license  renewal
process;  proposals to impose spectrum use  or other governmentally imposed fees
upon licensees;  proposals to  place  limitations on  the amount  of  commercial
matter that television stations can carry; proposals to change rules relating to
political  broadcasting; proposals to increase  the benchmarks or thresholds for
attributing ownership interest in broadcast media; proposals to require  certain
types of programming; proposals to restrict the use of LMAs and certain types of
marketing  arrangements; technical  and frequency  allocation matters, including
those relative to  the implementation of  digital audio broadcasting  on both  a
satellite  and terrestrial  basis; proposals to  initiate a  new high definition
television service; proposals to restrict  or prohibit the advertising of  beer,
wine  and other alcoholic  beverages or to  limit the tax  deductibility of such
advertisements; and  changes to  broadcast technical  requirements. The  Company
cannot  predict what other changes might be considered in the future, nor can it
judge in advance what impact, if any, such changes might have on its business.
 
     The foregoing  is  only  a  brief summary  of  certain  provisions  of  the
Communications   Act  and  FCC  regulations.  The  Communications  Act  and  FCC
regulations may be amended from time to time. The Company cannot predict whether
any such legislation will be enacted  or whether new or amended FCC  regulations
will  be  adopted, or  the effect  of any  changes on  the Company.  For further
information,  reference  should   be  made  to   the  Communications  Act,   FCC
regulations, and Public Notices issued by the FCC.
 
     Other  Matters.  Construction  projects  such  as  broadcasting  towers are
subject to state and local  construction and environmental laws and  regulations
and may require governmental permits.
 
                                       10
 
<PAGE>
<PAGE>
Broadcasting  towers also  must comply  with regulations  issued by  the Federal
Aviation  Administration   ('FAA')  and   must  receive   FAA  approval   before
construction.
 
OTHER TRANSACTIONS
 
     Fairmont  and Northstar  Management Agreements. The  Company currently owns
25% of the stock of Fairmont Communications Corporation. Fairmont is managed  by
the  Company pursuant to a management  agreement. In August 1992, Fairmont filed
for protection from its creditors under Chapter 11 of the U.S. Bankruptcy  Code.
In  September  1993,  Fairmont emerged  from  Chapter  11 upon  approval  by the
bankruptcy court of a plan of reorganization (the 'Plan'). The Plan provides for
the sale of Fairmont's assets, distribution  of proceeds in accordance with  the
Plan,  and subsequent liquidation  of Fairmont. All  of Fairmont's stations were
sold by the second quarter of 1994. The Company will continue to manage Fairmont
pursuant to  the management  agreement  which expires  upon the  liquidation  of
Fairmont, which is expected in 1996. For managing Fairmont, the Company receives
an  annual fee  of $125,000,  plus reimbursement  of out-of-pocket  expenses and
allocated overhead costs.  In 1994, the  Company received additional  management
fees  of $728,000 related to  the sale of Fairmont's  stations. The Company also
earned distributions  of  $0.4  million  and $2.3  million  in  1995  and  1994,
respectively,   classified  as  other  income   in  the  consolidated  financial
statements, determined by  the amounts realized  by Fairmont from  sales of  its
assets.
 
     The  Company held  a 32% interest  in Northstar Television  Group, Inc. and
managed Northstar's four television stations pursuant to a management  agreement
in  return for  reimbursement of  out-of-pocket expenses  and allocated overhead
costs. In 1994, Northstar's creditors and equity investors reached an  agreement
with  respect to  restructuring Northstar's  highly leveraged  capital structure
pursuant to which, among other things, the Company received a portion of accrued
and unpaid  management fees  and  retains an  economic interest.  The  Company's
management  agreement with Northstar terminated  following the restructuring. In
January 1995, three of  Northstar's four television stations  were sold and  the
Company  received a distribution of $1.6  million, classified as other income in
the consolidated financial statements.
 
ITEM 2. PROPERTIES
 
     The Company's corporate headquarters are located in Greenwich, Connecticut.
The Company leases offices in Greenwich  pursuant to a lease terminating in  May
1999.
 
     The  types of  properties required to  support each of  the Company's radio
stations include  offices,  studios,  and transmitter  and  antenna  sites.  The
Company  and  certain subsidiaries  lease the  following properties:  Ft. Myers,
Florida, radio station and Muzak  offices leased pursuant to leases  terminating
September  2005 and June 1999,  respectively; Tampa sound equipment distribution
offices leased pursuant to lease  terminating March 2000; Atlanta Muzak  offices
leased pursuant to lease terminating October 2001; Asheville, North Carolina, FM
broadcasting  tower  site leased  pursuant  to lease  terminating  October 1996;
Dayton, Ohio, offices leased pursuant  to lease expiring March 1999;  Greenwich,
Connecticut,  offices  leased pursuant  to lease  terminating May  1999; Daytona
Beach/Palatka, Florida,  offices  and  tower  site  leased  pursuant  to  leases
terminating  May  1999 and  December  2014, respectively;  Nashville, Tennessee,
offices leased  pursuant  to  lease terminating  October  1999;  Raleigh,  North
Carolina,  offices  leased pursuant  to lease  expiring December  1999; Atlantic
City, New Jersey, broadcasting tower site and offices leased pursuant to  leases
expiring  December  1999 and  December  2001, respectively;  and  Wheeling, West
Virginia, FM  broadcasting  tower  site leased  pursuant  to  lease  terminating
February  2002.  The  Company  owns  the  remaining  broadcasting  equipment and
offices,  studios  and  broadcasting  towers.  The  Company  believes  that  its
facilities are adequate and suitable for their present uses.
 
     All of the Company's properties are subject to encumbrances as security for
certain  of  the Company's  borrowings.  All of  the  stock in  the subsidiaries
holding such properties  has also been  pledged as security  for certain of  the
Company's borrowings. See Notes 6 and 7 to the consolidated financial statements
contained in Part II, Item 8 -- Financial Statements and Supplementary Data.
 
                                       11
 
<PAGE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
 
     The  Company is not a party to any lawsuit or any legal proceeding that, in
the opinion of management, is  likely to have a  material adverse impact on  the
Company.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     No  matters were submitted to a vote  of stockholders of the Company in the
fourth quarter of 1995.
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Set forth below are the name, age, present position with the Company and  a
brief  past  five-year  employment  history of  each  executive  officer  of the
Company.
 
<TABLE>
<CAPTION>
                      NAME                         AGE                           POSITION
------------------------------------------------   ---   ---------------------------------------------------------
 
<S>                                                <C>   <C>
Frank D. Osborn.................................   48    President, Chief Executive Officer, and Director
Thomas S. Douglas...............................   47    Senior Vice President -- Finance and Treasurer
W. Charles Hillebrand...........................   49    Senior Vice President -- Muzak
Michael F. Mangan...............................   34    Vice President -- Controller and Secretary
</TABLE>
 
     Frank D.  Osborn has  been President  and Chief  Executive Officer  of  the
Company  since the Company's  formation in September 1984  and was its Treasurer
until August 1989. From  1983-1985, Mr. Osborn  was Senior Vice  President/Radio
for  Price Communications Corporation, a diversified communications corporation.
From 1981-1983, Mr. Osborn served as Vice President and General Manager of WYNY,
NBC's New  York  FM  radio  station,  and was  Vice  President  of  Finance  and
Administration of NBC Radio from 1977-1981. Mr. Osborn serves as Chairman of the
Board and Chief Executive Officer of Fairmont Communications Corporation, and is
a  Director of  Northstar Television  Group, Inc. Mr.  Osborn is  married to the
niece of Edward G. Nelson, a Director of the Company. Fairmont filed a voluntary
bankruptcy petition under  Chapter 11 of  the United States  Bankruptcy Code  on
August 28, 1992 and emerged from Chapter 11 in September 1993.
 
     Thomas  S. Douglas  joined the Company  in January 1994,  and became Senior
Vice President --  Finance and  Treasurer in March  1994. For  the previous  two
years,   he  was  an  investment  banking  advisor  to  the  Czech  Ministry  of
Privatization in  Prague, the  Czech  Republic in  association with  Deloitte  &
Touche  and the  Bank Przemyslowo-Handlowy,  Crakow, Poland  in association with
KPMG Peat Marwick. From 1983 to 1991, he was a Director, Investment Banking,  at
Prudential Securities Incorporated, New York, New York.
 
     W.  Charles Hillebrand has  served as Senior Vice  President -- Muzak since
joining the Company  in 1986.  In February  1993, Mr.  Hillebrand was  appointed
President  of the Company's wholly-owned subsidiaries  which own and operate its
programmed music businesses.
 
     Michael F.  Mangan,  a certified  public  accountant, has  served  as  Vice
President  --  Controller  since rejoining  the  Company  in April  1994  and as
Secretary since June 1994. From July  1992 through April 1994, he was  Assistant
Controller  of  PolyGram Holding,  Inc. He  previously  served as  the Company's
Controller from 1989 through  June 1992, and as  Assistant Controller from  1987
through 1989.
 
                                       12
 
<PAGE>
<PAGE>
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
 
     The  Company's common stock is traded  on the NASDAQ National Market System
under the  symbol OSBN.  Common  stockholders of  record  at December  31,  1995
numbered  approximately  135,  but  the  Company  believes  that  the  number of
beneficial owners is approximately 1,000, including those whose shares are  held
in nominee or 'street' names.
 
<TABLE>
<CAPTION>
                                                       FIRST          SECOND             THIRD           FOURTH
                                                   -------------   -------------   ---------------   -------------
                                                   1995    1994    1995    1994     1995    1994     1995    1994
                                                   -----   -----   ----    -----   -----    -----    -----   -----
<S>                                                <C>     <C>     <C>     <C>     <C>      <C>      <C>     <C>
Quarterly market price range:
     High.......................................   7 1/2   7 1/2     7     7 1/2   11 1/8   7 3/4    9 5/8   7 1/2
     Low........................................   6 3/4   6 1/2     6     6 1/4   6 1/4    6 1/2    7 1/4   6
</TABLE>
 
     Market  prices have  been adjusted to  reflect (to the  nearest eighth) the
1-for-2 reverse stock split on July 11, 1994.
 
     To date, the Company has not paid cash dividends on its common stock. Under
the terms  of certain  of the  Company's debt  agreements, the  Company may  not
declare  or pay any dividend on, or make any distribution to the holders of, any
shares of capital stock of the Company.
 
ITEM 6. SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31,
                                                              ---------------------------------------------------
                                                               1995       1994       1993       1992       1991
                                                              -------    -------    -------    -------    -------
                                                                     (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                                                           <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA(1):
Net revenues...............................................   $39,100    $34,582    $27,399    $26,863    $24,860
Operating income (loss)....................................     2,215      1,315        398       (877)    (4,035)
Income (loss) before extraordinary items...................     6,624     (1,114)    (2,173)    (4,507)    (9,028)
Net income (loss)..........................................     2,703     (1,550)    (2,173)    (4,507)    (9,028)
INCOME (LOSS) PER COMMON SHARE(2):
Primary earnings per common share:
     Income (loss) before extraordinary items..............      1.23      (0.21)     (0.50)     (1.29)     (2.59)
     Net income (loss).....................................      0.50      (0.29)     (0.50)     (1.29)     (2.59)
Fully diluted earnings per common share:
     Income (loss) before extraordinary items..............      1.22      (0.21)     (0.50)     (1.29)     (2.59)
     Net income (loss).....................................      0.50      (0.29)     (0.50)     (1.29)     (2.59)
Dividends..................................................        --         --         --         --         --
BALANCE SHEET AND OTHER DATA:
Total assets...............................................    77,634     79,166     47,498     50,376     55,335
Long-term debt and other long-term obligations.............    44,915     48,577     22,655     27,844     30,727
Total stockholders' equity.................................    21,497     19,282     19,158     13,735     18,242
Operating cash flow(3).....................................     9,703      9,076      6,152      5,192      3,477
EBITDA(4)..................................................     7,997      6,600      4,654      3,701        827
</TABLE>
 
------------
 
(1) Reflects the  acquisitions  and dispositions  described  in Note  3  to  the
    consolidated  financial statements, as well as acquisitions and dispositions
    occurring in previous years.
 
(2) Per share data adjusted to reflect  the 1-for-2 reverse stock split on  July
    11, 1994.
 
(3) Operating  cash  flow is  defined as  operating income  before depreciation,
    amortization and corporate expenses.
 
(4) EBITDA is defined as operating income before depreciation and amortization.
 
                                       13
 
<PAGE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
GENERAL
 
     The primary source of  the Company's broadcasting revenues  is the sale  of
air  time on its radio stations  for advertising. The Company's most significant
operating expenses are employee  salaries and commissions, programming  expenses
and  advertising and promotional expenses. The  Company strives to control these
expenses by working closely with station management.
 
     The Company's revenues are affected primarily by the advertising rates  its
radio  stations  charge. These  rates are  in  large part  based on  a station's
ability  to  attract  audiences  in  the  demographic  groups  targeted  by  its
advertisers,  as measured periodically by  Arbitron. Because audience ratings in
local markets  are  crucial  to  a  station's  financial  success,  the  Company
endeavors to develop strong listener loyalty.
 
     The  number of  advertisements that  can be  broadcast without jeopardizing
listening levels (and the resulting ratings) is limited in part by the format of
a particular  station. The  Company's  stations strive  to maximize  revenue  by
constantly  managing the number of commercials  available for sale and adjusting
prices based upon local market conditions.
 
     The Company's advertising contracts  are generally short-term. The  Company
generates most of its revenue from local advertising, which is sold primarily by
a  station's sales  staff. To generate  national advertising  sales, the Company
engages  independent  advertising  sales  representatives  that  specialize   in
national  sales for each of its stations. The Company's operating results in any
period may be affected by the  incurrence of advertising and promotion  expenses
that  do not necessarily  produce commensurate revenues until  the impact of the
advertising and promotion is realized in future periods.
 
     The performance of a  broadcasting company is  customarily measured by  its
ability  to  generate operating  cash flow.  Operating cash  flow is  defined as
operating income  before  depreciation,  amortization  and  corporate  expenses.
Although  operating  cash flow  is not  a measure  of performance  calculated in
accordance with Generally Accepted  Accounting Principles ('GAAP'), the  Company
believes  that operating cash flow is useful to investors because it is accepted
by the  radio  broadcasting  industry  as  a  generally  recognized  measure  of
performance  and  is used  by  securities analysts  who  report publicly  on the
performance of  broadcasting  companies.  Operating  cash  flow  should  not  be
considered  in isolation  or as  a substitute  for net  income, cash  flows from
operating activities  and  consolidated  income  or  cash  flow  statement  data
prepared in accordance with GAAP, or as a measure of the Company's profitability
or liquidity.
 
FINANCIAL ADVISOR
 
     In  November 1994,  the Company engaged  an investment banking  firm as its
financial advisor to assist  the Company in evaluating  its options to  increase
shareholder  value. As  a result  of this  process, the  Company has  decided to
dispose of broadcasting properties in Syracuse, New York and Anniston,  Alabama.
The engagement of the financial advisor ended in January 1996.
 
TELECOMMUNICATIONS ACT OF 1996
 
     The  Telecommunications Act of 1996 (the '1996 Act'), which was signed into
law in February 1996, impacts the Company's operations in several respects.  The
1996  Act,  among other  things, directs  the Federal  Communications Commission
('FCC') to modify its ownership rules to  eliminate the limits on the number  of
radio  stations one  entity may  own nationally  and to  make the  limits on the
number of radio stations one entity may own in a single market less restrictive.
Under the 1996 Act, depending  on the number of  radio stations in a  particular
market, one entity may own a maximum of between five and eight radio stations in
a  market, except that  an entity may not  own more than 50%  of the stations in
such market. The 1996 Act directed the FCC to conduct a rulemaking to reevaluate
existing limitations  on the  number of  television stations  that a  person  or
entity  may own, operate or control, or have a cognizable interest in within the
same television  market.  In  addition,  the FCC  has  the  authority  to  grant
 
                                       14
 
<PAGE>
<PAGE>
broadcast  license terms  for a  maximum term  of eight  years (previously seven
years). Additionally,  the provisions  of the  1996 Act  strengthen the  license
renewal expectancy for a license holder.
 
ACQUISITIONS AND DISPOSITIONS
 
     Given  the less restrictive regulatory  environment, the Company intends to
own multiple radio stations in certain of its markets in order to attain a  more
dominant  position  in the  respective market.  If  the Company  determines that
opportunities to  acquire additional  stations in  a particular  market are  not
satisfactory,  it may dispose of  its stations in such  market. The Company also
intends to pursue the acquisition of multiple stations in other markets.
 
     Consistent with its  strategy of owning  multiple stations in  a market  or
leaving  markets  where opportunities  to  acquire additional  stations  are not
satisfactory,  the  Company  has  entered  into  several  transactions  for  the
acquisition  or disposition of broadcast properties in 1995 and early 1996. Each
of these  transactions  is  more fully  described  in  Notes 3  and  13  to  the
consolidated financial statements.
 
     In  August 1995, the Company agreed to acquire substantially all the assets
of radio stations  WKII-AM/WEEJ-FM, Port Charlotte,  Florida for $2.85  million,
subject  to FCC approval and  license renewal. In the  event that the Company is
able to  relocate WEEJ-FM's  broadcast  antenna to  the Company's  Pine  Island,
Florida  tower in  order to  better serve  the Port  Charlotte/Ft. Myers market,
additional consideration  of  $750,000 will  be  paid. The  Company  intends  to
combine these stations with its existing operations in the Ft. Myers market. The
transaction is expected to close in April 1996.
 
     In January 1996, the Company agreed to acquire substantially all the assets
of  radio station duopoly KNAX-FM/KRBT-FM,  Fresno, California for consideration
consisting of $6.0 million  plus 120,000 shares of  the Company's common  stock.
The FCC has consented to this transaction which is expected to close in 1996.
 
     In January 1996, the Company agreed to acquire substantially all the assets
of  radio  station WHLX-FM,  Wheeling,  West Virginia  for  $0.8 million  and in
February 1996,  agreed to  acquire substantially  all assets  of radio  stations
WKWK-AM/FM, also in Wheeling, for $2.7 million. Both acquisitions are subject to
FCC  approval.  The  Company  believes  that  these  acquisitions  will  further
strengthen its dominant position in the Wheeling market.
 
     Pending the closing of  these acquisitions, the  Port Charlotte and  Fresno
stations  are managed by the Company pursuant to local marketing agreements. The
Company also intends to enter into  a local marketing agreement to manage  radio
stations WKWK-AM/FM in Wheeling.
 
     The  Company has  determined that attractive  acquisition opportunities did
not exist in certain of  its markets and in 1995  and early 1996 agreed to  sell
certain broadcast properties.
 
     In  September 1995, the Company agreed to sell substantially all the assets
of radio stations  WNDR-AM/WNTQ-FM, Syracuse,  New York for  $12.5 million.  The
transaction  closed  in  February 1996.  Since  September 1995  and  pending the
closing of the transaction, the stations were managed by the purchaser  pursuant
to a local marketing agreement.
 
     In  September 1995, the Company agreed to sell substantially all the assets
of radio stations WWRD-FM, Jacksonville, Florida/Brunswick, Georgia and WFKS-FM,
Daytona Beach/Palatka, Florida,  as well as  the Company's 50%  interest in  the
broadcast  tower serving  WWRD-FM for total  consideration of  $6.5 million. The
sale of WWRD-FM closed in January  1996. The closing of the WFKS-FM  transaction
is  expected in 1996. Pending the closing of the transactions, the stations have
been managed by the purchaser pursuant to local marketing agreements.
 
     In February 1996, the Company agreed  to sell substantially all the  assets
of radio station WAYV-FM, Atlantic City, New Jersey for $3.1 million, subject to
FCC approval. Pending the closing of the transaction, which is expected in 1996,
the  purchaser is managing the station  pursuant to a local marketing agreement.
The station was acquired by the Company in March 1994 for consideration of  $2.5
million.
 
     In   February  1996,  the  Company  entered   into  an  agreement  to  sell
substantially all the  assets of radio  station WFXK-FM, Raleigh/Tarboro,  North
Carolina for $5.9 million, subject to FCC approval.
 
                                       15
 
<PAGE>
<PAGE>
Pending  the closing of the transaction, which  is expected in 1996, the station
will continue to  be operated  by the purchaser  pursuant to  a local  marketing
agreement.
 
     In  December  1995,  the  Company entered  into  an  option  agreement with
Allbritton Communications Company  for the sale  of television station  WJSU-TV,
Anniston,  Alabama,  and an  associated  10-year local  marketing  agreement. In
consideration for the option, the Company received a nonrefundable cash  payment
of  $10.0 million. Because the cash  proceeds from the option are nonrefundable,
the Company accounted for the economic substance of the transaction as if a sale
of substantially all the assets of the station had occurred. Accordingly, a gain
of approximately $8.1 million  was recorded. In addition,  upon the exercise  of
the option and the necessary FCC consent, the Company will receive an additional
cash  payment  of  $2.0 million.  If  the  necessary approvals  to  relocate the
station's broadcast transmitter to a new location to maximize broadcast coverage
are received, the Company  will receive additional cash  payments of up to  $7.0
million.  WJSU-TV  was the  Company's only  television station  and it  does not
intend to acquire  additional broadcast television  stations in the  foreseeable
future.
 
1994 ACQUISITIONS
 
     In June 1994, the Company acquired substantially all the assets of three FM
and  one  AM  radio  stations  for $20.0  million  plus  transaction  costs. The
acquisition included radio stations WWNC-AM/WKSF-FM, Asheville, North  Carolina;
WOLZ-FM,  Ft. Myers,  Florida; and  WFKS-FM, Daytona  Beach/Palatka, Florida. In
August  1994,  the   Company,  through  a   wholly-owned  subsidiary,   acquired
substantially all the assets of radio stations WAAX-AM/WQEN-FM, Gadsden, Alabama
for  $1.75 million plus  transaction costs. The  seller of the  six stations has
agreed not to own  or operate radio  stations in these markets  for a period  of
three years. The Gadsden market is adjacent to the Anniston market, in which the
Company  owned its television station. In August 1995, the Company was granted a
waiver of the FCC's  regulations prohibiting ownership  of radio and  television
stations in the same market. Pending the FCC's ruling on the waiver application,
the  Gadsden stations were placed in a  trust which operated the stations on the
Company's behalf.
 
     The Asheville, Ft. Myers, Daytona Beach/Palatka, Gadsden and Atlantic  City
acquisitions  have been accounted  for using the  purchase method of accounting.
Accordingly, the purchase price  of each acquisition has  been allocated to  the
assets  based upon their fair values at  the date of acquisition. The results of
operations of the properties are included in the Company's consolidated  results
of  operations from the respective dates  of acquisition for properties acquired
and until the date of disposition for properties disposed. Prior to the grant of
the waiver of the FCC's cross-ownership regulations, the Gadsden acquisition was
accounted for using  the equity  method of accounting.  Accordingly, prior  year
financial  statements have been reclassified to reflect the consolidation of the
Gadsden radio stations.
 
     Due to the acquisitions, dispositions, and local marketing agreements,  the
results  of operations  from period  to period  are not  comparable and  are not
necessarily indicative of future results. The effects of these acquisitions  and
dispositions  on 1996 revenue, operating cash  flow and net income are dependent
on the timing of  the closing of  each transaction. In  general, it is  expected
that  the net result will be a reduction  of net revenue and operating cash flow
in 1996 as compared to 1995 because  acquired properties will be included for  a
partial  year whereas divested properties will not be included for a majority of
the year. The  reduction in  operating cash  flow is  expected to  be more  than
offset  by  the  reduction  in  interest expense  due  to  the  expected reduced
borrowings.
 
RESULTS OF OPERATIONS
 
YEAR ENDED DECEMBER 31, 1995 VS. 1994
 
     Net revenues of $39.1  million in 1995 represent  a 13% increase from  1994
net  revenues of  $34.6 million. The  increase is primarily  attributable to the
radio stations acquired in 1994, as well as improved operations at the Company's
Asheville and  Gadsden radio  stations and  its Georgia  and Florida  programmed
music  franchises. For businesses owned and  operated for a comparable period in
1995  and  1994,  net  revenues  increased  3%.  For  broadcasting  and  related
businesses  operated for a  comparable period, net revenues  of $23.4 million in
1995 were basically flat compared to 1994. This is attributable to reductions in
net revenues for  the Syracuse  and Daytona Beach/Palatka  radio stations  which
have been
 
                                       16
 
<PAGE>
<PAGE>
subject  to local marketing agreements  since September 1995 pending disposition
in 1996,  and the  Anniston  television station  which  benefited in  1994  from
significant political advertising, offset by increased revenues by the Company's
other  broadcasting properties. Net  revenues for the  programmed music division
increased 13%, from $8.3 million in 1994  to $9.4 million in 1995. The  increase
reflects the growth of sound equipment sales in Georgia and Florida.
 
     Total operating expenses increased 11%, from $33.3 million in 1994 to $36.9
million  in 1995. The  increase is primarily attributable  to the radio stations
acquired in  1994, offset  by expense  reductions at  the Syracuse  and  Daytona
Beach/Palatka  radio  stations,  which  have  been  subject  to  local marketing
agreements since  September  1995.  For  businesses owned  and  operated  for  a
comparable  period  in  1995  and 1994,  operating  expenses  increased  2%. The
increase in operating expenses for comparable properties reflects the  increased
level of business at the Company's broadcasting and programmed music operations,
partially  offset  by  the  expense  reductions  at  the  Syracuse  and  Daytona
Beach/Palatka radio stations.  The decrease in  corporate expenses is  primarily
due  to  nonrecurring  costs  incurred  in  1994,  totalling  approximately $0.5
million, primarily  relating  to  the  relocation  of  the  Company's  corporate
headquarters  from New York City to Greenwich, Connecticut, severance costs, the
installation of new management for  the hospital cable television business,  and
certain costs relating to the 1994 refinancing.
 
     Operating cash flow increased 7%, to $9.7 million in 1995 from $9.1 million
in 1994. The increase is attributable to a full year of operations for the radio
stations  acquired in 1994,  as well as  stronger results for  the Asheville and
Gadsden radio stations and the programmed music franchises. For businesses owned
and operated  for a  comparable period  in 1995  and 1994,  operating cash  flow
increased  4%. The  increase in  operating cash  flow for  comparable properties
primarily reflects the  strong performance  by the Asheville  and Gadsden  radio
stations  and the growth of the sound equipment business in Georgia and Florida,
partially offset by the Syracuse radio stations.
 
     Operating income increased 68% to $2.2  million in 1995, from $1.3  million
in   1994.  Results  in  1995  include  distributions  totalling  $1.9  million,
classified as other  income, from Northstar  Television Group ('Northstar')  and
Fairmont  Communications  Corporation  ('Fairmont')  relating  to  the  sale  of
Northstar's television stations and Fairmont's radio stations, while results  in
1994  include a distribution of $2.3 million  relating to the sale of Fairmont's
radio stations (see Management Agreements).  Interest expense increased 19%,  to
$5.2  million in 1995  from $4.4 million in  1994 due to  the increased level of
debt outstanding following the 1994  acquisitions. Interest expense in 1995  and
1994  includes $0.3 million and $0.2 million, respectively, of non-cash interest
attributable to warrant  and deferred financing  cost amortization. Included  in
results in 1995 is the gain on the sale of the Anniston station of $8.1 million.
Included  in  1995  and  1994  results are  extraordinary  losses  on  the early
extinguishment of  debt of  $3.9  million and  $0.4 million,  respectively.  Net
income  of $2.7 million,  or $0.50 per share  in 1995 compares to  a net loss of
$1.6 million, or $0.29 per share in 1994.
 
YEAR ENDED DECEMBER 31, 1994 VS. 1993
 
     Net revenues of $34.6  million in 1994 represent  a 26% increase from  1993
net  revenues of  $27.4 million. The  increase is primarily  attributable to the
radio stations acquired in 1994, as well as improved operations at the Company's
other businesses. For businesses owned and  operated for a comparable period  in
1994  and  1993,  net  revenues  increased  10%.  For  broadcasting  and related
businesses operated for a comparable period, net revenues increased 8%, to $19.9
million in 1994  from $18.4  million in  1993. The  increase primarily  reflects
strong  performance by  the Company's  Anniston television  station, as  well as
certain other broadcasting  properties. Net  revenues for  the programmed  music
division  increased from  $7.2 million  in 1993 to  $8.3 million  in 1994, which
represents a 15% increase. The increase  reflects the growth of sound  equipment
sales  in  Georgia and  Florida.  Net revenues  in  1994 include  management fee
revenue of  $0.7  million  relating  to  the  sale  of  Fairmont  Communications
Corporation's radio stations (see Management Agreements).
 
     Total operating expenses increased 23%, from $27.0 million in 1993 to $33.3
million  in 1994. The  increase is primarily attributable  to the radio stations
acquired in 1994. For businesses owned  and operated for a comparable period  in
1994  and  1993,  operating expenses  increased  6%. The  increase  in operating
expenses for comparable properties reflects  the increased level of business  at
the  Company's broadcasting and programmed music operations, partially offset by
the local marketing agreement
 
                                       17
 
<PAGE>
<PAGE>
entered into by radio station WING-FM, Dayton in 1993 and reductions in expenses
at certain of the Company's  broadcasting properties. The increase in  corporate
expenses  is primarily  due to  nonrecurring costs  totalling approximately $0.5
million  primarily  relating  to  the  relocation  of  the  Company's  corporate
headquarters  from New York City to Greenwich, Connecticut, severance costs, the
installation of new management for  the hospital cable television business,  and
certain costs relating to the 1994 refinancing.
 
     Operating  cash  flow increased  48%,  to $9.1  million  in 1994  from $6.2
million in  1993.  The increase  is  attributable  to improved  results  at  the
businesses  owned for  a comparable  period and  the radio  stations acquired in
1994. For businesses  owned and  operated for a  comparable period  in 1994  and
1993, operating cash flow increased 33%. The increase in operating cash flow for
comparable  properties primarily reflects the strong performance by the Anniston
television station,  the Wheeling  radio and  entertainment businesses  and  the
growth  of the sound equipment business in Georgia. These increases also reflect
increased operating cash flow attributable  to the local marketing agreement  at
the Company's Dayton radio station.
 
     Operating  income of $1.3 million in 1994 compares to $0.4 million in 1993.
Other income  (expense)  in  1994  includes a  $2.3  million  distribution  from
Fairmont  relating to  the sale of  all of Fairmont's  radio stations, partially
offset by a charge of $0.4 million relating to the registration statement  filed
by  the  Company in  March 1994  and  withdrawn in  July 1994.  Interest expense
increased 62%, to $4.4 million in 1994  from $2.7 million in 1993. The  increase
in  interest expense is due to the increased level of debt outstanding following
the 1994  acquisitions.  Interest  expense  in 1994  includes  $0.2  million  of
non-cash   interest  attributable   to  warrant  and   deferred  financing  cost
amortization. The net loss in 1994 of  $1.6 million includes a tax provision  of
$0.3  million,  while  the net  loss  of $2.2  million  in 1993  includes  a tax
provision of $0.2 million. Included in  1994's results is an extraordinary  loss
on the early extinguishment of debt of $0.4 million.
 
LIQUIDITY AND CAPITAL RESOURCES
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
     In  1995 and 1994, net cash  provided by operating activities totalled $1.9
million and $2.8 million, respectively (see Results of Operations.)
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
     During 1995, the Company received  cash distributions relating to the  sale
of Northstar's and Fairmont's broadcasting properties totalling $4.2 million, of
which $2.3 million related to income accrued in 1994.
 
     In  June and August  1994, the Company  acquired six radio  stations for an
aggregate of  $21.8 million  plus  transaction costs  and  in 1995  the  Company
entered  into  an option  agreement  for $10.0  million  to sell  its television
station (see Acquisitions and Dispositions).
 
     During 1995 and 1994, the Company  received $1.6 million and $0.3  million,
respectively, representing the remaining principal from a note issued in 1988 by
the  purchaser of the Company's Toledo,  Ohio radio station and programmed music
franchise.
 
     In December 1995, the  Company paid $260,000 in  exchange for the  interest
held  by outside  investors in  Osborn Healthcare  Communications, Inc. ('Osborn
Healthcare'), thereby  increasing  its  ownership  to  100%.  Osborn  Healthcare
provides cable television services to hospitals.
 
     In addition to debt service requirements, the Company's remaining liquidity
demands  will primarily be for capital  expenditures and to meet working capital
needs. The Company made capital expenditures of $1.3 million and $0.9 million in
1995 and 1994,  respectively. These expenditures  are primarily attributable  to
the addition of new customers by its programmed music franchises and upgrades to
technical  facilities at several of the broadcasting properties, including those
acquired in 1994. For 1996, the Company expects to make capital expenditures for
its  existing  properties   totalling  $0.9  million   and  will  make   capital
expenditures for the properties acquired in 1996 as needed.
 
                                       18
 
<PAGE>
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
 
     In August 1995, the Company entered into a credit facility of $56.0 million
with  Society National Bank. The facility  consists of a $46.0 million revolving
credit facility and a $10.0 million facility which may be used for acquisitions.
The initial  drawdown of  $44.5  million, along  with the  Company's  internally
generated funds, was used to repay all outstanding indebtedness, totalling $50.0
million,  at 101% of par value under  the Company's existing debt facilities and
to pay transaction costs.
 
     In June  1994, the  Company entered  into loan  agreements totalling  $50.0
million  with World Subordinated  Debt Partners, L.P.,  an affiliate of Citicorp
Mezzanine Investment Fund  ('CMIF'). The  proceeds were  used to  fund the  1994
acquisitions,  except  the  Atlantic  City  acquisition  (see  Acquisitions  and
Dispositions); to repay certain  of the Company's existing  debt; to redeem  the
Company's  13.875% senior  subordinated notes  of $10.7  million at  101% of par
value; to pay  transaction costs;  and to  provide funds  for general  corporate
purposes. As partial consideration for making the loans, CMIF received a warrant
to  purchase 1,014,193 shares of the Company's  common stock at $7.00 per share.
The warrant is exercisable for a 10-year  period. The CMIF loans were repaid  in
August  1995, primarily with the proceeds  from the Society National Bank credit
facility. Along  with the  repayment of  debt, the  Company was  able to  cancel
purchase  rights with respect to 676,162 warrant shares of the 1,014,193 warrant
shares issued with the CMIF loans.
 
LONG-TERM DEBT
 
     Long-term debt to total capitalization decreased between December 31,  1994
and  December  31,  1995  from  73%  to  69%  (see  Cash  Flows  from  Financing
Activities). Based on transactions announced to date, the Company anticipates  a
net  reduction in the ratio of  long-term debt to total capitalization following
the  closing  of  the  acquisitions   and  dispositions  described  above   (see
Acquisitions and Dispositions).
 
WORKING CAPITAL
 
     At  December 31,  1995 and 1994,  cash and cash  equivalents totalled $13.0
million and $6.4 million, respectively. Working capital increased $3.9  million,
from $8.3 million to $12.2 million during 1995. The change in working capital is
primarily  attributable  to  the  results of  operations  (see  Cash  Flows from
Operating Activities) and the proceeds from the Anniston transaction.
 
     Assuming no deterioration in the economic climate, the Company believes the
funds generated from its  existing operations are adequate  to service its  debt
and to meet all other existing obligations in the normal course of business, and
will  continue to be  adequate for the foreseeable  future. The Company believes
that the funds available under its  existing credit facility, combined with  the
expected  proceeds from  the Syracuse, Jacksonville,  Daytona Beach/Palatka, and
Raleigh dispositions, will be sufficient to fund the Port Charlotte, Fresno, and
Wheeling acquisitions. In 1996, 1997, 1998, and 1999 through 2001, $2.7 million,
$4.1 million, $5.4  million, and  $35.0 million respectively,  of the  Company's
long-term debt principal is scheduled to be repaid. The Company anticipates that
the  1996 amount will  be repaid from the  proceeds of the  sale of the Atlantic
City radio station.  Such indebtedness  is secured by  the stock  and assets  of
Atlantic  City and is otherwise nonrecourse to the Company and its other assets.
There can  be  no  assurance  that  funds  generated  from  operations  will  be
sufficient  to meet these obligations in full at maturity and refinancing and/or
asset sales may  be necessary. There  can be  no assurance as  to the  Company's
ability to refinance this debt or sell assets on acceptable terms.
 
     It  is not possible to ascertain the effect on the Company's liquidity that
would  result  from   potential  future  acquisitions,   dispositions  or   debt
repurchases.  The Company expects to evaluate all viable forms of financing when
examining potential future  acquisitions or  its capital  structure. This  could
take  the form of, among other things,  additional sales of stock or notes, bank
and/or institutional  borrowings, or  seller financing,  as well  as  internally
generated funds.
 
MANAGEMENT AGREEMENTS
 
     The  Company currently  owns 25%  of the  stock of  Fairmont Communications
Corporation. Fairmont  is  managed  by  the Company  pursuant  to  a  management
agreement, for which the Company
 
                                       19
 
<PAGE>
<PAGE>
receives  a  management  fee  of $125,000  plus  reimbursement  of out-of-pocket
expenses and  allocated  overhead costs.  In  August 1992,  Fairmont  filed  for
protection  from its creditors under Chapter 11  of the U.S. Bankruptcy Code. In
September 1993, Fairmont emerged from Chapter 11 upon approval by the bankruptcy
court of a plan of reorganization (the  'Plan'). The Plan provides for the  sale
of  Fairmont's assets, distribution of proceeds in accordance with the Plan, and
subsequent liquidation  of Fairmont.  All of  Fairmont's stations  were sold  by
1994.  The Company will  continue to manage Fairmont  pursuant to the management
agreement which expires upon the liquidation  of Fairmont, which is expected  in
1996.  In addition to its management fees, the Company received distributions of
$0.4 million and $2.3  million in 1995 and  1994, respectively, relating to  the
sale of Fairmont's radio stations.
 
     The  Company held  a 32% interest  in Northstar Television  Group, Inc. and
managed Northstar's four television stations pursuant to a management  agreement
in  return for a management fee plus reimbursement of out-of-pocket expenses and
allocated overhead costs.  In 1994, Northstar's  creditors and equity  investors
reached  an agreement with respect to restructuring Northstar's highly leveraged
capital structure pursuant to which, among other things, the Company received  a
portion  of accrued and unpaid management fees and retains an economic interest.
The Company's  management  agreement  with Northstar  terminated  following  the
restructuring.  In January 1995,  three of Northstar's  four television stations
were sold and the Company received a distribution of $1.6 million.
 
OSBORN HEALTHCARE
 
     The Company's credit  facility limits the  amount of additional  investment
the Company may make in Osborn Healthcare to $2.0 million, of which $0.4 million
was   made  in  1995.  The  Company  believes  that  this  limitation  will  not
significantly impact the operation of the business in 1996.
 
SEASONALITY
 
     For broadcasting properties, the first  quarter is expected to reflect  the
lowest   revenues  and  net  income  of  the  year,  while  the  fourth  quarter
historically has had the highest revenues and net income. This is due in part to
increases in  retail advertising  in the  fall in  preparation for  the  holiday
season, with a subsequent reduction of retail advertising after the holidays.
 
     The  Company's entertainment properties are  expected to reflect the lowest
revenues and net operating results of the  year in the first quarter due to  the
planned scheduling of the most popular performers during the peak spring, summer
and  fall seasons. Also,  the Company's country music  festival, Jamboree in the
Hills, takes place in the third quarter of each year.
 
EFFECTS OF INFLATION
 
     The Company believes the  relatively moderate rates  of inflation over  the
past  three years have not had a  significant impact on the profitability of the
Company. In general, the  Company believes the effects  of inflation are  offset
through increases in advertising rates.
 
                                       20

<PAGE>
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             AND SUPPLEMENTARY DATA
 
<TABLE>
<CAPTION>
                                                                                                           PAGE
                                                                                                         ---------
 
<S>                                                                                                      <C>
Consolidated Financial Statements:
 
     Consolidated Balance Sheets at December 31, l995 and l994........................................       22
 
     Consolidated Statements of Operations for the years ended December 31, 1995, 1994 and 1993.......       23
 
     Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993.......       24
 
     Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 1995,
      1994 and 1993...................................................................................       25
 
Notes to Consolidated Financial Statements............................................................       26
 
Report of Independent Auditors........................................................................       37
</TABLE>
 
                                       21
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1995 AND 1994
 
<TABLE>
<CAPTION>
                                                                                             1995           1994
                                                                                      -----------    -----------
<S>                                                                                   <C>            <C>
ASSETS
Current assets:
     Cash and cash equivalents.....................................................   $12,994,779    $ 6,368,473
     Accounts receivable, less allowance for doubtful accounts of $518,157 in 1995
      and $370,102 in 1994.........................................................     5,759,562      5,435,792
     Distribution receivable.......................................................            --      2,264,552
     Note receivable...............................................................            --      1,620,455
     Inventory.....................................................................       889,942      1,080,647
     Prepaid expenses and other current assets.....................................     1,525,308        782,544
                                                                                      -----------    -----------
          Total current assets.....................................................    21,169,591     17,552,463
 
Investment in affiliated companies.................................................       524,084        535,913
Property, plant and equipment, at cost, less accumulated depreciation of
  $18,624,021 in 1995 and $15,945,361 in 1994......................................    15,358,070     16,442,810
Intangible assets, net of accumulated amortization of $15,238,193 in 1995 and
  $13,308,848 in 1994..............................................................    40,463,595     44,418,927
Other noncurrent assets............................................................       118,753        216,373
                                                                                      -----------    -----------
          Total assets.............................................................   $77,634,093    $79,166,486
                                                                                      -----------    -----------
                                                                                      -----------    -----------
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued expenses.........................................   $ 4,509,292    $ 3,787,528
     Accrued wages and sales commissions...........................................       434,309        304,781
     Accrued interest payable......................................................       459,114      1,944,787
     Accrued income taxes..........................................................       825,712        535,489
     Current portion of long-term debt.............................................     2,718,000      2,700,000
                                                                                      -----------    -----------
          Total current liabilities................................................     8,946,427      9,272,585
 
Long-term debt.....................................................................    44,482,000     48,313,905
 
Deferred income taxes..............................................................     2,275,711      2,035,047
 
Other noncurrent liabilities.......................................................       432,916        263,107
 
Commitments and contingencies......................................................            --             --
 
Stockholders' equity:
     Preferred stock, par value $.01 per share; authorized 5,000,000 shares, none
      issued and outstanding.......................................................            --             --
     Common stock, par value $.01 per share; authorized
       7,425,000 shares, issued and outstanding shares: 5,286,347
       and 5,276,347, respectively, in 1995; 5,369,747 and 5,359,747, respectively,
      in 1994......................................................................        52,764         53,598
     Non-voting common stock, par value $.01 per share; authorized 75,000 shares,
      none issued and outstanding..................................................            --             --
     Additional paid-in capital....................................................    39,694,601     40,181,258
     Accumulated deficit...........................................................   (18,250,326)   (20,953,014)
                                                                                      -----------    -----------
          Total stockholders' equity...............................................    21,497,039     19,281,842
                                                                                      -----------    -----------
          Total liabilities and stockholders' equity...............................   $77,634,093    $79,166,486
                                                                                      -----------    -----------
                                                                                      -----------    -----------
</TABLE>
 
                            See accompanying notes.
 
                                       22
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
<TABLE>
<CAPTION>
                                                                              1995           1994           1993
                                                                       -----------    -----------    -----------
<S>                                                                    <C>            <C>            <C>
Net revenues........................................................   $39,100,496    $34,581,651    $27,398,647
                                                                       -----------    -----------    -----------
Operating expenses:
     Selling, technical and program.................................    11,380,774      9,087,356      6,591,832
     Direct programmed music and entertainment......................    10,489,513      9,807,495      9,199,885
     General and administrative.....................................     7,526,897      6,611,035      5,454,912
     Depreciation and amortization..................................     5,782,404      5,285,280      4,256,648
     Corporate expenses.............................................     1,705,850      2,475,675      1,497,617
                                                                       -----------    -----------    -----------
          Total operating expenses..................................    36,885,438     33,266,841     27,000,894
                                                                       -----------    -----------    -----------
Operating income....................................................     2,215,058      1,314,810        397,753
 
Other income........................................................     2,314,508      2,246,450        297,592
 
Interest expense....................................................     5,212,999      4,385,827      2,714,071
 
Equity in results of affiliated company.............................       (11,829)            --             --
 
Gain on sale of station.............................................     8,094,993             --             --
                                                                       -----------    -----------    -----------
 
Income (loss) before income taxes and extraordinary item............     7,399,731       (824,567)    (2,018,726)
 
Provision for income taxes..........................................       775,982        289,220        154,366
                                                                       -----------    -----------    -----------
 
Income (loss) before extraordinary item.............................     6,623,749     (1,113,787)    (2,173,092)
 
Extraordinary item:
     Loss on debt extinguishment....................................    (3,921,061)      (436,329)            --
                                                                       -----------    -----------    -----------
Net income (loss)...................................................   $ 2,702,688    ($1,550,116)   ($2,173,092)
                                                                       -----------    -----------    -----------
                                                                       -----------    -----------    -----------
 
Primary earnings per common share:
     Income (loss) before extraordinary item........................         $1.23         ($0.21)        ($0.50)
     Loss on extinguishment of debt.................................         (0.73)         (0.08)            --
                                                                       -----------    -----------    -----------
Net income (loss) per common share..................................         $0.50         ($0.29)        ($0.50)
                                                                       -----------    -----------    -----------
                                                                       -----------    -----------    -----------
Fully diluted earnings per common share:
     Income (loss) before extraordinary item........................         $1.22         ($0.21)        ($0.50)
     Loss on extinguishment of debt.................................         (0.72)         (0.08)            --
                                                                       -----------    -----------    -----------
Net income (loss) per common share..................................         $0.50         ($0.29)        ($0.50)
                                                                       -----------    -----------    -----------
                                                                       -----------    -----------    -----------
 
Weighted average common shares outstanding:
     Primary shares.................................................     5,388,001      5,376,715      4,372,922
                                                                       -----------    -----------    -----------
                                                                       -----------    -----------    -----------
     Fully diluted shares...........................................     5,459,353      5,376,715      4,372,922
                                                                       -----------    -----------    -----------
                                                                       -----------    -----------    -----------
</TABLE>
 
                            See accompanying notes.
 
                                       23
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
<TABLE>
<CAPTION>
                                                                                          1995           1994           1993
                                                                                   -----------    -----------    -----------
<S>                                                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...............................................................   $ 2,702,688    ($1,550,116)   ($2,173,092)
Adjustments to reconcile net income (loss) to net cash provided by operating
  activities:
     Depreciation and amortization..............................................     5,782,404      5,285,280      4,256,648
     Gain on sale of station....................................................    (8,094,993)            --             --
     Deferred income taxes......................................................       240,664        175,000             --
     Loss on extinguishment of debt.............................................     3,921,061        436,329             --
     Write-off of registration statement costs..................................            --        397,583             --
     Non-cash interest expense..................................................       332,284        210,421             --
     Equity in results of affiliated company....................................        11,829             --             --
     Distributions from affiliated companies....................................    (1,942,731)            --             --
     Changes in current assets and current liabilities:
          Increase in accounts receivable.......................................      (323,770)    (2,165,123)      (464,823)
          Decrease (increase) in inventory......................................       190,705       (214,241)       (42,029)
          (Increase) decrease in prepaid expenses and other current assets......      (742,764)      (177,499)        55,702
          Acquisition deposit held in escrow....................................       180,000             --             --
          Increase in distribution receivable...................................            --     (2,264,552)            --
          Increase (decrease) in accounts payable and accrued expenses..........       721,764      1,069,534       (511,018)
          Increase (decrease) in accrued wages and sales commissions............       129,528        (96,287)        18,251
          (Decrease) increase in accrued interest payable.......................    (1,485,673)     1,632,742         33,646
          Increase in accrued income taxes......................................       290,223         15,009         84,250
                                                                                   -----------    -----------    -----------
               Total adjustments................................................      (789,469)     4,304,196      3,430,627
                                                                                   -----------    -----------    -----------
          Net cash provided by operating activities.............................     1,913,219      2,754,080      1,257,535
                                                                                   -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Distributions from affiliated companies....................................     4,207,283             --             --
     Payments for business acquisitions.........................................            --    (21,825,094)            --
     Proceeds from sale of station..............................................    10,000,000             --             --
     Accrued transaction costs..................................................    (1,411,981)            --             --
     Proceeds from note receivable..............................................     1,620,455        329,545      1,450,000
     Capital expenditures.......................................................    (1,326,492)      (942,771)      (340,464)
     Acquisition deposit held in escrow.........................................      (180,000)            --       (500,000)
     Expenditures for intangible assets.........................................      (524,863)            --             --
                                                                                   -----------    -----------    -----------
          Net cash provided by (used in) investing activities...................    12,384,402    (22,438,320)       609,536
                                                                                   -----------    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of long-term debt...................................    44,500,000     48,460,982             --
     Proceeds from issuance of stock warrant....................................            --      1,774,837             --
     Debt issuance costs........................................................    (1,183,824)    (1,887,965)            --
     Registration statement costs...............................................            --       (228,587)            --
     Proceeds from exercise of stock options....................................       154,863          6,000             --
     Purchase and retirement of treasury stock..................................      (642,354)      (107,058)            --
     Proceeds from rights offering..............................................            --             --      6,597,253
     Prepayment penalty on debt retirement......................................      (500,000)            --             --
     Principal payments on long-term debt and notes payable.....................   (50,000,000)   (23,286,671)    (8,086,529)
                                                                                   -----------    -----------    -----------
          Net cash (used in) provided by financing activities...................    (7,671,315)    24,731,538     (1,489,276)
                                                                                   -----------    -----------    -----------
Net increase in cash and cash equivalents.......................................     6,626,306      5,047,298        377,795
Cash and cash equivalents at beginning of period................................     6,368,473      1,321,175        943,380
                                                                                   -----------    -----------    -----------
Cash and cash equivalents at end of period......................................   $12,994,779    $ 6,368,473    $ 1,321,175
                                                                                   -----------    -----------    -----------
                                                                                   -----------    -----------    -----------
Supplemental cash flow information:
     Cash paid for interest.....................................................   $ 6,366,388    $ 2,542,664    $ 2,680,425
                                                                                   -----------    -----------    -----------
                                                                                   -----------    -----------    -----------
     Cash paid for income taxes.................................................   $   245,095    $    99,211    $    70,116
                                                                                   -----------    -----------    -----------
                                                                                   -----------    -----------    -----------
</TABLE>
 
                            See accompanying notes.
 
                                       24
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
<TABLE>
<CAPTION>
                                                          VOTING                NON-VOTING
                                                   ---------------------    ------------------    ADDITIONAL
                                                                   PAR                   PAR        PAID-IN      ACCUMULATED
                                                     SHARES       VALUE     SHARES      VALUE       CAPITAL        DEFICIT
                                                   ----------    -------    -------    -------    -----------    -----------
<S>                                                <C>           <C>        <C>        <C>        <C>            <C>
Balance at December 31, 1992....................    6,976,688    $69,768         --         --    $30,894,831    ($17,229,806)
 
Net loss........................................           --         --         --         --             --     (2,173,092)
 
Sale of common stock............................    3,490,000     34,900         --         --      6,562,353             --
 
Issuance of common stock in exchange for
  minority interest.............................      285,493      2,855         --         --        996,371             --
                                                   ----------    -------    -------    -------    -----------    -----------
 
Balance at December 31, 1993....................   10,752,181    107,523         --         --     38,453,555    (19,402,898)
 
Exercise of stock options.......................        1,500         15         --         --          5,984             --
 
Issuance of stock warrant.......................           --         --         --         --      1,774,837             --
 
Effect of 1-for-2 reverse stock split...........   (5,376,091)   (53,762)        --         --         53,762             --
 
Purchase and retirement of treasury stock.......      (17,843)      (178)        --         --       (106,880)            --
 
Net loss........................................           --         --         --         --             --     (1,550,116)
                                                   ----------    -------    -------    -------    -----------    -----------
 
Balance at December 31, 1994....................    5,359,747     53,598         --         --     40,181,258    (20,953,014)
 
Purchase and retirement of treasury stock.......     (107,059)    (1,071)        --         --       (641,283)            --
 
Exercise of stock options.......................       23,659        237         --         --        154,626             --
 
Net income......................................           --         --         --         --             --      2,702,688
                                                   ----------    -------    -------    -------    -----------    -----------
 
Balance at December 31, 1995....................    5,276,347    $52,764         --         --    $39,694,601    ($18,250,326)
                                                   ----------    -------    -------    -------    -----------    -----------
                                                   ----------    -------    -------    -------    -----------    -----------
</TABLE>
 
                            See accompanying notes.
 
                                       25

<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1995
 
NOTE 1 -- NATURE OF BUSINESS AND ORGANIZATION
 
     Osborn  Communications  Corporation  (the  'Company')  is  engaged  in  the
operation of radio,  television, programmed  music, cable  television and  other
communications properties throughout the United States.
 
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
 
     A.  Basis  of  presentation  --  The  accompanying  consolidated  financial
statements include  the  accounts  of  the Company  and  its  subsidiaries.  All
material  intercompany items and transactions  have been eliminated. Investments
in affiliated companies are accounted for using the equity method. Prior  years'
amounts have been reclassified to conform with the current year's presentation.
 
     B.  Depreciation -- Property, plant and  equipment are recorded at cost and
depreciated using the straight-line  method over the  estimated useful lives  of
the assets, as follows:
 
<TABLE>
<S>                                                                              <C>
Buildings.....................................................................       10-30 years
Furniture and fixtures........................................................           5 years
Broadcasting equipment........................................................        3-19 years
Transportation equipment......................................................         3-5 years
</TABLE>
 
     Expenditures  for  maintenance and  repairs  are charged  to  operations as
incurred.
 
     C. Intangible assets -- Intangible assets include $2.5 million for 1995 and
$3.0 million  for  1994  for  agreements not  to  compete  relating  to  certain
transactions described in Note 3, and $3.4 million for 1995 and 1994 assigned to
Muzak  customer contracts acquired  in 1990 and 1986,  which are being amortized
over their estimated useful lives. Deferred financing costs of $1.2 million  for
1995  and $1.9 million for 1994 are being amortized over the term of the related
debt on  a straight-line  basis,  which approximates  the interest  method.  The
remainder,  in the amount of $48.6 million  for 1995 and $49.3 million for 1994,
represents the excess  of acquisition cost  over the amounts  assigned to  other
assets  acquired  in the  Company's acquisitions,  and is  being amortized  on a
straight-line basis principally over a 40-year period.
 
     It is the Company's policy to account for goodwill and all other intangible
assets at the lower of amortized cost or estimated realizable value. As part  of
an  ongoing review of the valuation and amortization of intangible assets of the
Company and  its subsidiaries,  management assesses  the carrying  value of  the
intangible  assets  if  facts  and  circumstances  suggest  that  there  may  be
impairment.  If  this  review  indicates  that  the  intangibles  will  not   be
recoverable  as  determined  by  a  non-discounted  cash  flow  analysis  of the
operating assets over the remaining  amortization period, the carrying value  of
the intangible assets would be reduced to estimated realizable value.
 
     The  Financial Accounting  Standards Board issued  SFAS No.121, 'Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of'  in  March  1995,  which  establishes  standards  for  the  recognition  and
measurement  of  impairment losses  on  long-lived assets,  certain identifiable
intangible assets,  and  goodwill.  The  requirements of  SFAS  No.121  will  be
effective  for the Company's financial statements beginning in 1996. The Company
does not believe that the  implementation of SFAS No.  121 will have a  material
effect on its financial statements.
 
     D.  Barter transactions  -- Revenue  from barter  transactions (advertising
provided in  exchange for  goods  and services)  is  recognized as  income  when
advertisements  are broadcast, and merchandise  or services received are charged
to expense (or capitalized as appropriate) when received or used.
 
     E. Minority interest  -- In  December 1995,  the Company  paid $260,000  in
exchange  for  the  interest  held by  outside  investors  in  Osborn Healthcare
Communications, Inc. ('Osborn Healthcare'), thereby increasing its ownership  to
100%. Osborn Healthcare provides cable television services to hospitals.
 
                                       26
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
     F. Revenue -- Broadcast revenue is presented net of advertising commissions
and  representative fees of $2,326,000, $2,089,000  and $1,417,000 in 1995, 1994
and 1993, respectively.
 
     G. Per share data -- Primary earnings per common share for 1995 is based on
the net income for the year divided by the weighted average number of common and
common equivalent shares. Common stock equivalents consist of stock options  and
warrants  (see Notes 11 and 12). Shares issuable upon the exercise of all common
stock equivalents and other potentially dilutive securities are not included  in
the computations for 1994 and 1993 since their effect is not dilutive.
 
     H.  Cash  equivalents --  Cash  equivalents consist  of  short-term, highly
liquid investments which are readily convertible into cash and have an  original
maturity of three months or less when purchased.
 
     I.  Inventory -- Inventories,  consisting of merchandise  for the Company's
entertainment properties, sound equipment held for resale by the Company's Muzak
franchises and  equipment held  for  resale by  the Company's  healthcare  cable
business,  are  valued  at the  lower  of  cost or  market  using  the first-in,
first-out method.
 
     J. Risks and Uncertainties  -- The preparation  of financial statements  in
conformity with generally accepted accounting principles requires the Company to
make  estimates and assumptions  that affect the reported  amounts of assets and
liabilities and disclosure of contingent assets  and liabilities at the date  of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results may differ from those estimates.
 
NOTE 3 -- ACQUISITIONS AND DISPOSITIONS
 
     At  December 31, 1995 the Company owned  and operated eleven FM and five AM
radio stations, four  programmed music and  sound equipment distributorships,  a
hospital cable television company and certain entertainment properties.
 
1995:
 
     In  December  1995,  the  Company entered  into  an  option  agreement with
Allbritton Communications Company  for the sale  of television station  WJSU-TV,
Anniston,  Alabama,  and an  associated  10-year local  marketing  agreement. In
consideration for the option, the Company received a nonrefundable cash  payment
of  $10.0 million. Because the cash  proceeds from the option are nonrefundable,
the Company accounted for the economic substance of the transaction as if a sale
of substantially all the assets of the station had occurred. Accordingly, a gain
of approximately $8.1 million  was recorded. In addition,  upon the exercise  of
the option and the necessary FCC consent, the Company will receive an additional
cash  payment  of  $2.0 million.  If  the  necessary approvals  to  relocate the
station's broadcast transmitter to maximize  broadcast coverage of the  facility
are  received, the Company will  receive additional cash payments  of up to $7.0
million.
 
     In August 1995, the Company agreed to acquire substantially all the  assets
of   radio  stations  WKII-AM/WEEJ-FM,  Port  Charlotte,  Florida  from  Kneller
Broadcasting of Charlotte County, Inc. ('Kneller') for $2.85 million, subject to
Federal Communications Commission ('FCC') approval  and license renewal. In  the
event  that the Company is  able to relocate WEEJ-FM's  broadcast antenna to the
Company's Pine  Island,  Florida  tower  in  order  to  better  serve  the  Port
Charlotte/Ft.  Myers market, additional consideration  of $750,000 will be paid.
Pending the closing  of the transaction,  which is expected  in April 1996,  the
stations are managed by the Company pursuant to a local marketing agreement.
 
     In  September 1995, the Company agreed to sell substantially all the assets
of radio stations  WNDR-AM/WNTQ-FM, Syracuse, New  York to Pilot  Communications
L.L.C. ('Pilot') for $12.5 million, subject to FCC approval. Pending the closing
of the transaction, which occurred in February
 
                                       27
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
1996,  the stations were managed by the  purchaser pursuant to a local marketing
agreement (see Note 13).
 
     In September 1995, the Company agreed to sell substantially all the  assets
of radio stations WWRD-FM, Jacksonville, Florida/Brunswick, Georgia and WFKS-FM,
Daytona  Beach/Palatka, Florida,  as well as  the Company's 50%  interest in the
broadcast tower serving WWRD-FM to Renda Broadcasting Corporation ('Renda')  for
total  consideration of $6.5 million. The closing of the transactions is subject
to FCC approval. The sale  of WWRD-FM closed in January  1996 (see Note 13)  and
the  sale of WFKS-FM  is expected to close  in 1996. Pending  the closing of the
transactions, the stations have been managed by the purchaser pursuant to  local
marketing agreements.
 
1994:
 
     In June 1994, the Company acquired substantially all the assets of three FM
and  one  AM  radio  stations  for $20.0  million  plus  transaction  costs. The
acquisition included radio stations WWNC-AM/WKSF-FM, Asheville, North  Carolina;
WOLZ-FM,  Ft. Myers,  Florida; and  WFKS-FM, Daytona  Beach/Palatka, Florida. In
August 1994, the Company acquired substantially all the assets of radio stations
WAAX-AM/WQEN-FM, Gadsden, Alabama for $1.75 million plus transaction costs.  The
seller  of the six stations  has agreed not to own  or operate radio stations in
these markets for a period of three years. The Gadsden market is adjacent to the
Anniston market, in which  the Company owned its  television station. In  August
1995,  the Company  was granted  a waiver  of the  FCC's regulations prohibiting
ownership of radio and television stations in the same market. Pending the FCC's
ruling on the waiver  application, the Gadsden stations  were placed in a  trust
which operated the stations on the Company's behalf.
 
     In  March 1994,  the Company,  through a  wholly-owned subsidiary, acquired
radio  station  WAYV-FM,  Atlantic  City,  New  Jersey,  for  consideration   of
approximately  $2.5 million (see Note 6.)  In February 1996, the Company entered
into an agreement to sell substantially all the assets of radio station WAYV-FM,
Atlantic City,  New Jersey  to  Equity Communications,  L.P. for  $3.1  million,
subject  to  FCC approval.  Pending  the closing  of  the transaction,  which is
expected in 1996,  the purchaser is  managing the stations  pursuant to a  local
marketing agreement.
 
     All  of the acquisitions have been  accounted for using the purchase method
of accounting.  Accordingly, the  purchase price  of each  acquisition has  been
allocated to the assets based upon their fair values at the date of acquisition.
The  results  of  operations of  the  properties  acquired are  included  in the
Company's consolidated  results  of  operations from  the  respective  dates  of
acquisition  and until the date of disposition for properties disposed. Prior to
the grant of the  waiver of the FCC's  cross-ownership regulations, the  Gadsden
acquisition   was  accounted  for   using  the  equity   method  of  accounting.
Accordingly, prior year financial statements  have been reclassified to  reflect
the consolidation of the Gadsden radio stations.
 
OTHER INVESTMENTS:
 
     In  1989, the  Company acquired, for  $620,000, a  50% non-voting ownership
interest (without control) in a corporation that owns and operates radio station
WDRR-FM, San Carlos Park, Florida.  The station became operational in  September
1995.  The  Company's net  investment is  included  in investment  in affiliated
companies on the consolidated balance sheet.
 
     In 1989,  the  Company  acquired  a 32%  ownership  interest  in  Northstar
Television  Group, Inc.  ('Northstar') for $329,000.  From Northstar's inception
through May 1994, the Company  managed Northstar's four television stations  for
an  annual fee of  up to $250,000, plus  reimbursement of out-of-pocket expenses
and allocated overhead costs. In 1994,  as a result of a proposed  restructuring
of  Northstar, the  Company agreed, as  payment for prior  services rendered, to
receive an immediate
 
                                       28
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
payment of  $250,000, another  payment of  $250,000 within  two years,  and  the
retention of an economic interest. The Company's management agreement terminated
following  the  restructuring. In  1995,  three of  Northstar's  four television
stations were sold  and the  Company received  a distribution  of $1.6  million,
classified  as other  income in the  consolidated statement  of operations, plus
accrued management fees of $250,000.
 
     In 1987, the Company acquired 25%  of the stock of Fairmont  Communications
Corporation  ('Fairmont') for $500,000.  Fairmont owned seven  radio stations in
four large  and  medium  sized  markets. In  August  1992,  Fairmont  filed  for
protection  from its creditors under Chapter 11  of the U.S. Bankruptcy Code. In
September 1993, Fairmont emerged from Chapter 11 upon approval by the bankruptcy
court of a plan of reorganization (the  'Plan'). The Plan provided for the  sale
of  Fairmont's assets, distribution of the proceeds in accordance with the Plan,
and subsequent liquidation of Fairmont. All of Fairmont's stations were sold  by
the  second  quarter  of 1994.  The  Company  will continue  to  manage Fairmont
pursuant to  a  management  agreement  which expires  upon  the  liquidation  of
Fairmont, which is expected in 1996. For managing Fairmont, the Company receives
an  annual fee  of $125,000,  plus reimbursement  of out-of-pocket  expenses and
allocated overhead costs.  In 1994, the  Company received additional  management
fees  of $728,000 related to  the sale of Fairmont's  stations. The Company also
earned distributions  of  $0.4  million  and $2.3  million  in  1995  and  1994,
respectively,  classified  as other  income and  distribution receivable  in the
consolidated  financial  statements,  determined  by  the  amounts  realized  by
Fairmont from sales of its assets.
 
NOTE 4 -- LOCAL MARKETING AGREEMENTS
 
     The  Company has entered  into certain local  marketing agreements ('LMAs')
whereby it provides programming to a station  owned by a third party and pays  a
monthly  fee for  the right  to air such  programming. The  Company receives the
right to solicit advertising and to receive payments from the advertisers.
 
     In September 1995, the Company entered  into an LMA with Kneller to  manage
Kneller's  radio stations  WKII-AM/WEEJ-FM, Port Charlotte,  Florida pending the
acquisition of the stations (see Note 3).
 
     In January 1996, the  Company entered into an  LMA with EBE  Communications
Limited  Partnership and  EBE Broadcasting, L.P.  ('EBE') to  manage EBE's radio
stations KNAX-FM/KRBT-FM,  Fresno, California  pending  the acquisition  of  the
stations (see Note 13).
 
     In  addition, the  Company has  entered into  certain other  LMAs whereby a
third party provides programming to  a station owned by  the Company and pays  a
monthly  fee for the right to air such programming. The third party receives the
right to solicit advertising and to receive payments from the advertisers.
 
     In September 1995, the Company entered into LMAs with Renda to manage radio
stations WWRD-FM, Jacksonville, Florida/Brunswick, Georgia and WFKS-FM,  Daytona
Beach/Palatka, Florida pending the disposition of the stations (see Note 3).
 
     In  September 1995, the  Company entered into  an LMA with  Pilot to manage
radio stations WNDR-AM/WNTQ-FM,  Syracuse, New York  pending the disposition  of
the stations (see Note 3).
 
     In  1993,  the  Company entered  into  a  five-year LMA  with  Great Trails
Broadcasting Corporation ('Great Trails') to manage the Company's radio  station
WING-FM,  Dayton/Springfield, Ohio. Great Trails has  the option to purchase the
station at escalating prices throughout the term of the LMA.
 
     In  1992,  the  Company  entered   into  a  five-year  LMA  with   Pinnacle
Broadcasting  Company, Inc. ('Pinnacle')  to manage the  Company's radio station
WFXK-FM, Raleigh/Tarboro, North Carolina. In
 
                                       29
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
February 1996, the Company  agreed to sell substantially  all the assets of  the
station to Pinnacle (see Note 13).
 
NOTE 5 -- PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                               YEAR ENDED DECEMBER 31,
                                                                            --------------------------
                                                                                   1995           1994
                                                                            -----------    -----------
 
<S>                                                                         <C>            <C>
Net revenues.............................................................   $32,349,000    $30,485,000
Loss before extraordinary item...........................................      (533,000)    (1,377,000)
Net loss.................................................................    (4,454,000)    (1,813,000)
Net loss per share.......................................................       ($0.82)        ($0.34)
</TABLE>
 
     The  unaudited pro forma  information for the year  ended December 31, 1995
assumes that the Anniston, Syracuse and Jacksonville/Brunswick dispositions,  as
described  in Note 3, had  occurred on January 1,  1995. The unaudited pro forma
information for the  year ended  December 31,  1994 assumes  that the  Anniston,
Syracuse  and Jacksonville/Brunswick dispositions  and Atlantic City, Asheville,
Ft. Myers, Daytona Beach/Palatka, and Gadsden acquisitions, as described in Note
3, the CMIF credit agreement, as described  in Note 6, and reverse stock  split,
as  described  in  Note 12,  had  occurred on  January  1, 1994.  The  pro forma
information is not necessarily  indicative either of  the results of  operations
that  would have occurred had  these transactions been made  at the beginning of
the period, or of future results of operations.
 
     Net  assets  of   properties  to   be  disposed   in  Syracuse,   Anniston,
Jacksonville/Brunsick,   Daytona  Beach,   Raleigh/Tarboro  and   Atlantic  City
aggregated $17.6 million at December 31,  1995, consisting of current assets  of
$0.8  million,  net  property, plant  and  equipment  of $4.1  million,  and net
intangible assets of $12.7 million.
 
                                       30
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
NOTE 6 -- LONG-TERM DEBT
 
     A summary of long-term debt as of December 31, 1995 and 1994 is as follows:
 
<TABLE>
<CAPTION>
                                                                         1995           1994
                                                                  -----------    -----------
 
<S>                                                               <C>            <C>
Note payable to Society National Bank, at the prime rate plus
  1.5%; interest payable quarterly; principal due in quarterly
  installments from December 31, 1996 through December 31,
  2001(A)......................................................   $14,500,000             --
Note payable to Society National Bank, at LIBOR plus 2.75%;
  principal due in quarterly installments from December 31,
  1996 through December 31, 2001(A)............................    30,000,000             --
Notes payable to World Subordinated Debt Partners, L.P.:
     Senior Note at 9.25%; interest payable quarterly;
       principal due in quarterly installments in varying
       amounts June 1996 through June 2002(B)..................            --    $25,000,000
     Senior Subordinated Note at 11.00%; interest payable
       quarterly; principal due in quarterly installments in
       varying amounts June 1996 through June 2002(B)..........            --     10,000,000
     Subordinated Note at 12.00%; interest payable
       semiannually; principal due in equal installments June
       2003 and June 2004(B)...................................            --     15,000,000
Unamortized warrant value(B)...................................            --     (1,686,095)
Term loan payable to National Westminster Bank, net of
  unamortized debt discount of $700,000; interest payable
  quarterly at LIBOR plus 2.5%; principal due in quarterly
  installments in varying amounts June 1996 through March
  2000(C)......................................................     2,700,000      2,300,000
Revolving loan payable to National Westminster Bank, interest
  payable quarterly at LIBOR plus 2.5%; principal due in
  quarterly installments in varying amounts June 1996 through
  March 2000(C)................................................            --        400,000
                                                                  -----------    -----------
                                                                   47,200,000     51,013,905
Less current portion...........................................     2,718,000      2,700,000
                                                                  -----------    -----------
                                                                  $44,482,000    $48,313,905
                                                                  -----------    -----------
                                                                  -----------    -----------
</TABLE>
 
------------
 
 (A) In August 1995, the Company entered into a credit facility of $56.0 million
     with Society National  Bank (the  'Credit Facility').  The Credit  Facility
     consists  of a $46.0 million revolving  credit facility and a $10.0 million
     facility which may be used for acquisitions. The initial drawdown of  $44.5
     million,  along with the Company's internally  generated funds, was used to
     repay existing loans totalling $50.0 million and pay transaction costs. The
     Credit Facility contains covenants which require, among other things,  that
     the  Company  and its  subsidiaries  (excluding Atlantic  City Broadcasting
     Corp.) maintain  certain  financial  levels, principally  with  respect  to
     EBITDA and
 
                                       31
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
    leverage  ratios, and limit  the amount of  capital expenditures. The Credit
     Facility also restricts the payment of cash dividends. The Credit  Facility
     is  collateralized by pledges of the  tangible and intangible assets of the
     Company and its subsidiaries (excluding Atlantic City Broadcasting  Corp.),
     as  well as  the stock  of those  subsidiaries. At  December 31,  1995, the
     Company has additional availability under the revolving credit facility and
     the acquisition facility of $1.5  million and $10.0 million,  respectively.
     The Company pays an annual commitment fee of 0.5% of the unused commitment.
 
 (B) In  June 1994, the Company entered into two loan agreements totalling $50.0
     million with  World  Subordinated  Debt Partners,  L.P.,  an  affiliate  of
     Citicorp  Mezzanine Investment Fund ('CMIF').  As part of the consideration
     for making the loans, the lender was given a warrant to purchase  1,014,193
     shares  of the Company's common stock at $7.00 per share (see Note 12.) The
     net proceeds from  the loans were  used to fund  the acquisitions of  radio
     stations  and to repay certain of the Company's other debt, resulting in an
     extraordinary loss on the early extinguishment of debt of $436,000 in 1994.
     The loans were repaid in August 1995, primarily using the proceeds from the
     Credit Facility. Along with the repayment of debt, the Company was able  to
     cancel  purchase  rights  with respect  to  676,162 warrant  shares  of the
     1,014,193 warrant shares issued with the previous loans.
 
     As a result of  the repayment of  the CMIF loans,  the Company recorded  an
     extraordinary  loss on  the early  extinguishment of  debt of approximately
     $3.9 million in 1995. The extraordinary  loss is primarily due to  non-cash
     charges from the write-off of deferred financing costs and debt discount.
 
 (C) The  term loan  and revolving  loan contain  covenants with  respect to the
     Company's wholly-owned subsidiary, Atlantic City Broadcasting Corp.  which,
     among  other things, restrict  cash distributions to  the Company and limit
     the amount of annual capital expenditures. The revolving loan converted  to
     a term loan in March 1995. These loans are collateralized by pledges of the
     tangible  and  intangible assets  and stock  of Atlantic  City Broadcasting
     Corp., and is otherwise  nonrecourse to the Company  and its other  assets.
     The Company and the lender have agreed to sell substantially all the assets
     of   Atlantic  City  Broadcasting  Corp.,  and  accordingly,  the  debt  is
     classified as short term. All proceeds of the proposed sale are expected to
     be used to fund  transaction costs and  repay the debt  (see Note 13).  The
     assets  of Atlantic  City Broadcasting  Corporation were  acquired in March
     1994 for consideration  of approximately  $2.5 million,  consisting of  the
     assumption of debt.
 
                            ------------------------
 
     At  December 31, 1995,  the aggregate amounts of  long-term debt due during
the next five years are as follows:
 
<TABLE>
<CAPTION>
                        YEAR ENDING
                        DECEMBER 31,                             AMOUNT
------------------------------------------------------------   ----------
 
<S>                                                            <C>
1996........................................................   $2,718,000
1997........................................................    4,094,000
1998........................................................    5,428,000
1999........................................................    6,900,000
2000........................................................    9,108,000
</TABLE>
 
     The fair value of the debt approximates net book value.
 
                                       32
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
NOTE 7 -- PROPERTY, PLANT AND EQUIPMENT
 
     Property, plant and equipment at December 31, consists of the following:
 
<TABLE>
<CAPTION>
                                                                         1995            1994
                                                                 ------------    ------------
<S>                                                              <C>             <C>
Land..........................................................   $  4,256,414    $  4,212,237
Buildings.....................................................      4,168,839       4,122,771
Equipment.....................................................     25,556,838      24,053,163
                                                                 ------------    ------------
                                                                   33,982,091      32,388,171
Less accumulated depreciation.................................    (18,624,021)    (15,945,361)
                                                                 ------------    ------------
                                                                 $ 15,358,070    $ 16,442,810
                                                                 ------------    ------------
                                                                 ------------    ------------
</TABLE>
 
     At December  31, 1995,  all property,  plant and  equipment is  pledged  as
collateral for the debt disclosed in Note 6.
 
NOTE 8 -- INCOME TAXES
 
     At  December  31, 1995,  the Company  has  consolidated net  operating loss
carryforwards for income tax purposes of $33.9 million that expire in years 2002
through 2010. Of the total net  operating loss carryforwards, $11.0 million  may
be  used  only  to offset  future  income  of the  Company's  subsidiary, Osborn
Entertainment Enterprises  Corporation.  For  financial  reporting  purposes,  a
valuation  allowance of $9.1 million has  been recognized to offset the deferred
tax asset related to carryforwards.
 
     Deferred income taxes reflect the net tax effects of temporary  differences
between  the carrying amounts of assets  and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax  assets and liabilities as  of December 31, 1995  and
1994 are as follows:
 
<TABLE>
<CAPTION>
                                                                         1995            1994
                                                                  -----------    ------------
<S>                                                               <C>            <C>
Deferred tax assets:
     Net operating loss carryforwards..........................   $13,577,873    $ 12,389,451
     Other.....................................................       713,951         643,740
                                                                  -----------    ------------
                                                                   14,291,824      13,033,191
     Valuation allowance.......................................    (9,088,722)    (10,909,106)
                                                                  -----------    ------------
                                                                    5,203,102       2,124,085
Deferred tax liabilities:
     Depreciation and amortization.............................     4,014,313       3,984,132
     Sale of station...........................................     3,289,500              --
     Other.....................................................       175,000         175,000
                                                                  -----------    ------------
                                                                    7,478,813       4,159,132
                                                                  -----------    ------------
     Net deferred tax liability................................   $ 2,275,711    $  2,035,047
                                                                  -----------    ------------
                                                                  -----------    ------------
</TABLE>
 
     The  1995 provision for  income taxes consists entirely  of state and local
taxes, of which $535,000 is current and $241,000 is deferred. The 1994 provision
consists entirely of  state and local  taxes, of which  $114,000 is current  and
$175,000  is deferred. The 1993 provision consists entirely of current state and
local taxes.
 
                                       33
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
     The reconciliation of income tax computed at the U.S. federal statutory tax
rate to income tax expense is as follows:
 
<TABLE>
<CAPTION>
                                                                 1995        1994        1993
                                                          -----------    --------    --------
<S>                                                       <C>            <C>         <C>
Amount computed using statutory rate...................   $ 1,217,532   ($428,705)  ($686,367)
State and local taxes, net of federal benefit..........       504,388     190,885     101,882
Losses (with) without tax benefit......................    (1,228,507)    234,539     611,691
Nondeductible expenses.................................       282,569     292,501     127,160
                                                          -----------    --------    --------
                                                          $   775,982    $289,220    $154,366
                                                          -----------    --------    --------
                                                          -----------    --------    --------
</TABLE>
 
NOTE 9 -- COMMITMENTS
 
     The Company  leases office  space, vehicles  and office  equipment.  Rental
expense  amounted to  $994,000, $768,000  and $710,000  in 1995,  1994 and 1993,
respectively.
 
     The minimum aggregate annual rentals under noncancellable operating  leases
are payable as follows:
 
<TABLE>
<CAPTION>
                                  YEAR ENDING
                                  DECEMBER 31,                                       AMOUNT
--------------------------------------------------------------------------------   ----------
 
<S>                                                                                <C>
1996............................................................................   $1,492,000
1997............................................................................    1,137,000
1998............................................................................      917,000
1999............................................................................      653,000
2000............................................................................      279,000
and thereafter..................................................................      752,000
                                                                                   ----------
                                                                                   $5,230,000
                                                                                   ----------
                                                                                   ----------
</TABLE>
 
NOTE 10 -- EMPLOYEE BENEFIT PLANS
 
     The  Company sponsors a  profit sharing plan  which qualifies under Section
401(k) of the  Internal Revenue  Code. The plan  is available  to all  full-time
employees  with at least one  year of employment with  the Company. All eligible
employees may elect to contribute a portion of their compensation to the  profit
sharing  plan, subject to  Internal Revenue Code  limitations. In December 1994,
the Company  adopted a  non-qualified deferred  compensation plan  available  to
certain management employees.
 
NOTE 11 -- STOCK OPTION PLAN
 
     The  Company's Incentive  Stock Option  Plan provides  for the  granting to
officers and  key employees  of  incentive and  non-qualified stock  options  to
purchase  the Company's voting  common stock as defined  under current tax laws.
Incentive stock options  are exercisable  at a price  equal to  the fair  market
value,  as defined, on the date of grant,  for a maximum 10-year period from the
date of grant. Non-qualified stock options  may be granted at an exercise  price
equal  to at  least 85% of  the fair market  value on  the date of  grant, for a
maximum 11-year  period from  the date  of  grant. The  exercise prices  of  all
options  granted in 1995, 1994 and 1993 were  the fair market values at the date
of grant.
 
                                       34
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
     The following table summarizes the plan's transactions for the years  ended
December 31, 1995, 1994 and 1993:
 
<TABLE>
<CAPTION>
                                                                   1995       1994       1993
                                                                -------    -------    -------
<S>                                                             <C>        <C>        <C>
Outstanding options, beginning of year.......................   417,000    382,750    339,250
Granted......................................................    66,500    108,250     47,500
Cancelled or expired.........................................   (12,500)   (72,500)    (4,000)
Exercised....................................................   (23,659)    (1,500)     --
                                                                -------    -------    -------
Outstanding options, end of year.............................   447,341    417,000    382,750
                                                                -------    -------    -------
                                                                -------    -------    -------
Average price of options exercised...........................     $6.55      $4.00      --
Weighted average exercise price, end of year.................     $6.66      $6.64      $5.52
Options exercisable, end of year.............................   283,921    280,083    300,884
Options available for future grant...........................    79,000    133,000     17,250
</TABLE>
 
     The  Financial Accounting Standards Board  issued SFAS No. 123, 'Accounting
for Stock  Based  Compensation' in  October  1995, which  establishes  financial
accounting  and reporting standards for  stock based employee compensation plans
including stock  purchase  plans, stock  options,  restricted stock,  and  stock
appreciation  rights. The Company  has elected to  continue accounting for stock
based compensation  under  Accounting  Principles  Board  Opinion  No.  25.  The
disclosure  requirements of  SFAS No.  123 will  be effective  for the Company's
financial statements beginning in  1996. The Company does  not believe that  the
implementation  of SFAS  No. 123  will have a  material effect  on its financial
statements.
 
NOTE 12 -- STOCKHOLDERS' EQUITY
 
     In January 1995, the Company  repurchased and subsequently retired  107,059
unregistered  shares  of its  common stock  which were  held by  an institution,
totalling approximately $642,000. In December 1994, the Company repurchased  and
subsequently  retired  17,843 shares  of its  common stock  at $6.00  per share,
totalling approximately $107,000.
 
     In June  1994, the  Company entered  into two  credit agreements  totalling
$50.0  million with CMIF (see  Note 6.) As partial  consideration for making the
loans, CMIF received a warrant to purchase 1,014,193 shares (after giving effect
to the reverse  stock split described  below) of the  Company's common stock  at
$7.00  per share.  The warrant  is exercisable for  a 10-year  period. Under the
terms of the warrant agreement, in the event that the CMIF loans were repaid  by
December  31, 1995, purchase rights with  respect to 676,162 warrant shares will
be cancelled.  The  loans were  repaid  in  August 1995  and,  accordingly,  the
purchase rights with respect to 676,162 warrant shares were cancelled.
 
     On  July 11, 1994, the  Company effected a 1-for-2  reverse stock split for
shareholders of record on that date. Cash was paid in lieu of fractional shares.
All per share amounts  in the consolidated statement  of operations reflect  the
reverse stock split.
 
NOTE 13 -- SUBSEQUENT EVENTS (UNAUDITED)
 
     In  January  1996,  the  Company  entered  into  an  agreement  to  acquire
substantially all assets of  radio stations KNAX-FM/KRBT-FM, Fresno,  California
from  EBE Broadcasting,  L.P., subject  to FCC  approval. Consideration  for the
acquisition consists of $6.0 million plus 120,000 shares of the Company's common
stock. Pending the closing  of the transaction, which  is expected in 1996,  the
Company is managing the stations pursuant to a local marketing agreement.
 
     In  January  1996,  the  Company  entered  into  an  agreement  to  acquire
substantially all the assets of  radio station WHLX-FM, Wheeling, West  Virginia
from  Bethlehem  Radio, Inc.  for  $0.8 million,  subject  to FCC  approval. The
transaction is expected to close in 1996.
 
                                       35
 
<PAGE>
<PAGE>
                       OSBORN COMMUNICATIONS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                               DECEMBER 31, 1995
 
     In February  1996,  the  Company  entered  into  an  agreement  to  acquire
substantially  all  the  assets  of radio  stations  WKWK-AM/FM,  Wheeling, West
Virginia from  WKWK Radio,  Inc.  for $2.7  million,  subject to  FCC  approval.
Pending  the closing of the transaction, which  is expected in 1996, the Company
intends to enter into a local marketing agreement to manage the stations as soon
as FCC regulations permit.
 
     In January 1996,  the Company sold  substantially all the  assets of  radio
station  WWRD-FM, Jacksonville, Florida/Brunswick, Georgia to Renda Broadcasting
Corp. for  $2.5  million.  This  transaction  resulted  in  a  pre-tax  gain  of
approximately $0.8 million (see Note 3).
 
     In  February 1996, the  Company sold substantially all  the assets of radio
stations WNDR-AM/WNTQ-FM, Syracuse, New York to Pilot Communications, L.L.C. for
$12.5 million. This transaction resulted in a pre-tax gain of approximately $6.0
million (see Note 3).
 
     In  February  1996,  the  Company   entered  into  an  agreement  to   sell
substantially  all the assets  of radio station  WFXK-FM, Raleigh/Tarboro, North
Carolina to Pinnacle Broadcasting Corporation  for $5.9 million, subject to  FCC
approval. Pending the closing of the transaction, which is expected in 1996, the
purchaser  is continuing  to manage  the station  pursuant to  a local marketing
agreement (see Note 4).
 
     In  February  1996,  the  Company   entered  into  an  agreement  to   sell
substantially all the assets of radio station WAYV-FM, Atlantic City, New Jersey
to  Equity  Communications,  L.P. for  $3.1  million, subject  to  FCC approval.
Pending the closing of the transaction, which is expected in 1996, the purchaser
is managing the stations pursuant to a local marketing agreement.
 
                                       36
 
<PAGE>
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Directors and Stockholders
OSBORN COMMUNICATIONS CORPORATION
 
We  have  audited  the  accompanying  consolidated  balance  sheets  of   Osborn
Communications  Corporation as  of December 31,  1995 and 1994,  and the related
consolidated statements of operations, changes in stockholders' equity and  cash
flows  for each of  the three years in  the period ended  December 31, 1995. Our
audits also included  the financial statement  schedule listed in  the Index  at
Item  14(a). These financial  statements and schedule  are the responsibility of
the Company's management. Our responsibility is  to express an opinion on  these
financial statements and schedule based on our audits.
 
We   conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also  includes
assessing   the  accounting   principles  used  and   significant  estimates  by
management, as well as evaluating the overall financial statement  presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
In  our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of  Osborn
Communications  Corporation at December 31, 1995  and 1994, and the consolidated
results of its operations and its cash flows for each of the three years in  the
period ended December 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered  in  relation to  the basic  financial statements  taken as  a whole,
present fairly in all material respects the information set forth therein.
 
 
                                               ERNST & YOUNG LLP
 
New York, New York
February 16, 1996
 
                                       37
 
<PAGE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
 
     The information required by this item is not applicable.
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     The information required by this item relating to Directors of the  Company
is  included in the Company's definitive  proxy statement for the annual meeting
of shareholders  to be  held  on May  22, l996  and  is incorporated  herein  by
reference.  The  information required  by this  item  relating to  the executive
officers of the Company is included in Part I of this report on page 12.
 
     All directors hold office until the next annual meeting of the shareholders
of the Company and  until their successors are  elected and qualified.  Officers
are  elected by the Board  of Directors and serve at  the pleasure of the Board,
except that  Mr. Osborn  serves as  President pursuant  to a  contract  expiring
December 1996, as discussed in Part III, Item 11 of this report.
 
ITEM 11. EXECUTIVE COMPENSATION
 
     The  information  required  by  this  item  is  included  in  the Company's
definitive proxy statement for the annual meeting of shareholders to be held  on
May 22, l996 and is incorporated herein by reference.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The  information  required  by  this  item  is  included  in  the Company's
definitive proxy statement for the annual meeting of shareholders to be held  on
May 22, l996 and is incorporated herein by reference.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     The  information  required  by  this  item  is  included  in  the Company's
definitive proxy statement for the annual meeting of shareholders to be held  on
May 22, l996 and is incorporated herein by reference.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
 
     (a)(1)   The   following  consolidated   financial  statements   of  Osborn
Communications Corporation and subsidiaries are filed as a part of this report:
 
     Consolidated Financial Statements
 
          Consolidated Balance Sheets as of December 31, l995 and l994
 
          Consolidated Statements of Operations for the years ended December 31,
     1995, 1994 and 1993
 
          Consolidated Statements of Cash Flows for the years ended December 31,
     1995, 1994 and 1993
 
        Consolidated Statement of Changes in Stockholders' Equity for the  years
     ended
               December 31, 1995, 1994 and 1993
 
     Notes to Consolidated Financial Statements
 
     Report of Independent Auditors
 
     (a)(2)  The  following Financial  Statement  Schedule for  the  years ended
December 31, 1995,  1994 and  1993 is  filed as Exhibit  99(a) as  part of  this
annual report on Form 10-K.
 
     Schedule II -- Valuation and qualifying accounts
 
     All  other  schedules  have been  omitted  because the  information  is not
applicable or is not material or because the information required is included in
the consolidated financial statements or the notes thereto.
 
     (a)(3) Exhibits
 
     The exhibits listed in  the accompanying index to  exhibits on page 41  are
filed as part of this annual report on Form 10-K.
 
     (b) Reports on Form 8-K for the quarter ended December 31, l995: None
 
                                       38
 
<PAGE>
<PAGE>
                                   SIGNATURES
 
     Pursuant  to  the requirements  of Section  l3 or  l5(d) of  the Securities
Exchange Act of l934, the  registrant has duly caused  this Annual Report to  be
signed on its behalf by the undersigned, thereunto duly authorized.
 
                                            OSBORN COMMUNICATIONS CORPORATION
                                                   (Registrant)
 
                                          By:         /s/ FRANK D. OSBORN
                                             ...................................
                                                      FRANK D. OSBORN
                                               PRESIDENT AND CHIEF EXECUTIVE
                                                           OFFICER
 
                                                                  March 25, 1996
 
     Pursuant  to the requirements of the  Securities Exchange Act of l934, this
report has  been  signed  below  by  the following  persons  on  behalf  of  the
registrant and in the capacities and on the dates indicated:
 
<TABLE>
<CAPTION>
                SIGNATURE                                      TITLE                              DATE
------------------------------------------  --------------------------------------------   -------------------
<C>                                         <S>                                            <C>
           /s/ FRANK D. OSBORN              Principal Executive Officer and                  March 25, 1996
 .........................................    Director; President and Chief
            (FRANK D. OSBORN)                 Executive Officer
 
          /s/ THOMAS S. DOUGLAS             Principal Financial Officer; Senior              March 25, 1996
 .........................................    Vice President -- Finance and
           (THOMAS S. DOUGLAS)                Treasurer
 
          /s/ MICHAEL F. MANGAN             Principal Accounting Officer; Vice               March 25, 1996
 .........................................    President -- Controller and Secretary
           (MICHAEL F. MANGAN)
 
       /s/ BROWNLEE O. CURREY, JR.          Director                                         March 25, 1996
 .........................................
        (BROWNLEE O. CURREY, JR.)
 
         /s/ H. ANTHONY ITTLESON            Director                                         March 25, 1996
 .........................................
          (H. ANTHONY ITTLESON)
 
           /s/ EDWARD G. NELSON             Director                                         March 25, 1996
 .........................................
            (EDWARD G. NELSON)
 
          /s/ WILLIAM G. SPEARS             Director                                         March 25, 1996
 .........................................
           (WILLIAM G. SPEARS)
 
           /s/ ROBERT K. ZELLE              Director                                         March 25, 1996
 .........................................
            (ROBERT K. ZELLE)
</TABLE>
 
                                       39
 
<PAGE>
<PAGE>
                        CONSENT OF INDEPENDENT AUDITORS
 
     We  consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-30820) pertaining to the Osborn Communications Corporation 1987
Incentive Stock Plan, as Amended, and  in the related Prospectus, of our  report
dated February 16, 1996 with respect to the consolidated financal statements and
the  financial statement schedule  included in this Annual  Report (Form 10K) of
Osborn Communications Corporation.
 
                                          ERNST & YOUNG LLP
 
New York, New York
March 25, 1996
 
                                       40

<PAGE>
<PAGE>
                                           INDEX TO EXHIBITS
ITEM 14(A)3.
 
<TABLE>
<S>         <C>                                                                                                 <C>
 3(a)       --  Osborn Communications Corporation Restated Certificate  of Incorporation, previously filed as
              Exhibit 10.4  to Form  10-Q for  the period  ended June  30, 1994  and incorporated  herein  by
              reference......................................................................................
  (b)(i)    -- By-laws of the Company, as amended, previously filed as Exhibit 3(b) to Form 10-K for the year
              ended December 31, 1989 and incorporated herein by reference...................................
  (b)(ii)   --  By-laws of the Company, as amended, previously filed as Exhibit 3(b)(ii) to Form 10-K for the
              year ended December 31, 1992 and incorporated herein by reference..............................
 4(a)       -- Form of Specimen Stock Certificate, previously filed as Exhibit 4.1 to Registration  Statement
              No. 33-12804 and incorporated herein by reference..............................................
 9(a)       --  Irrevocable Voting Trust Agreement among  Southeast Radio Holding Corp., Gadsden Broadcasting
              Corp., Osborn Communications  Corporation and James  M. Ward dated  August 1, 1994,  previously
              filed as Exhibit 9.1 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by
              reference......................................................................................
10(a)       --  Stock Purchase  Agreement, dated August  6, 1985, between  the Company and  purchasers of the
              Company's Common Stock, previously filed as Exhibit 10.1 to Registration Statement No. 33-12804
              and incorporated herein by reference...........................................................
  (b)*      -- Employment Agreement between Osborn Communications Corporation and Frank D. Osborn dated  July
              1,  1994, previously filed as Exhibit 10.5 to Form  10-Q for the period ended June 30, 1994 and
              incorporated herein by reference...............................................................
  (c)*      -- Consulting Agreement,  dated August  6, 1985  between the  Company and  Nelson Capital  Corp.,
              previously filed as Exhibit 10.3 to Registration Statement No. 33-12804 and incorporated herein
              by reference...................................................................................
  (d)       --  Stock Purchase Agreement by and among Price Communications Corporation, Republic Broadcasting
              Corporation, and Fairfield Broadcasting, Inc., dated as of April 27, 1987, previously filed  as
              Item 7(c)(2) to Form 8-K dated August 31, 1987 and incorporated herein by reference............
  (e)       --  Senior Credit Agreement between Osborn Communications Corporation and World Subordinated Debt
              Partners, L.P. dated as of June 30, 1994, previously filed as Exhibit 10.1 to Form 10-Q for the
              period ended June 30, 1994 and incorporated herein by reference................................
  (f)       -- Subordinated Credit Agreement  among Osborn Communications  Corporation, its Subsidiaries  and
              World  Subordinated Debt Partners, L.P. dated as of  June 30, 1994, previously filed as Exhibit
              10.2 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference......
  (g)       -- Warrant Agreement dated  as of June 30,  1994 by and among  World Subordinated Debt  Partners,
              L.P.  and Osborn Communications Corporation, previously filed  as Exhibit 10.3 to Form 10-Q for
              the period ended June 30, 1994 and incorporated herein by reference............................
  (h)       -- Registration Rights Agreement, dated April 12,  1988 between Frank D. Osborn and the  Company,
              previously  filed  as Item  6(a)(1) to  Form  10-Q for  the quarter  ended  March 31,  1988 and
              incorporated herein by reference...............................................................
  (i)*      -- Osborn Communications Corporation 1987 Incentive  Stock Plan, as amended, previously filed  as
              Item 20.4d to Registration Statement S-8 No. 33-30820 and incorporated herein by reference.....
  (j)*      --  Osborn Communications Corporation Profit  Sharing Plan, as amended,  previously filed as Item
              (10)(j) to  Form 10-K  for  the period  ended  December 31,  1994  and incorporated  herein  by
              reference......................................................................................
  (k)*      -- Osborn Communications Corporation Deferred Compensation Plan, previously filed as Item (10)(k)
              to Form 10-K for the period ending December 31, 1994 and incorporated herein by reference......
  (l)       --  Asset  Purchase  Agreement, dated  April  28,  1988 among  Waite  Broadcasting  Corp., Osborn
              Communications Corporation, Noble  Broadcast of Toledo,  Inc. and Noble  Broadcast Group  Inc.,
              previously filed as Item 7(c)(1) to Form 8-K dated September 1, 1988 and incorporated herein by
              reference......................................................................................
  (m)(i)    -- Promissory Note, dated September 1, 1988, by Noble Broadcast Group, Inc. to Waite Broadcasting
              Corp.,  previously filed as Exhibit (10)(hh) to Form  10-K for the year ended December 31, 1988
              and incorporated herein by reference...........................................................
</TABLE>
 
                                                  (table continued on next page)
 
                                       41
 
<PAGE>
<PAGE>
(table continued from previous page)
 
<TABLE>
<S>         <C>                                                                                                 <C>
  (m)(ii)   -- Agreement for Modification of Promissory Note, dated August 29, 1993 by Noble Broadcast Group,
              Inc. to Waite Broadcasting Corp., previously  filed as Exhibit 10.33 to Registration  Statement
              No. 33-76260 and incorporated herein by reference..............................................
  (n)       --  Asset Purchase Agreement, dated September 22,  1988 among Champion City Broadcasting Company,
              Osborn of  Ohio, Inc.,  and  Osborn Communications  Corporation,  previously filed  as  Exhibit
              (10)(ii)  to  Form  10-K for  the  year ended  December  31,  1988 and  incorporated  herein by
              reference......................................................................................
  (o)       -- Asset Purchase Agreement, dated October 21, 1988 among Yellow Brick Radio Corporation,  Osborn
              Communications  Corporation, KKRD Inc., and  Sherman Broadcasting Corporation, previously filed
              as Exhibit (10)(jj) to Form 10-K for the  year ended December 31, 1988 and incorporated  herein
              by reference...................................................................................
  (p)       --  Asset  Purchase Agreement,  dated November  15,  1988 among  Beatrice Broadcasting  Corp. and
              Keymarket of NEPA, Inc., previously filed as Exhibit  (10)(kk) to Form 10-K for the year  ended
              December 31, 1988 and incorporated herein by reference.........................................
  (q)       --  Stock Exchange Agreement,  dated September 28, 1988  among Osborn Communications Corporation,
              Donald W. Curtis and J.D. Longfellow, previously filed as Exhibit (10)(ll) to Form 10-K for the
              year ended December 31, 1988 and incorporated herein by reference..............................
  (r)       -- Amended and Restated  Asset Purchase Agreement  by and among  NTG, Inc., Price  Communications
              Corporation,   and  Western  Michigan  Broadcasting   Corporation,  Rhode  Island  Broadcasting
              Corporation,  Magnolia  Broadcasting  Corporation,   and  Keystone  Broadcasting   Corporation,
              previously  filed as Item 7(c)(1) to Form 8-K filed November 15, 1989 an incorporated herein by
              reference......................................................................................
  (s)       -- Asset Purchase Agreement  between Brunswick Broadcasting  Corporation and Nelson  Broadcasting
              Corporation,  dated June 1, 1989, previously filed as Exhibit (10)(t) to Form 10-K for the year
              ended December 31, 1989 and incorporated herein by reference...................................
  (t)       -- Purchase and  Sale Agreement  between Florida  Sound Engineering  Company and  Osborn Sound  &
              Communications of Florida, Inc., dated October 10, 1989, previously filed as Exhibit (10)(u) to
              Form 10-K for the year ended December 31, 1989 and incorporated herein by reference............
  (u)       --  Asset Purchase Agreement, dated  December 1, 1993, among  Pine Trails Broadcasting Co., Inc.,
              Beachside East Broadcasting, Inc., and Beachside West Broadcasting, Inc., as Sellers;  Heritage
              Broadcast  Group,  Inc.  as Sellers'  Guarantor;  Asheville Broadcasting  Corp.,  Daytona Beach
              Broadcasting Corp. and Fort  Myers Broadcasting Corp., as  Buyers, and Southeast Radio  Holding
              Corp.,  as Issuer, previously filed as Exhibit  10.1 to Registration Statement No. 33-76260 and
              incorporated herein by reference...............................................................
  (v)       -- Asset Purchase Agreement, dated  December 1, 1993, among  Big Thicket Broadcasting Company  of
              Alabama,  Inc.,  as Seller;  Heritage  Broadcast Group,  Inc.,  as Seller's  Guarantor; Gadsden
              Broadcasting Corp., as Buyer, and Southeast Radio Holding Corp., as Issuer, previously filed as
              Exhibit 10.2 to Registration Statement No. 33-76260 and incorporated herein by reference.......
  (w)       -- Amendatory Agreement, dated as  of March 23, 1994, among  Pine Trails Broadcasting Co.,  Inc.,
              Beachside East Broadcasting , Inc., Beachside West Broadcasting, Inc., Big Thicket Broadcasting
              Company  of Alabama, Inc., Heritage Broadcast Group Inc., Asheville Broadcasting Corp., Gadsden
              Broadcasting Corp., Southeast Radio Holding Corp., and United States Trust Company of New York,
              previously filed as  Exhibit 10 (hh)  to Form  10-K for the  year ended December  31, 1993  and
              incorporated herein by reference...............................................................
  (x)       -- Management Agreement, dated as of March 18, 1994, by and between Pine Trails Broadcasting Co.,
              Inc.,   Beachside  East  Broadcasting,  Inc.,   Beachside  West  Broadcasting,  Inc.,  Heritage
              Broadcasting Group, Inc. and Southeast Radio Holding Corp., previously filed as Exhibit 10 (ii)
              to Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.........
</TABLE>
 
                                                  (table continued on next page)
 
                                       42
 
<PAGE>
<PAGE>
(table continued from previous page)
 
<TABLE>
<CAPTION>
<S>         <C>                                                                                                 <C>
  (y)       -- Amendatory Agreement No.  2, dated as of  June 29, 1994, among  Pine Trails Broadcasting  Co.,
              Inc.,  Beachside  East  Broadcasting,  Inc., Beachside  West  Broadcasting,  Inc.,  Big Thicket
              Broadcasting Company of Alabama,  Inc., Heritage Broadcast  Group Inc., Asheville  Broadcasting
              Corp.,  Daytona Beach Broadcasting  Corp., Fort Myers  Broadcasting Corp., Gadsden Broadcasting
              Corp., Southeast Radio Holding Corp., and United  States Trust Company of New York,  previously
              filed as an exhibit to Form 8-K dated June 30, 1994 and incorporated herein by reference.......
  (z)       --  Asset Purchase Agreement,  dated November 30,  1993, between Acquisition  Holding Company and
              Radio WAYV, Inc., previously filed as Exhibit  10.3 to Registration Statement No. 33-76260  and
              incorporated herein by reference...............................................................
  (aa)      --  Letter Agreement, dated as of  November 22, 1993, between the  Company and James Cullen, Jr.,
              previously filed as Exhibit 10.5 to Registration Statement No. 33-76260 and incorporated herein
              by reference...................................................................................
  (bb)      -- Agreement, dated as of June 2, 1993 among Spears, Benzak, Salomon & Farrell, William G. Spears
              and the Company,  previously filed as  Exhibit 10  to Registration Statement  No. 33-62660  and
              incorporated herein by reference...............................................................
  (cc)      --  Stock Exchange  Agreement, dated as  of December 17,  1993, by  and among Barker,  Lee & Co.,
              Upland Associates  L.P. and  the Company,  previously  filed as  Exhibit 10.8  to  Registration
              Statement No. 33-76260 and incorporated herein by reference....................................
  (dd)      --  Stock Exchange Agreement,  dated as of  December 17, 1993,  by and among  Evergreen IV, L.P.,
              Brentwood Associates IV, L.P. and the Company, previously filed as Exhibit 10.9 to Registration
              Statement No. 33-76260 and incorporated herein by reference....................................
  (ee)      -- Agreements between the Company and certain stockholders to restrict transfer of Common  Stock,
              previously  filed  as Exhibit  10.17 to  Registration Statement  No. 33-29629  and incorporated
              herein by reference............................................................................
  (ff)      -- Management Agreement,  dated September  30, 1987,  between Fairfield  Broadcasting, Inc.  (now
              known  as Fairmont  Communications Corporation)  and the  Company, previously  filed as Exhibit
              10(d) to  the  Company's  Registration  Statement  No.  33-29629  and  incorporated  herein  by
              reference......................................................................................
  (gg)      --  Amendment to Management Agreement, dated  September 21, 1993, between Fairmont Communications
              Corporation and the Company,  previously filed as Exhibit  10.31 to Registration Statement  No.
              33-76260 and incorporated herein by reference..................................................
  (hh)      --  Credit Agreement between Atlantic City Broadcasting  Corp. and National Westminster Bank USA,
              dated as of March 30, 1994, previously filed as Exhibit 10 (gg) to Form 10-K for the year ended
              December 31, 1993 and incorporated herein by reference.........................................
  (ii)      -- Loan Agreement by and among Osborn Communications Corporation, Society National Bank, and  the
              Financial Institutions Listed Herein as of August 18, 1995, previously filed as Item 6(a)(1) to
              Form 10-Q for the period ended September 30, 1995 and incorporated herein by reference.........
  (jj)      --  Asset Purchase Agreement,  dated August 31,  1995, between Kneller  Broadcasting of Charlotte
              County, Inc. and Osborn  Communications Corporation, previously filed  as Item 6(a)(2) to  Form
              10-Q for the period ended September 30, 1995 and incorporated herein by reference..............
  (kk)      -- Asset Purchase Agreement, dated August 31, 1995 by and between Nelson Broadcasting Corporation
              and  Renda Broadcasting  Corporation, previously  filed as  Item 6(a)(3)  to Form  10-Q for the
              period ending September 30, 1995 and incorporated herein by reference..........................
  (ll)      -- Asset Purchase  Agreement, dated August  31, 1995  by and between  Daytona Beach  Broadcasting
              Corporation  and Renda Broadcasting Corporation, previously filed  as Item 6(a)(4) to Form 10-Q
              for the period ending September 30, 1995 and incorporated herein by reference..................
  (mm)      -- Stock Purchase Agreement, dated August 31, 1995 between Renda Broadcasting Corporation and SNG
              Holdings, Inc., the  sole stockholder  of Nelson Tower  Corporation, previously  filed as  Item
              6(a)(5)  to Form  10-Q for  the period  ending September  30, 1995  and incorporated  herein by
              reference......................................................................................
</TABLE>
 
                                                  (table continued on next page)
 
                                       43
 
<PAGE>
<PAGE>
(table continued from previous page)
 
<TABLE>
<S>         <C>                                                                                                 <C>
  (oo)      -- Asset Purchase Agreement, dated September 18, 1995, between Pilot Communications of  Syracuse,
              Inc.  and Orange Communications,  Inc., previously filed as  Item 6(a)(6) to  Form 10-Q for the
              period ending September 30, 1995 and incorporated herein by reference..........................
  (pp)(i)   -- Asset  Purchase  Agreement,  dated December  31,  1995,  between EBE  Broadcasting,  L.P.  and
              Breadbasket Broadcasting Corporation...........................................................
 (pp)(ii)   --  Asset  Purchase  Agreement,  dated  December 31,  1995,  between  EBE  Communications Limited
              Partnership and Breadbasket Broadcasting Corporation...........................................
  (qq)      -- Option  Agreement,  dated December  21,  1995, between  RKZ  Television, Inc.  and  Allbritton
              Communications Corporation.....................................................................
  (rr)      --  Asset Purchase Agreement, dated January 29,  1996, between Bethlehem Radio, Inc. and Mountain
              Radio Corporation..............................................................................
  (ss)      -- Asset Purchase Agreement and Amendment to Program Service Agreement, dated February 12,  1996,
              between  Great American East, Inc., Osborn Communications  Corporation, WFXK and WDUR, Inc. and
              Pinnacle Myrtle Corp...........................................................................
  (tt)      -- Asset Purchase Agreement, dated February 20, 1996, between WKWK Radio, Inc. and Mountain Radio
              Corporation....................................................................................
  (uu)      -- Asset  Purchase  Agreement,  dated  February 29,  1996,  between  Atlantic  City  Broadcasting
              Corporation and Equity Communications, L.P.....................................................
21          -- Subsidiaries of the Company...................................................................
23          -- Consent of Ernst & Young LLP appears on page 40 of this report................................
27          -- Financial Data Schedules......................................................................
99(a)       -- Schedule II -- Valuation and Qualifying Accounts..............................................
</TABLE>
 
------------
* Indicates a management contract or compensatory plan or arrangement.
 
                                       44

<PAGE>
<PAGE>
OSBORN COMMUNICATIONS
  CORPORATION
130 Mason Street
Greenwich, Connecticut 06830
Telephone (203) 629-0905
Fax (203) 629-1749
 
DIRECTORS
Brownlee O. Currey, Jr.
H. Anthony Ittleson
Edward G. Nelson
Frank D. Osborn
William G. Spears
Robert K. Zelle
 
OFFICERS
Frank D. Osborn
President and Chief
  Executive Officer
 
Thomas S. Douglas
Senior Vice President/Finance
  and Treasurer
 
Michael F. Mangan
Vice President/Controller
  and Secretary
 
RADIO
Larry A. Anderson
Vice President/General Manager
Radio and Entertainment
Wheeling, West Virginia
 
Robert E. Vandine
Station Manager
Radio Stations
  WWVA-AM/WOVK-FM
Wheeling, West Virginia
 
Mark Bass
Vice President/General Manager
Radio Stations
  WAAX-AM/WQEN-FM
Gadsden, Alabama
 
Donald Boyles
Senior Vice President -- Southwest
Florida/General Manager
Radio Stations
  WKII-AM*/WOLZ-FM/
  WEEJ-FM*
 
Lynn Golub
General Manager
Radio Station WFKS-FM
Daytona Beach, Florida
 
Donald P. Hodges
Vice President/General Manager
Radio Stations
  WTJS-AM/WTNV-FM
Jackson, Tennessee
 
William R. McMartin
Vice President/General Manager
Radio Stations
  WWNC-AM/WKSF-FM
Asheville, North Carolina
 
Chris Pacheco
Vice President/General Manager
Radio Stations
  KNAX/KRBT-FM*
Fresno, California
 
John Rae
General Manager
Radio Station WFXK-FM
Raleigh/Tarboro, North Carolina
 
Ruth Ray
President/General Manager
Radio Station WDRR-FM**
Fort Myers/San Carlos Park, Florida
 
John Soller
Group Director of Engineering
General Manager
Radio Station WING-FM
Dayton/Springfield, Ohio
 
Joan Taylor
General Manager
Radio Station WAYV-FM
Atlantic City, New Jersey
 
MUZAK'r'/OSBORN SOUND
& COMMUNICATIONS
W. Charles Hillebrand
President
 
Peter P. Longley
Vice President
 
Kenneth R. Maas
General Manager
Tampa, Florida
 
Mark A. Rupert
General Manager
Fort Myers, Florida
 
Dominique Martin
General Manager
Albany, Georgia
 
HEALTHCARE COMMUNICATIONS
John F. McLane
President
Nashville, Tennessee
 
CORPORATE COUNSEL
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
 
FCC COUNSEL
Haley, Bader & Potts
4350 Fairfax Drive
Arlington, Virginia 22203
 
AUDITORS
Ernst & Young, LLP
787 Seventh Avenue
New York, New York 10019
 
STOCK TRANSFER AGENT
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
 
COMMON STOCK
The Company's common stock is listed on the NASDAQ National Market System and
trades under the symbol OSBN.
------------
 * Operating under an LMA pending acquisition
** The Company has a 50% non-voting ownership interest in WDRR-FM
 
                                       45 
 
 
 
 

<PAGE>