##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


(Mark One)


þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2008


Or


o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to


Commission file number 000-27823





Spanish Broadcasting System, Inc.


(Exact name of registrant as specified in its charter)


Delaware
    
    13-3827791(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)


2601 South Bayshore Drive, PH II
Coconut Grove, Florida 33133  (Address of principal executive offices and zip code)


(305) 441-6901


None


None




Title of Each Class
    
    Name of Each Exchange on Which RegisteredClass A common stock, par value $0.0001 per share
    
    The NASDAQ Global Market


o þ


o þ


þ o


o




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Large accelerated filer o
Accelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ o þ
   Documents Incorporated by Reference:




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##### 



Table of Contents
 PagePART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    21Item 2.
    
    Properties
    
    
    32Item 3.
    
    Legal Proceedings
    
    
    33Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    35PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    36Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    37Item 8.
    
    Financial Statements and Supplementary Data
    
    
    48Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    48Item 9A(T).
    
    Controls and Procedures
    
    
    49Item 9B.
    
    Other Information
    
    
    49PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    50Item 11.
    
    Executive Compensation
    
    
    50Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    50Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    50Item 14.
    
    Principal Accountant Fees and Services
    
    
    50PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    50EX-21.1EX-23.1EX-31.(I)1EX-31.(I)2EX-32.1EX-32.2
  1




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Special Note Regarding Forward-Looking Statements
   
 PART I
 
 Item 1. Business
 www.spanishbroadcasting.com.
 LaMusica.com, Mega.tv,
  Business Strategy
  2




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Hispanic Market Opportunity
  
    
    Hispanic Population Growth.The U.S. Hispanic population is the largest ethnic minority
group and the fastest growing consumer market and demographic group of the U.S. population.
Between 1990 and 2008, the Hispanic population growth increased by 107% compared to 14% for
the non-Hispanic population and a 22% gain for the total population. The Hispanic population
has grown 30.8% since 2000. By 2013, it is estimated that nearly one out of every six
individuals living in the U.S. will be of Hispanic origin.
    
    Hispanic Buying Power.The U.S. Hispanic population accounted for an estimated buying
power of $951 billion in 2008. Hispanic buying power is expected to increase by 45.8% to
$1.3 trillion by 2013, positioning the Hispanic demographic as an extremely attractive group
for advertisers.
    
    Growth in Spanish Language Advertising Spending.In 2007, advertisers spent an estimated
$3.9 billion on Spanish-language media advertising, compared to $3.8 billion in 2006,
representing a 4.2% increase from the previous year.
 Selig Center for
Economic Growth, The University of Georgia, July 2008 Advertising Age, Hispanic Fact Pack,
Annual Guide to Hispanic Marketing & Media, 2008 Edition.
 Operating Strategy
  Format high quality programming.
 Attract and retain strong local management teams.
 Utilize focused sales efforts and sales bundling.
 3




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Control broadcast station operating costs.
 Effective use of promotions and special events.
 Maintain strong community involvement.
 Expand branded content across multiple media platforms.
 Recent Developments
 Restructuring Costs
  4




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Draw Down of Revolving Credit Facility
    Dividend Payment on the Series B Preferred Stock
 3
 NASDAQ Delisting Letter and Temporary Postponement
     5




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Early Extinguishment of the $18.5 million Non-interest Bearing Promissory Note
    Operating Segments
  Item 8. Financial Statements and Supplementary Data
 Radio Overview
   Our Markets2008 Estimated
    
    
    
    
    
    
    2008 Total2008 Estimated
    
    
    % of Total
    
    
    2008 Estimated
    
    
    EstimatedHispanic
    
    
    
    Hispanic
    
    
    Hispanic
    
    
    % of Total
    
    
    Market Radio
    
    
    Number ofMarket
    
    
    
    Population
    
    
    Population in
    
    
    U.S. Hispanic
    
    
    Revenue
    
    
    StationsRank(a)
    
    Hispanic Market
    
    (000)(a)
    
    
    Market(a)
    
    
    Population(a)
    
    
    ($mm)(b)
    
    
    We Operate1
    
    Los Angeles
    
    
    8,507
    
    
    
    48
    %
    
    
    18
    %
    
    $
    951
    
    
    
    22
    
    New York
    
    
    4,435
    
    
    
    21
    %
    
    
    9
    %
    
    
    717
    
    
    
    2*
    
    Puerto Rico
    
    
    3,912
    
    
    
    99
    %
    
    
    9
    %
    
    
    109
    
    
    
    113
    
    Miami
    
    
    2,152
    
    
    
    49
    %
    
    
    5
    %
    
    
    298
    
    
    
    44
    
    Chicago
    
    
    1,972
    
    
    
    20
    %
    
    
    4
    %
    
    
    522
    
    
    
    16
    
    San Francisco
    
    
    1,712
    
    
    
    24
    %
    
    
    4
    %
    
    
    377
    
    
    
    1Total for our markets
    
    
    22,690
    
    
    
    35
    %
    
    
    48
    %
    
    $
    2,974
    
    
    
    21
 
 (a)
    
    Sources: Synovate 2008 Diversity Markets Report; U.S. Census Bureau Population Estimates for Puerto Rico, July 2007.(b)
    
    Source: BIA Financial Network Inc.s Investing in Radio, 2008 Market Report.*
    
    Puerto Rico is not ranked by the Synovate 2008 Diversity Markets Report. Radio Station Portfolio
 BIA Financial Network, Inc.s 2008 Investing in Radio Market Report,
Synovate 2008 Diversity Markets Report U.S. Census Bureau Population Estimates for Puerto
Rico  2007.
 6




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Los Angeles
  New York
  Puerto Rico
  Miami
  Chicago
  San Francisco
  7




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Radio Station Programming
  
    
    Spanish Tropical.The Spanish Tropical format primarily consists of salsa, merengue,
bachata and reggaeton music. Salsa is dance music combining Latin Caribbean rhythms with
jazz originating from Puerto Rico, Cuba and the Dominican Republic, which is popular with
the Hispanics whom we target in New York, Miami and Puerto Rico. Merengue music is up-tempo
dance music originating in the Dominican Republic. Bachata is a softer tempo dance music
also originating in the Dominican Republic. Reggaeton is a modern rhythmic dance genre that
incorporates certain elements of hip-hop music.
    
    Regional Mexican.The Regional Mexican format consists of various types of music played
in different regions of Mexico such as ranchera, nortena, banda and cumbia. Ranchera music,
originating from Jalisco, Mexico, is a traditional folkloric sound commonly referred to as
mariachi music. Mariachi music features acoustical instruments and is considered the music
indigenous to Mexicans who live in country towns. Nortena means northern, and is
representative of Northern Mexico. Featuring an accordion, nortena has a polka sound with a
distinct Mexican flavor. Banda is a regional format from the state of Sinalóa, Mexico and is
popular in California. Banda resembles up-tempo marching band music with synthesizers.
    
    Spanish Adult Contemporary.The Spanish Adult Contemporary format includes soft romantic
ballads and Spanish pop music as well as, international hits from Puerto Rico, Mexico, Latin
America and Spain.
    
    Spanish Oldies.The Spanish Oldies format includes a variety of Latin and English
classics, mainly from the 1960s, 1970s and 1980s.
    
    Top 40.The Top 40 format consists of the most popular current chart hits.
    
    News Talk.Top local, national and world news along with local traffic and weather
information. Moment by moment monitoring of breaking news as it happens along with
compelling hard hitting topics that shape our world.
    
    Latin Rhythmic.The Hispanic Urban (Hurban) format consists of reggaeton, which is
dance music that originated in Panama and Puerto Rico more than a decade ago and has evolved
into a mix of Spanish- and English-language dance hall, traditional reggae, Latin pop and
Spanish hip-hop.
  Target BuyingDemographicMarket
    
    FM Station
    
    Format
    
    Group by AgeLos Angeles
    
    KLAX
    
    Regional Mexican
    
    18-49KXOL
    
    Latin Rhythmic
    
    18-34New York
    
    WSKQ
    
    Spanish Tropical
    
    18-49WPAT
    
    Spanish Adult Contemporary
    
    25-54Puerto Rico
    
    WMEG
    
    Top 40
    
    18-34WEGM
    
    Top 40
    
    18-34WRXD
    
    News Talk
    
    25-54WIOA
    
    Spanish Adult Contemporary
    
    18-49WIOB
    
    Spanish Adult Contemporary
    
    18-49WIOC
    
    Spanish Adult Contemporary
    
    18-49WZNT
    
    Spanish Tropical
    
    18-49WZMT
    
    Spanish Tropical
    
    18-49WZET
    
    Spanish Tropical
    
    18-49WODA
    
    Latin Rhythmic
    
    18-34WNOD
    
    Latin Rhythmic
    
    18-34Chicago
    
    WLEY
    
    Regional Mexican
    
    18-49Miami
    
    WXDJ
    
    Spanish Tropical
    
    18-49WCMQ
    
    Spanish Oldies
    
    25-54WRMA
    
    Spanish Adult Contemporary
    
    18-49WRZA
    
    Regional Mexican
    
    18-49San Francisco
    
    KRZZ
    
    Regional Mexican
    
    18-49
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On-Line Properties (LaMusica.com)
 LaMusica.com, Mega.tv LaMusica.com LaMusica.com.
 LaMusica.com
 Television Overview and Programming
  Advertising Revenue
    9




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Seasonality
  Competition
   
    
    management experience;
    
    talent and popularity of on-air personalities and television show hosts and
actors;
    
    audience ratings and our broadcast stations rank in their markets;
    
    signal strength and frequency; and
    
    audience demographics, including the nature of the Spanish-language market
targeted by a particular station.
 Federal Regulation
of Radio and Television Broadcasting
 10




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tm ®
 ®
  Federal Regulation of Radio and Television Broadcasting
 Trademarks, Copyrights and Licenses
  11




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Antitrust
  Federal Regulation of Radio and Television Broadcasting
 General.
 
    
    assigns frequency bands for radio and television broadcasting;
    
    determines the particular frequencies, locations and operating power of radio
and television broadcast stations;
    
    issues, renews, revokes and modifies radio and television broadcast station
licenses;
    
    establishes technical requirements for certain transmitting equipment used by
radio and television broadcast stations;
    
    adopts and implements regulations and policies that directly or indirectly
affect the ownership, operation, program content and employment and business practices
of radio and television broadcast stations;
    
    has the power to impose penalties, including monetary forfeitures, for
violations of its rules and the Communications Act; and
    
    regulates certain aspects of the operation of cable and DTH satellite systems
and certain other electronic media that compete with broadcast stations.
  12




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FCC Licenses.
  Broadcast
    
    
    
    Date of
    
    
    Date of License
    
    
    Operation
    
    
    FCCStation
    
    Market
    
    Acquisition
    
    
    Expiration
    
    
    Frequency
    
    
    Class
    
    HAAT
    
    
    Power(In meters)
    
    
    (In kilowatts)KLAX-FM
    
    Los Angeles, CA
    
    
    02/24/88
    
    
    
    12/01/13
    
    
    97.9 MHz
    
    B
    
    
    184
    
    
    
    33.0KXOL-FM
    
    Los Angeles, CA
    
    
    10/30/03
    
    
    
    12/01/13
    
    
    96.3 MHz
    
    B
    
    
    398
    
    
    
    6.6WSKQ-FM
    
    New York, NY
    
    
    01/26/89
    
    
    
    06/01/06
    (a)
    
    97.9 MHz
    
    B
    
    
    415
    
    
    
    6.0WPAT-FM
    
    New York, NY
    
    
    03/25/96
    
    
    
    06/01/14
    
    
    93.1 MHz
    
    B
    
    
    433
    
    
    
    5.4WMEG-FM
    
    Puerto Rico
    
    
    05/13/99
    
    
    
    02/01/12
    
    
    106.9 MHz
    
    B
    
    
    594
    
    
    
    25.0WEGM-FM
    
    Puerto Rico
    
    
    01/14/00
    
    
    
    02/01/12
    
    
    95.1 MHz
    
    B
    
    
    600
    
    
    
    25.0WRXD-FM
    
    Puerto Rico
    
    
    12/01/98
    
    
    
    02/01/12
    
    
    96.5 MHz
    
    B
    
    
    852
    
    
    
    11.5WZET-FM
    
    Puerto Rico
    
    
    05/13/99
    
    
    
    02/01/12
    
    
    92.1 MHz
    
    A
    
    
    337
    
    
    
    3.0WIOA-FM
    
    Puerto Rico
    
    
    01/14/00
    
    
    
    02/01/12
    
    
    99.9 MHz
    
    B
    
    
    560
    
    
    
    31.0WIOB-FM
    
    Puerto Rico
    
    
    01/14/00
    
    
    
    02/01/12
    
    
    97.5 MHz
    
    B
    
    
    302
    
    
    
    50.0WIOC-FM
    
    Puerto Rico
    
    
    01/14/00
    
    
    
    02/01/12
    
    
    105.1 MHz
    
    B
    
    
    (61
    )
    
    
    47.0WZNT-FM
    
    Puerto Rico
    
    
    01/14/00
    
    
    
    02/01/12
    
    
    93.7 MHz
    
    B
    
    
    560
    
    
    
    28.0WZMT-FM
    
    Puerto Rico
    
    
    01/14/00
    
    
    
    02/01/12
    
    
    93.3 MHz
    
    B1
    
    
    (69
    )
    
    
    14.5WODA-FM
    
    Puerto Rico
    
    
    01/14/00
    
    
    
    02/01/12
    
    
    94.7 MHz
    
    B
    
    
    560
    
    
    
    31.0WNOD-FM
    
    Puerto Rico
    
    
    01/14/00
    
    
    
    02/01/12
    
    
    94.l MHz
    
    B
    
    
    597
    
    
    
    25.0WLEY-FM
    
    Chicago, IL
    
    
    03/27/97
    
    
    
    12/01/12
    
    
    107.9 MHz
    
    B
    
    
    232
    
    
    
    21.0WXDJ-FM
    
    Miami, FL
    
    
    03/28/97
    
    
    
    02/01/12
    
    
    95.7 MHz
    
    C2
    
    
    167
    
    
    
    40.0WCMQ-FM
    
    Miami, FL
    
    
    12/22/86
    
    
    
    02/01/12
    
    
    92.3 MHz
    
    C2
    
    
    188
    
    
    
    31.0WRMA-FM
    
    Miami, FL
    
    
    03/28/97
    
    
    
    02/01/12
    
    
    106.7 MHz
    
    CO
    
    
    300
    
    
    
    100.0WRAZ-FM(b)
    
    Miami, FL
    
    
    01/01/08
    
    
    
    02/01/12
    
    
    106.3 MHz
    
    C2
    
    
    93
    
    
    
    50.0KRZZ-FM
    
    San Francisco, CA
    
    
    12/23/04
    
    
    
    12/01/13
    
    
    93.3 MHz
    
    B
    
    
    150
    
    
    
    50.0WSBS-TV
    
    Miami, FL  (c)
    
    
    03/01/06
    
    
    
    02/01/13
    
    
    CH. 22
    
    TV
    
    
    62
    
    
    
    11.2WSBS-DT
    
    Miami, FL  (c)
    
    
    03/01/06
    
    
    
    02/01/13
    
    
    CH. 3
    
    DTV
    
    
    54
    
    
    
    1.0WSBS-CA
    
    Miami, FL
    
    
    03/01/06
    
    
    
    02/01/13
    
    
    CH. 50
    
    CA
    
    
    236
    
    
    
    150.0
 
 (a)
    
    Application for renewal of license is pending. The FCC license for
WSKQ-FM expired on June 1, 2006. A petition to deny the application
for renewal was filed by several parties who alleged, inter alia, that
WSKQ-FM had broadcast indecent material during the license term. An
opposition pleading was submitted to the Commission categorically
stating that the allegations made did not raise sufficient questions
to warrant non-renewal of the license. The application remains pending
and the station continues to operate under its expired license until
the FCC takes action on the renewal. In the great majority of cases,
radio broadcast licenses are renewed by the FCC even when petitions to
deny are filed against license renewal applications.(b)
    
    Pursuant to a Local Marketing Agreement between South Broadcasting
Company, Inc. and SBS, the station is programmed by us and, therefore,
attributable to us pursuant to FCC Rules.(c)
    
    TV Stations WSBS-TV and WSBS-DT are licensed to Key West, and are part
of the Miami DMA (designated market area, as defined by Nielsen Media
Research). License Grant and Renewal.
 
    
    the station has served the public interest, convenience and necessity;
    
    there have been no serious violations by the licensee of the Communications Act
or FCC rules and regulations; and
    
    there have been no other violations by the licensee of the Communications Act
or FCC rules and regulations which, taken together, indicate a pattern of abuse.
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Transfers and Assignments of License.
 
    
    the financial and legal qualifications of the prospective assignee or
transferee, including compliance with FCC restrictions on non-U.S. citizens or entity
ownership and control;
    
    compliance with FCC rules limiting the common ownership of attributable
interests in broadcast and newspaper properties;
    
    the history of compliance with FCC operating rules; and
    
    the character qualifications of the transferee or assignee and the individuals
or entities holding attributable interests in them.
  Alien Ownership.
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Ownership Attribution.
   Multiple Ownership.
 Local Radio Ownership. ®
 
    
    In a radio market with 45 or more full-power commercial and noncommercial radio stations,
a party may own, operate or control up to eight commercial radio stations, not more than
five of which are in the same service (AM or FM).
    
    In a radio market with between 30 and 44 (inclusive) full-power commercial and
noncommercial radio stations, a party may own, operate or control up to seven commercial
radio stations, not more than four of which are in the same service
(AM or FM).
 15




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
    
    In a radio market with between 15 and 29 (inclusive) full-power commercial and
noncommercial radio stations, a party may own, operate or control up to six commercial radio
stations, not more than four of which are in the same service (AM or FM).
    
    In a radio market with 14 or fewer full-power commercial and noncommercial radio
stations, a party may own, operate or control up to five commercial radio stations, not more
than three of which are in the same service (AM or FM), except that a party may not own,
operate, or control more than 50% of the radio stations in such market.
 ® ® ® ®
 Local Television Ownership.
 Television National Audience Reach Limitation.
 Radio-Television Cross-Ownership.
 
    
    in markets where 20 media voices will remain, a television station owner may own an
additional five radio stations, or, if the owner only has one television station, an
additional six radio stations; and
    
    in markets where ten media voices will remain, a television station owner may own an
additional three radio stations.
  Newspaper-Broadcast Cross-Ownership.
 Programming and Operations.
 16




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Indecency and Profanity.
 Equal Employment Opportunities.
 Simulcasting.
 Time Brokerage and Joint Sales Agreements.
 RF Radiation.
 Digital Audio Radio Satellite Service.
 Terrestrial Digital Radio.
 Low Power Radio Broadcast Service.
 17




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Change of Community.
 Cable and Satellite Carriage of Television Broadcast Stations.
   Digital Television Services.
 Childrens Television Programming.
 Localism.
 18




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Sponsorship Identification.
 Proposed and Recent Changes.
 
    
    changes to the license authorization and renewal process;
    
    proposals to increase regulatory fees or impose spectrum use or other fees on
FCC licensees;
    
    changes to the FCCs equal employment opportunity regulations and other matters
relating to the involvement of minorities and women in the broadcasting industry;
    
    proposals to change rules relating to political broadcasting including
proposals to grant free air time to candidates, and other changes regarding program
content;
    
    proposals to restrict or prohibit the advertising of beer, wine and other
alcoholic beverages;
    
    proposals to restrict or prohibit the advertising of on-line casinos or on-line
sports-betting services;
    
    proposals to increase and/or quantify locally oriented program content and
diversity;
    
    proposals to change rules regarding studio location and operations;
    
    technical and frequency allocation matters;
    
    changes in broadcast, multiple ownership, foreign ownership, cross-ownership
and ownership attribution policies;
    
    proposals to alter provisions of the tax laws affecting broadcast operations
and acquisitions;
    
    proposals to regulate or prohibit payments to stations by independent record
promoters, record labels and others for the inclusion of specific content in broadcast
programming; and
    
    proposals to require radio broadcasters to pay royalties to musicians and
record labels for the performance of music played on the stations.
 19




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Environmental Matters
   Management and Personnel
   Available Information
 http://www.sec.gov.
 www.spanishbroadcasting.com www.spanishbroadcasting.com
  20




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Item 1A. Risk Factors
    Risks Related to our Indebtedness
 Our substantial amount of debt could adversely affect our financial health.
  
    
    a significant portion of our net cash flow from operations will be dedicated to servicing
our debt obligations and will not be available for operations, future business opportunities
or other purposes;
    
    our ability to obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate or other purposes will be limited;
    
    our substantial debt could make us more vulnerable to downturns in our business or in the
general economy and increases in interest rates, limit our ability to withstand competitive
pressures and reduce our flexibility in responding to changing business and economic
conditions;
    
    our substantial debt could place us at a disadvantage compared to our competitors who
have less debt; and
    
    it may be more difficult for us to satisfy our obligations relating to our Series B
preferred stock and our Exchange Notes, if issued (for example, we may not be able to pay
cash dividends and interest, respectively, or repurchase our Series B preferred stock when,
and if, we are required to do so).
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We will require a significant amount of cash to service our debt and to make cash dividend payments
under our Series B Preferred Stock. Our ability to generate cash depends on many factors, some of
which are beyond our control.
    Any acceleration of our debt or event of default would harm our business and financial condition.
  Despite our current significant level of debt, we and our subsidiaries may still be able to incur
substantially more debt, which, if incurred, could further intensify the risks associated with our
substantial leverage.
  The terms of our existing debt and our preferred stock impose or will impose restrictions on us
that may adversely affect our business.
  
    
    incur additional debt, incur contingent obligations and issue additional preferred stock;
 22




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
    
    redeem or repurchase securities ranking junior to our Series B preferred stock;
    
    create liens and encumbrances;
    
    pay dividends, distributions or make other specified restricted payments, and restrict
the ability of certain of our subsidiaries to pay dividends or make other payments to us;
    
    sell assets;
    
    make certain capital expenditures, investments and acquisitions;
    
    change or add lines of business;
    
    enter into certain transactions with affiliates;
    
    enter into sale and leaseback transactions;
    
    issue capital stock or other equity interests;
    
    sell capital stock of our subsidiaries; and
    
    merge or consolidate with any other person, company or other entity or sell, assign,
transfer, lease, convey or otherwise dispose of all, or substantially all, of our assets.
   We may not have the funds or the ability to raise the funds necessary to repurchase our Series B
preferred stock if holders exercise their repurchase right, or to finance the change of control
offer required by our Series B preferred stock and the indenture that would govern our Exchange
Notes, if issued.
  23




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We may not have the funds or the ability to obtain additional financing for working capital,
capital expenditures, any business strategy or other general corporate purposes.
  A lowering of the ratings assigned to our debt securities by ratings agencies may further increase
our future borrowing costs and reduce our access to capital.
  Capital requirements necessary to implement strategic initiatives could pose risks.
  Risks Related to our Business
 The continuing deterioration in U.S. economic conditions is expected to adversely affect our
results of operations.
     24




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##### Table of Contents



We have experienced net losses in the past and, to the extent that we experience net losses in the
future, our ability to raise capital and the market price of our common stock may be adversely
affected.
   We compete for advertising revenue with other broadcast stations, as well as other media, many
operators of which have greater resources than we do.
 ® tm ® tm
  A large portion of our net revenue and operating income currently comes from our New York, Los
Angeles and Miami markets.
   Cancellations or reductions in advertising could adversely affect our net revenues.
  25




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##### Table of Contents



We may be unable to effectively integrate our acquisition of our television operation.
   The success of our television operation depends upon our ability to attract viewers and advertisers
to our broadcast television operation.
   Our growth depends on successfully executing our expansion strategy.
  
    
    the limits on our ability to acquire additional stations due to our substantial level of
debt;
    
    the need to raise additional financing, which may be limited by the terms of our debt
instruments and market conditions;
    
    the failure to increase our station operating income or yield other anticipated benefits
for future acquired stations;
    
    the need for required regulatory approvals, including FCC and antitrust approvals;
    
    the challenges of managing any rapid growth; and
    
    the difficulties of programming newly acquired stations to attract listenership or
viewership.
   26




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##### Table of Contents



Our business is dependent upon the performance of key employees, on-air talent and program hosts.
   Increased programming and content costs may adversely affect our profits.
  Piracy of our programming and other content, including digital and internet piracy, may decrease
revenue received from the exploitation of our programming and other content and adversely affect
our businesses and profitability.
  Risks Related to Legislative and Regulatory Matters
 Changes in U.S. communications laws or other regulations may have an adverse effect on the
companys business.
   27




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##### Table of Contents



We must be able to respond to rapidly changing technology, services and standards which
characterize our industry in order to remain competitive.
  
    
    cable television operators offer a service commonly referred to as cable radio which
provides cable television subscribers with several high-quality channels of music, news and
other information;
    
    the Internet offers new, diverse and evolving forms of video and audio program
distribution;
    
    direct satellite broadcast television companies are supplying subscribers with several
high quality music channels;
    
    the introduction of satellite digital audio radio technology has resulted in new
satellite radio services with multi-channel programming and sound quality equivalent to that
of compact discs;
    
    the introduction of in-band on-channel digital radio could provide multi-channel,
multi-format digital radio services in the same bandwidth currently occupied by traditional
AM and FM radio services; and
    
    the provision of video programming to cellular telephones, digital handheld devices and
gaming consoles.
 New
technologies may affect our broadcasting operations.
  28




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##### Table of Contents



Impairment of our goodwill and other intangible assets deemed to have indefinite useful lives can
cause our net income or net loss to fluctuate significantly.
 Goodwill and Other Intangible Assets
   The FCC has begun more vigorous enforcement of its indecency and other program content rules
against the broadcast industry, which could have a material adverse effect on our business.
  We may face regulatory review for additional acquisitions and divestitures in our existing markets
and, potentially, acquisitions in new markets.
  29




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##### Table of Contents



Our operation of various real properties and station facilities could lead to environmental
liability and increased compliance costs.
  The market price of our shares of Class A common stock may fluctuate significantly.
  
    
    fluctuations in our financial results;
    
    general conditions or developments in the media broadcasting industry and other media,
and the national economy;
    
    significant sales of our common stock into and/or in the marketplace;
    
    significant decreases in our stations audience ratings;
    
    inability to implement our acquisition and operating strategy;
    
    a shortfall in revenue, gross margin, earnings or other financial results from operations
or changes in analysts expectations; and
    
    developments in our relationships with our customers and suppliers.
  The liquidity of our common stock could be adversely affected if we are delisted from the NASDAQ
Global Market.
   30




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##### Table of Contents



Current or future sales by existing stockholders could depress the market price of our Class A
common stock.
  Our failure to comply with the Sarbanes-Oxley Act of 2002 could cause a loss of confidence in the
reliability of our financial statements and could have a material adverse effect on our business
and the price of our Class A common stock.
  We may be adversely affected by the occurrence of extraordinary events, such as terrorist attacks
or natural disasters.
  Risks related to our Chairman, Chief Executive Officer, and Presidents Controlling Position
 Raúl Alarcón, Jr., our Chairman of the board of directors, Chief Executive Officer and President,
has majority voting control and this control may discourage or influence certain types of
transactions, including an actual or potential change of control such as a merger or sale.
   31




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##### Table of Contents



We may be influenced by our chairman of the board and our president and chief executive officer,
whose interests may conflict with those of our other stockholders.
  
    
    influence the election of our board of directors;
    
    influence our management and policies; and
    
    influence the outcome of any corporate transaction or other matter submitted to our
stockholders for approval, including mergers, consolidations and the sale of all or
substantially all of our assets.
  Future sales by Raúl Alarcón, Jr. could adversely affect the price of our Class A common stock.
  
 Item 2. Properties
   Our Principal Properties (1)
 Aggregate Size ofProperty in
    
    
    
    
    LeaseSquare Feet
    
    
    Owned or
    
    ExpirationLocation
    
    (approximate)
    
    
    Leased
    
    DateNew York, NY(2)
    
    
    12,100
    
    
    Owned
    
    N/ALos Angeles, CA(3)
    
    
    40,000
    
    
    Owned
    
    N/AMiami, FL(4)
    
    
    12,100
    
    
    Leased
    
    2012Miami, FL(5)
    
    
    70,000
    
    
    Owned
    
    N/AMiami, FL(6)
    
    
    42,000
    
    
    Leased
    
    2015Guaynabo, PR (7)
    
    
    29,000
    
    
    Owned
    
    N/A
 
 (1)
    
    Excludes properties less than 12,000 square feet.(2)
    
    Facility used for the offices and studios for our New York radio stations and certain internet and television operations.(3)
    
    Facility used for the offices and studios for our Los Angeles radio stations and certain internet and television operations.(4)
    
    Facility was used for the offices and studios of the Miami radio stations.(5)
    
    Facility is used for the offices, operations and studios of the Miami radio and television stations, and for principal
internet production and operations.(6)
    
    Building includes corporate space, and sales space for Miami broadcast stations.(7)
    
    Facility is used for the offices, operations and studios of
the Puerto Rico broadcast stations. 32




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##### Table of Contents



Item 1. Business  Environmental Matters Item 13. Certain Relationships and
Related Transactions.
 
 Item 3. Legal Proceedings
  Wolf, et al., Litigation
   33




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##### Table of Contents



en banc sub judice
    Amigo Broadcasting Litigation
  34




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##### Table of Contents



Item 1. Business  Environmental Matters.
 
 Item 4. Submission of Matters to a Vote of Security Holders
  35




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##### Table of Contents



PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 (a) Market Information
  2008
    
    
    2007High
    
    
    Low
    
    
    High
    
    
    LowFirst quarter
    
    $
    2.08
    
    
    
    1.33
    
    
    
    4.70
    
    
    
    3.75Second quarter
    
    
    1.95
    
    
    
    0.98
    
    
    
    4.95
    
    
    
    3.27Third quarter
    
    
    1.12
    
    
    
    0.21
    
    
    
    4.60
    
    
    
    2.48Fourth quarter
    
    
    0.48
    
    
    
    0.06
    
    
    
    2.84
    
    
    
    1.68
 (b) Record Holders
  (c) Dividends
    Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Recent Sales of Unregistered Securities
  Issuer Purchases of Equity Securities
  (e) Equity Compensation Plans
  36




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
      LaMusica.com, Mega.tv
 37




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##### Table of Contents



Fiscal Year Ended 2008 Compared to Fiscal Year Ended 2007
  Change2008
    
    
    2007
    
    
    Change
    
    
    PercentageNet revenue:Radio
    
    $
    145,421
    
    
    
    169,573
    
    
    
    (24,152
    )
    
    
    (14
    %)Television
    
    
    18,296
    
    
    
    10,179
    
    
    
    8,117
    
    
    
    80
    %Consolidated
    
    $
    163,717
    
    
    
    179,752
    
    
    
    (16,035
    )
    
    
    (9
    %)Engineering and programming expenses:Radio
    
    $
    37,744
    
    
    
    35,896
    
    
    
    1,848
    
    
    
    5
    %Television
    
    
    23,268
    
    
    
    14,687
    
    
    
    8,581
    
    
    
    58
    %Consolidated
    
    $
    61,012
    
    
    
    50,583
    
    
    
    10,429
    
    
    
    21
    %Selling, general, and administrative:Radio
    
    $
    59,645
    
    
    
    67,097
    
    
    
    (7,452
    )
    
    
    (11
    %)Television
    
    
    11,075
    
    
    
    7,601
    
    
    
    3,474
    
    
    
    46
    %Consolidated
    
    $
    70,720
    
    
    
    74,698
    
    
    
    (3,978
    )
    
    
    (5
    %)Corporate expenses
    
    $
    12,806
    
    
    
    14,967
    
    
    
    (2,161
    )
    
    
    (14
    %)Depreciation and amortization:Radio
    
    $
    3,213
    
    
    
    2,897
    
    
    
    316
    
    
    
    11
    %Television
    
    
    1,595
    
    
    
    608
    
    
    
    987
    
    
    
    162
    %Corporate
    
    
    1,453
    
    
    
    1,237
    
    
    
    216
    
    
    
    17
    %Consolidated
    
    $
    6,261
    
    
    
    4,742
    
    
    
    1,519
    
    
    
    32
    %(Gain) loss on sale of assets, net:Radio
    
    $
    (3
    )
    
    
    49
    
    
    
    (52
    )
    
    
    (106
    %)Television
    
    
    (10
    )
    
    
    
    
    
    
    (10
    )
    
    
    100
    %Corporate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    N/AConsolidated
    
    $
    (13
    )
    
    
    49
    
    
    
    (62
    )
    
    
    (127
    %)Impairment of FCC broadcasting licenses and restructuring costs:Radio
    
    $
    402,243
    
    
    
    
    
    
    
    402,243
    
    
    
    100
    %Television
    
    
    18,710
    
    
    
    
    
    
    
    18,710
    
    
    
    100
    %Corporate
    
    
    163
    
    
    
    
    
    
    
    163
    
    
    
    100
    %Consolidated
    
    $
    421,116
    
    
    
    
    
    
    
    421,116
    
    
    
    100
    %Operating (loss) income:Radio
    
    $
    (357,421
    )
    
    
    63,634
    
    
    
    (421,055
    )
    
    
    (662
    %)Television
    
    
    (36,342
    )
    
    
    (12,717
    )
    
    
    (23,625
    )
    
    
    186
    %Corporate
    
    
    (14,422
    )
    
    
    (16,204
    )
    
    
    1,782
    
    
    
    (11
    %)Consolidated
    
    $
    (408,185
    )
    
    
    34,713
    
    
    
    (442,898
    )
    
    
    (1276
    %)
 38




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##### Table of Contents



Change2008
    
    
    2007
    
    
    Change
    
    
    Percentage(In thousands)Net revenue
    
    $
    163,717
    
    
    
    179,752
    
    
    
    (16,035
    )
    
    
    (9
    %)Engineering and programming expenses
    
    
    61,012
    
    
    
    50,583
    
    
    
    10,429
    
    
    
    21
    %Selling, general and administrative expenses
    
    
    70,720
    
    
    
    74,698
    
    
    
    (3,978
    )
    
    
    (5
    %)Corporate expenses
    
    
    12,806
    
    
    
    14,967
    
    
    
    (2,161
    )
    
    
    (14
    %)Depreciation and amortization
    
    
    6,261
    
    
    
    4,742
    
    
    
    1,519
    
    
    
    32
    %(Gain) loss on disposal of assets, net
    
    
    (13
    )
    
    
    49
    
    
    
    (62
    )
    
    
    (127
    %)Impairment
of FCC broadcasting licenses and restructuring costs
    
    
    421,116
    
    
    
    
    
    
    
    421,116
    
    
    
    100
    %Operating (loss) income
    
    $
    (408,185
    )
    
    
    34,713
    
    
    
    (442,898
    )
    
    
    (1276
    %)Interest expense, net
    
    
    (22,062
    )
    
    
    (19,057
    )
    
    
    (3,005
    )
    
    
    16
    %Change in fair value of derivative instrument
    
    
    (3,813
    )
    
    
    
    
    
    
    (3,813
    )
    
    
    100
    %Other income, net
    
    
    3,851
    
    
    
    1,986
    
    
    
    1,865
    
    
    
    94
    %Income tax (benefit) expense
    
    
    (101,486
    )
    
    
    16,661
    
    
    
    (118,147
    )
    
    
    (709
    %)Net (loss) income
    
    $
    (328,723
    )
    
    $
    981
    
    
    
    (329,704
    )
    
    
    (33609
    %)
 39




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##### Table of Contents



Net Revenue
  Engineering and Programming Expenses
  Selling, General and Administrative Expenses
  Corporate Expenses
  Depreciation and Amortization
  Impairment of FCC Broadcasting Licenses and Restructuring Costs
   40




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Operating Income
  Interest Expense, Net
  Change in Fair Value of Derivative Instrument
  Income Taxes
  Net Income
  41




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##### Table of Contents



Liquidity and Capital Resources
   
    
    the demand for advertising within the broadcasting industry and
economic conditions in general will not continue to deteriorate
further in any material respect;
    
    we will continue to successfully implement our business strategy; and
    
    we will not incur any material unforeseen liabilities, including but
not limited to taxes, environmental liabilities, regulatory matters
and legal judgments.
   42




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##### Table of Contents



2008
    
    
    2007
    
    
    Change(In thousands)Capital expenditures:Radio
    
    
    2,779
    
    
    
    2,080
    
    
    
    699Television
    
    
    12,871
    
    
    
    5,287
    
    
    
    7,584Corporate
    
    
    447
    
    
    
    3,147
    
    
    
    (2,700
    )Consolidated
    
    $
    16,097
    
    
    
    10,514
    
    
    
    5,583Net cash flows provided by operating activities
    
    $
    1,989
    
    
    
    18,124
    
    
    
    (16,135
    )Net cash flows used in investing activities
    
    
    (15,978
    )
    
    
    (10,499
    )
    
    
    (5,479
    )Net cash flows used in financing activities
    
    
    (14,281
    )
    
    
    (13,318
    )
    
    
    (963
    )Net decrease in cash and cash equivalents
    
    $
    (28,270
    )
    
    
    (5,693
    )
 Capital Expenditures
  Net Cash Flows Provided by Operating Activities
  Net Cash Flows Used in Investing Activities
  Net Cash Flows Used in Financing Activities
  43




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Recent Developments
 Restructuring Costs
  Draw Down of Revolving Credit Facility
    44




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##### Table of Contents



Dividend Payment on the Series B Preferred Stock
 3
 NASDAQ Delisting Letter and Temporary Postponement
      Early Extinguishment of the $18.5 million Non-interest Bearing Promissory Note
    45




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##### Table of Contents



Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Accounting for Indefinite Lived Intangible Assets and Goodwill
  Goodwill and Other Intangible Assets
 Unit of Accounting for Testing Impairment of Indefinite Lived Intangible Assets
   46




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##### Table of Contents



Disclosures about Segments of
an Enterprise and Related Information, Clarification of Reporting Unit Guidance in Paragraph 30 of FASB Statement
No. 142.
 Business
Combinations
  Accounting for Income Taxes
 Accounting for Income Taxes
 Accounting for
Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109
 Valuation of Accounts Receivable
  47




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##### Table of Contents



Revenue Recognition
  Contingencies and Litigations
  New Accounting Pronouncements
 Business Combinations Non-controlling Interests in Consolidated Financial Statements  an amendment to ARB No. 51
 Disclosures about Derivative Instruments and
Hedging Activities Accounting for Derivative Instruments
and Hedging Activities
 Impact on Inflation
  
 Item 8.
    
    Financial Statements and Supplementary Data
  
 Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  48




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##### Table of Contents



Item 9A(T).
    
    Controls and Procedures
 Conclusion Regarding the Effectiveness of Disclosure Control and Procedures
  Changes in Internal Control Over Financial Reporting.
   Managements Report On Internal Control Over Financial Reporting.
   Internal Control  Integrated Framework
  
 Item 9B.
    
    Other Information
  49




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  Code of Ethics
 www.spanishbroadcasting.com
 
 Item 11.
    
    Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 Item 14.
    
    Principal Accountant Fees and Services
  
 PART IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
 1. Financial Statements
        2. Financial Statement Schedule
   50




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Index
 PageReports of Independent Registered Public Accounting Firm
    
    
    52Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    53Consolidated Statements of Operations for the years ended December 31, 2008 and 2007
    
    
    54Consolidated Statements of Changes in Stockholders (Deficit) Equity and Comprehensive Loss for the years ended December 31, 2008 and 2007
    
    
    55Consolidated Statements of Cash Flows for the years ended December 31, 2008 and 2007
    
    
    56Notes to Consolidated Financial Statements
    
    
    57Financial Statement ScheduleValuation and Qualifying Accounts
    
    
    90
 51




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
 52




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    32,852
    
    
    
    61,122Receivables:Trade
    
    
    29,083
    
    
    
    38,934Barter
    
    
    172
    
    
    
    52429,255
    
    
    
    39,458Less allowance for doubtful accounts
    
    
    1,675
    
    
    
    3,623Net receivables
    
    
    27,580
    
    
    
    35,835Prepaid expenses and other current assets
    
    
    4,426
    
    
    
    4,515Total current assets
    
    
    64,858
    
    
    
    101,472Property and equipment, net
    
    
    52,411
    
    
    
    43,739FCC broadcasting licenses
    
    
    331,224
    
    
    
    749,864Goodwill
    
    
    32,806
    
    
    
    32,806Other intangible assets, net of accumulated amortization of $178 in 2008 and $142 in 2007
    
    
    1,256
    
    
    
    1,292Deferred financing costs, net of accumulated amortization of $3,956 in 2008 and $2,860 in 2007
    
    
    3,646
    
    
    
    4,803Other assets
    
    
    3,066
    
    
    
    2,153Total assets
    
    $
    489,267
    
    
    
    936,129Liabilities and Stockholders (Deficit) EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    15,428
    
    
    
    19,640Accrued interest
    
    
    486
    
    
    
    246Unearned revenue
    
    
    560
    
    
    
    4,015Deferred commitment fee
    
    
    
    
    
    
    300Other liabilities
    
    
    66
    
    
    
    84Current portion of the senior credit facility term loan due 2012
    
    
    3,250
    
    
    
    3,250Current portion of other long-term debt
    
    
    438
    
    
    
    430Series B cumulative exchangeable redeemable preferred stock dividends payable
    
    
    2,068
    
    
    
    2,014Total current liabilities
    
    
    22,296
    
    
    
    29,979Unearned revenue, less current portion
    
    
    
    
    
    
    305Other liabilities, less current portion
    
    
    139
    
    
    
    187Derivative instruments
    
    
    12,541
    
    
    
    3,582Senior credit facility revolver due 2010
    
    
    15,000
    
    
    
    Senior credit facility term loan due 2012, less current portion
    
    
    309,563
    
    
    
    312,813Other long-term debt, less current portion
    
    
    7,052
    
    
    
    7,490Non-interest bearing promissory note payable, net of unamortized discount of $1,410 in 2007
    
    
    
    
    
    
    17,090Deferred income taxes
    
    
    68,082
    
    
    
    170,148Total liabilities
    
    
    434,673
    
    
    
    541,594Commitments and contingencies (notes 12, 14, and 16)Cumulative exchangeable redeemable preferred stock:10 3/4% Series B cumulative exchangeable redeemable preferred stock, $0.01 par value, liquidation value $1,000
per share. Authorized 280,000 shares; 92,349 and 89,932 shares issued and
outstanding at December 31, 2008
and 2007, respectively
    
    
    92,349
    
    
    
    89,932Stockholders (deficit) equity:Series C convertible preferred stock, $0.01 par value and liquidation value. Authorized 600,000 shares; 380,000
shares issued and outstanding at December 31, 2008 and 2007, respectively
    
    
    4
    
    
    
    4Class A common stock, 0.0001 par value. Authorized 100,000,000 shares; 41,445,222 and 40,777,805 shares
issued and outstanding at December 31, 2008 and 2007, respectively
    
    
    4
    
    
    
    4Class B common stock, 0.0001 par value. Authorized 50,000,000 shares; 23,403,500 and 24,003,500 shares
issued and outstanding at December 31, 2008 and 2007, respectively
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    524,722
    
    
    
    524,030Accumulated other comprehensive loss
    
    
    (8,187
    )
    
    
    (3,582
    )Accumulated deficit
    
    
    (554,300
    )
    
    
    (215,855
    )Total stockholders (deficit) equity
    
    
    (37,755
    )
    
    
    304,603Total liabilities and stockholders
(deficit) equity
    
    $
    489,267
    
    
    
    936,129
  53




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 2008
    
    
    2007Net revenue
    
    $
    163,717
    
    
    
    179,752Operating expenses:Engineering and programming
    
    
    61,012
    
    
    
    50,583Selling, general and administrative
    
    
    70,720
    
    
    
    74,698Corporate expenses
    
    
    12,806
    
    
    
    14,967Depreciation and amortization
    
    
    6,261
    
    
    
    4,742Total operating expenses
    
    
    150,799
    
    
    
    144,990Loss (gain) on the sale of assets, net of disposal costs
    
    
    (13
    )
    
    
    49Impairment of FCC broadcasting licenses and restructuring costs
    
    
    421,116
    
    
    
    Operating (loss) income
    
    
    (408,185
    )
    
    
    34,713Other (expense) income:Interest expense
    
    
    (22,910
    )
    
    
    (22,170
    )Interest income
    
    
    848
    
    
    
    3,113Change in fair value of derivative instrument
    
    
    (3,813
    )
    
    
    Other, net
    
    
    3,851
    
    
    
    1,986(Loss) income before income taxes
    
    
    (430,209
    )
    
    
    17,642Income tax (benefit) expense
    
    
    (101,486
    )
    
    
    16,661Net (loss) income
    
    
    (328,723
    )
    
    
    981Dividends on Series B preferred stock
    
    
    (9,722
    )
    
    
    (9,668
    )Net loss applicable to
common stockholders
    
    $
    (338,445
    )
    
    
    (8,687
    )Basic and diluted net loss per common share
    
    $
    (4.67
    )
    
    
    (0.12
    )Weighted average common shares outstanding:Basic and diluted
    
    
    72,419
    
    
    
    72,381
  54




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 Accumulated
    
    
    
    
    
    
    TotalClass C preferred stock
    
    
    Class A common stock
    
    
    Class B common stock
    
    
    Additional
    
    
    other
    
    
    
    
    
    
    stockholdersNumber of
    
    
    Par
    
    
    Number of
    
    
    Par
    
    
    Number of
    
    
    Par
    
    
    paid-in
    
    
    comprehensive
    
    
    Accumulated
    
    
    (deficit)shares
    
    
    value
    
    
    shares
    
    
    value
    
    
    shares
    
    
    value
    
    
    capital
    
    
    (loss) income
    
    
    deficit
    
    
    equityBalance at December 31, 2006
    
    
    380,000
    
    
    
    4
    
    
    
    40,277,805
    
    
    
    4
    
    
    
    24,503,500
    
    
    
    2
    
    
    
    522,397
    
    
    
    7,755
    
    
    
    (207,168
    )
    
    
    322,994Conversion of Class B common stock
to Class A common stock
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    (500,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,633
    
    
    
    
    
    
    
    
    
    
    
    1,633Series B preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,668
    )
    
    
    (9,668
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    981
    
    
    
    981Unrealized loss on derivative
instrument
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,337
    )
    
    
    
    
    
    
    (11,337
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,356
    )Balance at December 31, 2007
    
    
    380,000
    
    
    
    4
    
    
    
    40,777,805
    
    
    
    4
    
    
    
    24,003,500
    
    
    
    2
    
    
    
    524,030
    
    
    
    (3,582
    )
    
    
    (215,855
    )
    
    
    304,603Conversion of Class B common stock
to Class A common stock
    
    
    
    
    
    
    
    
    
    
    600,000
    
    
    
    
    
    
    
    (600,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of Class A common stock
from vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    67,417
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    692
    
    
    
    
    
    
    
    
    
    
    
    692Series B preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,722
    )
    
    
    (9,722
    )Comprehensive loss:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (328,723
    )
    
    
    (328,723
    )Amounts reclassified to earnings
during the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (542
    )
    
    
    
    
    
    
    (542
    )Unrealized loss on derivative
instrument
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,063
    )
    
    
    
    
    
    
    (4,063
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (333,328
    )Balance at December 31, 2008
    
    
    380,000
    
    
    $
    4
    
    
    
    41,445,222
    
    
    $
    4
    
    
    
    23,403,500
    
    
    $
    2
    
    
    
    524,722
    
    
    
    (8,187
    )
    
    
    (554,300
    )
    
    
    (37,755
    )
  55




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 2008
    
    
    2007Cash flows from operating activities:Net (loss) income
    
    $
    (328,723
    )
    
    
    981Adjustments to reconcile net (loss) income to net cash provided by operating activities:(Gain) loss on the sale of assets
    
    
    (13
    )
    
    
    49Impairment of FCC broadcasting licenses
    
    
    418,891
    
    
    
    Stock-based compensation
    
    
    692
    
    
    
    1,633Depreciation and amortization
    
    
    6,261
    
    
    
    4,742Net barter income
    
    
    (113
    )
    
    
    (299
    )Provision for trade doubtful accounts
    
    
    1,191
    
    
    
    1,478Unearned revenue
    
    
    (3,558
    )
    
    
    (1,785
    )Change in fair value of derivative instrument, net of amortization
    
    
    4,354
    
    
    
    Amortization of deferred financing costs
    
    
    1,157
    
    
    
    1,111Amortization of non-interest bearing promissory note payable
    
    
    1,260
    
    
    
    1,303Deferred income taxes
    
    
    (102,066
    )
    
    
    16,465Accretion of the time-value of money component related to unearned revenue
    
    
    133
    
    
    
    241Amortization of deferred commitment fee
    
    
    (300
    )
    
    
    (75
    )Amortization of other liabilities
    
    
    (66
    )
    
    
    (33
    )Changes in operating assets and liabilities:Trade receivables
    
    
    6,713
    
    
    
    (4,954
    )Prepaid expenses and other current assets
    
    
    89
    
    
    
    (1,097
    )Other assets
    
    
    (913
    )
    
    
    (1,554
    )Accounts payable and accrued expenses
    
    
    (3,404
    )
    
    
    (15
    )Accrued interest
    
    
    275
    
    
    
    (183
    )Unearned revenue
    
    
    129
    
    
    
    Other liabilities
    
    
    
    
    
    
    116Net cash provided by operations
    
    
    1,989
    
    
    
    18,124Cash flows from investing activities:Purchases of property and equipment
    
    
    (10,058
    )
    
    
    (6,186
    )Acquisition of a building and its related building improvements
    
    
    (6,039
    )
    
    
    (4,328
    )Proceeds from an insurance recovery
    
    
    119
    
    
    
    15Net cash used in investing activities
    
    
    (15,978
    )
    
    
    (10,499
    )Cash flows from financing activities:Payment of non-interest bearing promissory note payable
    
    
    (18,350
    )
    
    
    Payment of senior credit facility term loan 2012
    
    
    (3,250
    )
    
    
    (3,250
    )Proceeds from senior credit facility revolver due 2010
    
    
    15,000
    
    
    
    Payment of Series B preferred stock cash dividends
    
    
    (7,251
    )
    
    
    (9,668
    )Payments of other long-term debt
    
    
    (430
    )
    
    
    (400
    )Net cash used in financing activities
    
    
    (14,281
    )
    
    
    (13,318
    )Net decrease in cash and cash
equivalents
    
    
    (28,270
    )
    
    
    (5,693
    )Cash and cash equivalents at beginning of year
    
    
    61,122
    
    
    
    66,815Cash and cash equivalents at end of year
    
    $
    32,852
    
    
    
    61,122Supplemental cash flows information:Interest paid
    
    $
    19,778
    
    
    
    20,063Income tax refund, net
    
    
    (57
    )
    
    
    Noncash investing and financing activities:Unrealized (loss) gain on derivative instruments
    
    $
    (4,063
    )
    
    
    (11,337
    )Ten-year promissory note issued for the acquisition of a building
    
    
    
    
    
    
    7,650Issuance of preferred stock as payment of preferred stock dividend
    
    
    2,417
    
    
    
    
  56




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (1)
    
    Organization and Nature of BusinessSpanish Broadcasting System, Inc., a Delaware corporation, and its subsidiaries (the Company,
we, us, our or SBS) owns and/or operates 21 radio stations in the Los Angeles, New York,
Puerto Rico, Chicago, Miami and San Francisco markets. In addition, we own and operate two
television stations, serving the South Florida market, which operate as one television
operation, branded as MegaTV. We also have various MegaTV broadcasting outlets under
affiliation or programming agreements. As part of our operating
business, we operate LaMusica.com, Mega.TV, and our radio station websites, which are
bilingual Spanish-English websites providing content related to Latin music, entertainment,
news and culture. We also occasionally produce live concerts and events throughout the U.S.,
including Puerto Rico.Our primary source of revenue is the sale of advertising time on our stations to local and
national advertisers. Our revenue is affected primarily by the advertising rates that our
stations are able to charge, as well as the overall demand for advertising time in each
respective market. Seasonal net broadcasting revenue fluctuations are common in the
broadcasting industry and are due to fluctuations in advertising expenditures by local and
national advertisers. Typically for the broadcasting industry, the first calendar quarter
generally produces the lowest revenue.The broadcasting industry is subject to extensive federal regulation which, among other
things, requires approval by the Federal Communications Commission (FCC) for the issuance,
renewal, transfer and assignment of broadcasting station operating licenses and limits the
number of broadcasting properties we may acquire.(2)
    
    Summary of Significant Accounting Policies and Related Matters
 (a)
    
    Basis of PresentationThe consolidated financial statements include the accounts of Spanish Broadcasting
System, Inc. and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.(b)
    
    Revenue RecognitionWe recognize broadcasting revenue as advertisements are aired on our stations,
subject to meeting certain conditions, such as persuasive evidence that an agreement
exists, a fixed or determinable price and reasonable assurance of
collection. Our revenue is presented net of agency commissions. Agency
commissions are calculated based on a stated percentage applied to gross billing revenue.
Advertisers remit the gross billing amount to the agency, and then the agency remits
gross billings less their commission to us when the advertisement is not placed directly
by the advertiser. Payments received in advance of being earned are recorded as customer
advances, which are included in accounts payable and accrued expenses.(c)
    
    Valuation of Accounts ReceivableWe review accounts receivable to determine which accounts are doubtful of collection. In
making the determination of the appropriate allowance for doubtful accounts, we consider
our history of write-offs, relationships with our customers, age of the invoices and the
overall creditworthiness of our customers. For the years ended December 31, 2008 and
2007, we incurred bad debt expense of $1.2 million and $1.5 million, respectively.
Changes in the credit worthiness of customers, general economic conditions and other
factors may impact the level of future write-offs.
 57




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (d)
    
    Property and EquipmentProperty and equipment, including capital leases, are stated at historical cost, less
accumulated depreciation and amortization. We depreciate the cost of our property and
equipment using the straight-line method over the respective estimated useful lives (see
note 5). Leasehold improvements are amortized on a straight-line basis over the shorter
of the remaining life of the lease or the useful life of the improvements.Maintenance and repairs are charged to expense as incurred; improvements are capitalized.
When items are retired or are otherwise disposed of, the related costs and accumulated
depreciation and amortization are removed from the accounts and any resulting gains or
losses are credited or charged to income from operations.(e)
    
    Impairment or Disposal of Long-Lived AssetsWe account for long-lived assets in accordance with Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of(SFAS No.
144). SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to future net cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized in the amount by which the carrying amount of the asset
exceeds the estimated fair value of the asset. SFAS No. 144 also requires companies to
separately report discontinued operations and extends the reporting requirements to a
component of an entity that either has been disposed of (by sale, abandonment, or in a
distribution to owners) or is classified as held for sale. Assets to be disposed of are
reported at the lower of the carrying amount or estimated fair value less costs to sell.(f)
    
    FCC Broadcasting LicensesFCC broadcasting licenses are granted to stations for up to eight years under the
Telecommunications Act of 1996 (the Act). The Act requires the FCC to renew a broadcast
license if: it finds that the station has served the public interest, convenience and
necessity; there have been no material violations of either the Communications Act of
1934 or the FCCs rules and regulations by the licensee; and there have been no other
serious violations, which taken together, constitute a pattern of abuse. We intend to
renew the licenses indefinitely and evidence supports our ability to do so. Generally,
there are no compelling challenges to our license renewals. Technology used in
broadcasting is not expected to be replaced by another technology any time in the
foreseeable future.In accordance with SFAS No. 142, Goodwill and Other Intangible Assets(SFAS No. 142), we
do not amortize our FCC licenses. We test our indefinite-lived intangible assets for
impairment at least annually. Our valuations principally use the discounted cash flow
methodology. This income approach consists of a quantitative model, which assumes the FCC
licenses are acquired and operated by a third party. This income approach incorporates
variables such as types of signals, media competition, audience share, market advertising
revenues, market revenue projections, anticipated operating profit margins and risk
adjusted discount rates. In the preparation of the FCC license appraisals, we make
estimates and assumptions that affect the valuation of the intangible asset. These
estimates and assumptions could differ from actual results and could have a material
impact on our financial statement in the future.
 58




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 Since the adoption of SFAS No. 142, we generally tested for impairment on our FCC license
intangible assets at the individual license level. Also, we applied the guidance in EITF
02-07, Unit of Accounting for Testing
Impairment of Indefinite Lived Intangible Assets(EITF 02-07), to certain of our FCC
license intangible assets if their signals were simulcasting and were operating as one
revenue producing asset. As of December 31, 2008, we modified the application of EITF
02-07 from a simulcast station level to a market cluster level. We believed that the
facts below, in addition to the factors described in the EITF 02-07 discussion, cause us
to review our application of EITF 02-07.By not acquiring or disposing of any radio FCC licenses in the last two fiscal years, it
has allowed our radio segment to mature and has permitted us to consolidate our
operations in each market and streamline processes to ultimately reach increased
economies of scale. Factors which influenced us to reach greater economies of scale were
the current radio technologies available, the current economic conditions and the
continued revenue declines in the radio broadcasting industry.
These factors, in addition to the factors described in the EITF 02-07 discussion, caused us to review our application of EITF 02-07.Since we modified our application of EITF 02-07 as of December 31, 2008 (i.e. change of
unit of accounting), we performed the impairment testing both at the individual license
level and the market cluster level as required under EITF 02-07. Please see note 3 for
details of testing and impairment results.(g)
    
    GoodwillGoodwill consists of the excess of the purchase price over the fair value of tangible and
identifiable intangible net assets acquired in business combinations. SFAS No. 142
requires us to test goodwill for impairment at least annually at the reporting unit level
in lieu of being amortized. We have determined that we have two reporting units under
SFAS No. 142; Radio and Television. We currently only have goodwill in our radio
reporting unit.
We have aggregated our operating components (radio stations) into a single radio reporting unit based upon the similarity
of their economic characteristics, including consideration of the requirements in SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information, as required by SFAS No. 142.  Our evaluation included consideration of factors such as
regulatory environment, business model, gross margins, nature of services and process for delivering these services.
In addition, we considered the guidance in D-101, Clarification of Reporting Unit Guidance in Paragraph 30 of FASB Statement
No. 142.The goodwill impairment test is a two-step test. Under the first step, the fair value of
the reporting unit is compared with its carrying value (including goodwill). If the fair
value of the reporting unit is less than its carrying value, an indication of goodwill
impairment exists for the reporting unit and the enterprise must perform step two of the
impairment test (measurement). If the fair value of the reporting unit exceeds its
carrying value, step two does not need to be performed. Under step two, an impairment
loss is recognized for any excess of the carrying amount of the reporting units goodwill
over the implied fair value of that goodwill. The implied fair value of goodwill is
determined by allocating the fair value of the reporting unit in a manner similar to a
purchase price allocation, in accordance with FASB Statement No. 141, Business
Combinations. The residual fair value after this allocation is the implied fair value of
the reporting unit goodwill. Fair value of the reporting unit is determined using a
discounted cash flow analysis. If the fair value of the reporting unit exceeds its
carrying value, step two does not need to be performed.During our quarters ended June 30, 2008 and December 31, 2008, we performed an
interim and annual impairment review of our goodwill and determined that there was no
impairment of goodwill. The estimated enterprise value of our radio reporting unit exceeded its carrying value during our impairment
testing. In addition, as a result of the impairment of FCC licensees in our second fiscal quarter of 2008, there
is currently a net accumulated deficit in our radio reporting unit and we have a net overall accumulated
deficit; therefore we have not performed a step-two impairment test.  When evaluating our estimated enterprise value, we
utilized an income approach which uses assumptions and estimates which among others include the aggregated expected
revenues and operating margins generated by our FCC licenses (i.e. our stations) and use of a risk adjusted discount rate.
We did not find reconciliation to our current market capitalization meaningful in the determination of our enterprise value
given current factors that impact our market capitalization, including but not limited to: our recent NASDAQ delisting
notice; limited trading volume; the impact of our television segment operating losses; and the significant voting control
of our Chairman and CEO.
 59




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (h)
    
    Other Intangible Assets, NetOther intangible assets, net, consist of favorable tower leases acquired. These assets
are being amortized over the lives of the leases; however, not to exceed 40 years.Estimated amortization expense for the five years subsequent to December 31, 2008 are as
follows (in thousands):
 Fiscal year ending December 31:2009
    
    $
    362010
    
    
    362011
    
    
    362012
    
    
    362013
    
    
    36
 (i)
    
    Deferred Financing CostsDeferred financing costs relate to the refinancing of our debt in June 2005 (see note 7).
Deferred financing costs are being amortized to interest expense using the effective interest method.(j)
    
    Barter TransactionsBarter transactions represent advertising time exchanged for non-cash goods and/or
services, such as promotional items, advertising, supplies, equipment and services.
Revenue from barter transactions are recognized as income when advertisements are
broadcasted. Expenses are recognized when goods or services are received or used. We
record barter transactions at the fair value of goods or services received or advertising
surrendered, whichever is more readily determinable. Barter revenue amounted to $9.2
million and $8.1 million for the fiscal years ended December 31, 2008 and 2007,
respectively. Barter expense amounted to $9.1 million and $7.8 million for the fiscal
years ended December 31, 2008 and 2007, respectively.Unearned revenue consists of the excess of the aggregate fair value of goods or services
received by us, over the aggregate fair value of advertising time delivered by us on
certain barter customers.(k)
    
    Cash and Cash EquivalentsCash and cash equivalents consist of cash, money market accounts and certificates of
deposit at various commercial banks. All cash equivalents have original maturities of 90
days or less.(l)
    
    Income TaxesWe file a consolidated federal income tax return for substantially all of our domestic
operations. We are also subject to foreign taxes on our Puerto Rico operations. We
account for income taxes under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date (see note 13).
 60




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 On January 1, 2007, we adopted the provisions of FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109(FIN 48). FIN
48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises
financial statements in accordance with FASB Statement No. 109, Accounting for Income
Taxes, and prescribes a recognition threshold and measurement process for financial
statement recognition and measurement of a tax position taken or expected to be taken in
a tax return. FIN 48 also provides guidance on derecognition, classification, interest
and penalties, accounting in interim periods, disclosure and transition. Interest and
penalties on tax liabilities, if any, would be recorded in interest expense and other
non-interest expense, respectively. The adoption of FIN 48 did not have any effect on our
financial statements on the adoption date (see note 13).(m)
    
    Advertising CostsWe incur advertising costs to add and maintain listeners. These costs are charged to
expense in the period incurred. Cash advertising costs amounted to $4.6 million and $8.1
million in fiscal years ended December 31, 2008 and 2007, respectively.(n)
    
    Contingent LiabilitiesWe account for contingencies in accordance with SFAS
No. 5, Accounting for Contingencies, which
requires that an estimated loss from a loss contingency shall be accrued when information available
prior to issuance of the financial statements indicates that it is probable that an asset has been
impaired or a liability has been incurred at the date of the financial statements and when the
amount of the loss can be reasonably estimated. Accounting for contingencies such as legal and
income tax matters requires us to use our judgment. We believe that our accruals for these matters
are adequate. Nevertheless, the actual loss from a loss contingency might differ from our
estimates.(o)
    
    Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting
principles in the United States of America requires Management to make estimates and
assumptions about future events 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 revenues and expenses during the reporting period. Significant items
subject to such estimates and assumptions, include the useful lives of fixed assets;
allowance for doubtful accounts; the valuation of derivatives; deferred tax assets; fixed
assets, and stock-based compensation. These estimates and assumptions are based on Managements best judgments. Management evaluates its
estimates and assumptions on an ongoing basis using historical experience and other factors,
including the current economic environment, which Management believes to be reasonable under the
circumstances. Management adjusts such estimates and assumptions as facts and circumstances
dictate. Illiquid credit markets, volatile equity markets and reductions in advertising spending
have combined to increase the uncertainty inherent in such estimates
and assumptions. Actual results could differ from these estimates.(p)
    
    Concentration of Business and Credit RisksFinancial instruments that potentially subject us to concentrations of risk include
primarily cash, and trade receivables and financial instruments used in hedging
activities (see notes 2(w) and 4). We place our cash with highly rated credit institutions. Although we try to
limit the amount of credit exposure with any one financial institution, we do in the
normal course of business maintain cash balances in excess of federally insured limits.Our operations are conducted in several markets across the United States, including
Puerto Rico. Our New York, Miami and Los Angeles markets accounted for more than 70% of
net revenue for the fiscal years ended December 31, 2008 and 2007. Our credit risk is
spread across a large number of diverse customers in a number of different industries,
thus spreading the trade credit risk. We do not normally require collateral on credit
sales; however, a credit analysis is performed before extending substantial credit to any
customer and occasionally we request payment in advance. We establish an allowance for
doubtful accounts based on customers payment history and perceived credit risks.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (q)
    
    Basic and Diluted Net (Loss) Income per Common ShareBasic net (loss) income per common share was computed by dividing net (loss) income
applicable to common stockholders by the weighted average number of shares of common
stock and convertible preferred stock outstanding for each period presented. Diluted net
(loss) income per common share is computed by giving effect to common stock equivalents
as if they were outstanding for the entire period. Common stock equivalents were not
considered for the fiscal years ended December 31, 2008 and 2007, since their effect
would be anti-dilutive. If included, common stock equivalents for the fiscal years ended
December 31, 2008 and 2007 would have amounted to 8 and 0, respectively. The following
table summarizes the net (loss) income applicable to common stockholders and the net
(loss) income per common share for the fiscal years ended December 31, 2008 and 2007 (in
thousands, except per share data):
 2008
    
    
    2007(Loss) income
    
    $
    (328,723
    )
    
    
    981Less dividends on preferred stock
    
    
    (9,722
    )
    
    
    (9,668
    )Net loss applicable
to common stockholders
    
    $
    (338,445
    )
    
    
    (8,687
    )Basic and diluted net loss per
common share:
    
    $
    (4.67
    )
    
    
    (0.12
    )Weighted average common shares
outstanding:Basic and diluted
    
    
    72,419
    
    
    
    72,381
 (r)
    
    Fair Value DisclosuresFair Value of Financial InstrumentsSFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires disclosure
of the fair value of certain financial instruments. Cash and cash equivalents,
receivables, as well as accounts payable, and other current liabilities, as reflected in
the consolidated financial statements, approximate fair value because of the short-term
maturity of these instruments. The estimated fair value of our other long-term debt
instruments, approximate their carrying amounts as the interest rates approximate our
current borrowing rate for similar debt instruments of comparable maturity, or have
variable interest rates.Fair value estimates are made at a specific point in time, based on relevant market
information and information about the financial instrument. These estimates are
subjective in nature and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions could significantly
affect the estimates.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 The estimated fair value of our financial instrument is as follows (in millions):
 December 31,2008
    
    
    2007Gross
    
    
    
    
    
    
    Grosscarrying
    
    
    
    
    
    
    carryingamount
    
    
    Fair value
    
    
    amount
    
    
    Fair valueSenior credit facility term loan
    
    $
    312.8
    
    
    
    87.6
    
    
    
    316.1
    
    
    
    291.610 3/4% Series B cumulative
exchangeable redeemable
preferred stock
    
    $
    92.3
    
    
    
    23.1
    
    
    
    89.9
    
    
    
    89.9
 The fair value estimates of the financial instrument were based upon market quotes from a
major financial institution taking into consideration current rates and the most recent market activity.Fair Value of Derivative InstrumentsIn September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS No. 157),
which defines fair value, establishes a framework for measuring fair value in GAAP and
expands disclosures about fair value measurements. We adopted SFAS No. 157 effective
January 1, 2008. The adoption of SFAS No. 157 did not impact our consolidated financial
position and results of operations. In accordance with SFAS No. 157, the following table
represents our liabilities that are measured at fair value on a recurring basis at
December 31, 2008 and the level within the fair value hierarchy in which the fair value
measurements are included (in millions).
 Fair value measurements atDecember 31, 2008Using significant otherDescription
    
    observable inputs (Level 2)Derivatives  Liabilities
    
    $
    12,541
 In February 2008, the FASB issued Staff Position FAS 157-2, Effective Date of FASB
Statement No. 157(FSP No. 157-2), which defers the effective date of SFAS No. 157 for
non-financial assets and liabilities, except for items that are recognized or disclosed
at fair value on a recurring basis, to fiscal years beginning after November 15, 2008 and
interim periods within those fiscal years. We have elected the deferral option permitted
by FSP No. 157-2 for our non-financial assets and liabilities initially measured at fair
value in prior business combinations including intangible assets and goodwill. On
October 10, 2008, the FASB issued Staff Position FAS No. 157-3, Determining the Fair
Value of a Financial Asset When the Market for That Asset Is Not Active, which clarifies
the application of SFAS No. 157, and includes an example illustrating the key principles
for determining fair value in a market that is not active.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (s)
    
    Share-based Compensation ExpenseWe account for our share-based compensation plans in accordance with SFAS No. 123(R),
Share-Based Payment(SFAS No. 123(R)). Accordingly, we recorded stock-based compensation
expense for awards granted prior to, but not yet vested, as of January 1, 2006, as if the
fair value method required for pro forma disclosure under SFAS No. 123, Accounting for
Stock-Based Compensation, were in effect for expense recognition purposes, adjusted for
estimated forfeitures. For stock-based awards granted after January 1, 2006, we have
recognized compensation expense based on the estimated grant date fair value method using
the Black-Scholes option pricing model. For these awards, we have recognized compensation
expense using a straight-line amortization method (prorated). As SFAS No. 123(R) requires
that stock-based compensation expense be based on awards that are ultimately expected to
vest, stock-based compensation for the fiscal years ended December 31, 2008 and 2007 were
reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary
termination behaviors, as well as trends of actual option forfeitures.(t)
    
    Leasing (Operating Leases)We recognize rent expense for operating leases with periods of free rent (including
construction periods), step rent provisions and escalation clauses on a straight line
basis over the applicable lease term. We consider lease renewals in the useful life of
related leasehold improvements when such renewals are reasonably assured. We take these
provisions into account when calculating minimum aggregate rental commitments under
noncancelable operating leases (see note 12). From time to time, we receive capital
improvement funding from our lessors. These amounts are recorded as deferred liabilities
and amortized over the remaining lease term as a reduction of rent expense.(u)
    
    Segment ReportingSFAS No. 131, Disclosures about Segments of an Enterprise and Related Information,
establishes standards for the way public business enterprises report information about
operating segments in annual financial statements and requires those enterprises to
report selected information about operating segments in interim financial reports issued
to stockholders. We have two reportable segments: radio and
television (see note 18).(v)
    
    Other, NetIn the fiscal years ended December 31, 2008 and 2007, the amount in other, net in our
statement of operations was primarily related to the write-off of the unused portion of
unearned revenue that expired on October 24, 2008, March 1, 2008 and March 1, 2007,
respectively. This unearned revenue relates to the MEGA TV acquisition advertising
agreement that provided the seller with the opportunity to use a total of $6.0 million of
advertising.(w)
    
    Derivative InstrumentWe only enter into derivative contracts to hedge against the potential impact of
increases in interest rates on our debt instruments. We only enter into derivative
contracts that we intend to designate as a hedge of the variability of cash flows to be
paid related to a recognized asset or liability (cash flow hedge).By using derivative financial instruments to hedge exposures to changes in interest
rates, we expose ourselves to credit risk and market risk. Credit risk is the failure of
the counterparty to perform under the terms of the derivative contract. When the fair
value of a derivative contract is positive, the counterparty owes us, which creates
credit risk for us. When the fair value of a derivative contract is negative, we owe the
counterparty and, therefore, it does not possess credit risk. We attempt to minimize the
credit risk in derivative instruments by entering into transactions with high-quality
counterparties whose credit rating is higher than Aa.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 Market risk is the adverse effect on the value of a derivative instrument that results
from a change in interest rates. The market risk associated with interest-rate contracts
is managed by establishing and monitoring parameters that limit the types and degree of
market risk that may be undertaken.For all hedging relationships, we formally document the hedging relationship and its
risk-management objective and strategy for undertaking the hedge, the hedging instrument,
the hedged item, the nature of the risk being hedged, how the hedging instruments
effectiveness in offsetting the hedged risk will be assessed prospectively and
retrospectively, and a description of the method of measuring ineffectiveness. We also
formally assess, both at the hedges inception and on an ongoing basis, whether the
derivatives that are used in hedging transactions are highly effective in offsetting cash
flows of hedged items.We are accounting for our interest rate swaps as cash flow hedges under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities, which
requires us to recognize all derivative instruments on the balance sheet at fair value.
The related gains or losses on these instruments are deferred in stockholders equity as
a component of accumulated other comprehensive income (loss). The deferred gains or
losses on these transactions are recognized in income in the period in which the related
items being hedged are recognized in expense. However, to the extent that the change in
value of the derivative contracts does not offset the change in the value of
the underlying transaction being hedged, that ineffective portion is immediately
recognized into income. We recognize gains and losses immediately when the underlying
transaction settles. For cash flow hedges in which hedge accounting is discontinued
because it is determined that the derivative no longer qualifies as an effective cash
flow hedge, we continue to carry the derivative instrument at its fair value on the
consolidated balance sheet and recognize any subsequent changes in its fair value in
earnings.(x)
    
    Comprehensive (Loss) IncomeOur comprehensive (loss) income consists of net (loss) income and other items recorded
directly to the equity accounts. The objective is to report a measure of all changes in
equity of an enterprise that result from transactions and other economic events during
the period. Our other comprehensive (loss) income consists of net (loss) income and gains
and losses on derivative instruments that qualify for cash flow hedge treatment.(y)
    
    Capitalized InterestOur policy is to capitalize interest cost incurred on debt during the construction of
major projects exceeding one year. A reconciliation of total interest cost to Interest
Expense as reported in the consolidated statements of operations for the fiscal years
2008 and 2007, is as follows (in thousands):
 2008
    
    
    2007Interest cost capitalized
    
    $
    199
    
    
    
    475Interest cost charged to income
    
    
    22,910
    
    
    
    22,170Total interest expense
    
    $
    23,109
    
    
    
    22,645
 (3)
    
    Impairment of FCC Broadcasting Licenses and Restructuring CostsImpairment of FCC Broadcasting LicensesWe generally perform our annual impairment test of our indefinite-lived intangibles during the
fourth quarter of the fiscal year but, given the deteriorating economic conditions throughout
the year and continued revenue declines in the broadcasting industry, we also performed an
interim impairment test as of June 30, 2008, in connection with the close of our quarter-ended
June 30, 2008.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 As a result of the interim impairment test, we determined that there was an impairment of our
FCC broadcasting licenses. We recorded a non-cash impairment loss of approximately $396.3
million that reduced the carrying values of our FCC broadcasting licenses for certain
individual stations in our Los Angeles, San Francisco, Puerto Rico, Miami and New York
markets. The tax impact of the impairment loss was an approximate $108.9 million tax benefit,
which was related to the reduction of the book/tax basis differences on our FCC broadcasting
licenses.During the annual impairment test, we determined that there was an additional impairment of
our FCC broadcasting licenses due to the decrease in the demand for advertising and the
continued deterioration of the economy. We recorded a non-cash impairment loss of
approximately $22.4 million that reduced the carrying values of our FCC broadcasting licenses
for certain individual stations in all of our markets. The tax impact of the impairment loss
was an approximate $5.0 million tax benefit, which was related to the reduction of the
book/tax basis differences on our FCC broadcasting licenses.The impairment loss was due to changes in estimates and assumptions which were primarily (a)
decreased advertising revenue growth projections in our respective markets, and (b) increased
risk adjusted discount rates used in fair value determinations. Also, the current decline in cash flow multiples for recent station sales were
considered in the estimates and assumptions used.Restructuring Costs
As a result of the decrease in the demand for advertising and the continued deterioration of
the economy, we began to implement a restructuring plan in the third quarter of fiscal year
2008 to reduce expenses throughout the Company and have incurred costs totaling $2.5 million
in 2008 related to the termination of various programming contracts and personnel. In
addition, we are reviewing other cost-cutting measures, as we continue to evaluate the scope
and duration of the current economic slowdown and its anticipated impact on our operations.(4)
    
    Derivatives and Hedging ActivitiesAt December 31, 2008, derivative financial instruments are comprised of the following (in
thousands):
 FixedNotional
    
    
    interest
    
    
    Expiration
    
    FairAgreement
    
    amount
    
    
    rate
    
    
    date
    
    valueInterest rate swap
    
    $
    312,813
    
    
    
    5.98
    %
    
    June 30, 2010
    
    $
    11,653Interest rate swap
    
    
    7,064
    
    
    
    6.31
    %
    
    January 4, 2017
    
    
    888$
    319,877
    
    
    
    
    
    
    
    
    $
    12,541
 On June 29, 2005, we entered into a five-year interest rate swap agreement for the original
notional principal amount of $324.2 million whereby we will pay a fixed interest rate of 5.98%
as compared to interest at a floating rate equal to three-month LIBOR plus 175 basis points.
The interest rate swap amortization schedule is identical to the First Lien
Credit Facility amortization schedule during June 30, 2005 to June 30, 2010, which has an
effective date of June 29, 2005, quarterly notional reductions and an expiration date of June
30, 2010 (see note 7).In September and October 2008, the counterparty to this interest rate swap, Lehman Brothers
Special Financing Inc., and its parent and credit support provider, Lehman Brothers Holdings
Inc., each filed for bankruptcy. Based on these bankruptcy filings, this cash flow hedge no
longer qualifies for hedge accounting. Therefore, the change in fair value from September 15,
2008, the last time this hedge was determined to be effective, to
December 31, 2008, was $3.8
million which was recorded in earnings as a Change in fair value of derivative instrument.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 On September 15, 2008, the Accumulated Other Comprehensive Loss associated with this hedge was
$7.8 million and will be reclassified into earnings (interest expense) over the remaining life
of the hedge, which terminates on June 30, 2010. During the fiscal year December 31, 2008,
$0.5 million was reclassified and recorded as interest expense. During the fiscal year December 31, 2009, we estimated that $5.4 million will be reclassified and
recorded as interest expense.On January 4, 2007, we entered into a ten-year interest rate swap agreement for the original
notional principal amount of $7.7 million whereby we will pay a fixed interest rate of 6.31%
as compared to interest at a floating rate equal to one-month LIBOR plus 125 basis points. The
interest rate swap amortization schedule is identical to the promissory note amortization
schedule, which has an effective date of January 4, 2007, monthly notional reductions and an
expiration date of January 4, 2017 (see note 9).(5)
    
    Property and Equipment, NetProperty and equipment, net consists of the following at December 31, 2008 and 2007 (in
thousands):
 Estimated2008
    
    
    2007
    
    
    useful livesLand
    
    $
    7,306
    
    
    
    7,466
    
    
    
    Building and building improvements
    
    
    35,706
    
    
    
    29,454
    
    
    720 yearsTower and antenna systems
    
    
    5,026
    
    
    
    4,847
    
    
    10 yearsStudio and technical equipment
    
    
    20,068
    
    
    
    13,590
    
    
    510 yearsFurniture and fixtures
    
    
    5,492
    
    
    
    4,467
    
    
    57 yearsTransmitter equipment
    
    
    6,919
    
    
    
    6,571
    
    
    10 yearsLeasehold improvements
    
    
    6,335
    
    
    
    6,708
    
    
    120 yearsComputer equipment and software
    
    
    6,647
    
    
    
    6,374
    
    
    35 yearsOther
    
    
    2,479
    
    
    
    2,450
    
    
    35 years95,978
    
    
    
    81,927Less accumulated depreciation and amortization
    
    
    (43,567
    )
    
    
    (38,188
    )$
    52,411
    
    
    
    43,739
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (6)
    
    Accounts Payable and Accrued ExpensesAccounts payable and accrued expenses at December 31, 2008 and 2007 consists of the following
(in thousands):
 2008
    
    
    2007Accounts payable  trade
    
    $
    1,732
    
    
    
    2,125Accrued compensation and commissions
    
    
    6,218
    
    
    
    8,431Accrued professional fees
    
    
    1,742
    
    
    
    1,230Accrued step-up leases
    
    
    1,445
    
    
    
    1,315Accrued income taxes
    
    
    1,994
    
    
    
    1,744Other accrued expenses
    
    
    2,297
    
    
    
    4,795$
    15,428
    
    
    
    19,640
 (7)
    
    Senior Secured Credit Facilities
 Senior secured credit facilities consist of the following at December 31, 2008 and 2007 (in
thousands):
 2008
    
    
    2007Revolving credit facility of $25.0 million, due 2010
    
    $
    15,000
    
    
    
    Term loan payable due in quarterly principal repayments of 0.25%
of the original outstanding amount of $325.0 million including
variable interest based on LIBOR plus 175 basis points,
with outstanding balance due in 2012
    
    
    312,813
    
    
    
    316,063327,813
    
    
    
    316,063Less current portion
    
    
    (3,250
    )
    
    
    (3,250
    )$
    324,563
    
    
    
    312,813
 The maturities of our senior credit facilities are as follows at December 31, 2008 (in
thousands):
 Fiscal year ending December 31:2009
    
    $
    3,2502010
    
    
    18,2502011
    
    
    3,2502012
    
    
    303,063$
    327,813
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 On June 10, 2005, we entered into a first lien credit agreement with Merrill Lynch, Pierce
Fenner & Smith, Incorporated, as syndication agent (Merrill Lynch), Wachovia Bank, National
Association, as documentation agent (Wachovia), Lehman Commercial Paper Inc., as
administrative agent (Lehman), and certain other lenders (the First Lien Credit Facility). The
First Lien Credit Facility consists of a term loan in the amount of $325.0 million, payable in
twenty-eight consecutive quarterly installments commencing on June 30, 2005, and continuing on
the last day of each of December, March, June and September of each year thereafter, through,
and including, March 31, 2012. The
amount of the quarterly installment due on each such payment date is equal to 0.25% of the
original principal balance of the term loan funded on June 10, 2005, which is approximately
$0.8 million. The term loan is due and payable on June 10, 2012. The First Lien Credit
Facility also includes a revolving credit facility in an aggregate principal amount of $25.0
million. The initial scheduled maturity of the revolving credit line is June 10, 2010.On October 3, 2008, we requested to draw down $25.0 million from our $25.0 million revolving
credit facility. On October 8, 2008, we only received an aggregate of $15.0 million of the
$25.0 million revolver, as a result of Lehmans failure to fund its $10.0 million portion of
the facility due to its bankruptcy filing. We are exploring options to replace Lehmans commitment within the revolver, but we cannot
guarantee that we will be able to obtain such replacement from others.Interest and FeesThe interest rates per annum applicable to loans under the First Lien Credit Facility are, at
our option, the Base Rate or Eurodollar Base Rate (as defined in the respective credit
agreement) plus, in each case, an applicable margin. The applicable margin under our First
Lien Credit Facility is either (i) 1.75% per annum for Eurodollar loans or (ii) 0.75% per
annum for Base Rate loans. The Base Rate is a fluctuating interest rate equal to the greater
of (1) the Prime Rate in effect on such day and (2) the Federal Funds Effective Rate in effect
on such day plus one-half of 1%. On June 29, 2005, we entered into a five-year interest rate
swap agreement to hedge against the potential impact of increases in interest rates on our
First Lien Credit Facility. The interest rate swap fixed our LIBOR interest rate for five
years, whereby we will pay a fixed interest rate of 5.98% as compared to interest at a
floating rate equal to three-month LIBOR plus 175 basis points (see note 4).The applicable margin of the revolving credit facility is either (i) 2.00% per annum for
Eurodollar loans or (ii) 1.00% per annum for Base Rate loans. In addition, we are required to
pay the lenders under the revolving credit facility under the First Lien Credit Facility a
commitment fee with respect to any unused commitments thereunder, at a per annum rate of
0.50%.Collateral and GuaranteesOur domestic subsidiaries, including any future direct or indirect subsidiaries that may be
created or acquired by us, with certain exceptions as set forth in the First Lien Credit
Facility credit agreement, guarantee our obligations therein. The guarantee is secured by a
perfected first priority security interest in substantially all of the guarantors tangible
and intangible assets (including, without limitation, intellectual property and all of the
capital stock of each of our direct and indirect domestic subsidiaries and 65% of the capital
stock of certain of our first-tier foreign subsidiaries), subject to certain exceptions.Covenants and Other MattersOur First Lien Credit Facility includes certain negative covenants restricting or limiting our
ability to, among other things:
 
    
    incur additional debt, incur contingent obligations and issue additional preferred
stock;
    
    create liens;
    
    pay dividends, distributions or make other specified restricted payments, and
restrict the ability of certain of our subsidiaries to pay dividends or make other
payments to us;
    
    sell assets;
    
    make certain capital expenditures, investments and acquisitions;
    
    enter into certain transactions with affiliates;
    
    enter into sale and leaseback transactions; and
    
    merge or consolidate with any other person or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of our assets.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 The First Lien Credit Facility contains certain customary representations and warranties,
affirmative covenants and events of default, including failure to pay principal, interest or
fees, material inaccuracy of representations and warranties, violations of covenants, certain
bankruptcy and insolvency events, certain ERISA events, certain events related to our FCC
licenses, a change of control, cross-defaults to other debt and material judgments.(8)
    
    Non-Interest Bearing Promissory Note, NetMega Media partially financed the acquisition of certain assets used in, or related to, the
operation of MegaTV by entering into a 34-month secured non-interest bearing promissory note
due 2009, in the principal amount of $18.5 million, to and made in favor of WDLP Broadcasting
Company, LLC and Robin Broadcasting Company, LLC. The promissory note was guaranteed by us and
secured by the assets acquired in the transaction as discussed in note 3. We discounted the
promissory note using an effective interest rate of approximately 8.25%, which had a present
value at closing of approximately $14.8 million. The discount was being amortized over the
life of the promissory note using the effective interest method.On October 24, 2008, we entered into a letter agreement with BC Media Funding Company II, LLC,
as agent for Media Funding Company, LLC, successors in interest to the rights of WDLP
Broadcasting Company, LLC and Robin Broadcasting Company, LLC, for the early extinguishment of
the $18.5 million non-interest bearing promissory note that was due January 2, 2009.Pursuant to the letter agreement, we received a discount of
$0.1 million and only paid $18.4
million (the Payoff Amount) in full satisfaction due under the non-interest bearing promissory
note. We used cash on hand and $15.0 million of proceeds drawn down from our revolving credit
facility to satisfy the Payoff Amount.In addition, on October 24, 2008, we were released from all obligations and liabilities,
security interests, pledges, liens, mortgages, assignments or other interests granted by us
and our subsidiaries pursuant to the security agreement, the pledge agreement, the
non-interest bearing promissory note and any and all documentation related to the loan
documents.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (9)
    
    Other Long-Term DebtOther long-term debt consists of the following at December 31, 2008 and 2007 (in thousands):
 2008
    
    
    2007Promissory note payable, due in monthly principal installments of
$26, plus interest at 6.31%, commencing January 2007,
with balance due on January 2017
    
    $
    7,064
    
    
    
    7,370Obligation under capital lease with related party payable in monthly
installments of $9, including interest at 6.25%, commencing
June 1992. See notes 12 and 15
    
    
    321
    
    
    
    406Various obligations under capital leases
    
    
    105
    
    
    
    1447,490
    
    
    
    7,920Less current portion
    
    
    (438
    )
    
    
    (430
    )$
    7,052
    
    
    
    7,490
 The scheduled maturities of other long-term debt are as follows at December 31, 2008 (in
thousands):
 Fiscal year ending December 31:2009
    
    $
    4382010
    
    
    4472011
    
    
    4262012
    
    
    3392013
    
    
    306Thereafter
    
    
    5,534$
    7,490
 On January 4, 2007, SBS, through its wholly owned subsidiary, SBS Miami Broadcast Center, Inc.
(SBS Miami Broadcast Center), completed the acquisition of certain real property located in
Miami-Dade County, Florida pursuant to the purchase and sale agreement, dated August 24, 2006,
as amended on September 25, 2006, as further amended on October 25, 2006 (the Purchase
Agreement). The real property consists of 5.47 acres (234,208 square
feet of land and approximately
62,000 square feet of office space (the Property)). The Property was acquired from 7007
Palmetto Investments, LLC (the Seller), an unrelated third party, for a total purchase price
of approximately $8.9 million, excluding closing costs and brokers fees. We funded the
purchase price and the significant construction costs incurred to retrofit the building to be
used as a broadcasting facility, using cash on hand and borrowings. We consolidated our Miami
radio and television operations at the new broadcasting facility.In connection with the acquisition of the Property, on January 4, 2007, SBS Miami Broadcast
Center, entered into a loan agreement (the Loan Agreement), a ten-year promissory note in the
original principal amount of $7.7 million (the Promissory Note), and a Mortgage, Assignment of
Rents and Security Agreement (the Mortgage) in favor of Wachovia Bank, National Association
(Wachovia). The Promissory Note bears an interest rate equal to one-month LIBOR plus 125 basis
points and requires monthly principal payments of $0.03 million with any unpaid balance due on
its maturity date of January 4, 2017. The Promissory Note is secured by the Property and any
related collateral.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 The terms of the loan include certain restrictions and covenants for SBS Miami Broadcast
Center, which limit, among other things, the incurrence of additional indebtedness and liens.
The Loan Agreement specifies a number of events of default (some of which are subject to
applicable cure periods), including, among others, the failure to make payments when due,
noncompliance with covenants and defaults under other agreements or instruments of
indebtedness. Upon the occurrence of an event of default and expiration of any applicable cure
periods, Wachovia may accelerate the loan and declare all amounts outstanding to be
immediately due and payable.Additionally, on January 4, 2007, SBS Miami Broadcast Center entered into an interest rate
swap arrangement (the Swap Agreement) for the original notional principal amount of $7.7
million whereby it will pay a fixed interest rate of 6.31% as compared to interest at a
floating rate equal to one-month LIBOR plus 125 basis points on the Promissory Note. The
interest rate swap amortization schedule is identical to the Promissory Note amortization
schedule, which has an effective date of January 4, 2007, monthly notional reductions and an
expiration date of January 4, 2017.In connection with the acquisition of the property, we agreed to unconditionally guaranty all
obligations of SBS Miami Broadcast Center pursuant to the Promissory Note, the Loan Agreement,
the Mortgage, the loan documents thereto, and the Swap Agreement, for the benefit of Wachovia
and its affiliates (the Guaranty). In addition, the terms of the Guaranty contain certain
financial covenants, which require us to maintain available liquidity of not less than 1.2
times the then outstanding principal balance of the loan made to SBS Miami Broadcast Center by
Wachovia.(10)
    
    103/4% Series A and B Cumulative Exchangeable Redeemable Preferred StockOn October 30, 2003, we partially financed the purchase of radio station KXOL-FM with proceeds
from the sale, through a private placement, of 75,000 shares of our 103/4% Series A cumulative
exchangeable redeemable preferred stock, par value $0.01 per share, with a liquidation
preference of $1,000 per share (the Series A Preferred Stock), without a specified maturity
date. The gross proceeds from the issuance of the Series A Preferred Stock amounted to $75.0
million.On February 18, 2004, we commenced an offer to exchange registered shares of our 10 3/4% Series
B cumulative exchangeable redeemable preferred stock, par value $0.01 per share and
liquidation preference of $1,000 per share (the Series B
Preferred Stock) for any and all shares of our outstanding unregistered Series A Preferred Stock. On April 5, 2004, we
completed the exchange offer and exchanged 76,702,083 shares of our Series B Preferred Stock
for all of our then outstanding shares of Series A Preferred Stock.We have the option on or after October 15, 2008, to redeem all or some of the registered
Series B Preferred Stock for cash on or after October 15, 2008 at 105.375%, October 15, 2009
at 103.583%, October 15, 2010 at 101.792 and October 15, 2011 and thereafter at 100%, plus
accumulated and unpaid dividends to the redemption date. On October 15, 2013, each holder of
Series B Preferred Stock will have the right to require us to redeem all or a portion of such
holders Series B Preferred Stock at a purchase price of 100% of the liquidation preference
thereof, plus accumulated and unpaid dividends.Under the terms of our Series B preferred stock, we are required to pay dividends at a rate of
10 3/4% per year of the $1,000 liquidation preference per share of Series B preferred stock.
From October 30, 2003 to October 15, 2008, we had the option to pay these dividends in either
cash or additional shares of Series B preferred stock. After October 15, 2008, we are required
to pay the dividends on our Series B preferred stock in cash. Our ability to make the
dividend payments described above will depend upon our future operating performance and on
economic, financial, regulatory and other factors, many of which may be beyond our control.During the fiscal years ended December 31, 2008, 2005, 2004 and 2003, we increased the
carrying amount of the Series B Preferred Stock by approximately $2.4 million, $5.0 million,
$8.5 million, and $1.4 million, respectively, for stock dividends, which were accreted using
the effective interest method. In addition, for the fiscal years ended December 31, 2008 and
2007, we paid cash dividends of approximately $7.3 million and $9.7 million and as of December
31, 2008 and 2007, we had accrued dividends of approximately $2.1 million and $2.0 million,
which were paid in cash in January 2009 and 2008, respectively.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (11)
    
    Stockholders Equity
 (a)
    
    Series C Convertible Preferred StockOn December 23, 2004, in connection with the closing of the merger agreement, dated
October 5, 2004, with CBS Radio (formerly known as Infinity Media Corporation, CBS
Radio), a division of CBS Corporation, Infinity Broadcasting Corporation of San Francisco
(Infinity SF) and SBS Bay Area, LLC, a wholly-owned subsidiary of SBS (SBS Bay Area), we
issued to CBS Radio (i) an aggregate of 380,000 shares of Series C convertible preferred
stock, $0.01 par value per share (the Series C preferred stock), each of which is
convertible at the option of the holder into twenty fully paid and non-assessable shares
of our Class A common stock, $0.0001 par value per share (the Class A common stock); and
(ii) a warrant to purchase an additional 190,000 shares of Series C preferred stock,
which was exercisable until December 23, 2008, at an exercise price of $300.00 per share
(the Warrant). On December 23, 2008, the Warrant expired.Under the terms of the certificate of designation governing the Series C preferred stock,
the holder of the Series C preferred stock has the right to convert each share into
twenty fully paid and non-assessable shares of our Class A common stock. The shares of
Series C preferred stock issued at the closing of the merger are convertible into
7,600,000 shares of our Class A common stock, subject to adjustment.In connection with the closing of the merger transaction, we also entered into a
registration rights agreement with CBS Radio, pursuant to which, CBS Radio may instruct
us to file up to three registration statements, on a best efforts basis, with the SEC
providing for the registration for resale of the Class A common stock issuable upon
conversion of the Series C preferred stock.We are required to pay holders of Series C preferred stock dividends on parity with our
Class A common stock and Class B common stock, $0.0001 par value per share (the Class B
common stock), and each other class or series of our capital stock, if created, after
December 23, 2004.(b)
    
    Class A and B Common StockThe rights of the holders of shares of Class A common stock and Class B common stock are
identical, except for voting rights and conversion provisions. The Class A common stock
is entitled to one vote per share and the Class B common stock is entitled to ten votes
per share. The Class B common stock is convertible to Class A common stock on a
share-for-share basis at the option of the holder at any time, or automatically upon the
transfer to a person or entity which is not a permitted transferee. Holders of each class
of common stock are entitled to receive dividends and, upon liquidation or dissolution,
are entitled to receive all assets available for distribution to stockholders. The
holders of each class have no preemptive or other subscription rights and there are no
redemption or sinking fund provisions with respect to such shares. Each class of common
stock is subordinate to our 10 3/4% Series B cumulative exchangeable redeemable preferred
stock, par value $0.01 per share and liquidation preference of $1,000 per share (the
Series B preferred stock) and on parity with the Series C preferred stock with respect to
dividend rights and rights upon liquidation, winding up and dissolution of SBS.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (c)
    
    Share-Based Compensation Plans2006 Omnibus Equity Compensation PlanIn July 2006, we adopted an omnibus equity compensation plan (the Omnibus Plan) in which
grants can be made to participants in any of the following forms: (i) incentive stock
options, (ii) non-qualified stock options, (iii) stock appreciation rights, (iv) stock
units, (v) stock awards, (vi) dividend equivalents, and (vii) other stock-based awards.
The Omnibus Plan authorizes up to 3,500,000 shares of our Class A common stock for
issuance, subject to adjustment in certain circumstances. The Omnibus Plan provides that
the maximum aggregate number of shares of Class A common stock that may be granted, other
than dividend equivalents, to any individual during any calendar year is 1,000,000
shares, subject to adjustments. In addition, the maximum aggregate number of shares of
Class A common stock with respect to grants of stock units, stock awards and other
stock-based awards that may be granted to any individual during a calendar year is also
1,000,000 shares, subject to adjustments.1999 Stock Option PlansIn September 1999, we adopted an employee incentive stock option plan (the 1999 ISO Plan)
and a non-employee director stock option plan (the 1999 NQ Plan, and together with the
1999 ISO Plan, the 1999 Stock Option Plans). Options granted under the 1999 ISO Plan will
vest according to terms to be determined by the compensation committee of our board of
directors, and will have a contractual life of up to 10 years from the date of grant.
Options granted under the 1999 NQ Plan will vest 20% upon grant and 20% each year for the
first four years from the date of grant. All options granted under the 1999 ISO Plan and
the 1999 NQ Plan vest immediately upon a change in control of SBS, as defined therein. A
total of 3,000,000 shares and 300,000 shares of Class A common stock were reserved for
issuance under the 1999 ISO Plan and the 1999 NQ Plan, respectively. Additionally, on
November 2, 1999, we granted a stock option to purchase 250,000 shares of Class A common
stock to a former director. This option vested immediately, and expires 10 years from the
date of grant.Accounting for Share-Based Plans under SFAS No. 123(R),Share-Based PaymentWe account for our share-based compensation plans in accordance with SFAS No. 123(R),
Share-Based Payment(SFAS No. 123(R)). Accordingly, we recorded stock-based compensation
expense for awards granted prior to, but not yet vested, as of January 1, 2006, as if the
fair value method required for pro forma disclosure under SFAS No. 123 Accounting for
Stock-Based Compensation, were in effect for expense recognition purposes, adjusted for
estimated forfeitures. For stock-based awards granted after January 1, 2006, we have
recognized compensation expense based on the estimated grant date fair value method using
the Black-Scholes option pricing model. For these awards, we have recognized compensation
expense using a straight-line amortization method (prorated). As SFAS No. 123(R) requires
that stock-based compensation expense be based on awards that are ultimately expected to
vest, stock-based compensation for the fiscal years ended December 31, 2008 and 2007 were
reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary
termination behaviors, as well as trends of actual option forfeitures. For the fiscal
years ended December 31, 2008 and 2007, stock-based compensation totaled $0.7 million and
$1.6 million, respectively.As of December 31, 2008, there was $0.4 million of total unrecognized compensation cost
related to nonvested stock-based compensation arrangements granted under all of our
plans. The cost is expected to be recognized over a weighted average period of
approximately 11/2 years.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 SFAS No. 123(R) requires cash flows resulting from excess tax benefits to be classified
as a part of cash flows from financing activities. Excess tax benefits are realized tax
benefits related to tax deductions for exercised options in excess of the deferred tax
asset attributable to stock compensation costs for such options.During the fiscal years ended December 31, 2008 and 2007, no stock options were
exercised; therefore, no cash payments were received. In addition, during the fiscal
years ended December 31, 2008 and 2007, we did not recognize a tax benefit on our
stock-based compensation expense due to our valuation allowance on substantially all of
our deferred tax assets.Valuation AssumptionsWe calculated the fair value of each option award on the date of grant using the
Black-Scholes option pricing model. The per share weighted average fair value of stock
options granted to employees during the fiscal years ended December 31, 2008 and 2007
were $0.21 and $1.66, respectively. The following weighted average assumptions were used
for each respective period:
 2008
    
    
    2007Expected term
    
    7 years
    
    7 yearsDividends to common stockholders
    
    None
    
    NoneRisk-free interest rate
    
    
    3.27
    %
    
    
    4.25
    %Expected volatility
    
    
    59
    %
    
    
    59
    %
 Our computation of expected volatility for the fiscal years ended December 31, 2008 and
2007 was based on a combination of historical and market-based implied volatility from
traded options on our stock. Our computation of expected term in 2008 and 2007 was
determined based on historical experience of similar awards, giving consideration to the
contractual terms of the stock-based awards, vesting schedules and expectations of future
employee behavior. The information provided above results from the behavior patterns of
separate groups of employees that have similar historical experience. The interest rate
for periods within the contractual life of the award is based on the U.S. Treasury yield
curve in effect at the time of grant.Stock Options ActivityStock options have only been granted to employees or directors under our 1999 Stock
Option Plans. Our stock options have various vesting schedules and are subject to the
employees continuing service to SBS. We recognize compensation expense based on the
estimated grant date fair value using the Black-Scholes option pricing model and
recognize the compensation expense using a straight-line amortization method. When
estimating forfeitures, we consider voluntary termination behaviors, as well as trends of
actual option forfeitures. Ultimately, our stock-based compensation expense is based on
awards that vest. Our stock-based compensation has been reduced for estimated
forfeitures.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 A summary of the status of our stock options, as of December 31, 2008 and 2007, and
changes during the fiscal years ended December 31, 2008 and 2007, is presented below (in
thousands, except per share data and contractual life):
 WeightedWeighted
    
    
    
    
    
    
    averageaverage
    
    
    Aggregate
    
    
    remainingexercise
    
    
    intrinsic
    
    
    contractualShares
    
    
    price
    
    
    value
    
    
    life (years)Outstanding at December 31, 2006
    
    
    3,029
    
    
    
    11.33Granted
    
    
    175
    
    
    
    2.60Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (141
    )
    
    
    10.55Outstanding at December 31, 2007
    
    
    3,063
    
    
    
    10.86Granted
    
    
    225
    
    
    
    0.34Exercised
    
    
    Forfeited
    
    
    (541
    )
    
    
    10.01Outstanding at December 31, 2008
    
    
    2,747
    
    
    $
    10.17
    
    
    $
    
    
    
    
    4.4Excercisable at December 31, 2008
    
    
    2,590
    
    
    $
    10.63
    
    
    $
    
    
    
    
    4.1
 During the fiscal years 2008 and 2007, no stock options were exercised.The following table summarizes information about our stock options outstanding and
exercisable at December 31, 2008 (in thousands, except per share data and contractual
life):
 WeightedWeighted
    
    
    average
    
    
    
    
    
    
    Weightedaverage
    
    
    remaining
    
    
    
    
    
    
    averageVested
    
    
    Unvested
    
    
    exercise
    
    
    contractual
    
    
    Options
    
    
    exerciseRange of exercise prices
    
    options
    
    
    options
    
    
    price
    
    
    life (years)
    
    
    exercisable
    
    
    price$0.204.99
    
    
    470
    
    
    
    130
    
    
    $
    2.49
    
    
    
    7.8
    
    
    
    470
    
    
    $
    2.845.009.99
    
    
    1,222
    
    
    
    17
    
    
    
    8.20
    
    
    
    4.5
    
    
    
    1,222
    
    
    
    8.2110.0014.99
    
    
    193
    
    
    
    10
    
    
    
    10.77
    
    
    
    5.6
    
    
    
    193
    
    
    
    10.7715.0020.00
    
    
    705
    
    
    
    
    
    
    
    20.00
    
    
    
    0.8
    
    
    
    705
    
    
    
    20.002,590
    
    
    
    157
    
    
    
    10.17
    
    
    
    4.4
    
    
    
    2,590
    
    
    $
    10.63
 Nonvested shares (restricted stock) are awarded to employees under our Omnibus Plan. In
general, nonvested shares vest over two to five years and are subject to the employees
continuing service to SBS. The cost of nonvested shares is determined using the fair
value of our common stock on the date of grant. The compensation expense is recognized
over the vesting period.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 A summary of the status of our nonvested shares, as of December 31, 2008 and 2007, and
changes during the fiscal years ended December 31, 2008 and 2007, is presented below (in
thousands, except per share data):
 Weightedaveragegrant-date
    
    
    Aggregatefair value
    
    
    intrinsicShares
    
    
    (per share)
    
    
    valueNonvested at December 31, 2006
    
    
    
    
    
    $
    Awarded
    
    
    77
    
    
    
    4.19Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Nonvested at December 31, 2007
    
    
    77
    
    
    $
    4.19Awarded
    
    
    215
    
    
    
    0.92Vested
    
    
    (67
    )
    
    
    1.87Forfeited
    
    
    
    
    
    
    Nonvested at December 31, 2008
    
    
    225
    
    
    $
    1.75
    
    
    $
    9.2
 (12)
    
    Commitments
 (a)
    
    LeasesWe have a building under a capital lease agreement, which is partially owned by our Chief
Executive Officer, expiring in June 2012. Also, we have furniture & fixtures under
various capital leases that expire at various dates through 2011. The amounts capitalized
under these lease agreements and included in property and equipment at December 31, 2008
and 2007 are as follows (in thousands):
 2008
    
    
    2007Building under capital lease
    
    $
    1,230
    
    
    
    1,230Various furniture and fixtures under capital leases
    
    
    178
    
    
    
    1781,408
    
    
    
    1,408Less accumulated depreciation
    
    
    (1,103
    )
    
    
    (1,001
    )$
    305
    
    
    
    407
 We lease office space and facilities and certain equipment under operating leases, some
of which are with related parties (see note 15), that expire at various dates through
2082. Certain leases provide for base rental payments plus escalation charges for real
estate taxes and operating expenses.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 At December 31, 2008, future minimum lease payments under such leases are as follows (in
thousands):
 Capital
    
    
    Operatinglease
    
    
    leaseFiscal year ending December 31:2009
    
    $
    209
    
    
    
    4,2802010
    
    
    209
    
    
    
    4,2042011
    
    
    169
    
    
    
    4,1432012
    
    
    53
    
    
    
    4,1842013
    
    
    
    
    
    
    4,021Thereafter
    
    
    
    
    
    
    11,276Total minimum lease payments
    
    
    640
    
    
    $
    32,108Less executory costs
    
    
    (164
    )476Less interest
    
    
    (49
    )Present value of minimum lease payments
    
    $
    427
 In connection with an operating lease, we have a standby letter of credit of $0.1
million, which was required under the lease terms.Total rent expense for the fiscal years ended December 31, 2008 and 2007 amounted to $6.7
million and $7.6 million, respectively.We have agreements to sublease our radio frequencies and portions of our tower sites and
buildings. Such agreements provide for payments through 2016. The future minimum rental
income to be received under these agreements as of December 31, 2008 is as follows (in
thousands):
 Fiscal year ending December 31:2009
    
    $
    3742010
    
    
    4812011
    
    
    3822012
    
    
    3412013
    
    
    349Thereafter
    
    
    1,102$
    3,029
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (b)
    
    Employment and Service AgreementsAt December 31, 2008, we are committed to employment and service contracts for certain
executives, on-air talent, general managers, and others expiring through 2013. Future
payments under such contracts are as follows (in thousands):
 Fiscal year ending December 31:2009
    
    $
    13,0692010
    
    
    8,3902011
    
    
    4,4852012
    
    
    3,1642013
    
    
    126Thereafter
    
    
    $
    29,234
 Included in the future payments schedule is our Chief Executive Officers (CEO)
employment agreement expiring on December 31, 2009. Our CEOs annual base salary is $1.25
million, and he is eligible to receive a cash bonus equal to 7.5% of the dollar increase
in same station operating income, as defined, for any fiscal year, including acquired
stations on a pro forma basis.Under the terms of the agreement, the board of directors, in its sole discretion, may
increase the CEOs annual base salary and cash bonus. For the fiscal year ended December
31, 2007, our CEO was awarded a cash bonus totaling $0.7 million, which was included in
accounts payable and accrued expenses in the accompanying consolidated balance sheets as
of December 31, 2007.Certain employees contracts provide for additional amounts to be paid if station ratings
or cash flow targets are met.(c)
    
    401(k)Profit-Sharing PlanIn September 1999, we adopted a tax-qualified employee savings and retirement plan (the
401(k) Plan). We can make matching and/or profit sharing contributions to the 401(k) Plan
on behalf of all participants at our sole discretion. All employees over the age of 21
that have completed at least 500 hours of service are eligible to participate in the
401(k) Plan. To date, we have not made contributions to this plan.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (d)
    
    Other CommitmentsAt December 31, 2008, we have commitments to vendors that provide us with goods or
services. These commitments included services for rating services, programming contracts,
software contracts and others. Future payments under such commitments are as follows (in
thousands):
 Fiscal year ending December 31:2009
    
    $
    7,9112010
    
    
    6,8552011
    
    
    6,4982012
    
    
    6,8702013
    
    
    672Thereafter
    
    
    $
    28,806
 (13)
    
    Income TaxesTotal income taxes for the years ended December 31, 2008 and 2007 were allocated as follows
(in thousands):
 2008
    
    
    2007(Loss) income from continuing operations
    
    $
    (101,486
    )
    
    
    16,661Stockholders equity, for stock-based
compensation expense for financial
reporting purposes in excess of amounts
recognized for tax purposes
    
    
    
    
    
    
    Stockholders equity, for net unrealized gain
(loss) on derivative instruments
    
    
    
    
    
    
    Stockholders equity, for adoption of FIN 48
    
    
    
    
    
    
    $
    (101,486
    )
    
    
    16,661
 For the years ended December 31, 2008 and 2007, (loss) income from continuing operations
before taxes consists of the following (in thousands):
 2008
    
    
    2007U.S. operations
    
    $
    (380,181
    )
    
    
    23,332Foreign operations
    
    
    (50,028
    )
    
    
    (5,690
    )$
    (430,209
    )
    
    
    17,642
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 The components of the provision for income tax expense included in the consolidated statements
of operations are as follows for the fiscal years ended December 31, 2008 and 2007 (in
thousands):
 2008
    
    
    2007Current:Federal
    
    $
    
    
    
    
    (10
    )State
    
    
    13
    
    
    
    30Foreign
    
    
    567
    
    
    
    175580
    
    
    
    195Deferred:Federal
    
    
    (77,676
    )
    
    
    14,160State
    
    
    (13,784
    )
    
    
    2,306Foreign
    
    
    (10,606
    )
    
    
    (102,066
    )
    
    
    16,466Total income tax (benefit) expense
    
    $
    (101,486
    )
    
    
    16,661
 For fiscal year ended December 31, 2008 and 2007, no net operating loss carry-forwards were
utilized.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 The tax effect of temporary differences and carry-forwards that give rise to deferred tax
assets and deferred tax liabilities at December 31, 2008 and 2007 are as follows (in
thousands):
 2008
    
    
    2007Deferred tax assets:Federal and state net operating loss carryforwards
    
    $
    74,296
    
    
    
    56,479Foreign net operating loss carryforwards
    
    
    13,902
    
    
    
    13,389FCC licenses
    
    
    52,651
    
    
    
    Allowance for doubtful accounts
    
    
    1,180
    
    
    
    2,056Unearned revenue
    
    
    224
    
    
    
    230AMT credit
    
    
    1,186
    
    
    
    1,186Derivatives and hedging instruments
    
    
    5,121
    
    
    
    1,470Fixed assets
    
    
    39
    
    
    
    Other
    
    
    3,714
    
    
    
    2,678152,313
    
    
    
    77,488Less valuation allowance
    
    
    (151,127
    )
    
    
    (75,693
    )Deferred tax asset
    
    
    1,186
    
    
    
    1,795Deferred tax liabilities:Fixed assets
    
    
    
    
    
    
    350Amortization of FCC licenses
    
    
    69,268
    
    
    
    171,334Interest accretion and other
    
    
    
    
    
    
    259Deferred tax liability
    
    
    69,268
    
    
    
    171,943Net deferred tax liability
    
    $
    68,082
    
    
    
    170,148
 Total income tax expense from continuing operations differed from the amounts computed by
applying the U.S. federal income tax rate of 35% for the fiscal years ended December 31, 2008
and 2007, as a result of the following:
 2008
    
    
    2007Computed expected tax expense (benefit)
    
    
    (35.0
    )%
    
    
    35.0
    %State income taxes, net of federal benefit
    
    
    (5.3
    )
    
    
    8.2Foreign taxes
    
    
    (0.3
    )
    
    
    (0.3
    )Current year change in valuation allowance
    
    
    17.1
    
    
    
    49.8Nondeductible expenses
    
    
    0.1
    
    
    
    2.9Change in effective rate
    
    
    (0.1
    )
    
    
    (3.0
    )Other
    
    
    (0.1
    )
    
    
    1.8(23.6
    )%
    
    
    94.4
    %
 82




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 The valuation allowance for deferred tax assets increased by $75.4 million during the fiscal
year ended December 31, 2008 and increased by $13.4 million during the fiscal year ended
December 31, 2007. As a result of adopting SFAS No.
142 on December 31, 2001, amortization of intangible assets ceased for financial statement
purposes. However, the impairment of FCC broadcasting licenses during 2008 resulted in the
reversal of a significant portion of the companys deferred tax liabilities relating to those
intangible assets. (See Note 3)In assessing the realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. If the realization of deferred tax
assets in the future is considered more likely than not, an adjustment to the deferred tax
assets would increase net income in the period such determination is made.Based upon the level of historical taxable income and projections for future taxable income
over the periods which the deferred tax assets are deductible, at this time, management
believes it is more likely than not that we will not realize the benefits of the majority of
these deductible differences. As a result, we have established and maintained a valuation
allowance for that portion of the deferred tax assets we believe will not be realized.At December 31, 2008, we have federal and state net operating loss carry-forwards of
approximately $181 million and $155.9 million, respectively. These net operating loss
carry-forwards are available to offset future taxable income and expire from the years 2009
through 2028.In addition, at December 31, 2008, we have foreign net operating loss carry-forwards of
approximately $35.6 million available to offset future taxable income expiring from the years
2009 through 2015.The U.S. Federal jurisdiction, Florida, New York, California, Illinois and Puerto Rico are the
major tax jurisdictions where we file income tax returns. The tax years that remain subject to
assessment of additional liabilities by the federal, state, and local tax authorities are 2005
through 2008. The tax years that remain subject to assessment of additional liabilities by the
Puerto Rico tax authority are 2003 through 2008. We believe that our
tax positions in Puerto Rico comply with applicable tax laws.We have adopted the provisions of FIN 48 on January 1, 2007. No liability for unrecognized tax
benefits was recorded as a result of implementing the Interpretation. For the years ended
December 31, 2008 and 2007, we did not have any unrecognized tax benefits as a result of tax
positions taken during a prior period or during the current period. No interest or penalties
have been recorded as a result of tax uncertainties. Our evaluation was performed for the tax
years ended December 31, 2003 through December 31, 2008; the tax years which remain subject to
examination by tax jurisdictions as of December 31, 2008.
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (14)
    
    Contingencies
 (a)
    
    Environmental MattersAs the owner, lessee or operator of various real properties and facilities, we are
subject to various federal, state and local environmental laws and regulations.
Historically, compliance with these laws and regulations has not had a material adverse
effect on our business. We cannot assure you, however, that compliance with existing or
new environmental laws and regulations will not require us to make significant
expenditures of funds.On March 19, 2002, the Environmental Quality Board, Mayagüez, Puerto Rico Regional
Office, or EQB, inspected our transmitter site in Maricao, Puerto Rico. Based on the
inspection, EQB issued a letter to us on March 26, 2002 noting the following potential
violations: (1) alleged violation of EQBs Regulation for the Control of Underground
Injection through construction and operation of a septic tank (for sanitary use only) at
each of the two antenna towers without the required permits; (2) alleged violation of
EQBs Regulation for the Control of Atmospheric Pollution through construction and
operation of an emergency generator of more than 10hp at each transmitter tower without
the required permits; and (3) alleged failure to show upon request an EQB approved
emergency plan detailing preventative measures and post-event steps that we will take in
the event of an oil spill. We received the emergency plan approval and the emergency
generator permit approval on April 30, 2003 and August 14, 2003, respectively. To date,
no penalties or other sanctions have been imposed against us relating to these matters.
We do not have sufficient information to assess our potential exposure to liability, if
any, and no amounts were accrued in the consolidated financial statements related to this
contingency.(b)
    
    FCC Licenses MattersThe broadcasting industry is subject to extensive regulation by the FCC under the
Communications Act of 1996. We are required to obtain licenses from the FCC to operate
our stations. Licenses are normally granted for a term of eight years and are renewable.
We have timely filed license renewal applications for all of our radio stations, however,
certain licenses were not renewed prior to their expiration dates. Based on having filed
timely renewal applications, we continue to operate the radio stations operating under
these licenses and anticipate that they will be renewed.
 (15)
    
    Related-Party TransactionsOur corporate headquarters are located in office space owned by Irradio Holdings Ltd., a
Florida limited partnership, for which the general partner is Irradio Investments, Inc., a
Florida subchapter S corporation, wholly owned by our Chief Executive Officer. Since November
1, 2000, we have leased our office space under a ten year lease, with the right to renew for
two consecutive five year terms (as amended, the Lease).On March 7, 2006, we entered into a third amendment to the Lease providing for the expansion
of our office space at our corporate headquarters. We previously entered into a second
amendment to the Lease, effective as of December 1, 2004, which extended the term of the Lease to April 30, 2015 and further expanded the office
space leased. The additional office space is used for the operation of our Miami sales offices
and corporate offices. We currently pay a monthly rent of approximately $0.2 million for all
the space leased under the Lease.We also have a building under a capital lease agreement, which is partially owned by our Chief
Executive Officer (see note 12(a)). The building lease expires in 2012 and calls for an annual
base rent of approximately $0.1 million.
 84




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 On January 1, 2008, we entered into a local marketing agreement with South Broadcasting
System, Inc., a company owned by our late Chairman Emeritus. Pursuant to the local marketing
agreement, we are permitted to broadcast our Mexican Regional programming on radio station
106.3 FM (the LMA Station). We are required to pay the operating costs of the LMA Station and
in exchange we retain all revenues from the sale of the advertising within the programming we
provide. Under the terms of the local marketing agreement, we have the right of first
negotiation and the right of first refusal to match a competing offer. However, after the
first anniversary of the effective date, if we do not agree to match the terms of the
competing offer within the ten (10) business day period or fail to notify South Broadcasting
of our intent to match the competing offer, then South Broadcasting has the right to accept
such offer, provided South Broadcasting pays us the early termination fee equal to the lesser
of 5% of the aggregate purchase price of the LMA Station or $1.0 million. The local marketing
agreement terminated on its terms on December 31, 2008, which we continue to operate on a
month to month basis. The Company is evaluating the renewal of the agreement.During the fiscal year ended December 31, 2007, one of our members of the board of directors
was special counsel to a law firm that provides legal services to us, for which we paid the
law firm approximately $3.1 million. We had an outstanding
liability included in accounts payable
and accrued expenses to the law firm for approximately $0.6 million as of December 31, 2007.
In addition, effective January 1, 2008, pursuant to a consulting agreement dated January 31,
2008, the retired partner served as our business consultant. The term of the agreement was for
one year and was not renewed. Under the terms of that agreement, he was paid a retainer of
$0.3 million for advising us with respect to various business matters.(16)
    
    LitigationFrom time to time we are involved in various routine legal and administrative proceedings and
litigation incidental to the conduct of our business, such as contractual matters and
employee-related matters. In the opinion of management, such litigation is not likely to have
a material adverse effect on our business, operating results or financial condition.
 (a)
    
    Wolf, et al., LitigationOn November 28, 2001, a complaint was filed against us in the United States District
Court for the Southern District of New York (the Southern District of New York) and was
amended on April 19, 2002. The amended complaint alleges that the named plaintiff,
Mitchell Wolf, purchased shares of our Class A common stock pursuant to the October 27,
1999, prospectus and registration statement relating to our initial public offering which
closed on November 2, 1999 (the IPO). The complaint was brought on behalf of Mr. Wolf and
an alleged class of similarly situated purchasers against us, eight underwriters and/or
their successors-in-interest who led or otherwise participated in our IPO, two members of
our senior management team, one of whom is our Chairman of the Board of Directors, and an
additional director, referred to collectively as the individual defendants. The complaint
was never served upon the individual defendants.This case is one of more than 300 similar cases brought by similar counsel against more
than 300 issuers, 40 underwriters and 1,000 individual defendants alleging, in general,
violations of federal securities laws in connection with initial public offerings, in
particular, failing to disclose that the underwriters allegedly solicited and received
additional, excessive and undisclosed commissions from certain investors in exchange
for which they allocated to those investors material portions of the restricted shares
issued in connection with each offering. All of these cases, including the one involving
us, have been assigned for consolidated pretrial purposes to one judge of the Southern
District of New York. The issuer defendants in the consolidated cases (collectively, the
Issuer Defendants) filed motions to dismiss the consolidated cases. These motions to
dismiss covered issues common among all Issuer Defendants and issues common among all
underwriter defendants (collectively, the Underwriter Defendants) in the consolidated
cases. As a result of these motions, the Individual Defendants were dismissed from one
of the claims against them, specifically the Section 10b-5 claim. On September 21, 2007,
Kaye Scholer LLP, on behalf of the individual defendants, executed a tolling agreement
with plaintiffs providing for the dismissal without prejudice of all claims against the
individual defendants upon the provision to plaintiffs of documentation showing that SBS
has entity coverage for the period in question. Documentation of such coverage was
subsequently provided to plaintiffs on December 19, 2007.
 85




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 On August 31, 2005, the Southern District of New York issued an order of preliminary
approval of a settlement proposal among the investors in the plaintiff class, the issuer
defendants (including us) and the issuer defendants insurance carriers (the Issuers
Settlement). The principal components of the Issuers Settlement were: 1) a release of
all claims against the issuer defendants and their directors, officers and certain other
related parties arising out of the alleged wrongful conduct in the amended complaint; 2)
the assignment to the plaintiffs of certain of the issuer defendants potential claims
against the Underwriters; and 3) a guarantee by the insurers to the plaintiffs of the
difference between $1.0 billion and any lesser amount recovered by the plaintiffs from
the Underwriter Defendants. The payments were to be charged to each issuer defendants
insurance policy on a pro rata basis.On October 13, 2004, the Southern District of New York granted plaintiffs motion for
class certification in six focus cases out of the more than 300 consolidated class
actions, but on December 5, 2006, the United States Court of Appeals for the Second
Circuit (the Second Circuit) reversed the order, holding that plaintiffs could not
satisfy the predominance requirement for a Federal Rule of Civil Procedure 23(b)(3) class
action. On June 25, 2007, in light of the Second Circuits reversal of the class
certification order and its subsequent denial of plaintiffs petition for a rehearing or
rehearing en banc, the Southern District of New York entered a stipulation between
plaintiffs and the Issuer Defendants, terminating the proposed Issuers Settlement which
the Southern District of New York had preliminarily approved on August 31, 2005.On September 27, 2007, plaintiffs filed a renewed motion for class certification with
respect to the six focus cases, based on newly proposed class definitions. On October
10, 2008, at plaintiffs request, the Southern District of New York ordered the
withdrawal without prejudice of plaintiffs renewed motion, which had been fully briefed
and was sub judice.On August 14, 2007, plaintiffs filed amended complaints in the six focus cases and
amended master allegations in the consolidated actions. On November 13, 2007, the
Underwriter Defendants and Issuer Defendants moved to dismiss the amended complaints in
the six focus cases. On March 26, 2008, the Southern District of New York granted in
part the motion as to a subset of plaintiffs Section 11 claims, but denied the motion as
to plaintiffs other claims. We are not named in any of the six focus cases.On January 7, 2008, the Underwriter Defendants filed a motion (in which the issuer
defendants joined) to strike class allegations in 26 of the consolidated cases, including
the case against us, on the ground that plaintiffs lacked a putative class representative
in those cases at the time of their May 30, 2007 oral motion.On May 13, 2008, the Southern District of New York issued an order granting the motion in
part and striking certain of the class allegations relating to the Section 10b-5 claims
in 8 of the 26 actions, including the action
against us. The order also requires plaintiffs to make certain disclosures with respect
to the putative class representatives in the remaining 18 actions. Once the disclosures
are filed, Defendants may seek clarification of the Southern District of New Yorks May
13, 2008 order with respect to the status of the remaining 10b-5-related class
allegations in the other 8 actions, including our action, as well as the status of the
Section 11-related class allegations. Based on the current developments, we believe that
it is unlikely that this litigation will result in any material liability to us that
would not be covered by our existing insurance.
 86




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (17)
    
    New Accounting PronouncementsIn December 2007, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 141R, Business Combinations(SFAS No. 141R) and SFAS
No. 160, Non-controlling Interests in Consolidated Financial Statements  an amendment to ARB
No. 51(SFAS No. 160). SFAS No. 141R and SFAS No. 160 require most identifiable assets,
liabilities, non-controlling interests, and goodwill acquired in a business combination to be
recorded at full fair value and require noncontrolling interests (previously referred to as
minority interests) to be reported as a component of equity, which changes the accounting for
transactions with non-controlling interest holders. Both SFAS No. 141R and SFAS No. 160 are
effective for periods beginning on or after December 15, 2008 or fiscal year 2009 for us. SFAS
No. 141R will be applied to business combinations occurring after the effective date. SFAS No.
160 will be applied prospectively to all non-controlling interests, including any that arose
before the effective date. We are currently evaluating the impact of adopting SFAS No. 141R
and SFAS No. 160 on our results of operations and financial position.In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and
Hedging Activities(SFAS No. 161), which amends SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities(SFAS No. 133). SFAS No. 161 requires companies with
derivative instruments to disclose information that should enable financial statement users to
understand how and why a company uses derivative instruments, how derivative instruments and
related hedged items are accounted for under SFAS No. 133, and how derivative instruments and
related hedged items affect a companys financial position, financial performance, and cash
flows. The required disclosures include the fair value of derivative instruments and their
gains or losses in tabular format, information about credit risk-related contingent features
in derivative agreements, counterparty credit risk, and a companys strategies and objectives
for using derivative instruments. SFAS No. 161 expands the current disclosure framework in
SFAS No. 133 and is effective prospectively for periods beginning on or after November 15,
2008 or fiscal year 2009 for us.
 87




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 (18)
    
    Segment DataThe following summary table presents separate financial data for each of our operating
segments. The accounting polices applied to determine the segment information are generally
the same as those described in the summary of significant accounting polices (see note 2(t)).
We evaluate the performance of our operating segments based on separate financial data for
each operating segment as provided below (in thousands):
 Fiscal Years Ended2008
    
    
    2007Net revenue:Radio
    
    $
    145,421
    
    
    
    169,573Television
    
    
    18,296
    
    
    
    10,179Consolidated
    
    $
    163,717
    
    
    
    179,752Engineering and programming expenses:Radio
    
    $
    37,744
    
    
    
    35,896Television
    
    
    23,268
    
    
    
    14,687Consolidated
    
    $
    61,012
    
    
    
    50,583Selling, general, and administrative:Radio
    
    $
    59,645
    
    
    
    67,097Television
    
    
    11,075
    
    
    
    7,601Consolidated
    
    $
    70,720
    
    
    
    74,698Corporate expenses
    
    $
    12,806
    
    
    
    14,967Depreciation and amortization:Radio
    
    $
    3,213
    
    
    
    2,897Television
    
    
    1,595
    
    
    
    608Corporate
    
    
    1,453
    
    
    
    1,237Consolidated
    
    $
    6,261
    
    
    
    4,742(Gain) loss on sale of assets, net:Radio
    
    $
    (3
    )
    
    
    49Television
    
    
    (10
    )
    
    
    Corporate
    
    
    
    
    
    
    Consolidated
    
    $
    (13
    )
    
    
    49Impairment of FCC broadcasting licenses and restructuring costs:Radio
    
    $
    402,243
    
    
    
    Television
    
    
    18,710
    
    
    
    Corporate
    
    
    163
    
    
    
    Consolidated
    
    $
    421,116
    
    
    
    Operating (loss) income:Radio
    
    $
    (357,421
    )
    
    
    63,634Television
    
    
    (36,342
    )
    
    
    (12,717
    )Corporate
    
    
    (14,422
    )
    
    
    (16,204
    )Consolidated
    
    $
    (408,185
    )
    
    
    34,713Capital expenditures:Radio
    
    $
    2,779
    
    
    
    2,080Television
    
    
    12,871
    
    
    
    5,287Corporate
    
    
    447
    
    
    
    3,147Consolidated
    
    $
    16,097
    
    
    
    10,514
 88




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 
 December 312008
    
    
    2007Total assets:Radio
    
    $
    422,827
    
    
    
    862,048Television
    
    
    57,225
    
    
    
    62,462Corporate
    
    
    9,215
    
    
    
    11,619Consolidated
    
    $
    489,267
    
    
    
    936,129
 89




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Balance
    
    
    Charged
    
    
    Charged tobeginning
    
    
    to cost
    
    
    other
    
    
    
    
    
    
    Balance atDescription
    
    of year
    
    
    and expense
    
    
    accounts (1)
    
    
    Deductions (2)
    
    
    end of yearFiscal year ended December 31, 2008:Allowance for doubtful accounts
    
    $
    3,623
    
    
    
    1,191
    
    
    
    
    
    
    
    3,139
    
    
    
    1,675Valuation allowance on
deferred taxes
    
    
    75,693
    
    
    
    73,562
    
    
    
    1,872
    
    
    
    
    
    
    
    151,127Fiscal year ended December 31, 2007:Allowance for doubtful accounts
    
    
    4,383
    
    
    
    1,478
    
    
    
    
    
    
    
    2,238
    
    
    
    3,623Valuation allowance on
deferred taxes
    
    
    62,247
    
    
    
    8,790
    
    
    
    4,656
    
    
    
    
    
    
    
    75,693
 
 (1)
    
    Amounts charged to other comprehensive income related to derivative instruments.(2)
    
    Cash write-offs, net of recoveries.  90




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 (b) Exhibits
  Exhibit number
    
    
    
    Exhibit description3.1
    
    
    
    
    Third Amended and Restated Certificate of Incorporation of Spanish Broadcasting System, Inc. (the
Company), dated September 29, 1999 (incorporated by reference to the Companys 1999 Registration
Statement on Form S-1 (Commission File No. 333-85499) (the 1999 Registration Statement)) (Exhibit A to
this exhibit is incorporated by reference to the Companys Current Report on Form 8-K, dated March 25,
1996 (the 1996 Current Report)).3.2
    
    
    
    
    Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company,
dated September 29, 1999 (incorporated by reference to Exhibit 3.2 of the Companys 1999 Registration
Statement).3.3
    
    
    
    
    Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 of the Companys
1999 Registration Statement).3.4
    
    
    
    
    Certificate of Elimination of 14 1/4% Senior Exchangeable Preferred Stock, Series A of the
Company, dated
October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Companys Quarterly Report on Form
10-Q, dated November 14, 2003 (the 11/14/03 Quarterly Report)).4.1
    
    
    
    
    Article V of the Third Amended and Restated Certificate of Incorporation of the Company, dated September
29, 1999 (incorporated by reference to Exhibit 3.1 of the Companys 1999 Registration Statement).4.3
    
    
    
    
    Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and
Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and
Restrictions of the 10 3/4% Series B Cumulative Exchangeable Redeemable Preferred Stock of Spanish
Broadcasting System, Inc. (incorporated by reference to Exhibit 4.2 of the Companys 11/14/03 Quarterly
Report).4.4
    
    
    
    
    Indenture dated June 29, 1994 among the Company, IBJ Schroder Bank & Trust Company, as Trustee, the
Guarantors named therein and the Purchasers named therein (incorporated by reference to Exhibit 4.1 of
the Companys 1994 Registration Statement on Form S-4 (the 1994 Registration Statement)).4.5
    
    
    
    
    First Supplemental Indenture dated as of March 25, 1996 to the Indenture dated as of June 29, 1994 among
the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated
by reference to the 1996 Current Report).
 91




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description4.6
    
    
    
    
    Second Supplemental Indenture dated as of March 1, 1997 to the Indenture dated as of June 29, 1994 among
the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated
by reference to the 1996 Current Report).4.7
    
    
    
    
    Supplemental Indenture dated as of October 21, 1999 to the Indenture dated as of June 29, 1994 among the
Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by
reference to the Companys 1999 Registration Statement).4.8
    
    
    
    
    Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee,
dated November 2, 1999 (incorporated by reference to the Current Report on Form 8-K dated November 2,
1999 (the 1999 Current Report)).4.9
    
    
    
    
    Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with the Bank of New York as Trustee,
dated June 8, 2001 (incorporated by reference to the Companys Registration Statement on Form S-3, filed
on June 25, 2001 (the 2001 Form S-3)).4.10
    
    
    
    
    Form of stock certificate for the Class A common stock of the Company (incorporated by reference to the
Companys 1999 Registration Statement).4.11
    
    
    
    
    Certificate of Elimination of 14 1/4% of Senior Exchangeable Preferred Stock, Series A of the
Company,
dated October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Companys Quarterly Report on
Form 10-Q filed November 14, 2003).4.12
    
    
    
    
    Certificate of Designation Setting Forth the Voting Power, Preferences and Relative, Participating,
Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the Series C
Convertible Preferred Stock of the Company (Certificate of Designation of Series C Preferred Stock)
(incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K filed on December
27, 2004).4.13
    
    
    
    
    Certificate of Correction to Certificate of Designation of Series C Preferred Stock of the Company dated
January 7, 2005 (incorporated by reference to Exhibit 4.13 of the Companys Annual Report filed on Form
10-K for the fiscal year 2004).10.1
    
    
    
    
    Warrant Agreement dated as of March 15, 1997 among the Company and IBJ Schroder Bank & Trust Company, as
Warrant Agent (incorporated by reference to the 1996 Current Report).10.2*
    
    
    
    
    Common Stock Registration Rights and Stockholders Agreement dated as of June 29, 1994 among the Company
and certain Management Stockholders named therein (incorporated by reference to the 1994 Registration
Statement).10.3*
    
    
    
    
    Amended and Restated Employment Agreement dated as of October 25, 1999, by and between the Company and
Raúl Alarcón, Jr. (incorporated by reference to the Companys 1999 Registration Statement).10.4*
    
    
    
    
    Employment Agreement dated as of October 25, 1999, by and between the Company and Joseph A. García
(incorporated by reference to the Companys 1999 Registration Statement).10.5
    
    
    
    
    Ground Lease dated December 18, 1995 between Louis Viola Company and SBS-NJ (incorporated by reference to
the 1996 Current Report).10.6
    
    
    
    
    Ground Lease dated December 18, 1995 between Frank F. Viola and Estate of Thomas C. Viola and SBS-NJ
(incorporated by reference to the 1996 Current Report).
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.7
    
    
    
    
    Lease and License Agreement dated February 1, 1991 between Empire State Building Company, as landlord,
and SBS-NY, as tenant (incorporated by reference to Exhibit 10.15.1 of the 1994 Registration Statement).10.8
    
    
    
    
    Modification of Lease and License dated June 30, 1992 between Empire State Building Company and SBS-NY
related to WSKQ-FM (incorporated by reference to Exhibit 10.15.2 of the 1994 Registration Statement).10.9
    
    
    
    
    Lease and License Modification and Extension Agreement dated as of June 30, 1992 between Empire State
Building Company, as landlord, and SBS-NY as tenant (incorporated by reference to Exhibit 10.15.3 of the
1994 Registration Statement).10.10
    
    
    
    
    Lease Agreement dated June 1, 1992 among Raúl Alarcón, Sr., Raúl Alarcón, Jr., and SBS-Fla (incorporated
by reference to Exhibit 10.30 of the 1994 Registration Statement).10.11
    
    
    
    
    Agreement of Lease dated as of March 1, 1996 No. WT-174-A119 1067 between The Port Authority of New
Jersey and SBS of Greater New York, Inc. as assignee of Park Radio (incorporated by reference to the 1996
Current Report).10.12
    
    
    
    
    Asset Purchase Agreement dated as of July 2, 1997, by and between Spanish Broadcasting System, Inc. (New
Jersey), Spanish Broadcasting System of California, Inc., Spanish Broadcasting System of Florida, Inc.,
Spanish Broadcasting System, Inc., and One-on-One Sports, Inc. (incorporated by reference to Exhibit
10.62 of the Companys Registration Statement on Form S-4 (Commission File No. 333-26295)).10.13
    
    
    
    
    Amendment No. 1 dated as of September 29, 1997 to the Asset Purchase Agreement dated as of July 2, 1997,
by and between Spanish Broadcasting System, Inc. (New Jersey), Spanish Broadcasting System of California,
Inc., Spanish Broadcasting System of Florida, Inc., Spanish Broadcasting System, Inc., and One-on-One
Sports, Inc. (incorporated by reference to the Companys Registration Statement on Form S-1, dated
January 21, 1999 (Commission File No. 333-29449)).10.14
    
    
    
    
    Extension of lease of a Condominium Unit (Metropolitan Tower Condominium) between Raúl Alarcón, Jr.
(Landlord) and Spanish Broadcasting System, Inc. (Tenant) (incorporated by reference to the Companys
1998 Annual Report on Form 10-K).10.15*
    
    
    
    
    Indemnification Agreement with Raúl Alarcón, Jr. dated as of November 2, 1999 (incorporated by reference
to the 1999 Current Report).10.16
    
    
    
    
    Indemnification Agreement with Jason L. Shrinsky dated as of November 2, 1999 (incorporated by reference
to the 1999 Current Report).10.17*
    
    
    
    
    Spanish Broadcasting System 1999 Stock Option Plan (incorporated by reference to the Companys 1999
Registration Statement).10.18*
    
    
    
    
    Spanish Broadcasting System 1999 Company Stock Option Plan for Nonemployee Directors (incorporated by
reference to the Companys 1999 Registration Statement).10.19
    
    
    
    
    Form of Lock-Up Letter Agreement (incorporated by reference in the Companys 1999 Registration Statement).10.20*
    
    
    
    
    Option Grant not under the Stock Option Plans with Arnold Sheiffer, dated October 27, 1999 (incorporated
by reference to the 1999 Current Report).10.21
    
    
    
    
    Credit Agreement, dated as of July 6, 2000, among Spanish Broadcasting System, Inc., a Delaware
corporation, the several banks and other financial institutions or entities from time to time party to
the Credit Agreement and Lehman Commercial Paper Inc., as administrative agent (incorporated by reference
to Exhibit 10.44 of the Companys Annual Report on Form 10-K for fiscal year 2000 (the 2000 Form 10-K)).
 93




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.22
    
    
    
    
    Guarantee and Collateral Agreement made by Spanish Broadcasting System, Inc. and certain of its
subsidiaries in favor of Lehman Commercial Paper, Inc. as Administrative Agent, dated as of July 6, 2000
(incorporated by reference to Exhibit 10.45 of the Companys 2000 Form 10-K).10.23*
    
    
    
    
    Employment Agreement dated August 31, 2000, between William Tanner and the Company (incorporated by
reference to Exhibit 10.47 of the Companys 2000 Form 10-K).10.24
    
    
    
    
    Deed of Constitution of Mortgage, Cadena Estereotempo, Inc., as Mortgagor, and Banco Bilbao Vizcaya
Puerto Rico, as Mortgagee (incorporated by reference to Exhibit 10.49 of the Companys 2000 Form 10-K).10.25
    
    
    
    
    Lease Agreement by and between the Company and Irradio Holdings, Ltd. made as of December 14, 2000
(incorporated by reference to Exhibit 10.50 of the Companys 2000 Form 10-K).10.26
    
    
    
    
    First Addendum to Lease between the Company and Irradio Holdings, Ltd. as of December 14, 2000
(incorporated by reference to Exhibit 10.51 of the Companys 2000 Form 10-K).10.27
    
    
    
    
    Asset Purchase Agreement dated as of November 2, 2000 by and between International Church of the
FourSquare Gospel and the Company (incorporated by reference to Exhibit 10.1 of the Companys 2000 Form
10-K).10.28
    
    
    
    
    Addendum to Asset Purchase Agreement, dated March 13, 2001, by and between International Church of the
FourSquare Gospel and the Company (incorporated by reference to Exhibit 10.2 of the Companys Quarterly
Report on Form 10-Q filed on May 9, 2001 (5/9/01 Quarterly Report)).10.29
    
    
    
    
    Time Brokerage Agreement, dated March 13, 2001, by and between International Church of the FourSquare
Gospel and the Company (incorporated by reference to Exhibit 10.3 of the Companys 5/9/01 Quarterly
Report).10.30
    
    
    
    
    93.5 Time Brokerage Agreement, dated March 13, 2001, by and between Spanish Broadcasting System
Southwest, Inc. and International Church of the FourSquare Gospel (incorporated by reference to Exhibit
10.4 of the Companys 5/9/01 Quarterly Report).10.31
    
    
    
    
    Radio Network Affiliation Agreement, dated April 5, 2001, between Clear Channel Broadcasting, Inc. and
SBS of San Francisco, Inc. (incorporated by reference to Exhibit 10.5 of the Companys 5/9/01 Quarterly
Report).10.32
    
    
    
    
    First Amendment to Credit Agreement, dated as of March 5, 2001, by and among the Company, the lenders
party to the Credit Agreement dated as of July 6, 2000 and Lehman Commercial Paper, Inc. (incorporated by
reference to Exhibit 10.1 of the Companys 5/9/01 Quarterly Report).10.33
    
    
    
    
    Purchase Agreement dated May 24, 2001 between the Company and Lehman Brothers Inc. with respect to 9 5/8%
Senior Subordinated Notes due 2009 (incorporated by reference to the Companys 2001 Form S-3).10.34
    
    
    
    
    Registration Rights Agreement dated June 8, 2001 between the Company and Lehman Brothers Inc. with
respect to9 5/8% Senior Subordinated Notes due 2009 (incorporated be reference to the Companys 2001
Form S-3).
 94




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.35
    
    
    
    
    Form of Indemnification Agreement with Carl Parmer dated as of August 9, 2001 (incorporated by reference
to Exhibit 10.48 to the Companys Annual Report on Form 10-K filed December 31, 2001).10.36*
    
    
    
    
    Stock Option Agreement dated as of January 15, 2001 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.49 to the Companys Annual Report on Form 10-K filed December
31, 2001).10.37*
    
    
    
    
    Form of Stock Option Agreement dated as of October 29, 2001 between Spanish Broadcasting System, Inc. and
Carl Parmer (incorporated by reference to Exhibit 10.51 to the Companys Annual Report on Form 10-K filed
December 31, 2001).10.38
    
    
    
    
    Amendment dated as of February 8, 2002 to Asset Purchase Agreement dated as of November 2, 2000 by and
between International Church of the FourSquare Gospel and Spanish Broadcasting System, Inc., as amended
by an Addendum dated March 13, 2001 (incorporated by reference to Exhibit 10.1 to the Companys Quarterly
Transition Report on Form 10-Q filed February 13, 2002).10.39
    
    
    
    
    Amendment No. 1 dated as of February 8, 2002 to Time Brokerage Agreement dated as of March 13, 2001 by
and between International Church of the FourSquare Gospel, as Licensee, and Spanish Broadcasting System,
Inc., as Time Broker (incorporated by reference to Exhibit 10.2 to the Companys Quarterly Transition
Report on Form 10-Q filed February 13, 2002).10.40
    
    
    
    
    Amendment No. 1 dated as of February 8, 2002 to the 93.5 Time Brokerage Agreement dated as of March 13,
2001 by and between Spanish Broadcasting System SouthWest, Inc., as Licensee and International Church of
the FourSquare Gospel, as Time Broker (incorporated by reference to Exhibit 10.3 to the Companys
Quarterly Transition Report on Form 10-Q filed February 13, 2002).10.41
    
    
    
    
    Warrant dated February 8, 2002 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed May 2,
2002).10.42*
    
    
    
    
    Stock Option Agreement dated as of January 16, 2002 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed May 2,
2002).10.43
    
    
    
    
    Asset Purchase Agreement dated June 4, 2002 by and among the Company, KTCY Licensing, Inc. and
Entravision  Texas Limited Partnership (incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q filed August 14, 2002).
 95




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.44
    
    
    
    
    Time Brokerage Agreement dated as of June 4, 2002 between KTCY Licensing, Inc. as Licensee and
Entravision Communications Corporation as Programmer (incorporated by reference to Exhibit 10.2 to the
Companys Quarterly Report on Form 10-Q filed August 14, 2002).10.45*
    
    
    
    
    Companys 1999 Stock Option Plan as amended on May 6, 2002 (incorporated by reference to Exhibit 10.3 to
the Companys Quarterly Report on Form 10-Q filed August 14, 2002).10.46*
    
    
    
    
    Companys 1999 Stock Option Plan for Non-Employee Directors as amended on May 6, 2002 (incorporated by
reference to Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q filed August 14, 2002).10.47*
    
    
    
    
    Stock Option Agreement dated as of October 29, 2002 between the Company and Raúl Alarcón, Jr.
(incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q filed November
13, 2002).10.48
    
    
    
    
    Asset Purchase Agreement dated as of December 31, 2002 by and among Spanish Broadcasting System of
Illinois, Inc., Big City Radio, Inc. and Big City Radio-CHI, L.L.C. (incorporated by reference to Exhibit
10.59 to the Companys Annual Report on Form 10-K filed March 31, 2003 (the 2003 Form 10-K)).10.49
    
    
    
    
    Time Brokerage Agreement dated as of December 31, 2002 between Big City Radio-CHI, L.L.C. as Licensee and
Spanish Broadcasting System of Illinois, Inc. as Programmer (incorporated by reference to Exhibit 10.60
to the Companys 2003 Form 10-K).10.50
    
    
    
    
    Guaranty Agreement dated as of December 31, 2002 by the Company in favor of Big City Radio, Inc. and Big
City Radio-CHI, L.L.C. (incorporated by reference to Exhibit 10.61 to the Companys 2003 Form 10-K).10.51
    
    
    
    
    Warrant dated March 31, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.4 of the Companys Quarterly Report on Form 10-Q, dated May 15,
2003 (the 5/15/03 Quarterly Report)).10.52
    
    
    
    
    Warrant dated April 30, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.5 of the Companys 5/15/03 Quarterly Report)10.53
    
    
    
    
    Warrant dated May 31, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q, dated August
13, 2003 (the 8/13/03 Quarterly Report)).
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.54
    
    
    
    
    Warrant dated June 30, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.2 of the Companys 8/13/03 Quarterly Report).10.55
    
    
    
    
    Warrant dated July 31, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.3 of the Companys 8/13/03 Quarterly Report).10.56
    
    
    
    
    Asset Purchase Agreement dated as of September 18, 2003 between Spanish Broadcasting System, Inc. and
Border Media Partners, LLC (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K, dated September 25, 2003).10.57
    
    
    
    
    Asset Purchase Agreement dated as of October 2, 2003 between Spanish Broadcasting System, Inc., Spanish
Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc. and 3 Point Media-San Francisco, LLC
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K, dated October 9,
2003).10.58
    
    
    
    
    Warrant dated August 31, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.1 of the Companys 11/14/03 Quarterly Report).10.59
    
    
    
    
    Warrant dated September 30, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.2 of the Companys 11/14/03 Quarterly Report).10.60
    
    
    
    
    Credit Agreement between the Company and Merrill Lynch, Pierce Fenner & Smith Incorporated, Deutsche Bank
Securities Inc. and Lehman Commercial Paper Inc. dated October 30, 2003 (incorporated by reference to
Exhibit 10.3 of the Companys 11/14/03 Quarterly Report).10.61
    
    
    
    
    Guarantee and Collateral Agreement between the Company and certain of its subsidiaries in favor of Lehman
Commercial Paper Inc. dated October 30, 2003 (incorporated by reference to Exhibit 10.4 of the Companys
11/14/03 Quarterly Report).10.62
    
    
    
    
    Assignment of Leases and Rents by the Company in favor of Lehman Commercial Paper Inc. dated October 30,
2003 (incorporated by reference to Exhibit 10.5 of the Companys 11/14/03 Quarterly Report).10.63
    
    
    
    
    Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by the Company in
favor of Lehman Commercial Paper Inc. dated October 30, 2003 (incorporated by reference to Exhibit 10.6
of the Companys 11/14/03 Quarterly Report).
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.64
    
    
    
    
    Transmission Facilities Lease between the Company and International Church of the FourSquare Gospel,
dated October 30, 2003 (incorporated by reference to Exhibit 10.7 of the Companys 11/14/03 Quarterly
Report).10.65
    
    
    
    
    Purchase Agreement dated October 30, 2003 between the Company and Merrill Lynch, Pierce Fenner & Smith
Incorporated, Deutsche Bank Securities Inc. and Lehman Brothers Inc. with respect to 10 3/4% Series A
Cumulative Exchangeable Redeemable Preferred Stock (incorporated by reference to Exhibit 10.8 of the
Companys 11/14/03 Quarterly Report).10.66*
    
    
    
    
    Registration Rights Agreement dated October 30, 2003 between the Company and Merrill Lynch, Pierce Fenner
& Smith Incorporated, Deutsche Bank Securities Inc. and Lehman Brothers Inc. with respect to 10 3/4% Series
A Cumulative Exchangeable Redeemable Preferred Stock (incorporated by reference to Exhibit 10.9 of the
Companys 11/14/03 Quarterly Report).10.67*
    
    
    
    
    Nonqualified Stock Option Agreement dated as of July 11, 2003 between the Company and Jack Langer
(incorporated by reference to Exhibit 10.74 of the Companys Annual Report on Form 10-K for fiscal year
2004 (the 2004 Form 10-K)).10.68*
    
    
    
    
    Nonqualified Stock Option Agreement dated as of July 11, 2003 between the Company and Dan Mason
(incorporated by reference to Exhibit 10.75 of the Companys 2004 Form 10-K).10.69*
    
    
    
    
    Amended and Restated Employment Agreement dated October 31, 2003 between the Company and Marko Radlovic
(incorporated by reference to Exhibit 10.81 of the Companys 2004 Form 10-K).10.70*
    
    
    
    
    Nonqualified Stock Option Agreement dated October 27, 2003 between the Company and Raúl Alarcón, Jr.
(incorporated by reference to Exhibit 10.78 of the Companys 2004 Form 10-K).10.71*
    
    
    
    
    Nonqualified Stock Option Agreement dated December 10, 2003 between the Company and Marko Radlovic
(incorporated by reference to Exhibit 10.79 of the Companys 2004 Form 10-K).10.72*
    
    
    
    
    Incentive Stock Option Agreement dated December 10, 2003 between the Company and Marko Radlovic
(incorporated by reference to Exhibit 10.80 of the Companys 2004 Form 10-K).10.73*
    
    
    
    
    Non-Qualified Stock Option Agreement dated as of March 3, 2004 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed May 10,
2004 (the 5/10/04 Quarterly Report)).
 98




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.74*
    
    
    
    
    Incentive Stock Option Agreement dated as of March 3, 2004 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.2 to the Companys 5/10/04 Quarterly Report).10.75
    
    
    
    
    Amendment dated as of April 15, 2004, to the Asset Purchase Agreement dated as of October 2, 2003 between
Spanish Broadcasting System, Inc., Spanish Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc.
and 3 Point Media-San Francisco, LLC (incorporated by reference to Exhibit 10.3 of the Companys 5/10/04
Quarterly Report).10.76
    
    
    
    
    Time Brokerage Agreement dated as of April 15, 2004 between KPTI Licensing, Inc., and Spanish
Broadcasting System-San Francisco, Inc. and 3 Point Media-San Francisco, LLC (incorporated by reference
to Exhibit 10.4 of the Companys 5/10/04 Quarterly Report).10.77*
    
    
    
    
    Stock Option Letter Agreement dated as of July 2, 2004 between the Company and Antonio S. Fernandez
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q filed August 9,
2004 (the 8/9/04 Quarterly Report)).10.78*
    
    
    
    
    Stock Option Letter Agreement dated as of July 2, 2004 between the Company and Jose Antonio Villamil
(incorporated by reference to Exhibit 10.2 of the Companys 8/9/04 Quarterly Report).10.79
    
    
    
    
    Asset Purchase Agreement dated as of July 26, 2004 between Newsweb Corporation and Spanish Broadcasting
System of Illinois, Inc. (incorporated by reference to Exhibit 10.5 of the Companys 8/9/04 Quarterly
Report).10.80
    
    
    
    
    Asset Purchase Agreement dated as of August 17, 2004 between Styles Media Group, LLC and Spanish
Broadcasting System Southwest, Inc. (incorporated by reference to Exhibit 10.1 of the Companys Quarterly
Report on Form 8-K filed August 23, 2004).10.81
    
    
    
    
    Merger Agreement dated as of October 5, 2004 among Infinity Media Corporation, Infinity Broadcasting
Corporation of San Francisco, Spanish Broadcasting System, Inc. and SBS Bay Area, LLC (incorporated by
reference to Exhibit 10.1 of the Companys Quarterly Report on Form 8-K filed on October 12, 2004).10.82
    
    
    
    
    Stockholder Agreement dated as of October 5, 2004 among Spanish Broadcasting System, Inc., Infinity Media
Corporation and Raúl Alarcón, Jr. (incorporated by reference to Exhibit 10.2 of the Companys Quarterly
Report on Form 8-K filed on October 12, 2004).
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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.83
    
    
    
    
    Local Marketing Agreement dated as of October 5, 2004 between Infinity Broadcasting Corporation of San
Francisco and SBS Bay Area, LLC (incorporated by reference to Exhibit 10.3 of the Companys Quarterly
Report on Form 8-K filed on October 12, 2004).10.84
    
    
    
    
    Time Brokerage Agreement dated as of August 17, 2004 between Spanish Broadcasting System Southwest, Inc.
and Styles Media Group, LLC (incorporated by reference to Exhibit 10.3 of the Companys Quarterly Report
on Form 8-K filed on November 9, 2004).10.85
    
    
    
    
    Warrant to Purchase Series C Preferred Stock of Spanish Broadcasting System, Inc. dated December 23, 2004
by the Company in favor of Infinity Media Corporation (incorporated by reference to Exhibit 4.2 of the
Companys Quarterly Report on Form 8-K filed on December 27, 2004).10.86
    
    
    
    
    Registration Rights Agreement dated as of December 23, 2004 between Spanish Broadcasting System, Inc. and
Infinity Media Corporation (incorporated by reference to Exhibit 4.3 of the Companys Quarterly Report on
Form 8-K filed on December 27, 2004).10.87*
    
    
    
    
    Nonqualified Stock Option Agreement, dated as of March 15, 2005 between the Company and Jason Shrinsky
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-K filed May 10,
2005).10.88
    
    
    
    
    Amendment to Asset Purchase Agreement, dated March 30, 2005, by and among Styles Media Group, LLC,
Spanish Broadcasting Southwest, Inc. and Spanish Broadcasting System, Inc. (incorporated by reference to
Exhibit 10.1 of the Companys Current Report on Form 8-K filed April 5, 2005).10.89
    
    
    
    
    First Lien Credit Agreement, dated as of June 10, 2005, among Spanish Broadcasting System, Inc., Merrill
Lynch, Pierce Fenner & Smith, Incorporated, Wachovia Bank, National Association, Lehman Commercial Paper
Inc. and various lenders (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed June 16, 2005).10.90
    
    
    
    
    Second Lien Term Loan Agreement, dated as of June 10, 2005, among Spanish Broadcasting System, Inc.,
Merrill Lynch, Pierce Fenner & Smith, Incorporated, Wachovia Bank, National Association, Lehman
Commercial Paper Inc. and various lenders (incorporated by reference to Exhibit 10.2 of the Companys
Current Report on Form 8-K filed June 16, 2005).10.91
    
    
    
    
    First Lien Guarantee and Collateral Agreement, dated as of June 10, 2005, among Spanish Broadcasting
System, Inc., certain of its subsidiaries and Lehman Commercial Paper Inc. (incorporated by reference to
Exhibit 10.3 of the Companys Current Report on Form 8-K filed June 16, 2005).
 100




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.92
    
    
    
    
    Second Lien Guarantee and Collateral Agreement, dated as of June 10, 2005, among Spanish Broadcasting
System, Inc., certain of its subsidiaries and Lehman Commercial Paper Inc (incorporated by reference to
Exhibit 10.4 of the Companys Current Report on Form 8-K filed June 16, 2005).10.93
    
    
    
    
    Intercreditor Agreement, dated as of June 10, 2005, among Spanish Broadcasting System, Inc. and Lehman
Commercial Paper Inc. (incorporated by reference to Exhibit 10.5 of the Companys Current Report on Form
8-K filed June 16, 2005).10.94*
    
    
    
    
    Nonqualified Stock Option Agreement, dated as of July 11, 2003 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-K filed May 10,
2005).10.95
    
    
    
    
    Asset Purchase Agreement, dated July 12, 2005 among the Company, WDLP Broadcasting Company, LLC, WDLP
Licensed Subsidiary, LLC, Robin Broadcasting Company, LLC and Robin Licensed Subsidiary, LLC
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-K filed August 9,
2005).10.96
    
    
    
    
    Second Amendment to Lease, dated December 1, 2004 between the Company and Irradio Holdings, Ltd.
(incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-K filed August 9,
2005).10.97*
    
    
    
    
    Amendment to Amended and Restated Employment Agreement, dated as of July 21, 2005, between Spanish
Broadcasting System, Inc. and Marko Radlovic. (incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed November 9, 2007).10.98
    
    
    
    
    Second Amendment to Asset Purchase Agreement, dated as of July 29, 2005, by and among Styles Media Group,
LLC, Spanish Broadcasting System Southwest, Inc., and Spanish Broadcasting System, Inc. (incorporated by
reference to Exhibit 10.1 of the Companys Current Report of Form 8-K filed August 2, 2005).10.99
    
    
    
    
    Amendment to Asset Purchase Agreement, dated January 6, 2006, by and among Mega Media Holdings, Inc.,
WDLP Licensing, Inc., and WDLP Broadcasting Company, LLC, WDLP Licensed Subsidiary, LLC, Robin
Broadcasting Company, LLC, and Robin Licensed Subsidiary, LLC (incorporated by reference to Exhibit 10.1
of the Companys Current Report on Form 8-K filed January 12, 2006).10.100
    
    
    
    
    Security Agreement, dated as of March 1, 2006, among Mega Media Holdings, Inc., WDLP Licensing, Inc.,
WDLP Broadcasting Company, LLC, WDLP Licensed Subsidiary, LLC, Robin Broadcasting Company, LLC and Robin
Licensed Subsidiary, LLC (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed March 6, 2006).10.101
    
    
    
    
    Pledge Agreement, dated as of March 1, 2006, among Mega Media Holdings, Inc., WDLP Broadcasting Company,
LLC, WDLP Licensed Subsidiary, LLC, Robin Broadcasting Company, LLC and Robin Licensed Subsidiary, LLC
(incorporated by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed March 6,
2006).10.102
    
    
    
    
    Secured Promissory Note, dated March 1, 2006, made by Spanish Broadcasting System, Inc., Mega Media
Holdings, Inc. and WDLP Licensing, Inc. in favor of WDLP Broadcasting Company, LLC and Robin Broadcasting
Company, LLC, in the principal amount of $18,500,000 (incorporated by reference to Exhibit 10.3 of the
Companys Current Report on Form 8-K filed March 6, 2006).10.103*
    
    
    
    
    Third Amendment to Lease, dated as of March 7, 2006, between Irradio Holdings, Ltd. and Spanish
Broadcasting System, Inc. (incorporated by reference to Exhibit 10.106 of the Companys Annual Report on
Form 10-K filed March 16, 2006).
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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.104*
    
    
    
    
    Employment Agreement dated as of November 21, 2005, effective January 3, 2006 between the Company and
Cynthia Hudson-Fernandez (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed on July 6, 2006).10.105*
    
    
    
    
    Spanish Broadcasting System, Inc. 2006 Omnibus Equity Compensation Plan (incorporated by reference to
Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q filed on August 8, 2006).10.106
    
    
    
    
    Agreement for Purchase and Sale dated August 24, 2006, by and between 7007 Palmetto Investments, LLC and
the Company (incorporated by reference to Exhibit 10.1 of the Companys Current Report of Form 8-K filed
on October 30, 2006 (the 10/30/06 Current Report)).10.107
    
    
    
    
    Amendment to Purchase and Sale dated September 25, 2006, by and between 7007 Palmetto Investments, LLC
and the Company (incorporated by reference to Exhibit 10.2 of the Companys 10/30/06 Current Report).10.108
    
    
    
    
    Second Amendment dated October 25, 2006, by and between 7007 Palmetto Investments, LLC and the Company
(incorporated by reference to Exhibit 10.3 of the Companys 10/30/06 Current Report).10.109
    
    
    
    
    Assignment and Assumption Agreement dated October 25, 2006, by and between the Company and SBS Miami
Broadcast Center, Inc. (SBS Miami Broadcast Center) (incorporated by reference to Exhibit 10.4 of the
Companys 10/30/06 Current Report).10.110
    
    
    
    
    Lease dated October 25, 2006, by and between the 7007 Palmetto Investments, LLC and SBS Miami Broadcast
Center (incorporated by reference to Exhibit 10.5 of the Companys 10/30/06 Current Report).10.111
    
    
    
    
    Loan Agreement dated January 4, 2007, by and between Wachovia Bank, National Association (Wachovia) and
SBS Miami Broadcast Center (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed on January 10, 2006 (the 1/10/06 Current Report)).10.112
    
    
    
    
    Promissory Note, dated January 4, 2007, by SBS Miami Broadcast Center in favor of Wachovia (incorporated
by reference to Exhibit 10.2 of the Companys 1/10/06 Current Report).10.113
    
    
    
    
    Mortgage, Assignment of Rents and Security Agreement dated January 4, 2007, by and between Wachovia and
SBS Miami Broadcast Center (incorporated by reference to Exhibit 10.3 of the Companys 1/10/06 Current
Report).10.114
    
    
    
    
    Unconditional Guaranty dated January 4, 2007, by Spanish Broadcasting System, Inc. in favor of Wachovia
(incorporated by reference to Exhibit 10.4 of the Companys 1/10/06 Current Report).10.115
    
    
    
    
    Termination of Lease dated January 4, 2007, by and between the Seller and SBS Miami Broadcast Center
(incorporated by reference to Exhibit 10.5 of the Companys 1/10/06 Current Report).10.116*
    
    
    
    
    Restricted Stock Grant, dated as of March 10, 2007
to Raúl Alarcón, Jr.
(incorporated by reference to Exhibit 10.116 of the Companys Annual Report filed on Form 10-K for the fiscal
year 2007 (the 2007 Annual Report)).10.117*
    
    
    
    
    Indemnification Agreement with Mitchell A. Yelen as of October 1, 2007 (incorporated by reference to
Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q filed November 11, 2007).
 102




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.118*
    
    
    
    
    Stock Option Agreement dated as of October 1, 2007 between the Company and Mitchell A. Yelen
(incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q filed November
11, 2007).10.119*
    
    
    
    
    Incentive Stock Option Agreement dated November 8,
2007 between the Company and Cynthia Hudson
(incorporated by reference to Exhibit 10.119 of the Companys 2007 Annual Report).10.120*
    
    
    
    
    Amendment No. 2 to Amended and Restated Employment Agreement dated as of November 7, 2007 by and between
the Company and Marko Radlovic (incorporated by reference to Exhibit 10.1 of the Companys Current Report
on Form 8-K filed November 9, 2007).10.121*
    
    
    
    
    Amended and Restated Employment Agreement dated as of August 4, 2008, by and between the Company and
Joseph A. García (incorporated by reference to Exhibit 10.1 of the Companys Current Report filed on Form
8-K filed on August 8, 2008).14.1
    
    
    
    
    Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 of the Companys 2004 Form
10-K).21.1
    
    
    
    
    List of Subsidiaries of the Company.23.1
    
    
    
    
    Consent of KPMG LLP.24.1
    
    
    
    
    Power of Attorney (included on the signature page of this Annual Report on Form 10-K).31(i).1
    
    
    
    
    Chief Executive Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31(i).2
    
    
    
    
    Chief Financial Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    
    Chief Executive Officers Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    
    Chief Financial Officers Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 103




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description99.1
    
    
    
    
    Form of Notice of Redemption, dated June 10, 2005, with respect to the redemption of the registrants 9
5/8% Senior Subordinated Notes due 2009 under the indenture dated as of November 2, 1999 (incorporated by
reference to Exhibit 99.1 of the Companys Current Report on Form 8-K filed June 16, 2005).99.2
    
    
    
    
    Form of Notice of Redemption, dated June 10, 2005, with respect to the redemption of the registrants 9
5/8% Senior Subordinated Notes due 2009 under the indenture dated as of June 8, 2001 (incorporated by
reference to Exhibit 99.2 of the Companys Current Report on Form 8-K filed June 16, 2005).
 
 *
    
    Indicates a management contract or compensatory plan or arrangement, as required by
Item 15(a)(3) of Form 10-K. 104




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##### Table of Contents



Signatures
  Spanish Broadcasting System, Inc.By:
    /s/ Raúl Alarcón, Jr.Name:
    Raúl Alarcón, Jr.Title:
    Chairman of the Board of Directors,
Chief Executive Officer and President    /s/  Raúl Alarcón, Jr.

Raúl Alarcón, Jr.
    
    Chairman of the Board of Directors, Chief Executive Officer and President (principal executive officer)/s/  Joseph A. García

Joseph A. García
    
    Director, Senior Executive Vice President, Chief Financial Officer, Chief Administration Officer and
Secretary (principal financial and accounting officer)/s/  Antonio S. Fernandez

Antonio S. Fernandez
    
    Director/s/  Jose A. Villamil

Jose A. Villamil
    
    Director/s/  Mitchell A. Yelen

Mitchell A. Yelen
    
    Director/s/  Jason L. Shrinsky

Jason L. Shrinsky
    
    Director
 105




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit Index
 Exhibit number
    
    
    
    Exhibit description3.1
    
    
    
    
    Third Amended and Restated Certificate of Incorporation of Spanish Broadcasting System, Inc. (the
Company), dated September 29, 1999 (incorporated by reference to the Companys 1999 Registration
Statement on Form S-1 (Commission File No. 333-85499) (the 1999 Registration Statement)) (Exhibit A to
this exhibit is incorporated by reference to the Companys Current Report on Form 8-K, dated March 25,
1996 (the 1996 Current Report)).3.2
    
    
    
    
    Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company,
dated September 29, 1999 (incorporated by reference to Exhibit 3.2 of the Companys 1999 Registration
Statement).3.3
    
    
    
    
    Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 of the Companys
1999 Registration Statement).3.4
    
    
    
    
    Certificate of Elimination of 14 1/4% Senior Exchangeable Preferred Stock, Series A of the Company, dated
October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Companys Quarterly Report on Form
10-Q, dated November 14, 2003 (the 11/14/03 Quarterly Report)).4.1
    
    
    
    
    Article V of the Third Amended and Restated Certificate of Incorporation of the Company, dated September
29, 1999 (incorporated by reference to Exhibit 3.1 of the Companys 1999 Registration Statement).4.3
    
    
    
    
    Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and
Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and
Restrictions of the 10 3/4% Series B Cumulative Exchangeable Redeemable Preferred Stock of Spanish
Broadcasting System, Inc. (incorporated by reference to Exhibit 4.2 of the Companys 11/14/03 Quarterly
Report).4.4
    
    
    
    
    Indenture dated June 29, 1994 among the Company, IBJ Schroder Bank & Trust Company, as Trustee, the
Guarantors named therein and the Purchasers named therein (incorporated by reference to Exhibit 4.1 of
the Companys 1994 Registration Statement on Form S-4 (the 1994 Registration Statement)).4.5
    
    
    
    
    First Supplemental Indenture dated as of March 25, 1996 to the Indenture dated as of June 29, 1994 among
the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated
by reference to the 1996 Current Report).
 106




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description4.6
    
    
    
    
    Second Supplemental Indenture dated as of March 1, 1997 to the Indenture dated as of June 29, 1994 among
the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated
by reference to the 1996 Current Report).4.7
    
    
    
    
    Supplemental Indenture dated as of October 21, 1999 to the Indenture dated as of June 29, 1994 among the
Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by
reference to the Companys 1999 Registration Statement).4.8
    
    
    
    
    Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee,
dated November 2, 1999 (incorporated by reference to the Current Report on Form 8-K dated November 2,
1999 (the 1999 Current Report)).4.9
    
    
    
    
    Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with the Bank of New York as Trustee,
dated June 8, 2001 (incorporated by reference to the Companys Registration Statement on Form S-3, filed
on June 25, 2001 (the 2001 Form S-3)).4.10
    
    
    
    
    Form of stock certificate for the Class A common stock of the Company (incorporated by reference to the
Companys 1999 Registration Statement).4.11
    
    
    
    
    Certificate of Elimination of 14 1/4% of Senior Exchangeable Preferred Stock, Series A of the
Company,
dated October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Companys Quarterly Report on
Form 10-Q filed November 14, 2003).4.12
    
    
    
    
    Certificate of Designation Setting Forth the Voting Power, Preferences and Relative, Participating,
Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the Series C
Convertible Preferred Stock of the Company (Certificate of Designation of Series C Preferred Stock)
(incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K filed on December
27, 2004).4.13
    
    
    
    
    Certificate of Correction to Certificate of Designation of Series C Preferred Stock of the Company dated
January 7, 2005 (incorporated by reference to Exhibit 4.13 of the Companys Annual Report filed on Form
10-K for the fiscal year 2004).10.1
    
    
    
    
    Warrant Agreement dated as of March 15, 1997 among the Company and IBJ Schroder Bank & Trust Company, as
Warrant Agent (incorporated by reference to the 1996 Current Report).10.2*
    
    
    
    
    Common Stock Registration Rights and Stockholders Agreement dated as of June 29, 1994 among the Company
and certain Management Stockholders named therein (incorporated by reference to the 1994 Registration
Statement).10.3*
    
    
    
    
    Amended and Restated Employment Agreement dated as of October 25, 1999, by and between the Company and
Raúl Alarcón, Jr. (incorporated by reference to the Companys 1999 Registration Statement).10.4*
    
    
    
    
    Employment Agreement dated as of October 25, 1999, by and between the Company and Joseph A. García
(incorporated by reference to the Companys 1999 Registration Statement).10.5
    
    
    
    
    Ground Lease dated December 18, 1995 between Louis Viola Company and SBS-NJ (incorporated by reference to
the 1996 Current Report).10.6
    
    
    
    
    Ground Lease dated December 18, 1995 between Frank F. Viola and Estate of Thomas C. Viola and SBS-NJ
(incorporated by reference to the 1996 Current Report).
 107




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.7
    
    
    
    
    Lease and License Agreement dated February 1, 1991 between Empire State Building Company, as landlord,
and SBS-NY, as tenant (incorporated by reference to Exhibit 10.15.1 of the 1994 Registration Statement).10.8
    
    
    
    
    Modification of Lease and License dated June 30, 1992 between Empire State Building Company and SBS-NY
related to WSKQ-FM (incorporated by reference to Exhibit 10.15.2 of the 1994 Registration Statement).10.9
    
    
    
    
    Lease and License Modification and Extension Agreement dated as of June 30, 1992 between Empire State
Building Company, as landlord, and SBS-NY as tenant (incorporated by reference to Exhibit 10.15.3 of the
1994 Registration Statement).10.10
    
    
    
    
    Lease Agreement dated June 1, 1992 among Raúl Alarcón, Sr., Raúl Alarcón, Jr., and SBS-Fla (incorporated
by reference to Exhibit 10.30 of the 1994 Registration Statement).10.11
    
    
    
    
    Agreement of Lease dated as of March 1, 1996 No. WT-174-A119 1067 between The Port Authority of New
Jersey and SBS of Greater New York, Inc. as assignee of Park Radio (incorporated by reference to the 1996
Current Report).10.12
    
    
    
    
    Asset Purchase Agreement dated as of July 2, 1997, by and between Spanish Broadcasting System, Inc. (New
Jersey), Spanish Broadcasting System of California, Inc., Spanish Broadcasting System of Florida, Inc.,
Spanish Broadcasting System, Inc., and One-on-One Sports, Inc. (incorporated by reference to Exhibit
10.62 of the Companys Registration Statement on Form S-4 (Commission File No. 333-26295)).10.13
    
    
    
    
    Amendment No. 1 dated as of September 29, 1997 to the Asset Purchase Agreement dated as of July 2, 1997,
by and between Spanish Broadcasting System, Inc. (New Jersey), Spanish Broadcasting System of California,
Inc., Spanish Broadcasting System of Florida, Inc., Spanish Broadcasting System, Inc., and One-on-One
Sports, Inc. (incorporated by reference to the Companys Registration Statement on Form S-1, dated
January 21, 1999 (Commission File No. 333-29449)).10.14
    
    
    
    
    Extension of lease of a Condominium Unit (Metropolitan Tower Condominium) between Raúl Alarcón, Jr.
(Landlord) and Spanish Broadcasting System, Inc. (Tenant) (incorporated by reference to the Companys
1998 Annual Report on Form 10-K).10.15*
    
    
    
    
    Indemnification Agreement with Raúl Alarcón, Jr. dated as of November 2, 1999 (incorporated by reference
to the 1999 Current Report).10.16
    
    
    
    
    Indemnification Agreement with Jason L. Shrinsky dated as of November 2, 1999 (incorporated by reference
to the 1999 Current Report).10.17*
    
    
    
    
    Spanish Broadcasting System 1999 Stock Option Plan (incorporated by reference to the Companys 1999
Registration Statement).10.18*
    
    
    
    
    Spanish Broadcasting System 1999 Company Stock Option Plan for Nonemployee Directors (incorporated by
reference to the Companys 1999 Registration Statement).10.19
    
    
    
    
    Form of Lock-Up Letter Agreement (incorporated by reference in the Companys 1999 Registration Statement).10.20*
    
    
    
    
    Option Grant not under the Stock Option Plans with Arnold Sheiffer, dated October 27, 1999 (incorporated
by reference to the 1999 Current Report).10.21
    
    
    
    
    Credit Agreement, dated as of July 6, 2000, among Spanish Broadcasting System, Inc., a Delaware
corporation, the several banks and other financial institutions or entities from time to time party to
the Credit Agreement and Lehman Commercial Paper Inc., as administrative agent (incorporated by reference
to Exhibit 10.44 of the Companys Annual Report on Form 10-K for fiscal year 2000 (the 2000 Form 10-K)).
 108




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.22
    
    
    
    
    Guarantee and Collateral Agreement made by Spanish Broadcasting System, Inc. and certain of its
subsidiaries in favor of Lehman Commercial Paper, Inc. as Administrative Agent, dated as of July 6, 2000
(incorporated by reference to Exhibit 10.45 of the Companys 2000 Form 10-K).10.23*
    
    
    
    
    Employment Agreement dated August 31, 2000, between William Tanner and the Company (incorporated by
reference to Exhibit 10.47 of the Companys 2000 Form 10-K).10.24
    
    
    
    
    Deed of Constitution of Mortgage, Cadena Estereotempo, Inc., as Mortgagor, and Banco Bilbao Vizcaya
Puerto Rico, as Mortgagee (incorporated by reference to Exhibit 10.49 of the Companys 2000 Form 10-K).10.25
    
    
    
    
    Lease Agreement by and between the Company and Irradio Holdings, Ltd. made as of December 14, 2000
(incorporated by reference to Exhibit 10.50 of the Companys 2000 Form 10-K).10.26
    
    
    
    
    First Addendum to Lease between the Company and Irradio Holdings, Ltd. as of December 14, 2000
(incorporated by reference to Exhibit 10.51 of the Companys 2000 Form 10-K).10.27
    
    
    
    
    Asset Purchase Agreement dated as of November 2, 2000 by and between International Church of the
FourSquare Gospel and the Company (incorporated by reference to Exhibit 10.1 of the Companys 2000 Form
10-K).10.28
    
    
    
    
    Addendum to Asset Purchase Agreement, dated March 13, 2001, by and between International Church of the
FourSquare Gospel and the Company (incorporated by reference to Exhibit 10.2 of the Companys Quarterly
Report on Form 10-Q filed on May 9, 2001 (5/9/01 Quarterly Report)).10.29
    
    
    
    
    Time Brokerage Agreement, dated March 13, 2001, by and between International Church of the FourSquare
Gospel and the Company (incorporated by reference to Exhibit 10.3 of the Companys 5/9/01 Quarterly
Report).10.30
    
    
    
    
    93.5 Time Brokerage Agreement, dated March 13, 2001, by and between Spanish Broadcasting System
Southwest, Inc. and International Church of the FourSquare Gospel (incorporated by reference to Exhibit
10.4 of the Companys 5/9/01 Quarterly Report).10.31
    
    
    
    
    Radio Network Affiliation Agreement, dated April 5, 2001, between Clear Channel Broadcasting, Inc. and
SBS of San Francisco, Inc. (incorporated by reference to Exhibit 10.5 of the Companys 5/9/01 Quarterly
Report).10.32
    
    
    
    
    First Amendment to Credit Agreement, dated as of March 5, 2001, by and among the Company, the lenders
party to the Credit Agreement dated as of July 6, 2000 and Lehman Commercial Paper, Inc. (incorporated by
reference to Exhibit 10.1 of the Companys 5/9/01 Quarterly Report).10.33
    
    
    
    
    Purchase Agreement dated May 24, 2001 between the Company and Lehman Brothers Inc. with respect to 9 5/8%
Senior Subordinated Notes due 2009 (incorporated by reference to the Companys 2001 Form S-3).10.34
    
    
    
    
    Registration Rights Agreement dated June 8, 2001 between the Company and Lehman Brothers Inc. with
respect to 9 5/8% Senior Subordinated Notes due 2009 (incorporated be reference to the Companys 2001
Form S-3).
 109




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.35
    
    
    
    
    Form of Indemnification Agreement with Carl Parmer dated as of August 9, 2001 (incorporated by reference
to Exhibit 10.48 to the Companys Annual Report on Form 10-K filed December 31, 2001).10.36*
    
    
    
    
    Stock Option Agreement dated as of January 15, 2001 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.49 to the Companys Annual Report on Form 10-K filed December
31, 2001).10.37*
    
    
    
    
    Form of Stock Option Agreement dated as of October 29, 2001 between Spanish Broadcasting System, Inc. and
Carl Parmer (incorporated by reference to Exhibit 10.51 to the Companys Annual Report on Form 10-K filed
December 31, 2001).10.38
    
    
    
    
    Amendment dated as of February 8, 2002 to Asset Purchase Agreement dated as of November 2, 2000 by and
between International Church of the FourSquare Gospel and Spanish Broadcasting System, Inc., as amended
by an Addendum dated March 13, 2001 (incorporated by reference to Exhibit 10.1 to the Companys Quarterly
Transition Report on Form 10-Q filed February 13, 2002).10.39
    
    
    
    
    Amendment No. 1 dated as of February 8, 2002 to Time Brokerage Agreement dated as of March 13, 2001 by
and between International Church of the FourSquare Gospel, as Licensee, and Spanish Broadcasting System,
Inc., as Time Broker (incorporated by reference to Exhibit 10.2 to the Companys Quarterly Transition
Report on Form 10-Q filed February 13, 2002).10.40
    
    
    
    
    Amendment No. 1 dated as of February 8, 2002 to the 93.5 Time Brokerage Agreement dated as of March 13,
2001 by and between Spanish Broadcasting System SouthWest, Inc., as Licensee and International Church of
the FourSquare Gospel, as Time Broker (incorporated by reference to Exhibit 10.3 to the Companys
Quarterly Transition Report on Form 10-Q filed February 13, 2002).10.41
    
    
    
    
    Warrant dated February 8, 2002 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed May 2,
2002).10.42*
    
    
    
    
    Stock Option Agreement dated as of January 16, 2002 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed May 2,
2002).10.43
    
    
    
    
    Asset Purchase Agreement dated June 4, 2002 by and among the Company, KTCY Licensing, Inc. and
Entravision  Texas Limited Partnership (incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q filed August 14, 2002).
 110




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.44
    
    
    
    
    Time Brokerage Agreement dated as of June 4, 2002 between KTCY Licensing, Inc. as Licensee and
Entravision Communications Corporation as Programmer (incorporated by reference to Exhibit 10.2 to the
Companys Quarterly Report on Form 10-Q filed August 14, 2002).10.45*
    
    
    
    
    Companys 1999 Stock Option Plan as amended on May 6, 2002 (incorporated by reference to Exhibit 10.3 to
the Companys Quarterly Report on Form 10-Q filed August 14, 2002).10.46*
    
    
    
    
    Companys 1999 Stock Option Plan for Non-Employee Directors as amended on May 6, 2002 (incorporated by
reference to Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q filed August 14, 2002).10.47*
    
    
    
    
    Stock Option Agreement dated as of October 29, 2002 between the Company and Raúl Alarcón, Jr.
(incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q filed November
13, 2002).10.48
    
    
    
    
    Asset Purchase Agreement dated as of December 31, 2002 by and among Spanish Broadcasting System of
Illinois, Inc., Big City Radio, Inc. and Big City Radio-CHI, L.L.C. (incorporated by reference to Exhibit
10.59 to the Companys Annual Report on Form 10-K filed March 31, 2003 (the 2003 Form 10-K)).10.49
    
    
    
    
    Time Brokerage Agreement dated as of December 31, 2002 between Big City Radio-CHI, L.L.C. as Licensee and
Spanish Broadcasting System of Illinois, Inc. as Programmer (incorporated by reference to Exhibit 10.60
to the Companys 2003 Form 10-K).10.50
    
    
    
    
    Guaranty Agreement dated as of December 31, 2002 by the Company in favor of Big City Radio, Inc. and Big
City Radio-CHI, L.L.C. (incorporated by reference to Exhibit 10.61 to the Companys 2003 Form 10-K).10.51
    
    
    
    
    Warrant dated March 31, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.4 of the Companys Quarterly Report on Form 10-Q, dated May 15,
2003 (the 5/15/03 Quarterly Report)).10.52
    
    
    
    
    Warrant dated April 30, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.5 of the Companys 5/15/03 Quarterly Report)10.53
    
    
    
    
    Warrant dated May 31, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q, dated August
13, 2003 (the 8/13/03 Quarterly Report)).
 111




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.54
    
    
    
    
    Warrant dated June 30, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.2 of the Companys 8/13/03 Quarterly Report).10.55
    
    
    
    
    Warrant dated July 31, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.3 of the Companys 8/13/03 Quarterly Report).10.56
    
    
    
    
    Asset Purchase Agreement dated as of September 18, 2003 between Spanish Broadcasting System, Inc. and
Border Media Partners, LLC (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K, dated September 25, 2003).10.57
    
    
    
    
    Asset Purchase Agreement dated as of October 2, 2003 between Spanish Broadcasting System, Inc., Spanish
Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc. and 3 Point Media-San Francisco, LLC
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K, dated October 9,
2003).10.58
    
    
    
    
    Warrant dated August 31, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.1 of the Companys 11/14/03 Quarterly Report).10.59
    
    
    
    
    Warrant dated September 30, 2003 by the Company in favor of International Church of the FourSquare Gospel
(incorporated by reference to Exhibit 10.2 of the Companys 11/14/03 Quarterly Report).10.60
    
    
    
    
    Credit Agreement between the Company and Merrill Lynch, Pierce Fenner & Smith Incorporated, Deutsche Bank
Securities Inc. and Lehman Commercial Paper Inc. dated October 30, 2003 (incorporated by reference to
Exhibit 10.3 of the Companys 11/14/03 Quarterly Report).10.61
    
    
    
    
    Guarantee and Collateral Agreement between the Company and certain of its subsidiaries in favor of Lehman
Commercial Paper Inc. dated October 30, 2003 (incorporated by reference to Exhibit 10.4 of the Companys
11/14/03 Quarterly Report).10.62
    
    
    
    
    Assignment of Leases and Rents by the Company in favor of Lehman Commercial Paper Inc. dated October 30,
2003 (incorporated by reference to Exhibit 10.5 of the Companys 11/14/03 Quarterly Report).10.63
    
    
    
    
    Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by the Company in
favor of Lehman Commercial Paper Inc. dated October 30, 2003 (incorporated by reference to Exhibit 10.6
of the Companys 11/14/03 Quarterly Report).
 112




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SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.64
    
    
    
    
    Transmission Facilities Lease between the Company and International Church of the FourSquare Gospel,
dated October 30, 2003 (incorporated by reference to Exhibit 10.7 of the Companys 11/14/03 Quarterly
Report).10.65
    
    
    
    
    Purchase Agreement dated October 30, 2003 between the Company and Merrill Lynch, Pierce Fenner & Smith
Incorporated, Deutsche Bank Securities Inc. and Lehman Brothers Inc. with respect to 10 3/4% Series A
Cumulative Exchangeable Redeemable Preferred Stock (incorporated by reference to Exhibit 10.8 of the
Companys 11/14/03 Quarterly Report).10.66*
    
    
    
    
    Registration Rights Agreement dated October 30, 2003 between the Company and Merrill Lynch, Pierce Fenner
& Smith Incorporated, Deutsche Bank Securities Inc. and Lehman Brothers Inc. with respect to 10 3/4% Series
A Cumulative Exchangeable Redeemable Preferred Stock (incorporated by reference to Exhibit 10.9 of the
Companys 11/14/03 Quarterly Report).10.67*
    
    
    
    
    Nonqualified Stock Option Agreement dated as of July 11, 2003 between the Company and Jack Langer
(incorporated by reference to Exhibit 10.74 of the Companys Annual Report on Form 10-K for fiscal year
2004 (the 2004 Form 10-K)).10.68*
    
    
    
    
    Nonqualified Stock Option Agreement dated as of July 11, 2003 between the Company and Dan Mason
(incorporated by reference to Exhibit 10.75 of the Companys 2004 Form 10-K).10.69*
    
    
    
    
    Amended and Restated Employment Agreement dated October 31, 2003 between the Company and Marko Radlovic
(incorporated by reference to Exhibit 10.81 of the Companys 2004 Form 10-K).10.70*
    
    
    
    
    Nonqualified Stock Option Agreement dated October 27, 2003 between the Company and Raúl Alarcón, Jr.
(incorporated by reference to Exhibit 10.78 of the Companys 2004 Form 10-K).10.71*
    
    
    
    
    Nonqualified Stock Option Agreement dated December 10, 2003 between the Company and Marko Radlovic
(incorporated by reference to Exhibit 10.79 of the Companys 2004 Form 10-K).10.72*
    
    
    
    
    Incentive Stock Option Agreement dated December 10, 2003 between the Company and Marko Radlovic
(incorporated by reference to Exhibit 10.80 of the Companys 2004 Form 10-K).10.73*
    
    
    
    
    Non-Qualified Stock Option Agreement dated as of March 3, 2004 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed May 10,
2004 (the 5/10/04 Quarterly Report)).
 113




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.74*
    
    
    
    
    Incentive Stock Option Agreement dated as of March 3, 2004 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.2 to the Companys 5/10/04 Quarterly Report).10.75
    
    
    
    
    Amendment dated as of April 15, 2004, to the Asset Purchase Agreement dated as of October 2, 2003 between
Spanish Broadcasting System, Inc., Spanish Broadcasting System-San Francisco, Inc., KPTI Licensing, Inc.
and 3 Point Media-San Francisco, LLC (incorporated by reference to Exhibit 10.3 of the Companys 5/10/04
Quarterly Report).10.76
    
    
    
    
    Time Brokerage Agreement dated as of April 15, 2004 between KPTI Licensing, Inc., and Spanish
Broadcasting System-San Francisco, Inc. and 3 Point Media-San Francisco, LLC (incorporated by reference
to Exhibit 10.4 of the Companys 5/10/04 Quarterly Report).10.77*
    
    
    
    
    Stock Option Letter Agreement dated as of July 2, 2004 between the Company and Antonio S. Fernandez
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q filed August 9,
2004 (the 8/9/04 Quarterly Report)).10.78*
    
    
    
    
    Stock Option Letter Agreement dated as of July 2, 2004 between the Company and Jose Antonio Villamil
(incorporated by reference to Exhibit 10.2 of the Companys 8/9/04 Quarterly Report).10.79
    
    
    
    
    Asset Purchase Agreement dated as of July 26, 2004 between Newsweb Corporation and Spanish Broadcasting
System of Illinois, Inc. (incorporated by reference to Exhibit 10.5 of the Companys 8/9/04 Quarterly
Report).10.80
    
    
    
    
    Asset Purchase Agreement dated as of August 17, 2004 between Styles Media Group, LLC and Spanish
Broadcasting System Southwest, Inc. (incorporated by reference to Exhibit 10.1 of the Companys Quarterly
Report on Form 8-K filed August 23, 2004).10.81
    
    
    
    
    Merger Agreement dated as of October 5, 2004 among Infinity Media Corporation, Infinity Broadcasting
Corporation of San Francisco, Spanish Broadcasting System, Inc. and SBS Bay Area, LLC (incorporated by
reference to Exhibit 10.1 of the Companys Quarterly Report on Form 8-K filed on October 12, 2004).10.82
    
    
    
    
    Stockholder Agreement dated as of October 5, 2004 among Spanish Broadcasting System, Inc., Infinity Media
Corporation and Raúl Alarcón, Jr. (incorporated by reference to Exhibit 10.2 of the Companys Quarterly
Report on Form 8-K filed on October 12, 2004).
 114




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.83
    
    
    
    
    Local Marketing Agreement dated as of October 5, 2004 between Infinity Broadcasting Corporation of San
Francisco and SBS Bay Area, LLC (incorporated by reference to Exhibit 10.3 of the Companys Quarterly
Report on Form 8-K filed on October 12, 2004).10.84
    
    
    
    
    Time Brokerage Agreement dated as of August 17, 2004 between Spanish Broadcasting System Southwest, Inc.
and Styles Media Group, LLC (incorporated by reference to Exhibit 10.3 of the Companys Quarterly Report
on Form 8-K filed on November 9, 2004).10.85
    
    
    
    
    Warrant to Purchase Series C Preferred Stock of Spanish Broadcasting System, Inc. dated December 23, 2004
by the Company in favor of Infinity Media Corporation (incorporated by reference to Exhibit 4.2 of the
Companys Quarterly Report on Form 8-K filed on December 27, 2004).10.86
    
    
    
    
    Registration Rights Agreement dated as of December 23, 2004 between Spanish Broadcasting System, Inc. and
Infinity Media Corporation (incorporated by reference to Exhibit 4.3 of the Companys Quarterly Report on
Form 8-K filed on December 27, 2004).10.87*
    
    
    
    
    Nonqualified Stock Option Agreement, dated as of March 15, 2005 between the Company and Jason Shrinsky
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-K filed May 10,
2005).10.88
    
    
    
    
    Amendment to Asset Purchase Agreement, dated March 30, 2005, by and among Styles Media Group, LLC,
Spanish Broadcasting Southwest, Inc. and Spanish Broadcasting System, Inc. (incorporated by reference to
Exhibit 10.1 of the Companys Current Report on Form 8-K filed April 5, 2005).10.89
    
    
    
    
    First Lien Credit Agreement, dated as of June 10, 2005, among Spanish Broadcasting System, Inc., Merrill
Lynch, Pierce Fenner & Smith, Incorporated, Wachovia Bank, National Association, Lehman Commercial Paper
Inc. and various lenders (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed June 16, 2005).10.90
    
    
    
    
    Second Lien Term Loan Agreement, dated as of June 10, 2005, among Spanish Broadcasting System, Inc.,
Merrill Lynch, Pierce Fenner & Smith, Incorporated, Wachovia Bank, National Association, Lehman
Commercial Paper Inc. and various lenders (incorporated by reference to Exhibit 10.2 of the Companys
Current Report on Form 8-K filed June 16, 2005).10.91
    
    
    
    
    First Lien Guarantee and Collateral Agreement, dated as of June 10, 2005, among Spanish Broadcasting
System, Inc., certain of its subsidiaries and Lehman Commercial Paper Inc. (incorporated by reference to
Exhibit 10.3 of the Companys Current Report on Form 8-K filed June 16, 2005).
 115




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.92
    
    
    
    
    Second Lien Guarantee and Collateral Agreement, dated as of June 10, 2005, among Spanish Broadcasting
System, Inc., certain of its subsidiaries and Lehman Commercial Paper Inc. (incorporated by reference to
Exhibit 10.4 of the Companys Current Report on Form 8-K filed June 16, 2005).10.93
    
    
    
    
    Intercreditor Agreement, dated as of June 10, 2005, among Spanish Broadcasting System, Inc. and Lehman
Commercial Paper Inc. (incorporated by reference to Exhibit 10.5 of the Companys Current Report on Form
8-K filed June 16, 2005).10.94*
    
    
    
    
    Nonqualified Stock Option Agreement, dated as of July 11, 2003 between the Company and Joseph A. García
(incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-K filed May 10,
2005).10.95
    
    
    
    
    Asset Purchase Agreement, dated July 12, 2005 among the Company, WDLP Broadcasting Company, LLC, WDLP
Licensed Subsidiary, LLC, Robin Broadcasting Company, LLC and Robin Licensed Subsidiary, LLC
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-K filed August 9,
2005).10.96
    
    
    
    
    Second Amendment to Lease, dated December 1, 2004 between the Company and Irradio Holdings, Ltd.
(incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-K filed August 9,
2005).10.97*
    
    
    
    
    Amendment to Amended and Restated Employment Agreement, dated as of July 21, 2005, between Spanish
Broadcasting System, Inc. and Marko Radlovic (incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed November 9, 2007).10.98
    
    
    
    
    Second Amendment to Asset Purchase Agreement, dated as of July 29, 2005, by and among Styles Media Group,
LLC, Spanish Broadcasting System Southwest, Inc., and Spanish Broadcasting System, Inc. (incorporated by
reference to Exhibit 10.1 of the Companys Current Report of Form 8-K filed August 2, 2005).10.99
    
    
    
    
    Amendment to Asset Purchase Agreement, dated January 6, 2006, by and among Mega Media Holdings, Inc.,
WDLP Licensing, Inc., and WDLP Broadcasting Company, LLC, WDLP Licensed Subsidiary, LLC, Robin
Broadcasting Company, LLC, and Robin Licensed Subsidiary, LLC (incorporated by reference to Exhibit 10.1
of the Companys Current Report on Form 8-K filed January 12, 2006).10.100
    
    
    
    
    Security Agreement, dated as of March 1, 2006, among Mega Media Holdings, Inc., WDLP Licensing, Inc.,
WDLP Broadcasting Company, LLC, WDLP Licensed Subsidiary, LLC, Robin Broadcasting Company, LLC and Robin
Licensed Subsidiary, LLC (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed March 6, 2006).10.101
    
    
    
    
    Pledge Agreement, dated as of March 1, 2006, among Mega Media Holdings, Inc., WDLP Broadcasting Company,
LLC, WDLP Licensed Subsidiary, LLC, Robin Broadcasting Company, LLC and Robin Licensed Subsidiary, LLC
(incorporated by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K filed March 6,
2006).10.102
    
    
    
    
    Secured Promissory Note, dated March 1, 2006, made by Spanish Broadcasting System, Inc., Mega Media
Holdings, Inc. and WDLP Licensing, Inc. in favor of WDLP Broadcasting Company, LLC and Robin Broadcasting
Company, LLC, in the principal amount of $18,500,000 (incorporated by reference to Exhibit 10.3 of the
Companys Current Report on Form 8-K filed March 6, 2006).10.103*
    
    
    
    
    Third Amendment to Lease, dated as of March 7, 2006, between Irradio Holdings, Ltd. and Spanish
Broadcasting System, Inc. (incorporated by reference to Exhibit 10.106 of the Companys Annual Report on
Form 10-K filed March 16, 2006).
 116




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.104*
    
    
    
    
    Employment Agreement dated as of November 21, 2005, effective January 3, 2006 between the Company and
Cynthia Hudson-Fernandez (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed on July 6, 2006).10.105*
    
    
    
    
    Spanish Broadcasting System, Inc. 2006 Omnibus Equity Compensation Plan (incorporated by reference to
Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q filed on August 8, 2006).10.106
    
    
    
    
    Agreement for Purchase and Sale dated August 24, 2006, by and between 7007 Palmetto Investments, LLC and
the Company (incorporated by reference to Exhibit 10.1 of the Companys Current Report of Form 8-K filed
on October 30, 2006 (the 10/30/06 Current Report)).10.107
    
    
    
    
    Amendment to Purchase and Sale dated September 25, 2006, by and between 7007 Palmetto Investments, LLC
and the Company (incorporated by reference to Exhibit 10.2 of the Companys 10/30/06 Current Report).10.108
    
    
    
    
    Second Amendment dated October 25, 2006, by and between 7007 Palmetto Investments, LLC and the Company
(incorporated by reference to Exhibit 10.3 of the Companys 10/30/06 Current Report).10.109
    
    
    
    
    Assignment and Assumption Agreement dated October 25, 2006, by and between the Company and SBS Miami
Broadcast Center, Inc. (SBS Miami Broadcast Center) (incorporated by reference to Exhibit 10.4 of the
Companys 10/30/06 Current Report).10.110
    
    
    
    
    Lease dated October 25, 2006, by and between the 7007 Palmetto Investments, LLC and SBS Miami Broadcast
Center (incorporated by reference to Exhibit 10.5 of the Companys 10/30/06 Current Report).10.111
    
    
    
    
    Loan Agreement dated January 4, 2007, by and between Wachovia Bank, National Association (Wachovia) and
SBS Miami Broadcast Center (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed on January 10, 2006 (the 1/10/06 Current Report)).10.112
    
    
    
    
    Promissory Note, dated January 4, 2007, by SBS Miami Broadcast Center in favor of Wachovia (incorporated
by reference to Exhibit 10.2 of the Companys 1/10/06 Current Report).10.113
    
    
    
    
    Mortgage, Assignment of Rents and Security Agreement dated January 4, 2007, by and between Wachovia and
SBS Miami Broadcast Center (incorporated by reference to Exhibit 10.3 of the Companys 1/10/06 Current
Report).10.114
    
    
    
    
    Unconditional Guaranty dated January 4, 2007, by Spanish Broadcasting System, Inc. in favor of Wachovia
(incorporated by reference to Exhibit 10.4 of the Companys 1/10/06 Current Report).10.115
    
    
    
    
    Termination of Lease dated January 4, 2007, by and between the Seller and SBS Miami Broadcast Center
(incorporated by reference to Exhibit 10.5 of the Companys 1/10/06 Current Report).10.116*
    
    
    
    
    Restricted Stock Grant, dated as of March 10, 2007
to Raúl Alarcón, Jr.
(incorporated by reference to Exhibit 10.116 of the Companys Annual Report filed on Form 10-K for the fiscal year 2007 (the 2007 Annual Report)).10.117*
    
    
    
    
    Indemnification Agreement with Mitchell A. Yelen as of October 1, 2007 (incorporated by reference to
Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q filed November 11, 2007).
 117




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description10.118*
    
    
    
    
    Stock Option Agreement dated as of October 1, 2007 between the Company and Mitchell A. Yelen
(incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q filed November
11, 2007).10.119*
    
    
    
    
    Incentive Stock Option Agreement dated November 8,
2007 between the Company and Cynthia Hudson
(incorporated by reference to Exhibit 10.119 of the Companys 2007 Annual Report).10.120*
    
    
    
    
    Amendment No. 2 to Amended and Restated Employment Agreement dated as of November 7, 2007 by and between
the Company and Marko Radlovic (incorporated by reference to Exhibit 10.1 of the Companys Current Report
on Form 8-K filed November 9, 2007).10.121*
    
    
    
    
    Amended and Restated Employment Agreement dated as of August 4, 2008, by and between the Company and
Joseph A. García (incorporated by reference to Exhibit 10.1 of the Companys Current Report filed on Form
8-K filed on August 8, 2008).14.1
    
    
    
    
    Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 of the Companys 2004 Form
10-K).21.1
    
    
    
    
    List of Subsidiaries of the Company.23.1
    
    
    
    
    Consent of KPMG LLP.24.1
    
    
    
    
    Power of Attorney (included on the signature page of this Annual Report on Form 10-K).31(i).1
    
    
    
    
    Chief Executive Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31(i).2
    
    
    
    
    Chief Financial Officers Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    
    Chief Executive Officers Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    
    Chief Financial Officers Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 118




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##### Table of Contents



SPANISH BROADCASTING SYSTEM, INC.
AND SUBSIDIARIES
 Exhibit number
    
    
    
    Exhibit description99.1
    
    
    
    
    Form of Notice of Redemption, dated June 10, 2005, with respect to the redemption of the registrants 9
5/8% Senior Subordinated Notes due 2009 under the indenture dated as of November 2, 1999 (incorporated by
reference to Exhibit 99.1 of the Companys Current Report on Form 8-K filed June 16, 2005).99.2
    
    
    
    
    Form of Notice of Redemption, dated June 10, 2005, with respect to the redemption of the registrants 9
5/8% Senior Subordinated Notes due 2009 under the indenture dated as of June 8, 2001 (incorporated by
reference to Exhibit 99.2 of the Companys Current Report on Form 8-K filed June 16, 2005).
 
 *
    
    Indicates a management contract or compensatory plan or arrangement, as required by
Item 15(a)(3) of Form 10-K. 119