UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2009


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 ~~001-14691~~0-14691

WESTWOOD ONE, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		95-3980449 (I.R.S. Employer Identification No.)

40 West 57^thStreet, 5^thFloor, New York, NY (Address of principal executive offices)		10019 (Zip Code)

(212) 641-2000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web Site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-X during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noþo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer” and smaller reporting company in Rule 12b-2 of the Exchange Act (Check One):



Large Accelerated Filero	Accelerated Filerþ	Non-Accelerated Filero	Smaller Reporting Companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

Number of shares of stock outstanding at ~~March 31,~~August 12, 2009 (excluding treasury shares):

Common stock, par value $.01 per share — ~~101,259,684 shares~~
~~Class B stock, par value $.01 per share — 291,722 shares~~
~~7.5% Series A Convertible Preferred Stock, par value $.01 per share — 75,000~~20,312 shares

PART I. FINANCIAL INFORMATION

WESTWOOD ONE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


							Successor Company				Predecessor Company
	March 31,			December 31,			June 30,			December 31,
	2009			2008			2009			2008
	(unaudited)			(audited)			(unaudited)			(derived from audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	7,199		$	6,437		$	7,980		$	6,437
Accounts receivable, net of allowance for doubtful accounts of $3,952 (2009) and $3,632 (2008)		81,080			94,273
Accounts receivable								82,448		94,273
Prepaid and other assets		14,629			18,758			17,026		18,758

Total Current Assets		102,908			119,468			107,454		119,468

Property and equipment, net		29,546			30,417			36,357		30,417
Goodwill		33,988			33,988			86,414		33,988
Intangible assets, net		2,477			2,660			112,032		2,660
Deferred tax asset		19,712			14,220			2,385		14,220
Other assets		2,765			4,335			2,414		4,335

TOTAL ASSETS	$	191,396		$	205,088		$	347,056		$	205,088

LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	20,770		$	27,807		$	17,588		$	27,807
Amounts payable to related parties		24,225			22,680			20,128		22,680
Deferred revenue		2,587			2,397			2,681		2,397
Accrued expenses and other liabilities		29,797			25,565			19,648		25,565
Current maturity of long-term debt		—			249,053			—		249,053

Total Current Liabilities		77,379			327,502			60,045		327,502
Long-term debt		251,446			—			128,078		—
Deferred tax liability								63,845		—
Due to Gores								10,891		—
Other liabilities		7,049			6,993			10,551		6,993

TOTAL LIABILITIES		335,874			334,495			273,410		334,495


Commitments and Contingencies
Redeemable Preferred Stock: $.01 par value, authorized: 10,000 shares; issued and outstanding: 75 shares of 7.5% Series A Convertible Preferred Stock; liquidation preference td,000 per share, plus accumulated dividends		79,545			73,738

Redeemable Preferred Stock: $.01 par value, authorized: 75 shares; issued and outstanding: 75 shares of 7.5% Series A-1 Preferred Stock; liquidation preference td,065 per share, plus accumulated dividends								38,880

Redeemable Preferred Stock: $.01 par value, authorized: 60 shares; issued and outstanding: 60 shares of 8.0% Series B Convertible Preferred Stock; liquidation preference td,000 per share, plus accumulated dividends								30,476

Redeemable Preferred Stock: $.01 par value, authorized: 10,000 shares; issued and outstanding: 75 shares of 7.5% Series A Convertible Preferred Stock; liquidation preference td,000 per share, plus accumulated dividends								—		73,738


Total Redeemable Preferred Stock								69,356		73,738

SHAREHOLDERS’ (DEFICIT) EQUITY
Common stock, $.01 par value: authorized: 300,000 shares; issued and outstanding: 101,259 (2009) and 101,253 (2008)		1,013			1,013
Common stock, $.01 par value: authorized: 300,000 shares; issued and outstanding: 510 (2009) and 101,253 (2008)								5		1,013
Class B stock, $.01 par value: authorized: 3,000 shares; issued and outstanding: 292 (2009 and 2008)		3			3			3		3
Additional paid-in capital		287,293			293,120			10,561		293,120
Net unrealized gain		402			267			(95	)			267
Accumulated deficit		(512,734	)		(497,548	)		(6,184	)			(497,548	)

TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)		(224,023	)		(203,145	)		4,290						(203,145	)

TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT)	$	191,396		$	205,088			347,056				$	205,088

WESTWOOD ONE, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except share and per share amounts)

(unaudited)


	Three Months Ended						Successor Company			Predecessor Company
	March 31,						For the Period			For the Period				Three Months Ended				For the Period				Six Months Ended
	2009			2008			April 24, 2009 to June 30, 2009			April 1, 2009 to April 23, 2009				June 30, 2008				January 1, 2009 to April 23, 2009				June 30, 2008

NET REVENUE	$	85,867		$	106,627		$	58,044		$	25,607			$	100,372			$	111,474			$	206,998


Operating Costs (includes related party expenses of td0,020 and td7,827, respectively)		91,393			94,229

Depreciation and Amortization (includes related party warrant amortization in 2008 of td,618)		2,063			3,976

Corporate General and Administrative Expenses (includes related party expenses in 2008 of $656)		2,766			3,466

Operating Costs								52,116		20,187				85,411				111,580				179,640
Depreciation and Amortization								5,845		521				2,421				2,585				6,397
Corporate General and Administrative Expenses								2,407		1,482				1,199				4,248				4,665
Goodwill Impairment								—		—				206,053				—				206,053
Restructuring Charges		3,440			—			1,454		536				—				3,976				—

Special Charges (includes related party expenses of td,713 in 2009 and $5,000 in 2008)		5,809			7,956
Special Charges								368		7,010				897				12,819				8,853

		105,471			109,627			62,190		29,736				295,981				135,208				405,608


OPERATING (LOSS) INCOME		(19,604	)		(3,000	)		(4,146	)			(4,129	)			(195,609	)			(23,734	)			(198,610	)

Interest Expense		3,263			5,399
Interest Expense (Income)								4,692			(41	)			4,352				3,222				9,751
Other Income		(300	)		(41	)		(4	)			(59	)			(43	)			(359	)			(85	)


INCOME (LOSS) BEFORE INCOME TAX		(22,567	)		(8,358	)		(8,834	)			(4,029	)			(199,918	)			(26,596	)			(208,276	)
INCOME TAX (BENEFIT) EXPENSE		(7,381	)		(3,020	)		(2,650	)			(254	)			(174	)			(7,635	)			(3,194	)


NET (LOSS) INCOME	$	(15,186	)	$	(5,338	)		(6,184	)		$	(3,775	)		$	(199,744	)		$	(18,961	)		$	(205,082	)

NET (LOSS) INCOME attributable to Common Stockholders	$	(16,650	)	$	(5,338	)		(9,595	)		$	(5,387	)		$	(199,932	)		$	(22,037	)		$	(205,270	)


(LOSS) EARNINGS PER SHARE
COMMON STOCK
BASIC	$	(0.17	)	$	(0.06	)		(18.85	)		$	(10.67	)		$	(396.69	)		$	(43.64	)		$	(431.24	)

DILUTED	$	(0.17	)	$	(0.06	)		(18.85	)		$	(10.67	)		$	(396.69	)		$	(43.64	)		$	(431.24	)


CLASS B STOCK
BASIC	$	—		$	—			—		$	—			$	—			$	—			$	—

DILUTED	$	—		$	—			—		$	—			$	—			$	—			$	—


WEIGHTED AVERAGE SHARES OUTSTANDING:
COMMON STOCK
BASIC		98,074			89,423			509				505				504				505				476

DILUTED		98,074			89,423			509				505				504				505				476


CLASS B STOCK
CLASS B STOCK *
BASIC		292			292			292				292				292				292				292

DILUTED		292			292			292				292				292				292				292

WESTWOOD ONE, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands, except share and per share amounts)

(unaudited)


	Successor			Predecessor
	Company			Company
	For the Period			For the Period			Six Months Ended
	April 24, 2009 to June 30, 2009			January 1, 2009 to April 23, 2009			June 30, 2008

CASH FLOW FROM OPERATING ACTIVITIES:
Net (loss)	$	(6,184	)	$	(18,961	)	$	(205,082	)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Depreciation and amortization		5,845			2,585			6,397
Goodwill impairment								206,053
Loss on disposal of property and equipment		76			188
Deferred taxes		2,162			(6,874	)		(7,196	)
Non-cash stock compensation		852			2,110			2,455
Amortization of deferred financing costs					331			792
Net change in assets and liabilities (net of effect of Refinancing):		(17,078	)		19,844			(8,261	)

Net Cash (Used) By Operating Activities		(14,327	)		(777	)		(4,842	)


CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures		(1,546	)		(1,384	)		(6,078	)

Net Cash (Used) In Investing Activities		(1,546	)		(1,384	)		(6,078	)


CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock								22,750
Issuance of series A convertible preferred stock and warrants								74,178
Issuance of series B converible preferred stock		25,000
Debt repayments		(25,000	)					(85,000	)
Payments of capital lease obligations		(152	)		(271	)		(343	)
Proceeds from term loan		20,000
Deferred financing costs		—						(1,537	)

Net Cash Provided (Used) in Financing Activities		19,848			(271	)		10,048


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		3,975			(2,432	)		(872	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		4,005			6,437			6,187

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	7,980		$	4,005		$	5,315


Supplemental disclosure of cash flow information:
Non-cash financing activities (1)
Cancellation of long-term debt (2)		—			252,060			—
Issuance of new long-term debt (2)		117,500			—			—


(1)		All of the Series A Preferred Stock was exchange for all of the Series A-1 Preferred Stock.
(2)		34,962 shares of the Series B Preferred Stock was issued to our lenders in exchange in part for the cancellation of prior indebtedness.

See accompanying notes to consolidated financial statements

WESTWOOD ONE, INC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except per share amounts)

Predecessor Company


															Unrealized					Accumulated
												(Accumulated			Gain(Loss) on		Total			Other
									Additional			Deficit)			Available		Share-			Compre-
	Common Stock				Class B Stock				Paid-in			Retained			for Sale		holders’			hensive
	Shares		Amount		Shares		Amount		Capital			Earnings			Securities		Equity			(Loss)
Balance as of December 31, 2008		101,253	$	1,013		292	$	3	$	293,120		$	(497,548	)	$	267	$	(203,145	)	$	(433,251	)
Net loss													(18,961	)				(18,961	)		(18,961	)
Comprehensive income																219		219			219
Equity based compensation										2,110								2,110
Issuance common stock under equity based compensation plans		777		7						(939	)							(932	)
Issuance of common stock																		—
Preferred stock accretion										(6,157	)		—					(6,157	)
Cancellations of vested equity grants										(890	)							(890	)

Ending Balance as of April 23, 2009		102,030	$	1,020		292	$	3	$	287,244		$	(516,509	)	$	486	$	(227,756	)	$	(451,993	)

Successor Company


															Unrealized						Accumulated
												(Accumulated			Gain(Loss) on			Total			Other
									Additional			Deficit)			Available			Share-			Compre-
	Common Stock				Class B Stock				Paid-in			Retained			for Sale			holders’			hensive
	Shares		Amount		Shares		Amount		Capital			Earnings			Securities			Equity			(Loss)
Revalued Capital		510		5		292		3		2,256									2,264
Net loss													(6,184	)					(6,184	)		(6,184	)
Comprehensive (loss)																(95	)		(95	)		(95	)
Equity based compensation										852									852
Issuance common stock under equity based compensation plans										(19	)								(19	)
Preferred stock accretion										(2,979	)								(2,979	)
Cancellations of vested equity grants										(59	)								(59	)
Beneficial conversion feature										10,510									10,510

Balance as of June 30, 2009		510		5		292		3		10,561			(6,184	)		(95	)		4,290			(6,279	)

See accompanying notes to consolidated financial statements

WESTWOOD ONE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

NOTE 1— Basis of Presentation:

In this report, “Westwood One,” “Company,” “registrant,” “we”, “us” and “our” refer to Westwood One, Inc. The accompanying unaudited consolidated financial statements have been prepared by us pursuant to the rules of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the audited financial statements and footnotes included in our ~~Annual~~Current Report on Form ~~10-K for the year ended December 31, 2008.~~

On April 23, 2009, we completed the refinancing of our outstanding long-term indebtedness and the recapitalization of our equity (see Note 17 — Subsequent Events). Based upon facts and circumstances that existed as of December 31, 2008, we previously disclosed that there was a substantial doubt about our ability to continue as a going concern. Management has subsequently reviewed the impact of the refinancing and recapitalization, including projected covenant compliance under the new debt, the results of our restructuring plan (see Note 14 — Restructuring Charges) and our current forecasted results and has concluded that the conditions that gave rise to substantial doubt about the Company’s ability to continue as a going concern have been removed.8-K filed on June 22, 2009.

In the opinion of management, all adjustments, consisting of normal and recurring adjustments necessary for a fair statement of the financial position, the results of operations and cash flows for the periods presented have been recorded. The results of operations for the ~~three-month period~~periods ended ~~March 31,~~April 23, 2009 and June 30, 2009 are not necessarily indicative of the operating results for a full fiscal year.

On April 23, 2009, we completed a refinancing of substantially all of our outstanding long-term indebtedness (approximately $241,000 in principal amount) and a recapitalization of our equity (the “Refinancing”). As part of the Refinancing we entered into a Purchase Agreement (the “Purchase Agreement”) with Gores Radio Holdings, LLC(currently our ultimate parent) (together with certain related entities “Gores”). In exchange for the then outstanding shares of Series A Preferred Stock held by Gores, we issued 75,000 shares of 7.50% Series A-1 Convertible Preferred Stock, par value $0.01 per share (the “Series A-1 Preferred Stock”). In addition Gores purchased 25,000 shares of 8.0% Series B Convertible Preferred Stock (the “Series B Preferred Stock” and together with the Series A-1 Preferred Stock, the “Preferred Stock”), for an aggregate purchase price of $25,000.

Additionally and simultaneously, we entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with: (1) holders of our then outstanding Senior Notes (“Old Notes”) both series of which were issued under the Note Purchase Agreement, dated as of December 3, 2002 and (2) lenders under the Credit Agreement, dated as of March 3, 2004 (the “Old Credit Agreement”). Gores purchased at a discount approximately $22,600 in principal amount of our then existing debt held by debt holders who did not wish to participate in the New Senior Notes, which upon completion of the Refinancing was exchanged for $10,797 of the New Senior Notes. Gores also agreed to guarantee the Senior Credit Facility and a $10.0 million contractual commitment by one of our wholly owned subsidiaries. Gores currently holds $10,891 (including PIK interest) of the New Senior Notes shown in the line item Due to Gores on our balance sheet. Pursuant to the Securities Purchase Agreement, in consideration for releasing all of their respective claims under the Senior Notes and the Old Credit Agreement, the participating debt holders collectively received in exchange for their outstanding debt: (1) $117.5 million of new senior secured notes maturing July 15, 2012 (the “New Senior Notes”); (2) 34,962 shares of Series B Preferred Stock, and (3) a one-time cash payment of $25,000.

As a result of the Refinancing, Gores acquired approximately 75.1% of our equity (in preferred and common stock) and our then existing lenders acquired approximately 23.0% of our equity (in preferred and common stock). We have considered the ownership held by Gores and our existing debt holders as a collaborative group in accordance with Emerging Issues Task Force D-97, “Push Down Accounting”. As a result, have followed the acquisition method of accounting, as described by SFAS No. 141(revised 2007), “Business Combinations” (“SFAS 141R”), and have applied the SEC rules and guidance regarding “push down” accounting treatment. Accordingly, our consolidated financial statements and transactional records prior to the closing of the Refinancing reflect the historical accounting basis in our assets and liabilities and are labeled predecessor company, while such records subsequent to the Refinancing are labeled successor company and reflect the push down basis of accounting for the new fair values in our financial statements. This is presented in our consolidated financial statements by a vertical black line division which appears between the columns entitled predecessor company and successor company on the statements and relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the Refinancing are not comparable.

Based on the complex structure of the Refinancing described above, a valuation was performed to determine the acquisition price using the Income Approach employing a Discounted Cash Flow (DCF) methodology. The DCF method explicitly recognizes that the value of a business enterprise is equal to the present value of the cash flows that are expected to be available for distribution to the equity and/or debt holders of a company. In the valuation of a business enterprise, indications of value are developed by discounting future net cash flows available for distribution to their present worth at a rate that reflects both the current return requirements of the market and the risk inherent in the specific investment.

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

We used a multi-year DCF model to derive a Total Invested Capital (TIC) value which was adjusted for cash, non-operating assets and any negative net working capital to calculate a Business Enterprise Value (BEV) which was then used to value our equity. In connection with the Income Approach portion of this exercise, we made the following assumptions: (a) the discount rate was based on an average of a range of scenarios with rates between 15% and 16%; (b) management’s estimates of future performance of our operations and; (c) a terminal growth rate of 2%. The discount rate and market growth rate reflect the risks associated with the general economic pressure impacting both the economy in general and more specifically and substantially the advertising industry. All costs and professional fees incurred as part of the Refinancing totaling approximately $15,777 have been expensed as special charges in periods ended April 23, 2009 and prior (the predecessor company).

The allocation of Business Enterprise Value is as follows:


Current Assets	$	104,641
Goodwill		86,414
Intangibles		116,910
Property, Plant and Equipment, Net		36,270
Other Assets		21,913
Current Liabilities		81,160
Deferred Income Taxes		77,879
Due to Gores		10,797
Other Liabilities		10,458
Long-term Debt		106,703


Total Business Enterprise Value	$	79,151

We expect to finalize the valuation and complete the allocation of the Business Enterprise Value as soon as practicable but no later than one year from the acquisition date.

The following unaudited pro forma financial summary for the three and six months ended June 30, 2008 and 2009 gives effect to the Refinancing, the resultant acquisition accounting and the conversion of all of the Series A-1 Preferred Stock and the Series B Preferred Stock to common stock and the effects of the 200:1 reverse stock split as if each had been consummated on January 1, 2008 and January 1, 2009, respectively. The pro forma information does not purport to be indicative of what the financial condition or results of operations would have been had the Refinancing been completed on the applicable dates of the pro forma financial information.


	Unaudited Pro Forma
	Three Months ended June 30,						Six Months ended June 30,
	2009			2008			2009			2008

Revenue	$	83,651		$	100,372		$	169,518		$	206,998
Net Loss		(15,275	)		(209,013	)		(35,589	)		(222,258	)
EPS	$	(0.75	)	$	(10.29	)	$	(1.75	)	$	(10.94	)

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

In the 23-day period ended April 23, 2009, we determined that we had incorrectly recorded a credit to interest expense, which should have been recorded in the three-month period ended March 31, 2009, for the settlement of an amount owed to a former employee. We determined that this error was not significant to any prior period results and accordingly reduced the 23-day period’s interest expense by $754. Also in the period ended April 23, 2009, we determined that we incorrectly calculated the accretion of our preferred shares to redemption value which should have been recorded in the three-month period ended March 31, 2009. We determined that this error was not significant to any prior results and does not affect our Net (Loss) Income. However, it does reduce the 23-day period’s Net Loss attributable to Common Stockholders by $1,262. We do not believe these adjustments are material to our current period consolidated financial statements or to any prior period’s consolidated financial statements. As a result, we have not restated any prior period amounts.

NOTE 2— Earnings Per Share:

~~We have~~Prior to the Refinancing described in Note 1 — Basis of Presentation, we had outstanding two classes of common stock (common stock and Class B stock) and a class of preferred stock (7.5% Series A Convertible Preferred Stock, referred to herein as the “Series A Preferred Stock”). Both the Class B stock and the Series A Preferred Stock ~~are~~were convertible tointo common stock. ~~With respect to dividend rights,~~To the extent declared by our board of directors, the common stock iswas entitled to cash dividends of at least ten percent higher than those declared and paid on our Class B stock, and the Series A Preferred Stock iswas also entitled to ~~dividends.~~receive such dividends on an as-converted basis if and when declared by the Board.

As described in more detail above, as part of the Refinancing, we issued Series A-1 Preferred Stock and Series B Preferred Stock. To the extent declared by our board of directors, the Series A Preferred Stock and Series B Preferred Stock were also entitled to receive such dividends on as as-converted basis if and when declared by the board of directors. The Series A Preferred Stock, ~~is therefore~~Series A-1 Preferred Stock and Series B Preferred Stock are considered a participating ~~security~~securities requiring use of the “two-class” method for the computation of basic net income (loss) per share in accordance with EITF Issue No. 03-6, Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share (“EITF 03-06”). Losses ~~are~~were not allocated to the Series A Preferred Stock, Series A-1 Preferred Stock or Series B Preferred Stock in the computation of basic earnings per share (“EPS”) as the Series A Preferred Stock, isSeries A-1 Preferred Stock and the Series B Preferred Stock were not obligated to share in losses. Diluted earnings per share is computed using the “if-converted” method.

Basic ~~earnings per share (“EPS”)~~EPS excludes the effect of common stock equivalents and is computed using the “two-class” computation method, which divides the sum of distributed earnings to common and Class B stockholders and undistributed earnings allocated to common stockholders and ~~Series A Preferred~~preferred stockholders on a pro rata basis, after Series A Preferred Stock dividends, by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflects the potential dilution that could result if securities or other contracts to issue common stock were exercised or converted into common stock. Diluted earnings per ~~common~~ share assumes the exercise of stock options using the treasury stock method and the conversion of Class B stock, Series A Preferred Stock, Series A-1 Preferred Stock and Series AB Preferred Stock using the “if-converted” method.

~~WESTWOOD ONE, INC.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
~~(in thousands, except per share amounts)~~

~~The following is a reconciliation of our shares of common stock and Class B stock outstanding for calculating basic and diluted net (loss) income per share:~~

Three Months Ended
March 31,
2009 2008
Net (Losses) Income
$ (15,186 ) $ (5,338 )
Less: Accumulated Preferred Stock dividends (1,464 ) —
Less: distributed earnings to common stockholders — —
Less: distributed earnings to Class B stockholders — —

Undistributed earnings $ (16,650 ) $ (5,338 )

Earnings — common stock

Basic

Distributed earnings to common stockholders $ — $ —
Undistributed earnings allocated to common stockholders (16,650 ) (5,338 )

Total Earnings — common stock, basic
$ (16,650 ) $ (5,338 )

Diluted

Distributed earnings to common stockholders $ — $ —
Distributed earnings to Class B stockholders — —
Undistributed earnings allocated to common stockholders (16,650 ) (5,338 )

Total Earnings — common stock, diluted
$ (16,650 ) $ (5,338 )

Weighted average common shares outstanding, basic
98,074 89,423
Share-based compensation — —
Warrants — —
Weighted average Class B shares — —

Weighted average common shares outstanding, diluted
98,074 89,423

(Loss) Earnings per common share, basic

Distributed earnings, basic $ — $ —
Undistributed earnings — basic (0.17 ) (0.06 )

Total
$ (0.17 ) $ (0.06 )

(Loss) Earnings per common share, diluted

Distributed earnings, diluted $ — $ —
Undistributed earnings — diluted 0.17 (0.06 )

Total
$ (0.17 ) $ (0.06 )

Earnings per share — Class B Stock

Basic

Distributed earnings to Class B stockholders $ — $ —
Undistributed earnings allocated to Class B stockholders — —

Total Earnings — Class B Stock, basic
$ 0 $ 0

Diluted

Distributed earnings to Class B stockholders $ — $ —
Undistributed earnings allocated to Class B stockholders — —

Total Earnings — Class B Stock, diluted
$ 0 $ 0

Weighted average Class B shares outstanding, basic
292 292
Share-based compensation — —
Warrants — —

Weighted average Class B shares outstanding, diluted
292 292

Earnings per Class B share, basic

Distributed earnings, basic $ 0.00 $ 0.00
Undistributed earnings — basic — —

Total
$ 0.00 $ 0.00

Earnings per Class B share, diluted

Distributed earnings, diluted $ 0.00 $ 0.00
Undistributed earnings — diluted — —

Total
$ 0.00 $ 0.00

~~On June 19, 2008, warrants to purchase up to 10,000 shares were issued to Gores Radio Holding, LLC. The~~

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share ~~prices of the Gores warrants excluded were $5.00 — $7.00. In addition, the Series A Preferred Stock, including accrued dividends, is convertible to common stock at the price of $3.00~~amounts)


	Successor Company					Predecessor Company
	For the Period					For the Period				Three Months				For the Period				Six Months
	April 24, 2009					April 1, 2009				Ended				January 1, 2009				Ended
	to June 30, 2009					to April 23, 2009				June 30, 2008				to April 23, 2009				June 30, 2008

Net (Losses) Income	$	(6,184	)			$	(3,775	)		$	(199,744	)		$	(18,961	)		$	(205,082	)
Less: Accumulated Preferred Stock dividends and accretion		(3,411	)				(1,612	)			(188	)			(3,076	)			(188	)
Less: distributed earnings to common stockholders		—					—				—				—				—
Less: distributed earnings to Class B stockholders		—					—				—				—				—

*Undistributed earnings*	$	(9,595	)			$	(5,387	)		$	(199,932	)		$	(22,037	)		$	(205,270	)


Earnings — common stock
*Basic*
Distributed earnings to common stockholders	$	—				$	—			$	—			$	—			$	—
Undistributed earnings allocated to common stockholders		(9,595	)				(5,387	)			(199,932	)			(22,037	)			(205,270	)

*Total Earnings — common stock, basic*	$	(9,595	)			$	(5,387	)		$	(199,932	)		$	(22,037	)		$	(205,270	)


*Diluted*
Distributed earnings to common stockholders										$	—
Distributed earnings to Class B stockholders											—
Undistributed earnings allocated to common stockholders		(9,595	)				(5,387	)			(199,932	)			(22,037	)			(205,270	)

*Total Earnings — common stock, diluted*	$	(9,595	)			$	(5,387	)		$	(199,932	)		$	(22,037	)		$	(205,270	)


Weighted average common shares outstanding, basic
Share-based compensation		509					505				504				505				476
Warrants							—				—				—				—
Weighted average Class B shares							—				—				—				—

Weighted average common shares outstanding, diluted		509					505				504				505				476


(Loss) Earnings per common share, basic
Distributed earnings, basic	$	—				$	—			$	—			$	—			$	—
Undistributed earnings — basic		(18.85	)				(10.67	)			(396.69	)			(43.64	)			(431.24	)

Total	$	(18.85	)			$	(10.67	)		$	(396.69	)		$	(43.64	)		$	(431.24	)


(Loss) Earnings per common share, diluted
Distributed earnings, diluted	$	—				$	—			$	—			$	—			$	—
Undistributed earnings — diluted		(18.85	)				(10.67	)			(396.69	)			(43.64	)			(431.24	)

Total	$	(18.85	)			$	(10.67	)		$	(396.69	)		$	(43.64	)		$	(431.24	)


Earnings per share — Class B Stock
*Basic*
Distributed earnings to Class B stockholders	$	—				$	—			$	—			$	—			$	—
Undistributed earnings allocated to Class B stockholders		—					—				—				—				—

*Total Earnings — Class B Stock, basic*	$	—				$	—			$	—			$	—			$	—


*Diluted*
Distributed earnings to Class B stockholders	$	—				$	—			$	—			$	—			$	—
Undistributed earnings allocated to Class B stockholders		—					—				—				—				—

*Total Earnings — Class B Stock, diluted*	$	—				$	—			$	—			$	—			$	—


Weighted average Class B shares outstanding, basic		292			292				292				292				292
Share-based compensation		—			—				—				—				—
Warrants		—			—				—				—				—

Weighted average Class B shares outstanding, diluted		292			292				292				292				292


Earnings per Class B share, basic
Distributed earnings, basic	$	—		$	—			$	—			$	—			$	—
Undistributed earnings — basic		—			—				—				—				—

Total	$	—		$	—			$	—			$	—			$	—


Earnings per Class B share, diluted
Distributed earnings, diluted	$	—		$	—			$	—			$	—			$	—
Undistributed earnings — diluted		—			—				—				—				—

Total	$	—		$	—			$	—			$	—			$	—

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

Gores Radio Holdings

We have a related party relationship with Gores. As a result of our Refinancing, Gores ~~Radio Holdings, LLC (together~~created a holding company which owns approximately 75.1% of our equity and is our ultimate parent company. Gores currently also holds $10,891(including PIK interest) of our New Senior Notes as a result of purchasing debt from certain of our former debt holders who did not wish to participate in the issuance of the New Senior Notes on April 23, 2009 in connection with ~~certain related entities “Gores”), an entity managed by the~~our Refinancing. Such debt is classified as Due to Gores ~~Group, LLC. For the three months ended March 31,2009, we~~on our balance sheet.

We recorded ~~$1,713 in~~ fees related to consultancy and advisory services ~~including $650 in fees paid to~~rendered by Gores and Glendon Partners, an operating group associated with ~~Gores.~~Gores as follows:


	Successor Company		Predecessor Company
	For the Period		For the Period		Three Months		For the Period		Six Months
	April 24, 2009		April 1, 2009		Ended		January 1, 2009		Ended
	to June 30, 2009		to April 23, 2009		June 30, 2008		to April 23, 2009		June 30, 2008

Consultancy and Advisory Fees		—		470		—		1,533		—
Gores Radio Holdings, LLC				230				230
Glendon Partners Fees		296		104		—		754		—

		296		804		—		2,517		—

POP Radio

We also have a related party relationship, including a sales representation agreement, with our investee, POP Radio, L.P. We recorded ~~$331 in~~ fees ~~paid to POP Radio for the three months ended March 31, 2009.~~as follows:

Successor Company

Predecessor Company

For the Period

Three Months

For the Period

Six Months

April 24, 2009

April 1, 2009

Ended

January 1, 2009

Ended

to June 30, 2009

to April 23, 2009

June 30, 2008

to April 23, 2009

June 30, 2008

Program commission expense

248

453

416

1,180

248

453

416

1,180

Related Party Expense by Category:


	Successor Company		Predecessor Company
	For the Period		For the Period		Three Months		For the Period		Six Months
	April 24, 2009		April 1, 2009		Ended		January 1, 2009		Ended
	to June 30, 2009		to April 23, 2009		June 30, 2008		to April 23, 2009		June 30, 2008

Operating Costs		12,191		4,971		18,445		24,991		36,320
Depreciation and Amortization		—		—		—		—		1,618
Corporate, General and Administrative		—		—		—		—		610
Special Charges		296		804		—		2,517		5,000

		12,487		5,775		18,445		27,508		43,548

912

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

As a result of the Refinancing described in Note 1 — Basis of Presentation, we have followed the acquisition method of accounting, as described by SFAS 141R. Accordingly, we have revalued our assets and liabilities using our best estimate of current fair value. The majority of goodwill is not expected to be tax deductible. The increase in the value of goodwill is primarily attributable to deferred taxes associated with the fair value of our intangible assets (see Note 6 — Intangibles) and deferred taxes arising from the cancellation of our prior indebtedness. The value assigned to goodwill is not amortized but rather the estimated fair value of the reporting unit is compared to its carrying amount on at least an annual basis to determine if there is a potential impairment. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit’s goodwill and intangible assets is less than its carrying value. Our consolidated financial statements prior to the closing of the Refinancing reflect the historical accounting basis in our assets and liabilities and are labeled predecessor company, while the periods subsequent to the Refinancing are labeled successor company and reflect the push down basis of accounting for the fair values which were allocated to our segments based on the Business Enterprise Value of each. The fair values in our financial statements including goodwill as presented in the table below.


	Total		Metro		Network

Predecessor Company		33,988		23,792		10,196

Goodwill, April 23, 2009	$	33,988	$	23,792	$	10,196


Successor Company		86,414		61,354		25,060

Goodwill, June 30, 2009	$	86,414	$	61,354	$	25,060

NOTE 6— Intangibles

In accordance with SFAS 141R which is applicable to the Refinancing described in Note 1 — Basis of Presentation, we have revalued our intangibles using our best estimate of current fair value. The ~~balance~~value assigned to indefinite lived intangible assets, our trademark, is not amortized to expense but tested at least annually for impairment or upon a triggering event. Our identified definite lived intangible assets are: our relationship with radio and television affiliates, or other distribution partners from which we obtain commercial airtime we sell to advertisers; internally developed software for systems unique to our business; contracts which provide information and talent for our programming; real estate leases; and insertion order commitments from advertisers. The values assigned to definite lived assets are amortized over their estimated useful life using, where applicable, contract completion dates, lease expiration dates, historical data on affiliate relationships and software usage. On an annual basis and upon the occurrence of certain events, we are required to perform impairment tests on our identified intangible assets with indefinite lives, including goodwill, ~~at March 31, 2009 and December 31, 2008 was $33,988.~~which testing could impact the value of our business.

1014

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)


		Successor Company		Predecessor Company
		For the Period		For the Period		Three Months		For the Period		Six Months
	Estimated	April 24, 2009		April 1, 2009		Ended		January 1, 2009		Ended
	Life	to June 30, 2009		to April 23, 2009		June 30, 2008		to April 23, 2009		June 30, 2008

Trademarks	Indefinite		20,900		—		—		—		—

Affiliate Relationships	10 years		72,100		2,477		3,211		2,661		3,395
Internally Developed Software	5 years		5,600
Client Contracts	5 years		8,930
Leases	7 years		980
Insertion Orders	9 months		8,400


Opening Balance			116,910		2,477		3,211		2,661		3,395

Amortization Expense			4,878		47		184		231		368


Ending Balance			112,032		2,430		3,027		2,430		3,027

NOTE 67— Acquisitions and Investments:

TrafficLand

On December 22, 2008, Metro Networks Communications, Inc. entered into a License and Services Agreement with TrafficLand (the “License Agreement”) which provides us with a three-year license to market and distribute TrafficLand services and products. Concurrent with the execution of the License Agreement, Westwood One, Inc. (Metro’s parent), TLAC, Inc. (a wholly-owned subsidiary of Westwood formed for such purpose) and TrafficLand entered into an option agreement with TrafficLand granting us the right to acquire 100% of the stock of TrafficLand pursuant to the terms of a Merger Agreement which the parties have negotiated and placed in escrow. As a result of payments previously made under the License Agreement, we have the right to cause the Merger Agreement to be released from escrow at any time on or prior to ~~May 15,~~December 1, 2009 (such date has been extended from the original date of March 31, 2009)~~, at which time the~~. The Merger Agreement ~~is deemed “executed”. The release of the Merger Agreement does not require that we close the merger, which remains~~if released, would remain subject to ~~additional~~ closing conditions, including the consent of our lenders. Upon consummation of the closing of the merger, the License Agreement would terminate.

As TrafficLand qualifies as a variable interest entity, we have considered qualitative and quantitative factors to determine if we are the primary beneficiary pursuant to FIN 46(R) of this variable interest entity. In connection with the TrafficLand arrangement, as of ~~March 31,~~June 30, 2009, we did not hold an equity interest or a debt interest in the variable interest entity, and we did not absorb a majority of the expected losses or residual returns. Therefore, we do not qualify as the primary beneficiary and, accordingly, we have not consolidated TrafficLand.

NOTE 78— Debt:

~~Prior to the refinancing of such debt on April 23, 2009, long-term debt consisted of the following at:~~

March 31, 2009 December 31, 2008

Revolving Credit Facility/Term Loan $ 41,000 $ 41,000
4.64% Senior Notes due on November 30, 2009 52,069 51,475
5.26% Senior Notes due on November 30, 2012 156,526 154,503
Deferred derivative gain 1,851 2,075

$ 251,446 $ 249,053

Effective February 28, 2008 (with the exception of clause (v) which became effective March 3, 2008), we amended the then existing Term Loan and Revolving Credit Facility (collectively the “Facility”) to: (1) provide security to our lenders (including holders of our 5.26% Senior Notes due November 30, 2012 and 4.64% Senior Notes due November 30, 2009 (collectively, “Senior Notes” or “Notes”)); (2) reduce the amount of the Revolving Credit Facility to $75,000; (3) increase the applicable margin on LIBOR loans to 1.75% and on prime rate loans to 0.75%; (4) change the allowable Total Debt Ratio to 4.0 times our Annualized Consolidated Operating Cash Flow through the remaining term of the Facility; (5) eliminate the provision that deemed the termination of the CBS Radio Management Agreement an event of default; and (6) include covenants prohibiting the payment of dividends and restricted payments. As a result of providing the banks in the Facility with a security interest in our assets, the Note holders were also provided with security pursuant to the terms of the Note Purchase Agreement governing the Notes.

On April 23, 2009, we completed the ~~refinancing~~Refinancing of our outstanding long-term indebtedness and the recapitalization of our equity with our existing lenders and ~~the~~ Gores ~~Group~~ (see Note 171 — ~~Subsequent Events)~~Basis of Presentation) and entered into a Securities Purchase Agreement with: (1) holders of our Old Notes, the two series of which were issued under the Note Purchase Agreement, dated as of December 3, 2002 and (2) certain participating lenders under the Old Credit Agreement, dated as of March 3, 2004. ”). ~~Consequently, the balance~~Gores purchased at a discount approximately $22,600 in principal amount of our then existing debt ~~at March 31, 2009,~~held by debt holders who did not wish to participate in the New Senior Notes which upon completion of the Refinancing was exchanged for $10,797 of the New Secured Notes which is classified on our balance sheet as ~~current at December 31, 2008, has been reclassified as long-term debt.~~

AsDue to Gores. Pursuant to the Securities Purchase Agreement, in consideration for releasing all of ~~March 31, 2009~~their respective claims under the Senior Notes and ~~2008, our weighted average interest rate was 6.5% for both periods.~~the Old Credit Agreement, the debt holders collectively received

1115

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

in exchange for their then outstanding debt: (1) $117,500 of New Senior Notes; (2) 34,962 shares of Series B Preferred Stock and (3) a one-time cash payment of $25,000. We also entered into a senior credit facility pursuant to which we have a $15,000 revolving line of credit (which includes a $1,500 letter of credit sub-facility) on a senior unsecured basis and a $20,000 unsecured non-amortizing term loan (collectively, the “Senior Credit Facility”), the obligations in respect of which are subordinated to obligations in respect of the New Senior Notes. As of June 30, 2009, we had borrowed the entire amount under the term loan but had not borrowed under the revolving line of credit.

As of December 31, 2008, prior to the refinancing of our debt on April 23, 2009, our debt consisted of an unsecured, five-year $120,000 term loan and a five-year $75,000 revolving credit facility. Interest on the facility was variable and payable at a maximum of the prime rate plus an applicable margin of up to 0.75% or LIBOR plus an applicable margin of up to 1.75%, at our option. The facility contained covenants relating to dividends, liens, indebtedness, capital expenditures and restricted payments, as defined, interest coverage and leverage ratios. As a result of an amendment to our facility in the first quarter of 2008, we provided security to our lenders (including holders of our Old Notes) on substantially all of our assets and amended our allowable total debt covenant to 4.0 times Annualized Consolidated Operating Cash Flow through the remaining term of the facility.

Prior to April 23, 2009, we also had $200,000 in Old Notes which we issued on December 3, 2002, which consisted of: 5.26% Senior Notes due November 30, 2012 (in an aggregate principal amount of $150,000) and 4.64% Senior Notes due November 30, 2009 (in an aggregate principal amount of $50,000). Interest on the Old Notes was payable semi-annually in May and November. The Old Notes contained covenants relating to leverage and interest coverage ratios that were identical to those contained in our facility.

At December 31, 2008, we had approximately $9,000 outstanding under our revolving credit facility and $32,000 outstanding under the term loan. In the fourth quarter of 2008, we did not make a semi-annual interest payment on our Old Notes and the amount of the unpaid interest is included in the debt balance at December 31, 2008.

The following table summarizes our debt:


	Successor Company			Predecessor Company
	June 30, 2009			December 31, 2008

Revolving Credit Facility/Term Loan	$	20,000	(1)	$	41,000
4.64% Senior Notes due on November 30, 2009		—			51,475
15.0% Senior Secured Notes due on July 15, 2012		108,078	(2)		—
Due to Gores due on July 15, 2012		10,891	(2)		—
5.26% Senior Notes due on November 30, 2012		—			154,503
Deferred Derivative Gain		—			2,075

	$	138,969		$	249,053


(1)		Interest rate of 7.0% on Term Loan.
(2)		Includes 5.0% PIK interest which accrues on a quarterly basis

Our Senior Credit Facility and New Senior Notes require us to comply with certain financial and operational covenants. These covenants include, without limitation: restrictions on our ability to incur debt, incur liens, make investments, make capital expenditures, consummate acquisitions, pay dividends, sell assets and enter into mergers and similar transactions, and a maximum senior leverage ratio expressed as the principal amount of the New Senior Notes divided by our consolidated Adjusted EBITDA (defined as operating income (loss) from our Statement of Operations adjusted to exclude: depreciation and amortization, stock-based stock compensation, special charges and goodwill impairment and certain other income and expense amounts). This financial covenant is measured every quarter beginning on December 31, 2009 on a trailing, four-quarter basis. The covenant is 6.25 to 1.0 on December 31, 2009 and declines on a quarterly basis thereafter, including to a 4.5 to 1.0 ratio on December 31, 2010 and a 3.5 to 1.0 ratio on December 31, 2011. Failure to comply with these covenants would result in a default under our Senior Credit Facility and New Senior Notes.

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

Gores, our ultimate parent company as a result of the Refinancing, currently holds $10,891 (including PIK interest) of our New Senior Notes because it purchased debt from certain of our former debt holders who did not wish to participate in the issuance of the New Senior Notes in connection with our Refinancing. The debt is classified as Due to Gores on our balance sheet.

We determined that in the 23-day period ended April 23, 2009, we incorrectly recorded a credit to interest expense, which should have been recorded in the first quarter, for the settlement of an amount owed to a former employee. We determined that this error was not significant to any prior period results and accordingly reduced the 23-day period’s interest expense by $754. We do not believe this adjustment is material to our Consolidated Financial Statements for the 23-day period ended April 23, 2009 or to any prior period’s Consolidated Financial Statements. As a result, we have not restated any prior period amounts.

Our weighted average interest rate is as follows:

Successor Company

Predecessor Company

For the Period

Three Months

For the Period

Six Months

April 24, 2009

April 1, 2009

Ended

January 1, 2009

Ended

to June 30, 2009

to April 23, 2009

June 30, 2008

to April 23, 2009

June 30, 2008

Weighted Average Interest Rate

13.0

4.2

3.8

6.6

5.2

NOTE 89— Fair Value Measurements:

Fair Value of Financial Instruments

Our financial instruments include cash, cash equivalents, receivables, accounts payable, borrowings and interest rate contracts. At June 30, 2009 and December 31, 2008, the fair values of cash and cash equivalents, receivables and accounts payable approximated carrying values because of the short-term nature of these instruments. In 2009 the estimated fair value of the borrowings was based on the appraised value at the Refinancing. In 2008, the estimated fair values of the borrowings were valued based on the then current agreement in principle related to the Refinancing:


	June 30, 2009				December 31, 2008
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

Borrowings (Short and Long Term)		138,969		137,500		249,053		158,100

Series A Preferred Stock		—		—		75,000		50,000

Series A-1 Preferred Stock		38,880		43,071		—		—

Series B Preferred Stock		30,476		33,817		—		—

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“SFAS 157”) establishes a common definition of fair value to be applied to U.S. ~~GAAP requiring~~generally accepted accounting principles (“GAAP”) which requires the use of fair value, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007.

There was no change recorded in our opening balance of Retained Earnings as of January 1, 2009 as we did not have any financial instruments requiring retroactive application per the provisions of SFAS 157.

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Fair Value Hierarchy

SFAS 157 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect our own assumptions of market participant valuation (unobservable inputs). In accordance with SFAS 157, these two types of inputs have created the following fair value hierarchy:

~~Level 1 — Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;~~

Level 2 — Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

~~Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.~~

	•		Level 1 — Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

	•		Level 2 — Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

	•		Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

SFAS 157 requires the use of observable market data if such data is available without undue cost and effort.

~~WESTWOOD ONE, INC.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
~~(in thousands, except per share amounts)~~


	Level 1		Level 2		Level 3
Assets:

Investments	$	634	$	—	$	—


Total Assets	$	634	$	—	$	—

NOTE 910— Shareholders’ Equity and ~~Series A~~ Preferred Stock:

On each of March 3, 2008 and March 24, 2008, respectively, we ~~announced the closing of~~closed the sale and issuance of 7,143 shares (14,286 shares in the aggregate) of our common stock to Gores ~~Radio Holdings, LLC~~ at a price of $1.75 per share for an aggregate purchase amount of $25,000 less issuance costs of $2,250.

On June 19, 2008, we completed a $75,000 private placement to Gores of our Series A Preferred Stock with an initial conversion price of $3.00 per share and four-year warrants to purchase an aggregate of 10,000 shares of our common stock in three, approximately equal tranches with exercise prices of $5.00, $6.00 and $7.00 per ~~share, respectively~~share.

On April 23, 2009, we entered into a Purchase Agreement with Gores pursuant to which Gores ~~Radio Holdings, LLC.~~

~~The~~purchased 25,000 shares of Series AB Preferred Stock ~~was issued with a deemed liquidation clause that provides that the security becomes redeemable at the election~~for an aggregate purchase price of ~~the holders of a majority of~~$25,000. In exchange for the then outstanding shares of Series A Preferred Stock held by Gores, we issued 75,000 shares of Series A-1 Preferred Stock. On April 23, 2009, we also closed the refinancing of our outstanding debt whereby participating debt holders exchanged their outstanding debt for: (1) $117,500 of New Senior Notes, (2) 34,962 shares of Series B Preferred Stock and (3) a one-time cash payment of $25,000.

On July 9, 2009, Gores converted three thousand five hundred shares of Series A-1 Preferred Stock into 103,513 shares of common stock (without taking into account the reverse stock split). Also on July 9, 2009, pursuant to the terms of our Certificate of Incorporation, the 292 outstanding shares of our Class B stock were automatically converted into 292 shares of common stock (without taking into account the reverse stock split) because as a result of such conversion by Gores, the voting power of the Class B stock, as a group, fell below ten percent of the aggregate voting power of issued and outstanding shares of common stock and Class B stock.

On August 3, 2009 at a special meeting of stockholders (see Note 18 — Subsequent Events), certain amendments to our Certification of Incorporation (also referred to herein as our Charter) were approved by our stockholders. Such amendments consisted of an increase in the ~~event~~number of authorized shares of our common stock from 300,000 to 5,000,000 and a ~~consolidation or merger~~two hundred to one (200:1) reverse stock split which was approved and effective on August 3, 2009. Accordingly, the reverse stock split has been reflected retrospectively in EPS for all periods herein. As contemplated by the terms of our Refinancing, the outstanding shares of Series A-1 Preferred Stock and Series B Preferred Stock were converted into shares of our common stock pursuant to the terms of the ~~Company, as defined, or~~Certifications of Designation for the ~~sale of all or substantially all of the assets of the Company.~~ Series A-1 Preferred Stock and Series B Preferred Stock.

In accordance with ~~Emergency~~Emerging Issues Task Force (EITF) D-98, the Series A Preferred Stock is required to be classified as mezzanine equity because a change of control of the Company could occur without our ~~approval and thus~~approval. Accordingly, the redemption of the Series A Preferred Stock is not solely under ~~the control of the Company. During the three months ended March 31, 2009, management concluded~~our control. We have determined that itsuch redemption is probable and have, accordingly, accreted up to the ~~Series A Preferred Stock will become redeemable. Accordingly, we have adjusted the initial carrying amount~~redemption value of the Series A Preferred Stock.

In accordance with EITF D-98, the Series A-1 Preferred Stock and Series B Preferred Stock is also required to ~~its~~be classified as mezzanine equity because the redemption ~~amount~~of these instruments is outside our control. We have recorded the Preferred Stock at fair value as of the ~~balance sheet date.~~

~~On April 23, 2009, we completed~~date of issuance and have subsequently accreted changes in the ~~refinancing~~redemption value from the date of ~~our outstanding debt and~~issuance to the ~~re-capitalization of our equity.~~earliest redemption date using the interest method.

On March 16, 2009, we were delisted from the NYSE and ~~at this time we do not~~since that date have ~~any immediate plans~~traded over-the-counter on the OTC Bulletin Board. On August 5, 2009, our ticker symbol changed to ~~list on an alternate exchange such as Nasdaq or Amex, which means~~WWOZ.OB in connection with our ~~common~~reverse stock ~~will continue to be lightly traded.~~split.

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

NOTE 1011— Equity-Based Compensation:

Equity Compensation Activity

~~During the three months ended March 31, 2009, we~~We awarded 2575 shares of common stock to certain ~~employees.~~employees in the period January 1, 2009 to April 23, 2009. The awards have restriction periods tied solely to employment and vest over three years. The cost of common stock awards, which is determined to be the fair market value of the shares on the date of grant net of estimated forfeitures, is expensed ratably over the related vesting period.

Our common stock activity ~~during the three-month period ended March 31, 2009~~ is as follows:

Weighted
2009 Average
Shares Exercise Price

Unvested at December 31, 2008 7,000 $ 7.58
Granted during the period 25 0.06
Forfeited during the period (4 ) 18.12

Unvested at March 31, 2009 7,021 $ 7.56


				Weighted
				Average
	Shares			Price

Predecessor Company
Unvested at December 31, 2008		7,000		$	7.58
Granted January 1 to April 23, 2009		75			0.06
Forfeited January 1 to April 23, 2009		(667	)		9.3

Unvested at April 23, 2009		6,408			7.32


Successor Company
Unvested at April 24, 2009		6,408		$	7.32
Granted April 24 to June 30, 2009		—			—
Forfeited April 24 to June 30, 2009		(232	)		3.39

Unvested at June 30, 2009		6,176			7.47

~~Total~~Stock based compensation expense for the three months ended March 31, 2009 and 2008 related to stock-based compensation was $1,352 and $2,123, respectively. Of that expense, $918 and $1,154, respectively, was included in operating costs in the Consolidated Statement of Operations and $434 and $969, respectively, was included in corporate, general and administrative expense in the Consolidated Statement of Operations.is recorded as follows:


	Successor Company		Predecessor Company
	For the Period		For the Period		Three Months			For the Period		Six Months
	April 24, 2009		April 1, 2009		Ended			January 1, 2009		Ended
	to June 30, 2009		to April 23, 2009		June 30, 2008			to April 23, 2009		June 30, 2008

Operating Costs		732		218		1,217			1,136		2,371
General and Administrative Expense		120		540		(885	)		974		84

Total Stock Compensation Expense		852		758		332			2,110		2,455

1320

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

Common equivalent shares outstanding are as follows:


	Successor Company		Predecessor Company
	June 30,		December 31,
	2009		2008
Options		6,176		7,000
Restricted Stock		179		364
Restricted Stock Units		440		1,216
Warrants		10,000		10,000

		16,795		18,580

The per share exercise price of the options excluded were $0.05 — $38.34 for the six months ended June 30, 2009 and the twelve months ended December 31, 2008, respectively.

On April 23, 2009, pursuant to a board of directors resolution, equity compensation awarded to directors who resigned in connection with the terms of the Refinancing accelerated and vested in full. In connection with this acceleration, we recorded stock based compensation expense of $514.

On June 19, 2008, warrants to purchase up to 10,000 shares were issued to Gores. The per share prices of the Gores warrants excluded were $5.00 — $7.00. Effective August 3, 2009, when the Charter Amendments were approved, these warrants were cancelled.

NOTE 1112 —— Other Income/(Loss):

~~During the quarter ended March 31, 2009, we recorded $224 in derivative contract gain. Such gain is included as a component of other income/(loss) in the Consolidated Statement of Operations.~~

Successor Company

Predecessor Company

For the Period

Three Months

For the Period

Six Months

April 24, 2009

April 1, 2009

Ended

January 1, 2009

Ended

to June 30, 2009

to April 23, 2009

June 30, 2008

to April 23, 2009

June 30, 2008

Other Income

359

NOTE 1213— Comprehensive Income (Loss):

Comprehensive income (loss) reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive net income (loss) represents net income or loss adjusted for unrealized gains or losses on available for sale securities. Comprehensive income (loss) is as follows:


							Successor Company				Predecessor Company
	Three Months Ended						For the Period			For the Period				Three Months				For the Period				Six Months
	March 31,						April 24, 2009			April 1, 2009				Ended				January 1, 2009				Ended
	2009			2008			to June 30, 2009			to April 23, 2009				June 30, 2008				to April 23, 2009				June 30, 2008

Net (loss) Income	$	(15,186	)	$	(5,338	)	$	(6,184	)		$	(3,775	)		$	(199,744	)		$	(18,961	)		$	(205,082	)
Unrealized gain (loss) on marketable securities net of income taxes		135			2,548
Unrealized gain (loss) on marketable securities, net of income taxes								(95	)			85				48				219				2,596

Comprehensive (loss) Income	$	(15,051	)	$	(2,790	)	$	(6,279	)		$	(3,690	)		$	(199,696	)		$	(18,742	)		$	(202,486	)

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

NOTE 1314— Income Taxes:

We use the asset and liability method of financial accounting and reporting for income taxes required by Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” (“SFAS 109”). Under SFAS 109, deferred income taxes reflect the tax impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes.

We classified interest expense and penalties related to unrecognized tax benefits as income tax expense in accordance with Financial Accounting Standards Board 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 SFAS 109 and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The evaluation of a tax position in accordance with this interpretation is a two-step process. The first step is recognition, in which the enterprise determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is measurement. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements.

We determined, based upon the weight of available evidence, that it is more likely than not that our deferred tax asset will be realized. We have experienced a long history of taxable income which would enable us to carryback any potential future net operating losses and taxable temporary differences that can be used as a source of income. As such, no valuation allowance was recorded for the ~~three~~six months ended ~~March 31,~~June 30, 2009 or 2008. We will continue to assess the need for a valuation allowance at each future reporting period.

As part of our compliance with acquisition accounting, being followed as of April 24, 2009, we have recorded a deferred tax liability which represents the fair value adjustment for book purposes of intangibles as well as plant, property and equipment.

In accordance with the provisions of the Internal Revenue Code, we are planning to make an election to defer the inclusion of cancellation of indebtedness income, which arose as part or our Refinancing, ratably over a five-year period beginning in 2014. We are still evaluating the facts and circumstances surrounding this election and may choose instead to exclude such income under the insolvency exception provision of the Internal Revenue Code; however, the election to defer income is the most likely approach we will take based on our understanding of facts and circumstances at this time. A deferred tax liability has been recorded as a part of acquisition accounting to reflect the future taxable income to be recognized relating to the cancellation of indebtedness income.

1422

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

NOTE 1415— Restructuring Charges:

In the third quarter of 2008, we announced a plan to restructure the traffic operations of the ~~Metro/~~Metro Traffic ~~operating segment and~~business (commonly referred to ~~take actions to address underperforming programming~~by us as the Metro re-engineering) and to implement other cost reductions. The ~~modifications~~re-engineering entailed reducing the number of our Metro Traffic operational hubs from 60 to ~~the traffic business are part of a series of~~13 regional centers and produced meaningful reductions in labor expense, aviation expense, station compensation, program commissions and rent.

The Metro re-engineering ~~initiatives identified by management to improve the operating and financial performance~~initiative began in the ~~near term, while setting~~second half of 2008 and has continued in 2009. In the ~~foundation for profitable long-term growth.~~

first half of 2009 we also undertook additional reductions in our workforce and terminated certain contracts. In connection with the Metro re-engineering ~~of our traffic operations~~ and the other cost reductions (which included the consolidation of leased offices, staff reductions and the elimination of underperforming programming and was implemented to a significant degree in the last half of 2008), in 2008,reduction initiatives, we recorded $14,100 and $5,429 of restructuring charges and for the three months ended March 31, 2009 we recorded $3,440 in restructuring charges. We anticipate further charges of approximately $6,260 as additional phases of the original traffic re-engineering and other cost-reduction programs are implemented and finalized in the second ~~quarter~~half of ~~2009.~~2008 and in the six months ended June 30, 2009, respectively. The total accumulated charges are $19,529, and the balance at June 30, 2009 is $8,481.

The restructuring charges for the traffic re-engineering and other cost-reduction programs are projected to be approximately $23,800. In addition, we have introduced and will complete new cost reduction programs in 2009. As these programs are implemented, we anticipate that we will incur new incremental costs for severance of approximately $6,000 and contract terminations of $3,100. In total, we estimate we will record aggregate restructuring charges of approximately $32,900, consisting of: (1) $15,500 of severance, relocation and other employee related costs; (2) $7,400 of facility consolidation and related costs; and (3) $10,000 of contract termination costs.activity follows:


				Facilities
	Severance			Consolidation			Contract
	Termination Costs			Related Costs			Termination Costs			Total

Acitivty Thru December 31, 2008
Charges		6,765			831			6,504			14,100
Payments		(3,487	)		(41	)		(1,108	)		(4,636	)
Non-Cash utilization		(80	)					(1,600	)		(1,680	)


Balance at December 31, 2008		3,198			790			3,796			7,784

Charges from January 1 to March 31, 2009		1,658			1,781			—			3,439
Charges from April 1 to April 23, 2009		—			536			—			536
Charges from April 24 to June 30, 2009		372			1,082			—			1,454
Payments		(2,971	)		(361	)		(1,400	)		(4,732	)
Non-Cash utilization		—			—			—			—


Balance at June 30, 2009		2,257			3,828			2,396			8,481



Accumulated Charges		8,795			4,230			6,504			19,529
Accumulated Payments		(6,458	)		(402	)		(2,508	)		(9,368	)
Accumulated Non-Cash utilization		(80	)		—			(1,600	)		(1,680	)


Balance at June 30, 2009		2,257			3,828			2,396			8,481

Restructuring charges have been recorded in accordance with SFAS No. 146, “Accounting for the Costs Associated with Exit or Disposal Activities” (“SFAS 146”) and SFAS No. 88, “Employer’s Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefit” (“SFAS 88”). We account for one-time termination benefits, contract terminations, asset write-offs and/or costs to terminate lease obligations less assumed sublease income in accordance with SFAS 146, which addresses financial accounting and reporting for costs associated with restructuring activities. Under SFAS 146, we establish a liability for a cost associated with an exit or disposal activity, including severance and lease termination obligations and other related costs, when the liability is incurred, rather than at the date that we commit to an exit plan.

InWe made certain estimates in determining the restructuring charges ~~related to the restructuring, we had to make estimates related to the expenses associated with the restructuring.~~indicated above. These estimates may vary from actual costs depending, in part, upon factors that may be beyond our control. We will continue to review the status of our restructuring obligations ~~on a quarterly basis~~ and, if appropriate, record changes to these obligations based on management’s most current estimates.

~~The restructuring charges are comprised as follows:~~

Restructuring Liability Severance Termination Cost Facilities Consolidation Related Costs Contract Termination Total

Balance at December 31, 2008 3,198 790 3,796 7,784
Charges 1,658 1,782 — 3,440
Payments (884 ) (115 ) (360 ) (1,359 )
Non-Cash utilization — — — —

Balance at March 31, 2009 3,972 2,457 3,436 9,865

1523

~~WESTWOOD ONE, INC.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
~~(in thousands, except per share amounts)~~

~~NOTE 17~~~~— Subsequent Events:~~

~~On April 23, 2009 (the “Closing Date”), we completed the refinancing of our outstanding long-term indebtedness and the recapitalization of our equity.~~

~~Debt Restructuring~~

~~Securities Purchase Agreement~~

As part of the recapitalization, we entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with: (1) holders of the Company’s outstanding Senior Notes both of which were issued under the Note Purchase Agreement, dated as of December 3, 2002 and (2) lenders under the Credit Agreement, dated as of March 3, 2004 (the “Old Credit Agreement”).

Pursuant to the Securities Purchase Agreement, in consideration for releasing all of their respective claims under the Senior Notes and the Old Credit Agreement, the debt holders collectively received: (1) $117.5 million of new senior secured notes maturing July 15, 2012 (the “New Senior Notes”); (2) 34,962 shares of 8.0% Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”); and (3) a one-time cash payment of $25.0 million. Gores purchased at a discount certain debt held by debt holders who did not wish to participate in the New Senior Notes as set forth in the Securities Purchase Agreement.

The New Senior Notes bear interest at 15.0% per annum, payable 10% in cash and 5% in-kind (PIK interest). The PIK interest will be added to principal quarterly but will not be payable until maturity. The New Senior Notes may be prepaid at any time, in whole or in part, without premium or penalty. Payment of the New Senior Notes is mandatory upon, among other things, certain asset sales and the occurrence of a “change of control” (as such term is defined in the Securities Purchase Agreement).

The New Senior Notes are guaranteed by our domestic subsidiaries (the “Guarantors”) and are secured, pursuant to an amendment of our security agreement with the debt holders, by a first priority lien on substantially all of our assets.

We are subject to restrictive covenants that, among other things, limit our ability to incur debt, incur liens, make investments, make capital expenditures, consummate acquisitions, pay dividends, sell assets and enter into mergers and similar transactions beyond specified baskets and identified carve-outs. Additionally, we may not exceed the maximum senior leverage ratio (the principal amount outstanding under the New Senior Notes over our consolidated EBITDA). The Securities Purchase Agreement contains customary representations and warranties and affirmative covenants.

The Securities Purchase Agreement also contains customary events of default, including, without limitation, nonpayment of principal or other amounts when due; breach of covenants; inaccuracy of representations and warranties; cross-default to our other indebtedness or our subsidiaries; certain ERISA-related events; certain voluntary and involuntary bankruptcy events; certain judgment related defaults; and invalidity or imperfected liens on collateral. The Guarantors’ obligations under the guaranty will be triggered upon the occurrence of an event of default.

If an event of default occurs and is continuing under the Securities Purchase Agreement, any holder or holders of more than 50% in principal amount of the New Senior Notes may accelerate all of our obligations under the New Senior Notes. For events of default related to nonpayment of principal or interest, any two holders of the New Senior Notes (other than Gores) holding at least 15% (in the aggregate) of principal amount of the New Senior Notes affected by the event of default, may accelerate our obligations under the New Senior Notes held by them. For other events of default, the obligations under the New Senior Notes are automatically accelerated.


	Successor Company		Predecessor Company
	June 30,		December 31,
	2009		2008
Assets
Network	$	121,998	$	92,109
Metro/Traffic		202,879		80,079
Corporate		22,179		32,900

Total Assets (1)	$	347,056	$	205,088

~~WESTWOOD ONE, INC.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
~~(in thousands, except per share amounts)~~

~~New Credit Agreement~~

In connection with the Debt Restructuring, we also entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Foothill, LLC, as the arranger, administrative agent and initial lender, pursuant to which we obtained a $15.0 million revolving line of credit (which includes a $1.5 million letter of credit sub-facility) on a senior unsecured basis and a $20.0 million unsecured non-amortizing term loan, the obligations in respect of which are subordinated to obligations in respect of the New Senior Notes. We borrowed the entire amount of the term loan on the Closing Date and did not make any borrowings under the revolving line of credit. Loans under the Credit Agreement will mature on July 15, 2012 and proceeds of the term loan will be used to, among other things, consummate the transactions contemplated by the Restructuring, and pay fees and expenses in connection therewith. Proceeds of the revolving loans are expected to be used for working capital and general corporate purposes.

Our obligations under the Credit Agreement are guaranteed by the Guarantors and Gores. Payment of the loans, under the Credit Agreement, is mandatory upon, among other things, certain asset sales and the occurrence of a change of control.

Loans under the Credit Agreement bear interest at our option at either LIBOR plus 4.5% per annum (with a LIBOR floor of 2.5%) or a base rate plus 4.5% per annum (with a base rate floor of the greater of 3.75% and the one-month LIBOR rate). The Credit Agreement contains substantially similar restrictive covenants (including a maximum senior leverage ratio calculated in a manner consistent with the Securities Purchase Agreement), affirmative covenants and representations and warranties as those found in the Securities Purchase Agreement, subject, in the case of certain covenants, to a cushion on baskets and covenant levels from those contained in the Securities Purchase Agreement.

The Credit Agreement contains customary events of default including, without limitation, nonpayment of principal or other amounts when due; breach of covenants; inaccuracy of representations and warranties; cross-acceleration to our other indebtedness; certain ERISA-related events; certain voluntary and involuntary bankruptcy events; certain judgment-related defaults; and certain events related to Gores, including defaults by Gores under the Gores guarantee and defaults by Gores under their other agreements with Wells Fargo Foothill unrelated to us. The Guarantors’ obligations under the guaranty will be triggered upon the occurrence of an event of default.

If an event of default occurs and is continuing under the Credit Agreement, the lenders may, among other things, terminate their obligations (including the revolver commitments) under the Credit Agreement and accelerate our obligations.

~~Equity Restructuring~~

~~Purchase Agreement~~

In connection with the Equity Restructuring, we entered into a Purchase Agreement (the “Purchase Agreement”) with Gores Radio Holdings, LLC. In exchange for the then outstanding shares of Series A Preferred Stock held by Gores, we issued 75,000 shares of 7.50% Series A-1 Convertible Preferred Stock, par value $0.01 per share (the “Series ~~A-1 Preferred~~ Stock”). In addition Gores purchased 25,000 shares of Series B Preferred Stock (together with the Series A-1 Preferred Stock, the “Preferred Stock”), for an aggregate purchase price of $25.0 million.

~~WESTWOOD ONE, INC.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
~~(in thousands, except per share amounts)~~

~~Terms of Series A-1 Preferred Stock~~

Holders of the Series A-1 Preferred Stock will be entitled to receive dividends at a rate of 7.50% per annum, compounded quarterly, which will be added to the liquidation preference (initially equal to $1,065 per share). The Series A-1 Preferred Stock ranks~~pari passu~~with the Series B Preferred Stock. If the Series A-1 Preferred Stock remains outstanding after June 19, 2013, the dividend rate will increase to 15.00% per annum. Holders of the Series A-1 Preferred Stock will also be entitled to receive dividends declared or paid on our common stock on an as-converted basis.

The Series A-1 Preferred Stock is convertible at the option of the holders into a number of shares of common stock by dividing the number of shares of Series A-1 Preferred Stock to be converted by the multiple of the liquidation preference and the conversion price in effect at the close of business on the conversion date.

After March 19, 2013, we have the sole option to redeem the Series A-1 Preferred Stock at any time provided we concurrently offer to redeem the same proportion (based on liquidation preference) of the Series B Preferred Stock on the same terms and conditions and at the same time. If the Series A-1 Preferred Stock remains outstanding after December 19, 2013, the liquidation preference per share will increase by 50%.

~~Terms of Series B Preferred Stock~~

Holders of the Series B Preferred Stock will be entitled to receive dividends at a rate of 8.0% per annum, compounded quarterly, which will be added to the liquidation preference (initially equal to $1,000 per share). The Series B Preferred Stock ranks~~pari passu~~with the Series A-1 Preferred Stock. If the Series B Preferred Stock remains outstanding after June 19, 2013, the dividend rate will increase to 15.00% per annum. Holders of the Series B Preferred Stock will also be entitled to receive dividends declared or paid on the Common Stock on an as-converted basis.

The Series B Preferred Stock is convertible at the option of the holders into a number of shares of Common Stock by dividing the number of shares of Series B Preferred Stock to be converted by the multiple of the liquidation preference and the conversion price in effect at the close of business on the conversion date.

~~Black Line Division~~

As a result of the debt and equity restructuring completed on April 23, 2009, in the future we will follow the purchase method of accounting, as described by Statement of Financial Accounting Standards (SFAS) 141R, “Business Combinations” and expect to apply the SEC rules and guidance regarding “push down” accounting treatment in the second quarter. Accordingly, in future filings our Consolidated Financial Statements and transactional records prior to the closing of the debt and equity restructuring will reflect the historical accounting basis in our assets and liabilities and be labeled predecessor company, while such records subsequent to the debt and equity restructuring will be labeled successor company and will reflect the push down basis of accounting for the new fair values in our financial statements. This will be presented in our Consolidated Financial Statements by a vertical black line division which will appear between the columns entitled predecessor company and successor company on the Consolidated Financial Statements and relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the debt and equity restructuring are not comparable. Since the completion of the debt and equity restructuring occurred on April 23, 2009, there was insufficient time to complete a valuation of the successor company for disclosure in the March 31, 2009 financial statements.

2025

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

NOTE 18— Subsequent Events:

A special meeting of stockholders to consider certain amendments to our Certificate of Incorporation (the “Charter Amendments) was held on August 3, 2009 where such amendments were approved by our stockholders. The Charter Amendments: (1) increased the number of authorized shares of our common stock from 300,000 to 5,000,000 (2) effected a reverse stock split of our outstanding common stock at a ratio of two hundred to one (200:1), (3) defined the term “Continuing Directors” that was used but not defined in the Certificate of Incorporation, (4) amended the Certificate of Incorporation to delete Article Sixteenth of the Certificate of Incorporation that set forth higher approval thresholds than those required under the Delaware General Corporation Law with respect to certain amendments of the Certificate of Incorporation and (5) amended the Certificate of Incorporation to delete the provision in Article Seventeenth relating to Article Sixteenth.

The Charter Amendments were made in connection with the refinancing of our debt which closed on April 23, 2009. On such date, the Series A-1 Convertible Preferred Stock and Series B Convertible Preferred Stock (collectively, the “Preferred Stock”) was issued but not converted because we did not have sufficient authorized shares of common stock into which the Preferred Stock could be converted. The Certificates of Designation for the Series A-1 Preferred Stock and Series B Preferred Stock, state that when the authorized shares of common stock were increased by a sufficient amount to allow the conversion of all Preferred Stock, the Preferred Stock would convert automatically, without further action required by us or any shareholder, into shares of common stock.

As previously disclosed, on July 9, 2009, Gores converted three thousand five hundred shares of Series A-1 Convertible Preferred Stock into 103,513 shares of common stock. Such conversion triggered the conversion of 292 shares of Class B Common into 292 shares of common stock pursuant to the terms of our Charter.

The conversion of Preferred Stock that occurred on August 3, 2009 increased the number of shares of common stock issued and outstanding from 206,263 to 4,062,446 on a pre-split basis, which was reduced to 20,312 shares after the 200:1 reverse stock split. While such technically resulted in substantial dilution to our common stockholders, the ownership interest of each of our common stockholders did not change substantially after the conversion of the Preferred Stock into common stock as the Preferred Stock that was issued on April 23, 2009 when our Refinancing closed from the time of its issuance participated on an as-converted basis with respect to voting, dividends and other economic rights as the common stock. Effective August 3, 2009, when the Charter Amendments were approved, the warrants issued to Gores on June 19, 2008 were cancelled.

For the interim financial period ended June 30, 2009, subsequent events were evaluated through the date of this filing, the date the financial statements were issued.

NOTE 19— Recent Accounting Pronouncements:

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162” (SFAS 168). SFAS 168 replaces SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” and establishes the “FASB Accounting Standard Codification” (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles in the United States. All guidance contained in the Codification carries an equal level of authority. On the effective date of SFAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We have evaluated this new statement, and have determined that it will not have a significant impact on the determination or reporting of our financial results.

WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, SFAS 165 sets forth: (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. In accordance with SFAS 165, an entity should apply the requirements to interim and annual financial periods ending after June 15, 2009. The implementation of this standard, effective for our interim financial statements ending June 30, 2009, did not have a material impact on our consolidated financial position and results of operations. For the interim financial period ended June 30, 2009, subsequent events were evaluated through August 10, 2009, the date the financial statements were issued.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”). This FSP amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We have adopted the disclosure requirements of FSP FAS 107-1 and APB 28-1 effective with our second quarter ended June 30, 2009. The adoption of FSP FAS 107-1 and APB 28-1 did not have an impact on the determination or reporting of our financial results.

In March 2009, the Financial Account Standards Board (“FASB’) issued FSP FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination (“FSP FAS 141(R)-1”), which amends the guidance in SFAS 141R, for the initial recognition and measurement, subsequent measurement, and disclosures of assets and liabilities arising from contingencies in a business combination. In addition, FSP FAS 141(R)-1 amends the existing guidance related to accounting for pre-existing contingent consideration assumed as part of the business combination. FSP FAS 141(R)-1 ~~is effective for the Company~~was adopted by us on January 1, 2009.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in our financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141R iswas effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008. The adoption of SFAS 141R and FSP FAS 141(R)-1 ~~did not have a significant impact on~~impacted the accounting for our ~~Consolidated Financial Statements.~~Refinancing (See Note 1 — Basis of Presentation).

In November 2008, the EITF issued Issue No. 08-6, Equity Method Investment Accounting Considerations (“EITF 08-6”), which is effective for the Company January 1, 2009. EITF 08-6 addresses the impact that SFAS 141R and SFAS 160 might have on the accounting for equity method investments, including how the initial carrying value of an equity method investment should be determined, how an impairment assessment of an underlying indefinite-lived intangible asset of an equity method investment should be performed and how to account for a change in an investment from the equity method to the cost method. The adoption of this guidance does not have a significant impact on our Consolidated Financial Statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
~~(In~~ (In thousands except per share amounts)

EXECUTIVE OVERVIEW

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the annual audited consolidated financial statements and notes thereto included in our ~~Annual~~Current Report on Form ~~10-K for the year ended December 31, 2008.~~8-K as filed on June 22, 2009.

Westwood One is a provider of programming, information services and other content to the radio, TV and digital sectors. We are one of the largest domestic outsourced providers of traffic reporting services and one of the nation’s largest radio networks, producing and distributing national news, sports, music, talk and entertainment programs, features and live events, in addition to local news, sports, weather, video news and other information programming. We deliver our content to over 5,000 radio and television stations in the U.S. ~~The commercial airtime that we sell to~~We exchange our ~~advertisers is acquired from~~content with radio and television ~~affiliates in exchange~~stations for ~~our programming, content, information,~~commercial airtime, which we then sell to local, regional and ~~in certain circumstances, cash compensation.~~national advertisers.

We derive substantially all of our revenue from the sale of :10 second, :15 second, :30 second and :60 second commercial airtime to advertisers. Our advertisers who target local/regional audiences generally find the most effective method is to purchase shorter duration advertisements, which are principally correlated to traffic and information related programming and content. Our advertisers who target national audiences generally find the most cost effective method is to purchase longer :30 or :60 second advertisements, which are principally correlated to news, talk, sports and music and entertainment related programming and content. A growing number of advertisers purchase both local/regional and national airtime. Our goal is to maximize the yield of our available commercial airtime to optimize revenue.

In managing our business, we develop programming and exploit our commercial airtime by concurrently taking into consideration the demands of our advertisers on both a market specific and national basis, the inputs of the owners and management of our radio station affiliates, and the inputs of our programming partners and talent. Our continued success and prospects for growth are dependent upon our ability to manage these factors in a cost effective manner and to adapt our information and entertainment programming to different distribution platforms. Our results may also be impacted by overall economic conditions, trends in demand for radio related advertising, competition, and risks inherent in our customer base, including customer attrition and our ability to generate new business opportunities to offset any attrition.

There are a variety of factors that influence our revenue on a periodic basis, including but not limited to: (1) economic conditions and the relative strength or weakness in the United States economy; (2) advertiser spending patterns and the timing of the broadcasting of our programming, principally the seasonal nature of sports programming; (3) advertiser demand on a local/regional or national basis for radio related advertising products; (4) increases or decreases in our portfolio of program offerings and related audiences, including changes in the demographic composition of our audience base; (5) increases or decreases in the size of our advertiser sales force; and (6) competitive and alternative programs and advertising mediums, including, but not limited to, radio.

Our commercial airtime is perishable, and accordingly, our revenue is significantly impacted by the commercial airtime available at the time we enter into an arrangement with an advertiser. Our ability to specifically isolate the relative historical aggregate impact of price and volume is not practical as commercial airtime is sold and managed on an order-by-order basis. We closely monitor advertiser commitments for the current calendar year, with particular emphasis placed on the annual upfront process and a prospective three-month period. We take the following factors, among others, into account when pricing commercial airtime: (1) the dollar value, length and breadth of the order; (2) the desired reach and audience demographic; (3) the quantity of commercial airtime available for the desired demographic requested by the advertiser for sale at the time their order is negotiated; and (4) the proximity of the date of the order placement to the desired broadcast date of the commercial airtime.

2229

Our national revenue has been trending downward for the last several years due principally to reductions in national audience levels and ~~lower clearance and~~the audience levels of our affiliated stations. Our local/regional revenue has been trending downward due principally to increased competition, ~~reductions in our local/regional sales force~~ and an increase in the amount of :10 second inventory being sold by radio stations. Recently, our operating performance has also been affected by the weakness in the United States economy and advertiser demand for radio-related advertising products.

The principal components of our operating expenses are programming, production and distribution costs (including affiliate compensation and broadcast rights fees), selling expenses including commissions, promotional expenses and bad debt expenses, depreciation and amortization, and corporate general and administrative expenses. Corporate general and administrative expenses are primarily comprised of costs associated with the Management Agreement (which terminated on March 3, 2008), corporate accounting, legal and administrative personnel costs, and other administrative expenses, including those associated with corporate governance matters. Special charges include one-time expenses associated with the renegotiation of the CBS agreements, the 2009 and 2008 Gores ~~investment, re-financing/recapitalization~~investments, Refinancing costs and ~~re-engineering expenses.~~regionalization costs.

We consider our operating cost structure to be largely fixed in nature, and as a result, we need several months lead time to make significant modifications to our cost structure to react to what we view are more than temporary increases or decreases in advertiser demand. This becomes important in predicting our performance in periods when advertiser revenue is increasing or decreasing. In periods where advertiser revenue is increasing, the fixed nature of a substantial portion of our costs means that operating income will grow faster than the related growth in revenue. Conversely, in a period of declining revenue, operating income will decrease by a greater percentage than the decline in revenue because of the lead time needed to reduce our operating cost structure. If we perceive a decline in revenue to be temporary, we may choose not to reduce our fixed costs, or may even increase our fixed costs, so as to not limit our future growth potential when the advertising marketplace rebounds. We carefully consider matters such as credit and commercial inventory risks, among others, in assessing arrangements with our programming and distribution partners. In those circumstances where we function as the principal in the transaction, the revenue and associated operating costs are presented on a gross basis in the Consolidated Statement of Operations. In those circumstances where we function as an agent or sales representative, our effective commission is presented within revenue with no corresponding operating expenses. Although no individual relationship is significant, the relative mix of such arrangements is significant when evaluating operating margin and/or increases and decreases in operating expenses.

~~We engaged consultants for~~In the ~~most part to assist us in determining the most cost effective manner to gather and disseminate traffic information to our constituents. As a result,~~third quarter of 2008, we announced a ~~Metro/~~plan to restructure the traffic operations of the Metro Traffic business (commonly referred to by us as the Metro re-engineering) and to implement other cost reductions. The re-engineering ~~initiative that was~~entailed reducing the number of our Metro Traffic operational hubs from 60 to 13 regional centers and produced meaningful reductions in labor expense, aviation expense, station compensation, program commissions and rent. Management has also implemented additional cost reduction initiatives in the ~~last~~first half of ~~2008. The modifications~~2009, to ~~the Metro/Traffic business are part of a series of re-engineering initiatives identified by us to~~help improve our operating and financial performance ~~in the near-term, while setting the~~and help establish a foundation for ~~profitable~~potential long-term growth. ~~Over time, these changes will result in a~~We have recognized $25,000 of savings from both the Metro re-engineering and additional cost reduction ~~of staff levels and the consolidation of operations centers into 13 regional hubs~~initiatives undertaken by us through the end of the second fiscal quarter of 2009. We anticipate that the total annual savings in 2009 (from the start of the Metro re-engineering and other cost reductions in the third quarter of 2008) will be in the $53,000 to $61,000 range and additional savings in 2010 will be approximately $2,000, as additional phases of the Metro re-engineering and cost-reduction programs are implemented. These anticipated savings are comprised of labor savings, lower programming costs and reductions in aviation expense, station compensation and savings from consolidation of office leases. Many of the initiatives were instituted as of June 30, 2009.

These savings will be offset somewhat by increased business investments, including for strengthening our sales force in both the Network and Metro Traffic businesses as well as for investments in the digital area, in addition to incremental costs related to our TrafficLand License Agreement and expenses under our distribution arrangement with CBS Radio which partly results from increased clearance levels by CBS Radio.

In connection with the Metro re-engineering and the cost reduction initiatives, we recorded $14,100 and $5,429 of restructuring charges in the second half of 2008 and for the six months ended June 30, 2009, respectively. In connection with the foregoing, we estimate we will record, in the aggregate, restructuring charges of approximately $27,100, consisting of: (1) $11,600 of severance, relocation and other employee related costs; (2) $8,900 of facility consolidation and related costs; and (3) $6,600 of contract termination costs.

Prior to the new CBS arrangement which closed on March 3, 2008, many of our affiliation agreements with CBS Radio did not tie station compensation to audience levels or clearance levels. Such factors contributed to a significant decline in our national audience delivery to advertisers when CBS Radio stations delivered lower audience levels and broadcast fewer commercials than in earlier years. Our new arrangement with CBS largely mitigates both of these circumstances by adjusting affiliate compensation for changes in audience levels. In addition, the arrangement provides CBS Radio with financial incentives to broadcast substantially all our commercial inventory (referred to as “clearance”) in accordance with the terms of the contracts and significant penalties for not complying with the contractual terms of our arrangement. WeAt this point, we believe that CBS Radio has taken and will continue to take the necessary steps to stabilize and increase the audience reached by its stations. It should be noted however, that as CBS takes steps to increase its compliance with our affiliation agreements, our operating costs will increase beforeover time we will be able to increase prices for this larger audience; however, if we cannot, the ~~larger audience we will deliver, which was and~~higher costs recently incurred by us without offsetting revenue gains, may continue to be a contributing factor to ~~the~~our decline in ~~our~~ operating income.

As a result of the refinancing of substantially all of our outstanding long-term indebtedness (approximately $241,000 in principal amount) and a recapitalization of our equity (“Refinancing”), we followed the acquisition method of accounting, as described by SFAS 141R, and applied the SEC rules and guidance regarding “push down” accounting treatment. Accordingly, our consolidated financial statements and transactional records prior to the closing of the Refinancing reflect the historical accounting basis in our assets and liabilities and are labeled predecessor company, while such records subsequent to the Refinancing are labeled successor company and reflect the push down basis of accounting for the new fair values in our financial statements. This is presented in our consolidated financial statements by a vertical black line division which appears between the columns entitled predecessor company and successor company on the statements and relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the Refinancing are not comparable. For management purposes we continue to measure our performance against comparable prior periods. For purposes of presenting a comparison of our 2009 results to prior periods, we have presented our 2009 results as the mathematical addition of the Predecessor Company and Successor Company periods. We believe that this presentation provides the most meaningful information about our results of operations. This approach is not consistent with GAAP, may yield results that are not strictly comparable on a period-to-period basis, and may not reflect the actual results we would have achieved. Below is a reconciliation of our financial statements to this non-GAAP measure.

On August 10, 2009, we issued a press release announcing its earnings for the quarter ended June 30, 2009. Subsequent to that date, we determined that certain non-cash adjustments were required as a result of the Series A-1 Preferred Stock and Series B Preferred Stock issued in connection with our Refinancing and the purchase accounting recorded in connection with the change in control transaction. The Preferred Stock non-cash adjustments relate to the accounting for a beneficial conversion feature contained in the Preferred Stock and accretion of the Preferred Stock to redemption value. The non-cash purchase accounting adjustment relates to a fair value adjustment that incorrectly reduced goodwill by $1,000; Other Liabilities by $1,000; the Series A-1 Preferred Stock by $7,055; the Series B Preferred Stock by $5,476, and increased Net Loss attributable to Common Stockholders by $1,231 for the predecessor period ended April 23, 2009 and reduced Net Loss attributable to Common Stockholders by $1,589 for the successor period ended June 30, 2009. Net Loss attributable to Common Stockholders for the predecessor period ended April 23, 2009 is $(5,387), and for the successor period ended June 30, 2009 is $(9,595), compared to $(4,156) and $(11,184), respectively, as announced on August 10, 2009. Loss per share for the predecessor period ended April 23, 2009 increased to $(10.67) per share from $(8.23) per share and for the successor period ended June 30, 2009 decreased to $(18.85) per share from $(21.97) per share as announced on August 10, 2009. The consolidated financial statements included in this report contain the corrected amounts.

Results of Operations

We established a new organizational structure in 2008 pursuant to which we manage and report our business in two operating segments: Network and ~~Metro/~~Metro Traffic. Our Network ~~Division~~business produces and distributes regularly scheduled and special syndicated programs, including exclusive live concerts, music and interview shows, national music countdowns, lifestyle short features, news broadcasts, talk programs, sporting events and sports features. Our ~~Metro/~~Metro Traffic ~~Division~~business provides traffic reports and local news, weather and sports information programming to radio and television affiliates and their websites. We evaluate segment performance based on segment revenue and segment operating (loss)/income. Administrative functions such as finance, human resources and information systems are centralized. However, where applicable, portions of the administrative function costs are allocated between the operating segments. The operating segments do not share programming or report distribution. Operating costs are captured discretely within each segment. Our accounts receivable and property, plant and equipment are captured and reported discretely within each operating segment.

Combined Three Months Ended ~~March 31,~~June 30, 2009 Compared With Three Months Ended ~~March 31,~~June 30, 2008

Revenue

Revenue presented by operating segment is as ~~follows for the three month periods ending March 31:~~follows:


	For the Three Months Ended March 31,										Three Months ended
	2009					2008					June 30, 2009					June 30, 2008
	$		% of Total			$		% of Total			$		% of Total			$		% of Total

Metro	$	34,684		40.4	%	$	47,442		44.5	%		43,487		52	%		53,203		53	%
Network		51,183		59.6	%		59,185		55.5	%		40,164		48	%		47,169		47	%

Total (1)	$	85,867		100.0	%	$	106,627		100.0	%	$	83,651		100	%	$	100,372		100	%

Operating Costs

Operating costs for the three months ended June 30, 2009 and 2008 were as follows:


	Three Months ended
	June 30, 2009					June 30, 2008
	$		% of Total			$		% of Total
Payroll and payroll related		20,392		28	%		25,522		30	%
Programming and production		14,394		20	%		18,489		22	%
Program and operating		6,715		9	%		4,116		5	%
Station compensation		18,334		25	%		20,748		24	%
Other operating expenses		12,468		18	%		16,536		19	%

	$	72,303		100	%	$	85,411		100	%

Operating costs decreased $13,108, or 15.3%, to $72,303 in the second quarter of 2009 from $85,411 in the second quarter of 2008. The decrease reflects the benefit of the Metro re-engineering and cost reduction programs which began in the last half of 2008 and continued through the second quarter of 2009. Payroll and payroll related costs declined $5,130 or 20.0% as a result of the salary and headcount reductions, partially offset by an increase in commission rates implemented to incentivize sales growth. Programming and production costs decreased by $4,095 from $18,489 to $14,394 due to lower talent fees and reduced revenue sharing expense as a result of our lower revenue. Program and operating costs increased to $6,715 from $4,116 reflecting increased purchases of inventory and expenses related to our License Agreement with TrafficLand. Station Compensation expense decreased by $2,414 primarily due to the renegotiation and cancellation of certain affiliate arrangements Other operating expenses declined from $16,536 to $12,468 again reflecting the benefit of the Metro re-engineering program, primarily related to facilities, aviation, telephony and other costs.

Depreciation and Amortization

Depreciation and amortization increased $3,945 to $6,366 in the second quarter of 2009 from $2,421 in the second quarter of 2008. The increase is primarily attributable to the increase in amortization for the fair value of intangibles recorded as a result of the application of acquisition accounting and by increased depreciation and amortization for additional investments in systems and infrastructure, partially offset by decreased depreciation for leasehold improvements from the closure and consolidation of facilities in connection with our Metro re-engineering that began in the last half of 2008.

Corporate General and Administrative Expenses

Corporate, general and administrative expenses increased by $2,690 to $3,889 for the three months ended June 30, 2009 as compared to $1,199 for the same period in 2008. The increase is principally due to increased accounting fees associated with the additional reporting required by acquisition accounting, which increased by $1,017, and the increased stock compensation expense of $1,545 which reflects a credit taken in 2008 for the reversal of compensation cost associated with the cancellation of unvested options. Corporate, general and administrative expenses are expected to return to more normal levels once the accounting work in support of the acquisition accounting and a potential stock offering are completed.

Goodwill Impairment

During the second quarter of 2009, there were no indications of impairment of our goodwill. During the comparable quarter of 2008, we incurred a goodwill impairment charge of $206,053 as a result of a continued decline in our operating performance and stock price in that period.

Restructuring Charges

During the three months ended June 30, 2009, we recorded a $1,990 restructuring charge in connection with the re-engineering of our Metro Traffic operations that commenced in the last half of 2008 and has continued into 2009, and the new cost reduction initiatives undertaken in the first half of 2009. Facilities shutdown expense of $1,618 was the major component of the restructuring charge, which also included amounts for severance and contract cancellations.

Special Charges

We incurred non-recurring expenses aggregating $7,378 and $897 in the second quarter of 2009 and 2008, respectively. Special charges in the second quarter of 2009 include transaction fees and expenses related to negotiation of the definitive documentation for the Refinancing, including the fees of various legal and financial advisors to the constituents involved in the Refinancing (e.g. Westwood One, Gores, Glendon Partners, the banks, noteholders and the lenders of the new Senior Credit Facility) and other professional fees. Special charges in the second quarter of 2008 consisted primarily of costs related to the negotiation and closing of documentation related to the issuance of Series A Preferred Stock to Gores in 2008.

Operating (Loss)

The operating (loss) for the three months ended June 30, 2009 decreased to $(8,275) from $(195,609) for the same period in 2008. The decreased loss is due to the absence of a goodwill impairment of $206,053 recorded in the second quarter of 2008. Exclusive of the impairment charge, net income for the second quarter of 2008 would have been $10,444. The decline in operating income between the second quarter of 2008, absent the goodwill impairment charge, and the operating loss for the second quarter of 2009 is primarily attributable to the decline in our revenue, which was impacted by the current overall economic downturn and related weakness in the advertising market. The decline in revenue was partially offset by the realignment of our cost base, net of restructuring charges, as part of our Metro Traffic re-engineering and other cost reduction initiatives.

Interest Expense

Interest expense increased $298, or 6.8%, to $4,650 in the second quarter of 2009 from $4,352 in the second quarter of 2008. The increase reflects the higher interest rate on the debt from our Refinancing, which was incurred for most of the second quarter of 2009, offset by the reduction in the debt level.

Provision for Income Taxes

Income tax benefit in the second quarter of 2009 was $2,904 compared with a tax benefit of $174 in the second quarter of 2008. Our effective tax rate for the quarter ended June 30, 2009 was approximately 22.5% as compared to the 38.5% (excluding the impact of our goodwill impairment) for the same period in 2008, due to the non-deductibility of certain costs incurred related to our Refinancing.

Net (Loss)

Net (loss) for the second quarter of 2009 increased to $(9,959) from net income of $6,309, absent the goodwill impairment charge of $206,053, in the second quarter of 2008. Net (loss) per share for basic and diluted shares was $(29.48) in the second quarter of 2009, compared with net (loss) per share, including the goodwill impairment charge, for basic and diluted of $(396.69) in the second quarter of 2008.

Combined Six Months Ended June 30, 2009 Compared With Six Months Ended June 30, 2008

Revenue

Revenue presented by operating segment is as follows:


	Six Months ended
	June 30, 2009					June 30, 2008
	$		% of Total			$		% of Total

Metro		78,171		46	%		100,645		49	%
Network		91,347		54	%		106,353		51	%

Total (1)	$	169,518		100	%	$	206,998		100	%

For the six months ended June 30, 2009, revenue decreased $37,480 or 18.1%, to $169,518 compared with $206,998 for the six months ended June 30, 2008. The overall decline in revenue is principally attributable to the ongoing economic downturn and, in particular, the general decline in advertising spending, which started to contract in the second half of 2008 and has continued in 2009.

Metro Traffic revenue for the six months ended June 30, 2009 decreased $22,474 or 22.3% to $78,171 from $100,645 for the same period in 2008. The decrease in Metro Traffic revenue was principally related to a weak local advertising marketplace spanning various sectors and categories including automotive, retail and telecommunications, which placed an overall downward pressure on advertising sales and rates.

For the six months ended June 30, 2009, Network revenue was $91,347 compared to $106,353 for the comparable period in 2008, a decrease of 14.1% or $15,006. The decline is primarily the result of the general decline in advertising spending which affected our Network revenue from news and talk programs and sports events, the cancellation of certain programs and lower revenues from our RADAR ~~rated~~ network inventory.

Operating Costs

Operating costs for the ~~three~~six months ended ~~March 31,~~June 30, 2009 and 2008 were as follows:


	2009					2008					Six Months ended
	$		% of Total			$		% of Total			June 30, 2009					June 30, 2008
											$		% of Total			$		% of Total
Payroll and payroll related	$	21,920		24	%	$	26,243		28	%		42,503		26	%		51,767		29	%
Programming and production		28,805		32	%		28,665		30	%		43,199		26	%		47,154		26	%
Program and operating		4,570		5	%		4,167		4	%		11,285		7	%		8,283		5	%
Station compensation		19,769		22	%		19,138		20	%		38,103		23	%		39,886		22	%
Other operating expenses		16,329		18	%		16,016		17	%		28,606		18	%		32,550		18	%

	$	91,393		100	%	$	94,229		100	%	$	163,696		100	%	$	179,640		100	%

Operating costs decreased ~~$2,836,~~$15,944, or ~~3.0~~8.9%,to ~~$91,393 in~~$163,696 for the ~~first quarter of~~six months ended June 30, 2009 from ~~$94,229 in~~$179,640 for the ~~first quarter of~~six month ended June 30, 2008. The decrease generally reflects the benefit of ~~our~~the re-engineering and cost reduction programs which began in the last half of 2008. Payroll and payroll related costs declined ~~$4,323~~$9,264, or ~~16.5%~~17.9%, as a result of the reduction in ~~headcount. This was~~salaries and headcount, partially offset by ~~increases~~an increase in ~~program~~commission rates implemented to incentivize sales growth. Programming and production costs decreased by $3,955 to $43,199 from $47,154 for the six months ended June 30, 2009 due to lower talent fees and reduced revenue sharing expense as a result of our lower revenue. Program and operating costs increased to $11,285 from $8,283, reflecting increased purchases of inventory and expenses related ~~costs for new programming~~to our License Agreement with TrafficLand. Station compensation expense decreased to $38,103 from $39,886, reflecting the renegotiation and ~~station compensation expense.~~cancellation of certain affiliate arrangements. Other operating expenses declined by ~~$313~~$3,944, or ~~2.0%~~12.1%, again reflecting the benefit of ~~our cost reduction~~the Metro Traffic re-engineering program ~~as specifically~~primarily related to facilities, aviation, telephony and other costs.

~~We expect our operating costs to decrease in the future after our re-engineering and cost reduction initiatives are completed.~~

Depreciation and Amortization

Depreciation and amortization ~~decreased $1,913,~~increased $2,033, or ~~48.1%~~31.8%, to ~~$2,063 in~~$8,430 for the ~~first quarter of~~six months ended June 30, 2009 from ~~$3,976 in~~$6,397 for the ~~first quarter of~~six months ended June 30, 2008. The ~~decrease was principally~~increase is primarily attributable to the increase in amortization for the fair value of intangibles recorded as a ~~reduction~~result of the application of acquisition accounting and by increased depreciation and amortization for additional investments in systems and infrastructure. This was partially offset by a decrease in warrant amortization expense as ~~the~~a result of the cancellation on March 3, 2008 of all ~~then~~ outstanding warrants previously granted to CBS ~~Radio.~~

~~We expect~~Radio and decreased depreciation for leasehold improvements from the closure and ~~amortization to increase when compared to amounts incurred in 2008 as a result~~consolidation of ~~our investment in systems and infrastructure.~~facilities.

Corporate General and Administrative Expenses

Corporate, general and administrative expenses ~~decreased $700, or 20.2%,~~increased $1,990 to ~~$2,766~~$6,655 for the ~~three~~six months ended ~~March 31,~~June 30, 2009 as compared to ~~$3,466~~$4,665 for the same period in 2008. The ~~decrease~~increase is principally due to ~~decreased stock-based~~increased accounting fees associated with the additional reporting required by acquisition accounting, which increased by $989, and the increased stock compensation expense ~~offset by increased bad debt expense~~of $1,011, which reflects a credit taken in 2008 for the reversal of compensation cost associated with the cancellation of unvested options. Corporate, general and ~~bank fees.~~administrative expenses are expected to return to more normal levels once the accounting work in support of the acquisition accounting and a potential stock offering are completed

Goodwill Impairment

There were no impairment charges recorded for the ~~three~~six months ended ~~March 31, 2009~~June 30, 2009. During the first six months of 2008, we incurred a goodwill impairment charge of $206,053 as a result of a continued decline in our operating performance and ~~2008.~~stock price in that period.

Restructuring Charges

During the ~~three~~six months ended ~~March 31,~~June 30, 2009, we recorded ~~a $3,440~~$5,429 of restructuring ~~charge~~charges in connection with the re-engineering of our ~~traffic~~Metro Traffic operations that commenced in the last half of 2008 and has continued into 2009, and the ~~elimination~~new cost reduction initiatives undertaken in the first half of ~~underperforming programming announced on September 12, 2008.~~2009. The major components of these charges included severance of ~~$1,658~~$2,030 and facilities ~~shutdown costs~~closure expense of ~~$1,782.~~$3,399.

Special Charges

We incurred non-recurring expenses aggregating ~~$5,809~~$13,187 and ~~$7,956 in~~$8,853 for the ~~first quarter of~~six months ended June 30, 2009 and 2008, respectively. Special charges in the ~~first~~second quarter of 2009 ~~were incurred predominantly as part~~related to the Refinancing include transaction fees and expenses related to negotiation of ~~our debt restructuring~~the definitive documentation for the Refinancing, including the fees of various legal and ~~recapitalization.~~financial advisors for the constituents involved in the Refinancing (e.g. Westwood One, Gores, Glendon Partners, the banks, noteholders and the lenders of the new Senior Credit Facility) and other professional fees. Special charges in the ~~first~~second quarter of 2008 consisted of $5,000 of contract termination costs and $2,956 of associated legal and professional fees incurred in connection with the new CBS ~~Agreement.~~arrangement.

Operating (Loss) ~~Income~~

The operating (loss) for the ~~three~~six months ended ~~March 31,~~June 30, 2009 ~~increased~~decreased to ~~$(19,604)~~$(27,880) from ~~$(3,000)~~$(198,610) for the same period in 2008. The decreased loss is due to the absence of a goodwill impairment of $206,053 recorded in the second quarter of 2008. Excluding the impairment charge, net income for the six months ended June 30, 2008 would have been $7,443. The decline in operating income between the six months ended June 30, 2008, absent the goodwill impairment charge, and the operating loss for the comparable period of 2009 is primarily ~~attributable~~related to ~~the decline in our revenue~~a weak local advertising marketplace spanning various sectors and categories including automotive, retail and telecommunications, which ~~was impacted by the current~~placed an overall ~~economic downturn.~~downward pressure on advertising sales and rates. The decline in revenue was partially offset by the realignment of our cost base, net of restructuring charges, as part of our Metro re-engineering ~~initiative~~ and ~~related weakness in the advertising market.~~

~~We currently anticipate that operating income will decrease in 2009 compared with 2008 principally as a result of an anticipated declining revenue base.~~other reduction initiatives.

Interest Expense

Interest expense decreased ~~$2,136,~~$1,837, or ~~39.6%~~18.8%, to ~~$3,263~~$7,914 for the six months ended June 30, 2009 from $9,751 in the ~~first quarter~~comparable period. The decrease reflects the reduced debt level from our Refinancing partially offset by the higher interest rates associated with that debt. The decrease also reflects a one-time reversal of ~~2009 from $5,399 in the first quarter of 2008 reflecting the decrease in the amount of outstanding debt.~~

~~Based on the refinancing of our debt, we anticipate that~~ interest expense ~~will decrease significantly for~~from the ~~remainder~~settlement of ~~2009 due~~an amount owed to ~~lower debt levels.~~a former employee of $754.

Provision for Income Taxes

Income tax benefit in the first ~~quarter~~half of 2009 was ~~$7,381~~$10,285 compared with a tax benefit of ~~$3,020~~$3,194 in the first ~~quarter~~half of 2008. Our effective tax ~~rate~~ for the ~~quarter ended March 31,~~first half of 2009 was approximately ~~34.2%~~28.8% as compared to the 38.5% (excluding the impact of goodwill impairment) for the same period in 2008.

Net (Loss) Income

Net (loss) ~~for~~in the first ~~quarter~~half of 2009 increased to ~~$(15,186)~~$(25,145) from a net ~~loss~~income of ~~$(5,338)~~$971, absent the goodwill impairment charge of $206,053, in the first ~~quarter of~~half 2008. Net (loss) per share for basic and diluted shares was ~~$(0.17)~~$(62.45) in the first ~~quarter~~half of 2009, compared with net (loss) per share, including the impairment charge, for basic and diluted of ~~$(0.06)~~$(431.24), in the first ~~quarter~~half of 2008.

~~Weighted Average Shares Outstanding~~

Weighted average shares outstanding used to compute basic and diluted earnings per share were 98,074 in the first quarter of 2009 compared with 89,423 in the first quarter of 2008. The increase in the number of outstanding shares is attributable to restricted stock vesting. Basic and diluted shares outstanding were the same in 2008 as the inclusion of common stock equivalents in the diluted share calculation would be anti-dilutive.

Liquidity and Capital Resources

We continually project anticipated cash requirements, which may include potential acquisitions, capital expenditures, principal and interest payments on our outstanding indebtedness, ~~share repurchases,~~ dividends and working capital requirements. To date, funding requirements have been financed through cash flows from operations, the issuance of equity and the issuance of long-term debt.

As disclosed in more detail elsewhere in this report, on April 23, 2009, we completed the refinancing of our outstanding long-term indebtedness and the recapitalization of our equity. Based upon facts and circumstances that existed as of December 31, 2008, we previously disclosed that there was a substantial doubt about our ability to continue as a going concern. Management has since reviewed the impact of the refinancing and recapitalization, the results of the restructuring plan discussed in more detail above, and our current forecast and has concluded that the substantial doubt about the Company’s ability to continue as a going concern has been removed. We believe that our sources of liquidity are adequate to fund ongoing operating requirements in the next twelve months.

Existing Indebtedness

Effective April 23, 2009, we have: $117.5 million of new senior secured notes maturing July 15, 2012 (the “New Senior Notes”); a $20.0 million unsecured, non-amortizing term loan and a $15.0 million revolving line of credit (which includes a $1.5 million letter of credit sub-facility) on a senior unsecured ~~basis.~~basis (the foregoing, the “Senior Credit Facility”). The term loan and revolver mature on July 15, 2012 and are guaranteed by our domestic subsidiaries (the “Guarantors”) and Gores. We borrowed the entire amount of the term loan on the Closing Date and did not make any borrowings of revolving loans. The New Senior Notes bear interest at 15.0% per annum, payable 10% in cash and 5% in-kind (PIK interest). The PIK interest ~~will be~~is added to principal quarterly but ~~will~~is not be payable until maturity. The New Senior Notes may be prepaid at any time, in whole or in part, without premium or penalty. Payment of the New Senior Notes is mandatory upon, among other things, certain asset sales and the occurrence of a “change of control” (as such term is defined in the Securities Purchase Agreement governing the New Senior Notes). The New Senior Notes are guaranteed by the Guarantors and are secured by a first priority lien on substantially all of our assets.

Loans under ~~the~~our existing Credit Agreement (related to the Senior Credit Facility) bear interest at our option at either LIBOR plus 4.5% per annum (with a LIBOR floor of 2.5%) or a base rate plus 4.5% per annum (with a base rate floor of the greater of 3.75% and the one-month LIBOR rate).

Both the Securities Purchase Agreement (governing the New Senior Notes) and Credit Agreement (governing ~~for~~ the new term loan and ~~revolver)~~revolver which collectively comprise the Senior Credit Facility) contain restrictive covenants that, among other things, limit our ability to incur debt, incur liens, make investments, make capital expenditures, consummate acquisitions, pay dividends, sell assets and enter into mergers and similar transactions beyond specified baskets and identified carve-outs . Additionally, we may not exceed the maximum senior leverage ratio (the principal amount outstanding under the New Senior Notes over our consolidated Adjusted EBITDA). The Securities Purchase Agreement contains customary representations and warranties and affirmative covenants. The Credit Agreement contains substantially identical restrictive covenants (including a maximum senior leverage ratio calculated in athe same manner ~~consistent~~as with the Securities Purchase Agreement), affirmative covenants and representations and warranties aslike those found in the Securities Purchase Agreement, ~~subject,~~modified, in the case of certain covenants, tofor a cushion on ~~baskets~~basket amounts and covenant levels from those contained in the Securities Purchase Agreement. We currently believe, based on our latest forecast, that we will be in compliance with our debt covenants for the next 12 months. A wide range of factors could materially affect future developments and performance and would cause us to be unable to meet our debt covenants. Such factors and others are discussed in greater detail in the section Risks Related to Our Business.

As part of the ~~foregoing refinancing/recapitalization,~~Refinancing that closed on April 23, 2009, we sold 25,000 shares of Series B Preferred Stock to Gores for an aggregate purchase price of $25,000.

Indebtedness prior to April 23, 2009

Prior to April 23, 2009, our debt consisted of an unsecured, five-year $120,000 term loan and a five-year $75,000 revolving credit facility (collectively, the ~~“Facility”~~“Old Facility”). Interest on the Old Facility was variable and payable at a maximum of the prime rate plus an applicable margin of up to .75% or LIBOR plus an applicable margin of up to 1.75%, at our option. The Old Facility contained covenants relating to dividends, liens, indebtedness, capital expenditures and restricted payments, as defined, interest coverage and leverage ratios. As a result of an amendment to our Old Facility in the first quarter of 2008, we provided security to our lenders (including holders of our Senior Notes) on substantially all of our assets and amended our allowable total debt covenant to 4.0 times Annualized Consolidated Operating Cash Flow through the remaining term of the Old Facility.

Prior to April 23, 2009, we also had $200 million in Senior Notes which we issued on December 3, 2002, ~~and~~which consisted of: 5.26% Senior Notes due November 30, 2012 (in an aggregate principal amount of $150 million) and 4.64% Senior Notes due November 30, 2009 (in an aggregate principal amount of $50 million). Interest on the Notes was payable semi-annually in May and November. The Notes contained covenants relating to leverage and interest coverage ratios that were identical to those contained in our Old Facility.

At March 31, 2009, we had approximately $9,000 outstanding under our revolving credit facility and ~~actual debt~~$32,000 outstanding under the term ~~loan was $32,000.~~loan. At March 31, 2009, our principal sources of liquidity were cash and cash equivalents of $7,199.

On March 3, 2008 and March 24, 2008, respectively, we sold 7,143 shares (14,286 shares in the aggregate) of common stock to Gores for an aggregate purchase price of $25,000 and on June 19, 2008, we sold $75,000 of Series A Preferred Stock with warrants to Gores, generating net proceeds of approximately $96,928.

Current Position

Net cash ~~provided~~used by operating activities was ~~$2,134~~$15,104 for the ~~three~~period ended June 30, 2009 and $4,842 for the six months ended ~~March 31, 2009 and $(10,756) for the three months ended March 31,~~June 30, 2008, an increase of ~~$12,890~~$10,262 in net cash ~~provided~~used by operating activities. The increase ~~was~~ principally ~~attributable to a positive change in our deferred asset position and decrease in our accounts receivable balance.~~reflects the increased net loss, before impairment charges, partially offset by lower capital expenditures.

~~While our~~Our business does not usually require significant cash outlays for capital ~~expenditures, capital~~expenditures. Capital expenditures in the first ~~three months~~half of 2009 decreased ~~$2,495~~$3,148 to ~~$1,169,~~$2,930 from ~~$3,664 when compared to capital expenditures~~$6,078 in the first ~~three months~~half of 2008. The decrease in ~~the~~ first ~~quarter~~half of 2009 is principally attributable to the timing of our expenditures planned for the year. We anticipate an increase in capital expenditures for the remainder of 2009 as we invest in systems and infrastructure.

In May 2007, ~~the Board~~our board of ~~Directors~~directors elected to discontinue the payment of a dividend on our common stock and does not plan to declare dividends on our common stock for the foreseeable future. The payment of dividends on our common stock is also prohibited by the terms of our New Senior Notes.

While we are authorized to repurchase up to $290,490 of our common stock as of December 31, 2008, we do not plan on repurchasing any additional shares for the foreseeable future. Such repurchases are also prohibited by the terms of our New Senior ~~Notes.~~Notes and new Senior Credit Facility.

Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification ™ and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162” (SFAS 168). SFAS 168 replaces SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” and establishes the “FASB Accounting Standard Codification ™” (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles in the United States. All guidance contained in the Codification carries an equal level of authority. On the effective date of SFAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We have evaluated this new statement, and have determined that it will not have a significant impact on the determination or reporting of our financial results.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in our financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141R is effective as of the beginning of an entity’s fiscal year that begins after December 15, 2008. The adoption of SFAS 141R and FSP FAS 141(R)-1 ~~did not have a significant impact on~~impacted the accounting for our ~~Consolidated Financial Statements.~~Refinancing (See Note 1 – Basis of Presentation).

In March 2008, the FASB issued SFAS 161, “Disclosures About Derivative Instruments and Hedging Activities —– an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 expands quarterly disclosure requirements in SFAS No. 133 about an entity’s derivative instruments and hedging activities. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. The relevant disclosures have been included in our Consolidated Financial Statements.

In December 2007, the FASB issued SFAS 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 160 establishes requirements for ownership interests in subsidiaries held by parties other than the parent (sometimes called “minority interests”) to be clearly identified, presented, and disclosed in the consolidated statement of financial position within equity, but separate from the parent’s equity. All changes in the parent’s ownership interests are required to be accounted for consistently as equity transactions and any non-controlling equity investments in unconsolidated subsidiaries must be measured initially at fair value. SFAS 160 is effective, on a prospective basis, for fiscal years beginning after December 15, 2008. However, presentation and disclosure requirements must be retrospectively applied to our Consolidated Financial Statements.

Cautionary Statement Concerning Forward-Looking Statements and Factors Affecting Forward-Looking Statements

This quarterly report on Form 10-Q, including “Item 1A—Risk Factors” and “Item 2—Management’s Discussion and Analysis of Results of Operations and Financial Condition,” contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements we make or others make on our behalf. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements are not based on historical fact but rather are based on management’s views and assumptions concerning future events and results at the time the statements are made. No assurances can be given that management’s expectations will come to pass. There may be additional risks, uncertainties and factors that we do not currently view as material or that are not necessarily known. Any forward-looking statements included in this document are only made as of the date of this document and we do not have any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances.

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A wide range of factors could materially affect future developments and performance including the following:

Risks Related to Our Business

Deterioration in general economic conditions and constrained consumer spending has caused, and could cause, additional decreases or delays in advertising spending, could harm our ability to generate advertising revenue and negatively affect our results of operations.

We derive the majority of our revenue from the sale of local, regional and national advertising. The current global economic slowdown has resulted in a decline in advertising and marketing services among our customers, resulting in a decline in advertising revenue across our businesses. Additionally, advertisers, and the agencies that represent them, have put increased pressure on advertising rates, in some cases, requesting broad percentage discounts on ad buys, demanding increased levels of inventory and re-negotiating booked orders. The current state of the economy could also adversely affect our ability to collect accounts receivable from our advertisers, particularly those entities which have filed for bankruptcy. Reductions in advertising expenditures and declines in ad rates have adversely affected our revenue, and the continuation of the global economic slowdown would likely continue to adversely impact our revenue, profit margins, cash flow and liquidity in future periods. In addition, in the event that the current economic situation improves, we cannot predict whether or not advertisers’ demands and budgets for advertising will return to previous levels.

Our operating income has declined since ~~2002.~~2002 and may continue to decline. We may not be able to reverse this trend or reduce costs sufficiently to offset declines in revenue if such trends ~~continue~~continue..

Since 2002, our ~~full year~~annual operating income has declined from operating income of approximately ~~$180,000~~$180 million to an operating loss of ~~$(438,041)~~$438 million, which included goodwill impairment charges of approximately $430 million, for the year ended 2008, ~~($19,430 exclusive of goodwill impairment charges of $430,126, restructuring charges of $14,100 and special charges of $13,245),~~ with the most significant decline occurring between 2005 and 2008. Between 2002 and 2008, our operating income declined as a result of increased competition in our local and regional markets and an increase in the ~~past three years. In addition,~~amount of 10 second inventory being sold by radio stations. The decline (between 2005 and 2008) also was due to reductions in national audience levels (which dropped significantly between 2005 and 2006), lower commercial clearance and audience levels of our ~~2006~~affiliated stations and ~~2008 results were adversely~~reductions in our local and regional sales force, which began in mid-2006. Recently, our operating income has also been affected by ~~goodwill impairment charges of approximately $516,000~~the weakness in the United States economy and ~~$430,000, respectively.~~advertising market. Given the current economic climate, it is possible our operating income will continue to decline. Historically, we have been able to reduce expenses to partially mitigate the impact of the decline in our revenue and its effect on operating income. However, given the extensive restructuring of the Metro/Traffic division from 61 offices into 13 hubs (announced in Q3 of 2008 and anticipated to be completed by the end of Q2 of 2009) and the additional cost reductions currently being implemented, our ability to implement further significant cost reductions without negatively affecting our revenue may be somewhat limited, and may make it difficult for us to mitigate the impact of further declines in revenue.

~~The global credit market disruptions~~CBS Radio provides us with a significant portion of our commercial inventory and ~~economic slowdown which significantly worsened~~audience that we sell to advertisers. A material reduction in the ~~last half of 2008 have created~~audience delivered by CBS Radio stations or a ~~difficult and uncertain environment across all industries and there is no immediate sign of a recovery.~~

The recent credit market disruptions and economic contraction in the United States and globally have been severe, creating an economic environment unseen in recent history. Aside from the decline in consumer spending as described below, many of our clients could face their own difficulties in obtaining necessary financing to fund their ordinary course business operations. Given the economic downturn and the tight credit markets, many advertisers are reducing their ad budgets and/or negotiating reductions in rates, each of which has impacted our financial results. Depending on the severity of the economic downturn and the pace of recovery, our operating results could continue to be negatively impacted.

The cost of our indebtedness has increased substantially, which, when combined with our recent performance of declining revenue, further affects our liquidity and could limit our ability to implement our business plan and respond competitively.

Since 2004, our full year revenue has declined from approximately $562,000 to $404,000 for the year ended 2008. This decrease in revenue has been attributable to a decline in audience and in the quality and quantitymaterial loss of commercial inventory on both a local/regional and a national basis, increased competition, a decline in a number of customer accounts and a substantial reduction in sales persons. Our strategy to increase revenue is dependent on, among other things, our ability to reverse these declines in audience, improve our affiliate base, hire additional sales persons and managers, modernize our distribution system and expand our product offerings to other distribution platforms, all of which, to varying degrees, require additional capital. As a result of our recently completed recapitalization transaction, the annual interest payments on our debt will increase from approximately $12,000 to $19,000; $7,000 of this interest will be paid in kind (PIK). If the economy continues to stall and advertisers continue to maintain reduced budgets which do not recover in 2009, notwithstanding the closing of the refinancing, we may be required to delay the implementation or reduce the scope of our business plan and our ability to develop or enhance our services or programs could be curtailed. Without additional revenue and/or capital, we may be unable to take advantage of business opportunities or respond to competitive pressures, such as M&A opportunities or securing rights to marquee or popular programming. If any of the foregoing should occur, this couldCBS Radio would have ~~a material and~~an adverse effect on our ~~business.~~advertising sales and financial results.

While we provide programming to all major radio station groups, we have affiliation agreements with most of CBS Radio’s owned and operated radio stations which, in the aggregate, provide us with a significant portion of the audience and commercial inventory that we sell to advertisers, much of which is in the more desirable top 10 radio markets. Although the compensation we pay to CBS Radio under our new 2008 arrangement is adjustable for audience levels and commercial clearance (i.e., the percentage of commercial inventory broadcast by CBS Radio stations), any significant loss of audience or inventory delivered by CBS Radio stations, including, by way of example only, as a result of a decline in station audience, commercial clearance levels or station sales that resulted in lower audience levels, would have a material adverse impact on our advertising sales and revenue. Since implementing the new arrangement in early 2008, CBS Radio has delivered improved audience levels and broadcast more advertising inventory than it had under our previous arrangement. However, there can be no assurance that CBS Radio will be able to maintain these higher levels, in particular, with the introduction of The Portable People Meter^TM, or PPM^TM, which to date has reported substantially lower audience ratings for certain of our radio station affiliates, including our CBS Radio station affiliates, in those markets in which PPM^TM has been implemented as described below. Additionally, while our arrangement with CBS Radio is scheduled to terminate in 2017, there can be no assurance that such arrangement will not be breached by either party. If our agreement with CBS Radio were terminated as a result of such breach, our results of operations could be materially impacted.

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~~Although~~We may not realize expected benefits from our cost cutting initiatives.

In order to improve the efficiency of our operations, we have ~~recently significantly reduced our~~implemented and continue to implement certain cost cutting initiatives, including headcount and salary reductions. We cannot assure you that we will realize the full level of ~~indebtedness,~~expected cost savings or improve our operating performance as a result of our past, current and future cost cutting activities. We also cannot assure you that our cost cutting activities will not adversely affect our ability to retain key employees, the significant loss of whom could adversely affect our operating results. Further, as a result of our cost cutting activities, we may not have the appropriate level of ~~indebtedness remains~~resources and personnel to appropriately react to significant changes or fluctuations in the market and in the level of demand for our programming and services.

Our ability to increase our revenue is significantly dependent on advertising rates, which rates could be negatively impacted by the introduction of The Portable People Meter.

Arbitron Inc., the supplier of ratings data for United States radio markets, has developed new electronic audience measurement technology to collect data for its ratings service known as The Portable People Meter^TM, or PPM^TM. The PPM^TM measures the audience of radio stations remotely without requiring listeners to keep a manual diary of the stations they listen to. To date, the PPM^TM has been implemented in 17 markets (including nine of the top 10 markets) and, in ratings books released to date, has reported substantially lower audience ratings for certain of our key radio affiliates than the traditional diary methodology previously used by the radio industry. As the PPM^TMis instituted in more markets, it is unclear whether the audience ratings posted by it will continue to be significantly lower and if so, what effect this may have on audience ratings and advertising rates. While we have to date experienced a decline in our local ad revenue, we are unable to determine at this time how much of such decline is a result of the general economic environment versus a decline in audience. If the PPM^TM continues to report lower audience ratings than the traditional diary methodology and the ~~interest~~rates we charge our advertisers are materially impacted by such results, our revenue would be materially and adversely affected.

Our ability to grow our Metro business revenue may be adversely affected by the increased proliferation of free of charge traffic content to consumers.

Our Metro business produces and distributes traffic and other local information reports to approximately 2,300 radio and television affiliates and we derive the substantial majority of the revenue attributed to this business from the sale of commercial advertising inventory embedded within these reports. Recently, the U.S. Department of Transportation and other regional and local departments of transportation have significantly increased their direct provision of real-time traffic and traveler information to the public free of charge. The ability to obtain this information free of charge may result in our radio and television affiliates electing not to utilize the traffic and local information reports produced by our Metro business, which in turn could adversely affect our revenue from the sale of advertising inventory embedded in such reports.

We may require additional financing to fund our working capital, debt service, capital expenditures or other capital requirements and the ongoing global credit market disruptions have reduced access to credit and created higher costs of obtaining financing.

Our primary source of liquidity is cash flow from operations, which has been adversely impacted by the decline in our advertising revenue. Based on our current and anticipated levels of operations, we believe that cash flow from operations as well as cash on hand (including amounts drawn or available under our Senior Credit Facility) will enable us to meet our working capital, capital expenditure, debt service and other capital requirements for at least the next 12 months. However, our ability to fund our working capital needs, debt service and other obligations, and to comply with the financial covenants under our financing agreements depends on our future operating performance and cash flow, which are subject to prevailing economic conditions and other factors, many of which are beyond our control. If our future operating performance does not meet our expectations or our plans materially change in an adverse manner or prove to be materially inaccurate, we may need additional financing. There can be no assurance that such financing, if permitted under the terms of our financing agreements, will be available on terms acceptable to us or at all. Additionally, disruptions in the credit markets make it harder and more expensive to obtain financing. If available financing is limited or we are forced to fund our operations at a higher cost, these conditions may require us to curtail our business activities and increase our cost of financing, both of which could reduce our profitability or increase our losses. The inability to obtain additional financing in such circumstances could have a material adverse effect on our financial condition and on our ability to meet our obligations.

We have a significant amount of indebtedness, ~~remains high,~~ which could adversely affect our liquidity and future business operations if our operating income ~~continues to decline.~~declines more than we currently anticipate.

~~After the completion~~As of ~~our refinancing,~~June 30, 2009, we ~~have $117.5~~had approximately $119.0 million in aggregate principal amount of New Senior Notes outstanding (of which $1.5 million is PIK interest), which bear interest at a rate of 15.0%, and a ~~new~~Senior Credit ~~Agreement~~Facility consisting of: (x) a $20 million term loan and (y) a $15 million revolving line of credit which we intend to borrow against in the future. Loans under our ~~new~~Senior Credit ~~Agreement~~Facility bear interest at LIBOR plus 4.5% (with a LIBOR floor of 2.5%) or a base rate plus 4.5% (with a base rate floor equal to the greater of 3.75% or the one-month LIBOR rate). Our ability to service our debt will depend on competitive pressures and our financial performance in an uncertain and unpredictable economic environment. Further, our New Senior Notes and ~~new~~Senior Credit ~~Agreement~~Facility restrict our ability to incur ~~any meaningful amount of~~ additional indebtedness. The amount of leverage that we employ at any particular time will depend on our management’s and our Board of Directors’ assessment of market and other factors at the time of any proposed borrowing. If our operating income ~~continues~~declines more than we currently anticipate, resulting in an inability to ~~decline~~incur additional indebtedness under the terms of our outstanding indebtedness, and we are unable to obtain a waiver to increase our indebtedness or successfully raise funds through an issuance of equity, we could have insufficient liquidity which would have a material adverse effect on our business, financial condition and results of operations. If we are unable to meet our debt service and repayment obligations under the New Senior Notes or the Senior Credit Facility, we would be in default under the terms of the agreements governing our debt, which if uncured, would allow our creditors at that time to declare all outstanding indebtedness to be due and payable and materially impair our financial condition and liquidity.

Our failure to obtain or retain the rights in popular programming could adversely affect our revenue.

Our revenue from our radio programming and television business is dependent on our continued ability to anticipate and adapt to changes in consumer tastes and behavior on a timely basis. We obtain a significant portion of our popular programming from third parties. For example, some of our most widely heard broadcasts, including certain NFL games, are made available based upon programming rights of varying duration that we have negotiated with third parties. Competition for popular programming that is licensed from third parties is intense, and due to increased costs of such programming or potential capital constraints, we may be outbid by our competitors for the rights to new, popular programming or in connection with the renewal of popular programming currently licensed by us. Our failure to obtain or retain rights to popular content could adversely affect our revenue.

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

Our business segments operate in a highly competitive environment. Our radio and television programming competes for audiences and advertising revenue directly with radio and television stations and other syndicated programming, as well as with other media such as newspapers, magazines, cable television, outdoor advertising, direct mail and, more increasingly, digital media. We may experience increased audience fragmentation caused by the proliferation of new media platforms, including the Internet and video-on-demand and the deployment of portable digital devices and new technologies which allow consumers to time shift programming, make and store digital copies and skip or fast-forward through advertisements. New or existing competitors may have resources significantly greater than our own and, in particular, the consolidation of the radio industry has created opportunities for large radio groups, such as Clear Channel Communications, CBS Radio and Citadel Broadcasting Corporation to gather information and produce radio and television programming on their own. Increased competition, in part, has resulted in reduced market share, and could result in lower audience levels, advertising revenue and cash flow. There can be no assurance that we will be able to compete effectively, be successful in our efforts to regain market share and increase or maintain our current audience ratings and advertising revenue. To the extent we experience a further decline in audience for our programs or the cost of programming continues to increase, we may be unable to retain the rights to popular programs and advertisers’ willingness to purchase our advertising could be further reduced. Additionally, audience ratings and performance-based revenue arrangements are subject to change based on the competitive environment and any adverse change in a particular geographic area could have a material and adverse effect on our ability to attract not only advertisers in that region, but national advertisers as well.

In recent years, digital media platforms and the offerings thereon have increased significantly and consumers are playing an increasingly large role in dictating the content received through such mediums. We face increasing pressure to adapt our existing programming as well as to expand the programming and services we offer to address these new and evolving digital distribution channels. Advertising buyers have the option to filter their messages through various digital platforms and as a result, many are adjusting their advertising budgets downward with respect to traditional advertising mediums such as radio and television or utilizing providers who offer “one-stop shopping” access to both traditional and alternative distribution channels. If we are unable to offer our broadcasters and advertisers an attractive full suite of traditional and new media platforms and address the industry shift to new digital mediums, our operating results may be negatively impacted.

Our Senior Credit ~~Agreement~~Facility and ~~Securities Purchase Agreement governing our~~ New Senior Notes contain various covenants which, if not complied with, could accelerate repayment under such indebtedness, thereby materially and adversely affecting our financial condition and results of operations.

Our ~~new~~New Senior Credit ~~Agreement~~Facility and ~~Securities Purchase Agreement governing our~~ New Senior Notes require us to comply with certain financial and operational covenants. These covenants include, without limitation:

~~limitations~~restrictions on our ability to incur debt, incur liens, make investments, make capital expenditures, consummate acquisitions, pay dividends, sell assets and enter into mergers and similar transactions; and

a maximum senior leverage ratio ~~(the~~(expressed as the principal amount of New Senior Notes over our consolidated EBITDA (as defined in our New Senior Credit Facility) measured on a trailing, four-quarter basis) which is 6.25 to 1.0 ~~ratio~~ on December 31, 2009 but begins to decline on a quarterly basis thereafter, including to a 4.5 to 1.0 ratio on December 31, 2010 and a 3.5 to 1.0 ratio on December 31, 2011.

~~As of April 30, 2009, we were in compliance with these covenants. Although we believe we will continue to be in compliance with these covenants, there are no~~We cannot make any assurances that we will remain in compliance with these agreements, particularly if the advertising environment remains weak or our operating income continues to decline. Failure to comply with these covenants would result in a default under our ~~new~~New Senior Credit ~~Agreement~~Facility and New Senior Notes ~~which,~~that, if we were unable to obtain a waiver from the lenders or holders thereof, could accelerate repayment under the ~~new~~New Senior Credit ~~Agreement~~Facility and New Senior Notes and thereby have a material adverse impact on our ~~financial condition and results of operations.~~business.

~~Our~~The cost of our indebtedness has increased substantially, which, when combined with our recent declining revenue, further affects our liquidity and could ~~further decline if the general economy~~limit our ability to implement our business plan and ~~broadcast industry do not improve and even more so if the economy and industry worsen, and consumer spending remains constrained or is further restricted~~respond competitively.

~~Our revenue is largely based~~As a result of our recently completed recapitalization transactions, the annual interest payments on our debt increased from approximately $12 million to $19 million, $6 million of which will be paid in kind. If the economy continues in recession and advertisers ~~seeking~~continue to ~~stimulate consumer spending. Consumer confidence eroded significantly amid~~maintain reduced budgets which do not recover in 2009, we may be required to delay the ~~national~~implementation or reduce the scope of our business plan and ~~global economic slowdown, increased unemployment and layoffs and the general belief that the U.S. has entered a recession, which many believe~~our ability to develop or enhance our services or programs could be ~~a sustained recession and/or contraction. Advertising expenditures~~curtailed. Without additional revenue and ~~consumer spending tend~~capital, we may be unable to decline during recessionary periods and they have done so in this economy, as advertising budgets in the retail, automotive and financial services industries have softened. More recently, advertisers (and the agencies that represent them), faced with their own reduced budgets and sales levels, have put increased pressure on advertising rates, in some cases, requesting broad percentage discounts on ad buys, demanding increased levelstake advantage of ~~inventory and re-negotiating booked orders. Reductions in advertising expenditures and declines in ad rates have adversely affected our revenue.~~

If we are not able to integrate future acquisitions successfully, our operating results could be harmed.

We evaluate acquisitions on an ongoing basis and intend to pursue acquisitions of businesses in our industry and related industries that can assist us in achieving our growth strategy. The success of our future acquisition strategy will depend on our ability to ~~attract~~identify, negotiate, complete and integrate acquisitions and, if necessary, to obtain satisfactory debt or equity financing to fund those acquisitions. Mergers and acquisitions are inherently risky, and any mergers and acquisitions we do complete may not ~~only advertisers in that region,~~be successful. Any mergers and acquisitions we do may involve certain risks, including, but ~~national advertisers as well. Increased competition, in part, has resulted in reduced market share, and could result in lower audience levels, advertising revenue and lower cash flow. In addition,~~not limited to, the ~~following factors could have an adverse effect upon our financial performance.~~following:

	•		~~advertiser spending patterns, including~~difficulties in integrating and managing the ~~notion that orders are placed in close proximity to~~operations, technologies and products of the ~~time such ads are broadcast, which could affect spending patterns and limit our visibility of demand for our products;~~companies we acquire;

	•		~~the level~~diversion of ~~competition for advertising dollars;~~our management’s attention from normal daily operations of our business;

	•		~~new~~our inability to maintain the key business relationships and reputations of the businesses we acquire;

	•		uncertainty of entry into markets in which we have limited or no prior experience or in which competitors ~~or existing competitors~~have stronger market positions;

	•		our dependence on unfamiliar affiliates and partners of the companies we acquire;

	•		insufficient revenue to offset our increased expenses associated with ~~expanded resources, including as a result~~the acquisitions;

	•		our responsibility for the liabilities of ~~consolidation;~~the businesses we acquire; and

	•		~~lower than anticipated market acceptance~~potential loss of ~~new or existing products.~~key employees of the companies we acquire.

~~Although we believe that~~Our success is dependent upon audience acceptance of our content, particularly our radio ~~programming will continue~~programs, which is difficult to ~~attract audiences~~predict.

Revenue derived from the production and ~~advertisers, there can be no assurance~~distribution of radio programs depend primarily upon their acceptance by the public, which is difficult to predict. The commercial success of a radio program also depends upon the quality and acceptance of other competing programs released into the marketplace at or near the same time, the availability of alternative forms of entertainment activities, general economic conditions and other tangible and intangible factors, all of which are difficult to predict. Rating points are also factors that are weighed when determining the advertising rates that we ~~will be able~~receive. Poor ratings can lead to ~~compete effectively, regain our market share and increase or maintain our current audience ratings~~a reduction in pricing and advertising revenue. To the extent we experience a decline in audience for our programs or the cost of programming continues to increase (or in some cases cannot be reduced in connection with the new economic environment), we might be unable to retain the rights to popular programs and advertisers’willingness to purchase our advertising could be further reduced.

~~Gores, through its voting control of the Company, is in a position to control actions that require stockholder approval.~~

~~Gores, through its beneficial ownership of 162,378,385 shares~~Consequently, low public acceptance of our ~~common stock (including preferred stock~~content, particularly our radio programs, could have an adverse effect on ~~an as-converted basis) as~~our results of April 23, 2009 (or approximately 74.9% of our voting power), has voting control of the Company. For as long as Gores continues to beneficially own shares of common stock (including preferred stock on an as-converted basis) representing more than 50% of the voting power of our common stock, it will be able to elect all of the members of our Board of Directors and determine the outcome of all matters submitted to a vote of our stockholders, including matters involving mergers or other business combinations, the acquisition or disposition of assets, the incurrence of indebtedness, the issuance of any additional shares of common stock or other equity securities and the payment of dividends on common stock. Gores will also have the power to prevent or cause a change in control, and could take other actions that might be desirable to Gores but not to other stockholders.operations.

Continued consolidation in the radio broadcast industry could adversely affect our operating results.

The radio broadcasting industry has continued to experience significant change, including ~~as a result of~~ a significant amount of consolidation in recent years and increased business transactions by key players in the radio industry (e.g.,Clear Channel, Citadel ~~ABC~~ and CBS Radio). ~~In connection therewith, certain~~Certain major station groups have: (1) modified overall amounts of commercial inventory broadcast on their radio stations; (2) experienced significant declines in audience; and (3) increased their supply of shorter duration advertisements, in particular the amount of 10 second inventory, which is directly competitive to us. To the extent similar initiatives are adopted by other major station groups, this could adversely impact the amount of commercial inventory made available to us or increase the cost of such commercial inventory at the time of renewal of existing affiliate agreements. Additionally, if the size and financial resources of certain station groups continue to increase, the station groups may be able to develop their own programming as a substitute to that offered by us or, alternatively, they could seek to obtain programming from our competitors. Any such occurrences, or merely the threat of such occurrences, could adversely affect our ability to negotiate favorable terms with our station affiliates, to attract audiences and to attract advertisers. If we do not succeed in these efforts, our operating results could be adversely affected.

3246

We may be required to recognize further impairment charges.

On an annual basis and upon the occurrence of certain events, we are required to perform impairment tests on our identified intangible assets with indefinite lives, including goodwill, which testing could impact the value of our business. At December 31, 2008, we determined that our goodwill was impaired and recorded an impairment charge of ~~$224,073,~~approximately $224.1 million, which is in addition to the impairment ~~change~~charge of ~~$206,053~~approximately $206.1 million taken on June 30, 2008. ~~The remaining book~~In connection with our Refinancing and our requisite adoption of the acquisition method of accounting, based on a third-party appraisal, we recorded new values of certain assets such that as of April 24, 2009 our revalued goodwill is $86.4 million (an increase of $52.4 million) and net intangible assets are $112.0 million (an increase of $109.3 million), all of which will be tested annually for impairment or upon a triggering event in the future. As of June 30, 2009, goodwill is $86.4 million, net intangible assets are $112.0 million and the value of our ~~goodwill at December 31, 2008 and March 31, 2009~~fixed assets is ~~$33,988.~~$36.4 million, all of which will be tested for impairment in the future. Unanticipated differences to our forecasted operational results and cash flows could require a provision for further impairment that could significantly affect our reported earnings in a period of such change.

Risks Relating to Our Common Stock

~~We have has been delisted from the New York Stock Exchange and do~~Our common stock may not ~~have immediate plans to~~maintain an active trading market or list on ~~an alternate~~a nationally recognized exchange which could affect the liquidity and market price of our common stock..

~~Since November 24, 2008,~~As a result of the decline in our stock price, our common stock ceased to be traded on the NYSE ~~which has affected the liquidity~~as of ~~our common stock. On~~November 24, 2008 and on March 16, 2009, we were delisted from the ~~NYSE and at this time,~~NYSE. Since November 24, 2008, we ~~do not~~ have ~~any immediate plans~~traded over-the-counter on the OTC Bulletin Board, which has constrained the liquidity of our common stock. As part of our S-1 registration statement filing on June 22, 2009, we disclosed that we intend to apply to list our common stock on the NASDAQ Global Market if we consummate a successful offering of our common stock. However, there can be no assurance that following an ~~alternate exchange such as Nasdaq~~offering, if one is completed, an active trading market on the NASDAQ Global Market will be maintained, that our common stock price will increase or ~~Amex, which means~~that our common stock will continue to ~~be lightly traded~~trade on the exchange for any specific period of time. If we are unable to maintain our listing on the NASDAQ Global Market or we continue to remain delisted from a nationally recognized exchange and ~~liquidity~~to trade on the OTC Bulletin Board, we may be ~~negatively affected~~subject to a loss of confidence by customers and investors and the market price of our shares may be affected.

Sales of additional shares of common stock by Gores or our other lenders could adversely affect the stock price.

Gores beneficially owns 75.1% of our outstanding common stock. There can be no assurance that at some future time Gores, or our other lenders, will not, subject to the applicable volume, manner of sale, holding period and limitations of Rule 144 under the Securities Act, sell additional shares of our common stock, which could adversely affect our share price. The perception that these sales might occur could also cause the market price of our common stock to decline. Such sales could also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

Gores will be able to exert significant influence over us and our significant corporate decisions and may act in a manner that advances its best interest and not necessarily those of other stockholders.

As a result of its beneficial ownership of 15,257,509 shares of our common stock, or approximately 75.1% of our voting power, Gores has voting control over our corporate actions. For so long as Gores continues to beneficially own shares of common stock (including preferred stock on an as-converted basis) representing more than 50% of the voting power of our common stock, it will be able to elect all of the members of our board of directors and determine the outcome of all matters submitted to a vote of our stockholders, including matters involving mergers or other business combinations, the acquisition or disposition of assets, the incurrence of indebtedness, the issuance of any additional shares of common stock or other equity securities and the payment of dividends on common stock. Gores may act in a manner that advances its best interests and not necessarily those of other stockholders by, among other things:

	•		delaying, deferring or preventing a change in control;

	•		impeding a merger, consolidation, takeover or other business combination;

	•		discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control; or

	•		causing us to enter into transactions or agreements that are not in the best interests of all stockholders.

Provisions in our restated certificate of incorporation and by-laws and Delaware law may discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Provisions of our restated certificate of incorporation and by-laws and Delaware law may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. This provision of the Delaware General Corporation Law could delay or prevent a change of control of our company, which could adversely affect the price of our common stock.

We do not anticipate paying dividends on our common stock.

We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently anticipate that we will retain all of our available cash, if any, for use as working capital and for other general corporate purposes. Any payment of future cash dividends will be at the discretion of our board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our board of directors deems relevant. In addition, our Senior Credit Facility and the New Senior Notes restrict the payment of dividends.

Any issuance of shares of preferred stock by us could delay or prevent a change of control of our company, dilute the voting power of the common stockholders and adversely affect the value of our common stock.

Our board of directors has the authority to cause us to issue, without any further vote or action by the stockholders, up to 10,000,000 shares of preferred stock, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series. To the extent we choose to issue preferred stock, any such issuance may have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders, even where stockholders are offered a premium for their shares.

The issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of our other classes of voting stock either by diluting the voting power of our other classes of voting stock if they vote together as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote even if the action were approved by the holders of our other classes of voting stock.

The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price causing economic dilution to the holders of common stock.

The foregoing list of factors that may affect future performance and the accuracy of forward-looking statements included in the factors above are illustrative, but by no means all-inclusive or exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, we employ established policies and procedures to manage our exposure to changes in interest rates using financial instruments. Previously we used derivative financial instruments ~~(fixed-to-floating~~(fixed-to-floating interest rate swap agreements) for the purpose of hedging specific exposures and normally hold all derivatives for purposes other than trading. All derivative financial instruments previously held reduced the risk of the underlying hedged item and were designated at inception as hedges with respect to the underlying hedged item. Hedges of fair value exposure were entered into in order to hedge the fair value of a recognized asset, liability or a firm commitment.

Prior to terminating our interest rate swaps in November 2007 and December 2008, we had entered into a seven-year interest rate swap agreement covering $25,000 notional value of our outstanding borrowing to effectively float the majority of the interest rate at three-month LIBOR plus 74 basis points, and two ten-year interest rate swap agreements covering $75,000 notional value of our outstanding borrowing to effectively float the majority of the interest rate at three-month LIBOR plus 80 basis points. In total, the swaps initially covered $100,000, which represented 50% of the notional amount of Senior Notes. These swap transactions allowed us to benefit from short-term declines in interest rates while having the long-term stability on the other 50% of the Senior Notes of fairly low fixed rates. The instruments met all of the criteria of a fair-value hedge and were classified in the same category as the item hedged in the accompanying balance sheet. We had the appropriate documentation, including the risk management objective and strategy for undertaking the hedge, identification of the hedged instrument, the hedge item, the nature of the risk being hedged, and how the hedging instrument’s effectiveness offsets the exposure to changes in the hedged item’s fair ~~value~~value.

Our receivables do not represent a significant concentration of credit risk due to the wide variety of customers and markets in which we operate.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~On September 12, 2006, Mark Randall, derivatively on behalf of Westwood One, Inc., filed suit~~There have been no material developments in the ~~Supreme Court of~~second quarter to the ~~State of New York, County of New York, against us and certain of~~legal proceeding descibed in our ~~current and former directors and certain former executive officers. The complaint alleges breach of fiduciary duties and unjust enrichment in connection with~~Quarterly Report on Form 10-Q for the granting of certain options to our former directors and executives. Plaintiff seeks judgment against the individual defendants in favor of us for an unstated amount of damages, disgorgement of the options which are the subject of the suit (and any proceeds from the exercise of those options and subsequent sale of the underlying stock) and equitable relief. Subsequently, on December 15, 2006, Plaintiff filed an amended complaint which asserts claims against certain of our former directors and executives who were not named in the initial complaint filed in September 2006 and dismisses claims against other former directors and executives named in the initial complaint. Onquarter ended March 2, 2007, we filed a motion to dismiss the suit. On April 23, 2007, Plaintiff filed its response to our motion to dismiss. On May 14, 2007, we filed our reply in furtherance of its motion to dismiss Plaintiff’s amended complaint. On August 3, 2007, the Court granted such motion to dismiss and denied Plaintiff’s request for leave to replead and file a further amended complaint. On September 20, 2007, Plaintiff appealed the Court’s dismissal of its complaint and moved for “renewal” under CPLR 2221(e). Oral argument on Plaintiff’s motion for renewal occurred on October 31, ~~2007. On April 22, 2008, Plaintiff withdrew its motion for renewal, without prejudice to renew.~~2009.

Item 1A. Risk Factors

A description of the risk factors associated with our business is included under “Cautionary Statement Concerning Forward-Looking Statements and Factors Affecting Forward-Looking Statements “ in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contained in Item 2 of Part I of this report. This description includes any material changes to and supersedes the description of the risk factors associated with our business previously disclosed in Item 1A of ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, 2008 and is incorporated herein by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

As previously disclosed in a Current Report on Form 8-K filed with the SEC on April 27, 2009, on April 23, 2009, we closed on definitive documentation to refinance substantially all of our then outstanding long-term indebtedness (approximately $241 million in principal amount) and recapitalize our equity. As part of such transaction, we issued shares of Series A-1 Convertible Preferred Stock and Series B Convertible Preferred Stock as described elsewhere in this report in more detail.

During the quarter ended ~~March 31,~~June 30, 2009, ~~the Company~~we did not purchase any of its common stock under ~~its~~our existing stock purchase program and ~~does~~we do not intend to repurchase any shares for the foreseeable future.

Issuer Purchases of Equity Securities

Approximate Dollar

Total Number of

Value of Shares that

Total

Shares Purchased as

May Yet Be

Number of Shares

Part of Publicly

Purchased Under

Purchased in

Average Price Paid

Announced Plan or

the Plans or

Period

Per Share

Program

Programs (A)

4/1/09 – 4/30/09

—

N/A

5/1/09 – 5/31/09

—

N/A

2/6/1/09 – ~~2/28/09~~

—

~~N/A~~

~~3/1/09 – 3/31/~~6/30/09

—

N/A


(A)		Represents remaining authorization from the $250 million repurchase authorization approved on February 24, 2004 and the additional $300 million authorization approved on April 29, 2004.

Item 4. Submission of Matters to a Vote of Security Holders

~~None.~~As described elsewhere in this report, we held a special meeting of our stockholders on June 26, 2009. Such meeting was adjourned until August 3, 2009 without taking any action on any of the proposals set forth in our definitive proxy statement filed with the SEC on June 4, 2009, with the exception of Proposal 6 to adjourn the meeting.

Item 5. Changes to Director Nomination Procedures

On April 23, 2009, the Board of Directors of the Company (the “Board”) adopted and approved the Amended and Restated By-Laws (the “Amended and Restated By-Laws”). Section 2.16 of the Amended and Restated By-Laws added advance notice provisions relating to stockholder proposals to nominate directors for election at stockholder meetings. The following summary is qualified in its entirety by reference to the copy of the Amended and Restated By-Laws attached as Exhibit 3.1 to the Company’s Current Report on 8-K filed with the SEC on April 27, 2009.

Nominations of persons for election to the Board may be made at any Annual Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors, (1) by or at the direction of the Board (or any duly authorized committee thereof) or (2) by any stockholder of the Company (A) who is a stockholder of record on the date of the giving of the notice provided for in Section 2.16 of the Amended and Restated By-Laws and on the record date for the determination of stockholders entitled to vote at such meeting and (B) who complies with the notice procedures set forth in Section 2.16 of the Amended and Restated By-Laws.

~~For a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Company.~~

To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Company as follows: (1) in the case of an Annual Meeting, not less than ninety (90) days nor more than one hundred-twenty (120) days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs; and (2) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Special Meeting was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any existing time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth: (a) as to each person whom the stockholder proposes to nominate for election as a director: (1) the name, age, business address and residence address of the person, (2) the principal occupation and employment of the person, (3) the class, series and number of all shares of stock of the Company which are owned beneficially or of record by the person and (4) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act; and (b) as to the stockholder giving the notice: (1) the name and record address of such stockholder, (2) (A) the class, series and number of all shares of stock of the Company which are owned by such stockholder, (B) the name of each nominee holder of shares owned beneficially but not of record by such stockholder and the number of shares of stock held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest has been entered into by or on behalf of such stockholder or any of its affiliates or associates with respect to stock of the Company and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock) has been made by or on behalf of such stockholder or any of its affiliates or associates, the effect or intent of which is to mitigate loss to, or to manage risk or benefit of stock price changes for, such stockholder or any of its affiliates or associates or to increase or decrease the voting power or pecuniary or economic interest of such stockholder or any of its affiliates or associates with respect to stock of the Company, (3) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (4) a representation that such stockholder is a holder of record of stock of the Company entitled to vote at such meeting and that such stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons named in its notice and (5) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the Exchange Act. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

A stockholder who wishes to recommend a prospective nominee for the Board should notify the Company’s Secretary in accordance with advance notice provisions of the Amended and Restated By-Laws (as described above) and include supporting materials the stockholder considers relevant to the potential candidate’s qualifications. Any correspondence mailed to the Company should include a clear and prominent notation that such contains a “Director Recommendation” and confirm the author is a stockholder.None.

Item 6. Exhibits


Exhibit
Number (A)			Description of Exhibit

	3.1		Restated Certificate of Incorporation, as filed with the Secretary of the State of Delaware. (1)

	3.1.1	*	Certificate of Amendment to the Restated Certificate of Incorporation of Westwood One, Inc., as filed with the Secretary of the State of Delaware on August 3, 2009.

	3.2		Amended and Restated Bylaws of Registrant adopted on April 23, 2009 and currently in effect. (2)

	4.1		Note Purchase Agreement, dated as of December 3, 2002, between the Company and the Purchasers parties thereto. (3)

	4.1.1		First Amendment, dated as of February 28, 2008, to Note Purchase Agreement, dated as of December 3, 2002, by and between Registrant and the noteholders parties thereto. (4)

	4.2		Securities Purchase Agreement, dated as of April 23, 2009, by and among Westwood One, Inc. and the other parties thereto. (2)


	Page No.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Consolidated Balance Sheets		3

Consolidated Statements of Operations		4

Consolidated Statements of Cash Flows		5

Consolidated Statements of Shareholders’ Equity		6

Notes to Consolidated Financial Statements		67

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2229

Item 3. Quantitative and Qualitative Disclosures About Market Risk		3349

Item 4. Controls and Procedures		3449

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		3450

Item 1A. Risk Factors		3450

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3450

Item 3. Defaults Upon Senior Securities		3550

Item 4. Submission of Matters to a Vote of Security Holders		3551

Item 5. Other Information		3551

Item 6. Exhibits		3651

SIGNATURES		3853

Exhibit Index		3954

Exhibit ~~10.1~~3.1.1
Exhibit ~~10.2~~10.1
Exhibit 31.a
Exhibit 31.b
Exhibit 32.a
Exhibit 32.b


					Successor Company			Predecessor Company
	March 31,		December 31,		June 30, 2009		December 31, 2008
	2009		2008		2009		2008

Land, buildings and improvements	$	12,007	$	11,999	$	18,397	$	11,999
Recording, broadcasting and studio equipment		72,749		75,907		73,761	75,907
Furniture, equipment and other		18,454		18,445		18,116	18,445

	$	103,210	$	106,351	$	110,274	$	106,351
Less: Accumulated depreciation and amortization		73,664		75,934
Less: Accumulated depreciation						73,917	75,934

Property and equipment, net	$	29,546	$	30,417	$	36,357	$	30,417


	Three Months Ended
	March 31,
	2009			2008
Segment Operating (Loss) Income
Network	$	(4,465	)	$	8,073
Metro/Traffic		(5,512	)		3,335

Total Segment Operating Income	$	(9,977	)	$	11,408
Corporate Expenses		(9,626	)		(14,408	)

Operating (Loss) Income	$	(19,603	)	$	(3,000	)
Interest Expense		(3,263	)		(5,399	)
Other Income		300			41

(Loss) Income Before Income Taxes	$	(22,567	)	$	(8,358	)


*		Reverse stock split not reflected in total. Class B Stock was converted into common stock prior to effectiveness of reverse stock split.



	March 31, 2009		December 31, 2008

Revolving Credit Facility/Term Loan	$	41,000	$	41,000
4.64% Senior Notes due on November 30, 2009		52,069		51,475
5.26% Senior Notes due on November 30, 2012		156,526		154,503
Deferred derivative gain		1,851		2,075

	$	251,446	$	249,053


Restructuring Liability	Severance Termination Cost			Facilities Consolidation Related Costs			Contract Termination			Total

Balance at December 31, 2008		3,198			790			3,796			7,784
Charges		1,658			1,782			—			3,440
Payments		(884	)		(115	)		(360	)		(1,359	)
Non-Cash utilization		—			—			—			—


Balance at March 31, 2009		3,972			2,457			3,436			9,865


~~(1)~~		~~An impairment charge of $206,053 in the second quarter of 2008 and $224,073 in the fourth quarter of 2008 reduced the balance of Goodwill.~~


	Successor Company			Predecessor Company			Combined Total
							For the three
	For the Period			For the Period			months ended
	April 24, 2009 to June 30, 2009			April 1, 2009 to April 23, 2009			June 30,2009

NET REVENUE	$	58,044		$	25,607		$	83,651

Operating Costs		52,116			20,187			72,303
Depreciation and Amortization		5,845			521			6,366
Corporate General and Administrative Expenses		2,407			1,482			3,889
Restructuring Charges		1,454			536			1,990
Special Charges		368			7,010			7,378

		62,190			29,736			91,926

OPERATING (LOSS)		(4,146	)		(4,129	)		(8,275	)
Interest Expense (Income)		4,692			(41	)		4,651
Other Income		(4	)		(59	)		(63	)

(LOSS) BEFORE INCOME TAX		(8,834	)		(4,029	)		(12,863	)
INCOME TAX (BENEFIT)		(2,650	)		(254	)		(2,904	)

NET (LOSS)	$	(6,184	)	$	(3,775	)	$	(9,959	)


1)		As described above, we currently aggregate revenue data based on the operating segment. A number of advertisers purchase both local/regional and national commercial airtime in both segments. Our objective is to optimize total revenue from those advertisers.


~~Exhibit~~
~~Number (A)~~			~~Description of Exhibit~~
	4.3		Certificate of Designations for the 7.50% Series A-1 Convertible Preferred Stock as filed with the Secretary of State of the State of Delaware on April 23, 2009. (2)

	4.4		Certificate of Designations for the 8.0% Series B Convertible Preferred Stock as filed with the Secretary of State of the State of Delaware on April 23, 2009. (2)

	4.5		First Amendment to Security Agreement, dated as of April 23, 2009, by and among Westwood One, Inc., each of the subsidiaries of Westwood One, Inc. and The Bank of New York Mellon, as collateral trustee. (2)

	10.1	*	~~Separation~~Option Agreement, ~~effective~~dated as of ~~March 31, 2009,~~December 22, 2008, by and between Registrant and ~~Andrew Hersam. +~~by and among Westwood One, Inc., TLAC, Inc., TrafficLand, Inc. and P. Richard Zitelman, in his capacity as Stockholder Representative, as amended.

	10.2	*	Consulting Agreement made as of April 27, 2009, by and between Registrant and AndrewHersam. +

	31.a	*	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.b	*	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.a	**	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.b	**	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		Filed herewith.

**		Furnished herewith.

+		Indicates a management contract or compensatory plan.


(A)		The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.

(1)		Filed as an exhibit to Company’s quarterly report on Form 10-Q for the year ended June 30, 2008 and incorporated herein by reference.

(2)		Filed as an exhibit to Company’s current report on Form 8-K dated April 27, 2009 and incorporated herein by reference.

(3)		Filed as an exhibit to Company’s current report on Form 8-K dated December 4, 2002 and incorporated herein by reference.

(4)		Filed as an exhibit to Registrant’s current report on Form 8-K dated February 28, 2008 and incorporated herein by reference.


WESTWOOD ONE, INC.
By:	/s/ Roderick M. Sherwood III
	Name:	Roderick M. Sherwood III
	Title:	President and CFO
	Date: August 14, 2009