UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K


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

		For the fiscal year ended December 31, 2008

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 333-143558

CMP Susquehanna Radio Holdings Corp.

(Exact Name of Registrant as Specified in Its Charter)


Delaware (State of Incorporation)		36-4159663 (I.R.S. Employer Identification No.)

3280 Peachtree Road N.W.
Suite 2300
Atlanta, GA 30305
(404) 949-0700
(Address, including zip code, and telephone number, including area code, of registrant’s principal offices)

Securities Registered Pursuant to Section 12(b) of the Act:
None

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes þ No o

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

Indicate by check mark whether the registrant has submitted data electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No þ

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller Reporting Company o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

CMP SUSQUEHANNA RADIO HOLDINGS CORP.

ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2008


Item		Page
Number		Number
	Index
	PART I

1	Business		1
1A.	Risk Factors		17
1B.	Unresolved Staff Comments		25
2	Properties		25
3	Legal Proceedings		26
4	Submission of Matters to a Vote of Security Holders		26

	PART II

5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		26
6	Selected Consolidated Financial Data		26
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
7A.	Quantitative and Qualitative Disclosure about Market Risk		46
8	Financial Statements and Supplementary Data		47
9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		47
9A.	Controls and Procedures		47
9B.	Other Information		48

	PART III

10	Directors and Executive Officers and Corporate Governance		48
11	Executive Compensation		49
12	Security Ownership of Certain Beneficial Owners and Management & Related Stockholder Matters		49
13	Certain Relationships and Related Transactions, and Director Independence		50
14	Principal Accountant Fees and services		53

	PART IV

15	Exhibits and Financial Statement Schedules		54
	Signatures		56
EX-21.1
EX-23.1
EX-23.2
EX-23.3
EX-31.1
EX-31.2
EX-32.1

PART I


Item 1.		*Business*

Certain Definitions

In this Form 10-K the terms “we,” “our” and “us” refer to Susquehanna Pfaltzgraff Co. and its consolidated subsidiaries (“SPC”) with respect to the periods prior to our acquisition of SPC’s radio broadcast operations on May 5, 2006 (the “Acquisition”) and to CMP Susquehanna Radio Holdings Corp. and its consolidated subsidiaries (“Radio Holdings”), with respect to the periods after the Acquisition, in each case except as otherwise indicated by the context. Radio Holdings is a direct subsidiary of CMP Susquehanna Holdings Corp. (“Holdings”), a second-tier subsidiary of Cumulus Media Partners, LLC (“CMP”) and the 100% owner of CMP Susquehanna Corp. (“CMPSC”), which is the principal operating subsidiary of CMP.

We use the term “local marketing agreement” (“LMA”) in various places in this report. A typical LMA is an agreement under which a Federal Communications Commission (“FCC”) licensee of a radio station makes available, for a fee, air time on its station to another party. The other party provides programming to be broadcast during the airtime and collects revenues from advertising it sells for broadcast during that programming. In addition to entering into LMAs, we will from time to time enter into management or consulting agreements that provide us with the ability, as contractually specified, to assist current owners in the management of radio station assets that we have contracted to purchase, subject to FCC approval. In such arrangements, we generally receive a contractually specified management fee or consulting fee in exchange for the services provided.

We also use the term “joint services agreement” (“JSA”) in several places in this report. A typical JSA is an agreement that authorizes one party or station to sell another station’s advertising time and retain the revenue from the sale of that airtime. A JSA typically includes a periodic payment to the station whose airtime is being sold (which may include a share of the revenue being collected from the sale of airtime).

Unless otherwise indicated:

	•		we obtained total radio industry listener and revenue levels from the Radio Advertising Bureau (the “RAB”);

	•		we derived historical market revenue statistics and market revenue share percentages from data published by Miller Kaplan, Arase & Co., LLP (“Miller Kaplan”), a public accounting firm that specializes in serving the broadcasting industry and BIA Financial Network, Inc. (“BIA”), a media and telecommunications advisory services firm;

	•		we derived all audience share data and audience rankings, including ranking by population, except where otherwise stated to the contrary, from surveys of people ages 12 and over (“Adults 12+”), listening Monday through Sunday, 6 a.m. to 12 midnight, and based on the Fall 2008 Arbitron Market Report, referred to as Arbitron’s Market Report, pertaining to each market; and

	•		all dollar amounts are rounded to the nearest million, unless otherwise indicated.

The term “Station Operating Income,” is used in various places in this document. Station Operating Income consists of operating income before gain (loss) on sale of assets, depreciation and amortization, corporate general and administrative expenses, costs related to sale of business (principally advisory fees), and impairment of intangible assets and goodwill. Station Operating Income is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). Station Operating Income isolates the amount of income generated solely by our stations and assists management in evaluating the earnings potential of our station portfolio. In deriving this measure, we exclude costs related to the sale of business (primarily advisory fees) and gain (loss) on sale of assets due to the nature of a non-repetitive transaction not being an actual measure of

on-going station performance. We exclude depreciation and amortization due to the insignificant investment in tangible assets required to operate the stations and the relatively insignificant amount of intangible assets subject to amortization. Corporate expenses, despite representing an additional significant cash commitment, are excluded in an effort to present the operating performance of our stations exclusive of the corporate resources employed. We believe this is important to our investors because it highlights the gross margin generated by our station portfolio. Finally, we exclude impairment of intangible assets and goodwill from the measure as they do not represent cash payments related to the operation of the stations.

We believe that Station Operating Income is the most frequently used financial measure in determining the market value of a radio station or group of stations. Our management has observed that Station Operating Income is commonly employed by firms that provide appraisal services to the broadcasting industry in valuing radio stations. Further, in each of the more than 140 radio station acquisitions our management has completed in their combined experience, they have used Station Operating Income as the primary metric to evaluate and negotiate the purchase price to be paid. Given its relevance to the estimated value of a radio station, we believe, and our experience indicates, that investors consider the measure to be extremely useful in order to determine the value of our portfolio of stations. We believe that Station Operating Income is the most commonly used financial measure employed by the investment community to compare the performance of radio station operators. Finally, Station Operating Income is one of the measures that our management uses to evaluate the performance and results of our stations. Management uses the measure to assess the performance of our station managers and our Board uses it to determine the relative performance of our executive management. As a result, in disclosing Station Operating Income, we provide our investors with an analysis of our performance that is consistent with that which is utilized by our management and Board.

Station Operating Income is not a recognized term under GAAP and does not purport to be an alternative to operating income from continuing operations as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, Station Operating Income is not intended to be a measure of free cash flow available for dividends, reinvestment in our business or other management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Station Operating Income should be viewed as a supplement to, and not a substitute for, results of operations presented on the basis of GAAP. Management compensates for the limitations of using station operating income by using it only to supplement our GAAP results to provide a more complete understanding of the factors and trends affecting our business than GAAP results alone. Station Operating Income has its limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

Company Overview

We believe that we are the 10th largest radio broadcasting company overall in the United States based on 2008 revenues. We own 32 radio stations, of which we operate 23 FM and 9 AM revenue-generating stations in 9 metropolitan markets in the United States. We believe our properties represent a unique collection of radio assets with diversified geographic presence and programming formats. Our stations serve four of the ten largest radio markets in the United States by revenue (San Francisco, Dallas, Atlanta and Houston) in addition to the Cincinnati, Kansas City, Louisville, Indianapolis, and York, PA markets. We believe our station portfolio includes a number of the highest revenue-grossing and most listened-to stations in our markets. In 2008, we had net revenues of $203.4 million and Station Operating Income of $83.4 million. Please see “Selected Consolidated Financial Data” for a reconciliation of Station Operating Income to its most directly comparable financial measure calculated and presented in accordance with GAAP.

We have followed a focused strategy of assembling and operating clusters of stations in some of the nation’s largest markets. According to BIA, our cluster rank by revenue is in the top three in six of the nine markets in which we operate. According to Arbitron, 21 of our stations have ratings ranking them in the top 3 within their formats of their targeted demographic in their respective markets, including 14 stations that rank first within their formats and 7 stations that rank second within their formats. The majority of our stations enjoy strong ratings in their target demographics, reflecting loyal listener bases, which we believe are driven by these stations’ long-standing

community presences and established brands. In addition, we believe our markets have attractive demographics. According to BIA, most of our markets have per capita and household after-tax disposable income, expected household after-tax disposable income growth and expected population growth in excess of the national average, which we believe makes our stations attractive to a broad base of radio advertisers and reduces our dependence on any one economic sector or specific advertiser.

Our stations offer a broad range of programming formats including country, contemporary hit radio/top 40, adult contemporary, oldies, rock and sports and talk radio, each targeted to a specific demographic audience within our markets. In addition, we have affiliations with 10 professional sports teams across several of our markets, increasing our attractiveness to national and local advertisers. We believe our presence in large metropolitan markets, clustering strategy and variety of programming formats make us attractive to a diverse base of local and national advertisers, which, together with our strong ratings, provide us the opportunity to generate higher market revenue share.

In May 2006, our direct parent, Holdings, entered into a management agreement with Cumulus Media Inc. (“Cumulus”), the second-largest radio company in the United States based on the number of stations owned or operated. See “Certain Relationships and Related Transactions, and Director Independence—Cumulus Management Agreement.” We believe that Cumulus is one of the premier radio management companies in the United States, operating 315 stations across 59 markets. Our stations and Cumulus’s stations do not overlap or compete against one another in any market. During the term of the Cumulus management agreement, officers of Cumulus also serve as our officers and manage our operations.

Radio Holdings is a Delaware corporation formed in 2006.

Highlights during 2008

Economic Developments

The advertising environment for 2008 lagged behind 2007. The RAB has reported that trends in radio advertising revenue mirrored fluctuations in the current economic environment, yielding mixed results over the last three years. In 2008, advertising revenues decreased 9%, after decreasing 2% in 2007 and increasing only 1% in 2006. Additionally our political revenues increased by $2.8 million compared to 2007 due to 2008 being a presidential election year.

We review the recorded values of our FCC licenses and goodwill for impairment on an annual basis. We recorded total impairment charges of $669.8 million in 2008 in order to reduce the carrying value of certain broadcast licenses and goodwill. The impairment loss recorded in connection with our review of broadcasting licenses and goodwill during the fourth quarter of 2008 (see Note 10 in the accompanying notes to the financial statements) was primarily due to: (1) an increase in the discount rate used for valuation purposes; (2) a decrease in prevailing station transaction multiples; and (3) a decrease in advertising revenue growth projections for the broadcasting industry.

Liquidity Considerations

As the capital and credit market crisis has worsened during the fourth quarter of 2008 and early 2009, and in conjunction with the development of our 2009 business plan, we continue to assess the impact of recent market developments on a variety of areas, including our forecasted advertising revenues and liquidity. In response to these conditions, we further refined our 2009 business plan to incorporate a further reduction in our forecasted 2009 revenues and additional cost reductions to mitigate the impact of our anticipated decline in 2009 revenue.

Based upon actions the Company has already taken, including the 2009 Exchange Offer described further below and various cost reduction activities in our markets (which have mainly been head count reductions implemented in the fourth quarter 2008) management believes that CMPSC will continue to be in compliance with all of its debt covenants through at least December 31, 2009 (which become more restrictive effective September 30, 2009 and December 31, 2009).

For further discussion of liquidity considerations, see “Liquidity and Capital Resources — Sources of Liquidity” in Item 7, as well as Note 1 to the consolidated financial statements.

Subsequent Events

While preparing our 2009 business plan, we assessed future covenant compliance under the credit agreement governing CMPSC’s senior secured credit facility, including consideration of market uncertainties, as well as the incremental cost that would be required to potentially amend the terms of the credit agreement. As a result of this review, and in an effort to significantly

reduce our long-term debt, we commenced an exchange offer (the “2009 Exchange Offer”) on March 9, 2009, pursuant to which we offered to exchange all of CMPSC’s outstanding 9 7/8% senior subordinated notes due 2014 (the “Existing Notes”), for (1) up to $15 million aggregate principal amount of Variable Rate Senior Subordinated Secured Second Lien Notes due 2014 of CMPSC (the “New Notes”), (2) up to $35 million in shares of our Series A preferred stock (the “New Preferred Stock”), and (3) warrants exercisable for shares of our common stock representing, in the aggregate, up to 40% of our outstanding common stock on a fully diluted basis (the “New Warrants”).

Subsequent to year end, on March 26, 2009, we and CMPSC completed the exchange of $175,464,000 aggregate principal amount of Existing Notes, which represented 93.5% of the total principal amount outstanding prior to the commencement of the 2009 Exchange Offer, for $14,031,000 aggregate principal amount of New Notes, 3,273,633 shares of New Preferred Stock and New Warrants exercisable for 3,740,893 shares of our common stock. If we had not successfully completed the 2009 Exchange Offer, we would have been in violation of the total leverage ratio covenant in the credit agreement governing CMPSC’s senior secured credit facilities as of March 31, 2009.

Based upon actions we have already taken, including the 2009 Exchange Offer, as well as various cost reduction activities in our markets, we believe we will continue to be in compliance with our debt covenants through at least December 31, 2009. Additionally, we believe there are sufficient additional cost reduction activities that could be implemented during the year, if necessary, in order to remain in compliance with all of our debt covenants should advertising revenues continue to decline. Further discussion of our debt covenant compliance is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Strategy

Our business strategy includes the following key elements intended to establish leadership positions in the markets we serve and to enhance our operating and financial performance.

	•		Focus on Clusters in Large Markets. We believe that large markets provide an attractive combination of scale, stability and opportunity for future growth. We have followed a focused strategy of operating sizeable clusters of stations within our markets, and we manage a large share of the radio advertising within each market. This market position allows us to offer advertisers more attractive advertising packages targeted towards more specific audiences. In addition, the ability to share human resources, information technology, engineering, legal, marketing and other costs across cluster stations helps to improve our Station Operating Income margins.

	•		Improve Operating Performance Using Cumulus’s Best-in-Class Practices. In May 2006, our direct parent, Holdings, entered into a management agreement with Cumulus, the second largest radio company in the United States based on number of stations owned or operated. Cumulus has been recognized as having one of the top management teams in the radio industry. The Chairman and Chief Executive Officer of Cumulus, Lewis W. Dickey, Jr., is our Chairman, President and Chief Executive Officer. Mr. Dickey was named “Best Radio & TV Broadcasting CEO” by Institutional Investor (January 2005). Among the reasons identified for this recognition were Mr. Dickey’s record for reducing Cumulus’s debt and improving its free cash flow while still acquiring operationally critical assets. We believe that the combination of best-in-class business practices from Cumulus’s management team, together with the enhanced purchasing power, scale and supplier relationships that result from the common management of the portfolios of Cumulus and our company, helps us drive local sales growth and operating efficiencies and improve Station Operating Income margins.

•

Employ Market Research and Targeted Programming. We seek to maximize station operating performance through market research and targeted programming. We maintain and regularly update extensive listener databases that provide valuable insight into our listener base. We also retain consultants and research organizations to continually evaluate listeners’ preferences and use information gathered from these sources to optimize our programming and marketing strategies. These strategies have included format changes and utilization of customized marketing campaigns to expand our listener base. We believe these

			strategies have contributed to the strong ratings and market positions of our stations. We believe the combination of our existing local market research abilities with the scale of Cumulus’s in-house market research allows us to maximize our future station operating performance.

	•		Continue to Build Strong Relationships with Listeners and Advertisers. We are focused on developing and maintaining strong relationships with both our listener and advertiser bases in our stations’ communities. Our stations maintain close relationships with listeners via e-mail event notification and weekly/biweekly station newsletters made possible by maintaining extensive listener databases. In addition, our stations host numerous high-profile community service events, concerts and listener promotions each year. These relationships with our listeners allow us to offer value-added marketing services to our advertiser base, including contacting listeners via targeted marketing campaigns.

	•		Maintain Balanced Advertising Load. We closely manage our on-air inventory to maximize revenue without jeopardizing listening levels and resulting ratings. We believe the inventory levels maintained by our stations are lower inventory levels of our competitors. Our stations generally respond to demand for on-air inventory by varying pricing rather than varying target inventory levels. We believe that this strategy supports long-term positive ratings trends and stable revenue growth.

	•		Pursue Strategic Acquisitions and Alternatives. Our portfolio development strategy has been focused on clustering radio stations in our existing markets and making opportunistic acquisitions in new markets in which we believe we can cost-effectively achieve a leading position in terms of audience and revenue share. We may also pursue strategic alternatives, such as asset swaps, to diversify or strengthen our portfolio of stations. In evaluating potential new stations, we assess the strategic fit of the station with our existing clusters of radio stations. When entering a new market, we would typically seek to acquire a “platform” upon which to expand our portfolio of stations and build a leading cluster of stations. We believe our ability to further develop our portfolio has been enhanced by our association with Cumulus, which we believe has a long history of successfully identifying and integrating acquisitions and asset swaps.

	•		Pursue Internet Initiatives. We have aggressively pursued Internet opportunities, such as online streaming and incorporating advertisement-replacement technologies into streams. We have achieved success with radio streaming and, as a result, all of our stations are currently streamed over the Internet. Further, we believe San Francisco’s KFOG and Dallas’s “The Ticket” are among the most streamed stations in the country. These Internet initiatives expand our audience reach through new distribution methods while offering potential new revenue sources.

Acquisitions and Dispositions

Completed Acquisitions

There were no completed acquisitions in 2008.

Completed Dispositions

We completed the sale of our radio station WZZB-AM in Seymour, Indiana for $0.3 million during the three months ended March 31, 2008. We recorded an immaterial gain on this transaction.

2007

On December 5, 2007, we completed a transaction with Entercom Communications Corp (“Entercom”) to exchange WSWD-FM for WGRR-FM and certain other intellectual property. Each of the stations included in the exchange serves the Cincinnati, Ohio radio market. Concurrently with first entering into the asset exchange agreement on November 1, 2006, we also entered into an LMA. Pursuant to the LMA, we commenced operation of WGRR-FM and Entercom commenced operations of WSWD-FM. We included the net revenues and station operating expenses associated with operating WGRR-FM in our consolidated financial statements for the years ended December 31, 2007 and 2006. Under the asset purchase agreement and the LMA, there were very few employees hired and a minimal number of contracts assumed. The fair value of the assets acquired in exchange for the assets disposed, were accounted for under SFAS No. 141, which resulted in a fair value of $31.0 million.

KCHZ Trust

Effective March 1, 2007, KCHZ-FM, which was an asset of a non-guarantor, indirect subsidiary of Radio Holdings, was transferred to another wholly owned, second-tier subsidiary of CMP that is neither directly or indirectly owned by Radio Holdings, and the entity that previously held KCHZ was dissolved. Radio Holdings accounted for this transaction as a change in entity and has retrospectively applied this change to all periods presented. As a result of this change, the entity that previously owned KCHZ is no longer included in any financial statements of Radio Holdings. This change in entity occurred as a result of final FCC approval of the transfer of the KCHZ broadcast license.

KCHZ-FM’s assets were $9.7 million, liabilities were $0.5 million, and equity was $9.2 million as of December 31, 2006. The station contributed net income of $0.0 million from May 5, 2006 (date of inception) to December 31, 2006, and net income of $0.1 million from January 1, 2007 to February 28, 2007.

Acquisition of SPC

On May 5, 2006, a subsidiary of Radio Holdings acquired the stock of SPC, which, at that point, held only radio assets, in the Acquisition for approximately $1.2 billion. This acquisition gave Radio Holdings station platforms in seven of the top 50 radio markets in the country. Subsequent to the Acquisition, Radio Holdings allocated the purchase price to the tangible and intangible assets of SPC, according to fair value appraisals performed after the closing. The difference between the purchase price and the appraised values assigned to tangible and intangibles assets was recorded as goodwill. This purchase accounting allocation of the acquisition price established the new basis of accounting. Included in intangible assets are FCC licenses and goodwill, neither of which is amortized. Other intangibles consist primarily of pre-sold advertising contracts, which were substantially fully amortized by December 31, 2006.

Proceeds for the Acquisition were derived from bank financing, high yield unsecured notes (the Existing Notes), and $250 million in sponsor equity. In addition, Radio Holdings obtained $64 million of cash as equity from the asset-based financing, by a third party, of CMP KC, LLC’s radio assets, which were three radio stations contributed by Cumulus as part of its equity contribution to CMP. Management consulted the guidelines issued by the SEC staff under Staff Accounting Bulletin 73 and determined that the cash from CMP KC, LLC constituted equity in Radio Holdings.

In addition, Radio Holdings recognized approximately $1.5 million in exit activity costs for employee severance and contract termination costs. In accordance with the guidance set forth in Emerging Issue Task Force 95-3 Recognition of Liabilities in Connection with a Purchase Business Combination, Radio Holdings capitalized these costs on the consolidated balance sheet and paid out approximately $1.5 million by December 31, 2007.

Industry Overview

The primary source of revenues for radio stations is the sale of advertising time to local, regional and national spot advertisers and national network advertisers. National spot advertisers assist advertisers in placing their advertisements in a specific market. National network advertisers place advertisements on a national network show and such advertisements will air in each market where the network has an affiliate. During the past decade, local

advertising revenue as a percentage of total radio advertising revenue in a given market has ranged from approximately 72% to 87% according to the RAB. The trends in radio advertising revenue mirrored fluctuations in the current economic environment, yielding mixed results over the last three years. In 2008, advertising revenues decreased 9%, after decreasing 2% in 2007 and increasing approximately 1% in 2006.

Generally, radio is considered an efficient, cost-effective means of reaching specifically identified demographic groups. Stations are typically classified by their on-air format, such as country, rock, adult contemporary, oldies and news/talk. A station’s format and style of presentation enables it to target specific segments of listeners sharing certain demographic features. By capturing a specific share of a market’s radio listening audience with particular concentration in a targeted demographic, a station is able to market its broadcasting time to advertisers seeking to reach a specific audience. Advertisers and stations use data published by audience measuring services, such as Nielsen, to estimate how many people within particular geographical markets and demographics listen to specific stations.

Advertising Sales

The primary source of our revenues is the sale of broadcasting time on our radio stations for local, regional and national advertising. During 2008, 2007 and 2006, approximately 81%, 79% and 78%, respectively, of our net revenues were from local and regional advertising and 19%, 21%, and 22%, respectively, of our net revenues were from national advertising during the same periods. We generate additional revenues by marketing our proprietary database of listeners, selling online advertising and sponsoring local events. These other sources of revenue supplement our traditional advertising revenues without increasing on-air commercial time. Like other industry participants, we sometimes utilize trade or barter agreements to exchange advertising time for goods or services such as travel or lodging, instead of for cash. In 2008, 2007, and 2006, our non-cash advertising revenues accounted for approximately 1% of our total advertising revenues.

Our local advertisers cover a wide range of categories including automotive dealers, airlines, telecommunications, financial institutions, furniture and home furnishings, food and beverage stores, food services, and electronics and equipment. Our contracts with our advertisers are generally short-term.

Each radio station’s local sales staff solicits advertising either directly from local advertisers or indirectly through advertising agencies. We employ a strategy of building local direct accounts by employing personnel in each of our markets to produce custom commercials that respond to the needs of our advertisers. Regional advertising sales, which we define as sales in regions surrounding our markets to companies that advertise in our markets, are generally made by our local sales staff.

To generate national advertising sales, we have engaged a firm specializing in soliciting radio advertising sales on a national level as our exclusive national representative. National sales representatives obtain advertising principally from advertising agencies located outside the station’s market and receive commissions from us based on our gross revenue, net of agency commission, from the advertising sold.

We estimate the optimum number of advertisements available for sale by a station for a particular time period. The number of advertisements that can be broadcast without jeopardizing listening levels (and resulting ratings) is limited in part by the programming format of a particular station. We seek to maximize revenue by closely managing on-air inventory of advertising time and adjusting prices to local market conditions. We seek to broaden our base of advertisers in each of our markets by providing a wide array of audience demographic segments across our cluster of stations, thereby providing each of our potential advertisers with an effective means of reaching a targeted demographic group. Each of our stations has a general target level of on-air inventory that it makes available for advertising. This target level may vary at different times of the day but tends to remain stable over time. Much of our selling activity is based on demand for our on-air inventory and, in general, we respond to this demand by varying prices rather than varying our target inventory level for a particular station. As a result, most changes in revenue are explained by demand-driven pricing changes rather than changes in available inventory.

We believe that radio is one of the most efficient and cost-effective means for advertisers to reach specific demographic groups. Advertising rates charged by radio stations are based primarily on:

	•		a station’s share of audiences in the demographic groups targeted by advertisers;

	•		the number of stations in the market competing for the same demographic groups;

	•		the supply of and demand for radio advertising time; and

	•		certain qualitative factors.

Rates are generally highest during morning and afternoon commuting hours. A station’s listenership is reflected in ratings surveys that estimate the number of listeners tuned to the station and the time they spend listening. Each station’s ratings are used by its advertisers and advertising representatives in connection with advertising sales and are used by us to chart audience growth, set advertising rates and adjust programming. The radio broadcast industry’s and our principal rating agency is Arbitron, which publishes periodic ratings surveys for significant domestic radio markets. We have agreements with Arbitron that give us access to Arbitron’s ratings materials in a majority of our markets through March 2010. Since 2004, Arbitron has been promoting an electronic radio rating system, as opposed to its historical manual system of gathering information from media users. We do not know when or to what extent the radio industry will adopt the new electronic rating system, nor whether the information obtained from this new system will affect our ratings or our audience demographics.

Competition

The radio broadcasting industry is very competitive. The success of each of our stations depends largely upon its audience ratings and its share of the overall advertising revenues within its market. Our audience ratings and advertising revenue are subject to change, and any adverse change in a particular market affecting advertising expenditures or an adverse change in the relative market share of the stations located in a particular market could have a material adverse effect on the revenues of our radio stations located in that market. There can be no assurance that any one or all of our radio stations will be able to maintain or increase current audience ratings or advertising revenue market share.

Our stations compete for listeners and advertising revenues directly with other radio stations within their respective markets, as well as with other advertising media as discussed below. Radio stations compete for listeners primarily on the basis of program content that appeals to a particular demographic group. By building a strong listener base comprised of specific demographic groups in each of its markets, we are able to attract advertisers seeking to reach those listeners. Radio stations periodically change their formats to compete directly with other stations for listeners and advertisers. Another station’s decision to convert to a format similar to that of one of our radio stations in the same geographic area or launch an aggressive promotional campaign may result in lower ratings and advertising revenue, increased promotion and other expenses and consequently, in turn, may lower our Station Operating Income.

Factors that are material to a radio station’s competitive position include station brand identity and loyalty, management experience, the station’s local audience rank in its market, transmitter power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other radio stations in the market area. We attempt to improve our competitive position in each of our markets by extensively researching our stations’ programming, implementing advertising campaigns aimed at the demographic groups for which our stations program and managing our sales efforts to attract a larger share of advertising dollars for each station individually. However, we compete with many organizations that have substantially greater financial and other resources than we do.

In 1996, changes in federal law and FCC rules dramatically increased the number of radio stations a single party can own and operate in a local market. Our management continues to believe that companies that elect to take advantage of those changes by forming groups of commonly owned stations or joint arrangements such as LMAs in a particular market may, in certain circumstances, have lower operating costs and may be able to offer advertisers in those markets more attractive rates and services. Although we currently operate multiple stations in each of our markets and intend to pursue the creation of additional multiple station groups in particular markets, our competitors in certain markets include other parties who own and operate as many or more stations than we do. We may also compete with those other parties or broadcast groups for the purchase of additional stations in those markets or new markets. Some of those other parties and groups are owned or operated by companies that have substantially greater financial or other resources than we do.

A radio station’s competitive position can be enhanced by a variety of factors, including changes in the station’s format and an upgrade of the station’s authorized power. However, the competitive position of existing radio stations is protected to some extent by certain regulatory barriers to new entrants. The operation of a radio broadcast station requires an FCC license, and the number of radio stations that an entity can operate in a given market is limited. Under FCC rules that became effective in 2004, the number of radio stations that a party can own in a particular market is dictated largely by whether the station is in a defined “Arbitron Metro” (a designation designed by a private party for use in advertising matters), and, if so, the number of stations included in that Arbitron Metro. In those markets that are not in an Arbitron Metro, the number of stations a party can own in the particular market is dictated by the number of AM and FM signals that together comprise that FCC-defined radio market. For a discussion of FCC regulation (including recent changes), see “- Federal Regulation of Radio Broadcasting”.

Our stations also compete for advertising revenue with other media, including low power FM radio stations (that are required to operate on a noncommercial basis), newspapers, broadcast television, cable and satellite television, magazines, direct mail, coupons and outdoor advertising. In addition, the radio broadcasting industry is subject to competition from companies that use new media technologies that are being developed or have already been introduced, such as the Internet and the delivery of digital audio programming by cable television systems, by satellite radio carriers, and by terrestrial-based radio stations that broadcast digital audio signals. The FCC authorized two companies, who have since merged to provide a digital audio programming service by satellite to nationwide audiences with a multi-channel, multi-format and with sound quality equivalent to that of compact discs. The FCC has also authorized FM terrestrial stations like ours to use two separate antennae to deliver both the current analog radio signal and a new digital signal. The FCC is also exploring the possibility of allowing AM stations to deliver both analog and digital signals.

We cannot predict how new sources of competition will affect our performance and operating result. Historically, the radio broadcasting industry has grown despite the introduction of new technologies for the delivery of entertainment and information, such as television broadcasting, cable television, and the internet. A growing population and greater availability of radios, particularly car and portable radios, have contributed to this growth. There can be no assurance, however, that the development or introduction of any new media technology will not have an adverse effect on the radio broadcasting industry in general or our stations in particular.

We cannot predict what other matters might be considered in the future by the FCC or Congress, nor can we assess in advance what impact, if any, the implementation of any of these proposals or changes might have on our business.

Employees

We currently have approximately 530 full-time and approximately 296 part-time employees. None of our employees are covered by collective bargaining agreements, and we consider relations with our employees to be satisfactory.

We employ several on-air personalities with large audiences in their respective markets. On occasion, we enter into employment agreements with these personalities to protect our interests in those relationships that we believe to

be valuable. The loss of one or more of these personalities could result in a short-term loss of audience share, but we do not believe that any such loss would have a material adverse effect on our financial condition or results of operations, taken as a whole.

Federal Regulation of Radio Broadcasting

General. The ownership, operation and sale of broadcast stations, including those licensed to us, are subject to the jurisdiction of the FCC, which acts under authority derived from the Communications Act of 1934 (the “Communications Act”). Among other things, the FCC grants permits and licenses to construct and operate radio stations; assigns frequency bands for broadcasting; determines whether to approve changes in ownership or control of station licenses; regulates equipment used by stations and the operating power and other technical parameters of stations; adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of stations; regulates some aspects of radio programming; and has the power under the Communications Act to impose penalties for violations of its rules. The Telecommunications Act of 1996 (the “Telecom Act”) made several changes to the provisions of the Communications Act which affect broadcasting, including amendments which increased the number of radio stations a party could own and operate in a particular market and the circumstances under which the FCC could deny a renewal application for a radio license.

License Grant and Renewal. Radio broadcast licenses are granted and renewed for maximum terms of eight years. Licenses must be renewed through an application to the FCC. The Communications Act requires that the FCC grant the renewal of a station’s license if the FCC finds that, during the preceding term of the license, the station has served the public interest, convenience and necessity, that there have been no serious violations by the licensee of the Communications Act or the rules and regulations of the FCC, and that there have been no other violations by the licensee of the Communications Act or the rules and regulations of the FCC that, when taken together, would constitute a pattern of abuse.

Petitions to deny license renewal applications can be filed with the FCC by interested parties, including members of the public. Such petitions may raise various issues. The FCC is required to hold hearings on renewal applications if it is unable to determine that renewal of a license would serve the public interest, convenience and necessity, or if a petition to deny raises a “substantial and material question of fact” as to whether the grant of the renewal application would be inconsistent with the public interest, convenience and necessity. If a renewal application is pending, the FCC may defer action on the assignment of the license or the transfer of control of the renewal applicant.

Service Areas. The area served by AM stations is determined by a combination of frequency, transmitter power, antenna orientation, and soil conductivity. To determine the effective service area of an AM station, the station’s power, operating frequency, antenna patterns and its day/night operating modes are required. The area served by an FM station is determined by a combination of transmitter power and antenna height, with stations divided into classes according to these technical parameters.

There are eight classes of FM radio stations, with each class having the right to broadcast with a certain amount of power from an antenna located at a certain height. The most powerful FM radio stations are Class C FM stations, which operate with the equivalent of 100 kilowatts of effective radiated power (“ERP”) at an antenna height of up to 1,968 feet above average terrain and which usually provide service to a large area, typically covering one or more counties within a state. There are also Class C0, C1, C2 and C3 FM radio stations which operate with progressively less power and/or antenna height. Class B FM stations operate with the equivalent of 50 kilowatts ERP at an antenna height of up to 492 feet above average terrain. Class B stations typically serve large metropolitan areas as well as their associated suburbs. There are also Class B1 stations that can operate with 25 kilowatts ERP at an antenna height of up to 328 feet above average terrain. Class A FM stations operate with the equivalent of 6 kilowatts ERP at an antenna height of up to 328 feet above average terrain, and generally serve smaller cities and towns or suburbs of larger cities.

The following table sets forth the market, call letters, FCC license classification, antenna elevation above average terrain (for FM stations only), power and frequency of all owned and/or operated stations as of February 28, 2009, all pending station acquisitions operated under an LMA as of February 28, 2009, and all other announced pending station acquisitions as of February 28, 2009:

Frequency

Power in

Market and

City of

(FM-MHZ)

FCC

HAAT

Kilowatts

License

Stations

License

(AM-KHZ)

Class

(Meters)

(Day)

Expiration Date

Atlanta, GA

WNNX — FM

College Park

100.5 MHz

298

13.0

April 1, 2012

WWWQ — FM

Atlanta

99.7 MHz

340

97.0

April 1, 2012

Cincinnati, OH

WFTK — FM

Lebanon

96.5 MHz

247

19.5

October 1, 2012

WGRR — FM

Hamilton

103.5 MHz

316

11.0

October 1, 2012

WRRM — FM

Cincinnati

98.5 MHz

246

17.5

October 1, 2012

Dallas, TX

KDBN — FM

Haltom City

93.3 MHz

120

50.0

August 1, 2013

KGVL — AM

Greenville

1400 KHz

N/A

1.0

August 1, 2013

KIKT — FM

Greenville

93.5 MHz

100

1.8

August 1, 2013

KKLF — AM

Richardson

1700 KHz

N/A

10.0

August 1, 2013

KLIF — AM

Dallas

570 KHz

N/A

5.0

August 1, 2013

KPLX — FM

Ft. Worth

99.5 MHz

511

100.0

August 1, 2013

KTCK — AM

Dallas

1310 KHz

N/A

9.0

August 1, 2013

KTDK — FM

Sanger

104.1 MHz

192

6.2

August 1, 2013

Houston, TX

KRBE — FM

Houston

104.1 MHz

585

92.2

August 1, 2013

Indianapolis, IN

WFMS — FM

Indianapolis

95.5 MHz

302

13.0

August 1, 2012

WISG — FM(1)

Clifford

89.9 MHz

—

0.1

September 19, 2011

WJJK — FM

Noblesville

104.5 MHz

150

50.0

August 1, 2012

Kansas City, MO

KCFX — FM

Harrisonville

101.1 MHz

335

97.0

February 1, 2013

KCJK — FM

Garden City

105.1 MHz

349

69.0

February 1, 2013

KCMO — AM

Kansas City

710 KHz

—

10.0

February 1, 2013

KCMO — FM

Kansas City

94.9 MHz

332

100.0

February 1, 2013

Louisville, KY

WLCL — FM

Sellersburg

93.9 MHz

152

2.7

August 1, 2012

WQKC — AM

Jeffersonville

1450 KHz

—

1.0

August 1, 2012

San Francisco, CA

KFFG — FM

Los Altos

97.7 MHz

136

3.3

December 1, 2013

KFOG — FM

San Francisco

104.5 MHz

459

7.1

December 1, 2013

KNBR — AM

San Francisco

680 KHz

—

50.0

December 1, 2013

KSAN — FM

San Mateo

107.7 MHz

354

8.9

December 1, 2013

KTCT — AM

San Mateo

1050 KHz

—

50.0

December 1, 2013

York, PA(2)

WARM — FM

York

103.3 MHz

398

6.4

August 1, 2014

WGLD — AM

Red Lion

1440 KHz

—

1.0

August 1, 2014

WSBA — AM

York

910 KHz

—

5.0

August 1, 2014

WSOX — FM

Red Lion

96.1 MHz

290

13.5

August 1, 2014


(1)		Under a Construction Permit

(2)		These stations also reach Lancaster, PA.

Regulatory Approvals. The Communications Laws prohibit the assignment or transfer of control of a broadcast license without the prior approval of the FCC. In determining whether to grant an application for assignment or transfer of control of a broadcast license, the Communications Act requires the FCC to find that the assignment or transfer would serve the public interest. The FCC considers a number of factors in making this determination, including (1) compliance with various rules limiting common ownership of media properties, (2) the financial and “character” qualifications of the assignee or transferee (including those parties holding an “attributable” interest in the assignee or transferee), (3) compliance with the Communications Act’s foreign ownership restrictions, and (4) compliance with other Communications Laws, including those related to programming and filing requirements.

Assigning an FCC broadcast license or transferring control of a party who holds an FCC broadcast license requires the filing of an application with the FCC. The FCC reviews the application and determines whether to grant the application. During the application process, interested parties, including members of the public who reside in the market, may file petitions to deny or raise objections to the application. Any staff action on an assignment or transfer application can be reviewed by the FCC Commissioners and the courts.

Absent a timely request for reconsideration, administrative review or judicial review, the FCC staff’s initial grant of an application becomes final by operation of law and generally is no longer subject to administrative or judicial review.

The pendency of a license renewal application may delay FCC disposition of an assignment or transfer application because the FCC’s general policy is that it will not issue an unconditional grant of the application if the station’s license renewal application is still pending.

Ownership Matters. The Communications Act restricts us from having more than one-fourth of our capital stock owned or voted by non-U.S. persons, foreign governments or non-U.S. corporations. We are required to take appropriate steps to monitor the citizenship of our stockholders, such as through representative samplings on a periodic basis, to provide a reasonable basis for certifying compliance with the foreign ownership restrictions of the Communications Act.

The Communications Laws also generally restrict (1) the number of radio stations one person or entity may own, operate or control in a local market, (2) the common ownership, operation or control of radio broadcast stations and television broadcast stations serving the same local market, and (3) except in the 20 largest Designated Market Areas (“DMAs”) the common ownership, operation or control of a radio broadcast station and a daily newspaper serving the same local market.

None of these multiple and cross ownership rules requires any change in our current ownership of radio broadcast stations. The Communications Laws will limit the number of additional stations that we may acquire in the future in our existing markets as well as new markets.

Because of these multiple and cross ownership rules, a purchaser of our voting stock who acquires an “attributable” interest in us (as discussed below) may violate the Communications Laws if such purchaser also has an attributable interest in other radio or television stations, or in daily newspapers, depending on the number and location of those radio or television stations or daily newspapers. Such a purchaser also may be restricted in the companies in which it may invest to the extent that those investments give rise to an attributable interest. If one of our attributable stockholders violates any of these ownership rules, we may be unable to obtain from the FCC one or more authorizations needed to conduct our radio station business and may be unable to obtain FCC consents for certain future acquisitions.

The FCC generally applies its television/radio/newspaper cross-ownership rules and its broadcast multiple ownership rules by considering the “attributable” or cognizable, interests held by a person or entity. With some exceptions, a person or entity will be deemed to hold an attributable interest in a radio station, television station or daily newspaper if the person or entity serves as an officer, director, partner, stockholder, member, or, in certain

cases, a debt holder of a company that owns that station or newspaper. Whether that interest is attributable and thus subject to the FCC’s multiple ownership rules, is determined by the FCC’s attribution rules. If an interest is attributable, the FCC treats the person or entity who holds that interest as the “owner” of the radio station, television station or daily newspaper in question, and that interest thus counts against the person in determining compliance with the FCC’s ownership rules.

With respect to a corporation, officers, directors and persons or entities that directly or indirectly hold 5% or more of the corporation’s voting stock (20% or more of such stock in the case of insurance companies, investment companies, bank trust departments and certain other “passive investors” that hold such stock for investment purposes only) generally they are attributed with ownership of the radio stations, television stations and daily newspapers owned by the corporation. As discussed below, participation in an LMA or a JSA also may result in an attributable interest. See “— Local Marketing Agreements” and “— Joint Sales Agreements.”

With respect to a partnership (or limited liability company), the interest of a general partner is attributable, as is the interest of any limited partner (or limited liability company member) who is “materially involved” in the media-related activities of the partnership (or limited liability company). The following interests generally are not attributable: (1) debt instruments, non-voting stock, options and warrants for voting stock, partnership interests, or membership interests that have not yet been exercised; (2) limited partnership or limited liability company interests where (a) the limited partner or member is not “materially involved” in the media-related activities of the partnership or limited liability company, and (b) the limited partnership agreement or limited liability company agreement expressly “insulates” the limited partner or member from such material involvement by inclusion of provisions specified by the FCC; and (3) holders of less than 5% of an entity’s voting stock. Non-voting equity and debt interests which, in the aggregate, constitute more than 33% of a station’s “enterprise value,” which consists of the total equity and debt capitalization, are considered attributable in certain circumstances.

On June 2, 2003, the FCC adopted new rules and policies (the “New Rules”) which modify the ownership rules and policies then in effect (the “Current Rules”). Among other changes, the New Rules would (1) change the methodology to determine the boundaries of radio markets, (2) require that JSAs involving radio stations (but not television stations) be deemed to be an attributable ownership interest under certain circumstances, (3) authorize the common ownership of radio stations and daily newspapers under certain specified circumstances, and (4) eliminate the procedural policy of “flagging” assignment or transfer of control applications that raised potential anticompetitive concerns (namely, those applications that would permit the buyer to control 50% or more of the radio advertising dollars in the market, or would permit two entities (including the buyer), collectively, to control 70% or more of the radio advertising dollars in the market). Certain private parties challenged the New Rules in court, and the court issued an order which prevented the New Rules from going into effect until the court issued a decision on the challenges. On June 24, 2004, the court issued a decision which upheld some of the FCC’s New Rules (for the most part, those that relate to radio) and concluded that other New Rules (for the most part, those that relate to television and newspapers) required further explanation or modification. The court left in place, however, the order which precluded all of the New Rules from going into effect. On September 3, 2004, the court issued a further order which granted the FCC’s request to allow certain New Rules relating to radio to go into effect. The New Rules that became effective (1) changed the definition of the “radio market” for those markets that are rated by Arbitron, (2) modified the Current Rules method for defining a radio market in those markets that are not rated by Arbitron, and (3) made JSAs an attributable ownership interest under certain circumstances.

On February 4, 2008, the FCC issued a Report and Order and Order on Reconsideration which changed Commission rules to allow common ownership of a radio station or a television station and a daily newspaper in the top 20 DMAs and to consider waivers to allow cross-ownership of a radio or television station with a daily newspaper in other DMAs. The FCC retained all pre-existing rules relating to radio ownership without change.

Programming and Operation. The Communications Act requires broadcasters to serve the “public interest.” Broadcasters are required to present programming that is responsive to community problems, needs and interests and to maintain certain records demonstrating such responsiveness. Complaints from listeners concerning a station’s programming may be filed at any time and will be considered by the FCC both at the time they are filed and in

connection with a licensee’s renewal application. Stations also must follow various FCC rules that regulate, among other things, political advertising, the broadcast of obscene or indecent programming, sponsorship identification, the broadcast of contests and lotteries, and technical operations (including limits on radio frequency radiation). Failure to observe these or other rules and policies can result in the imposition of various sanctions, including monetary forfeitures, the grant of a “short-term” (less than the maximum term) license renewal or, for particularly egregious violations, the denial of a license renewal application or the revocation of a station license.

Local Marketing Agreements. Radio stations can enter into LMAs. In a typical LMA, the licensee of a station authorizes another party (the “broker”) to supply programming to be broadcast on the station, and to collect revenues from advertising aired during such programming. The broker reimburses the licensee for its cost of running the station and sometimes pays a fee as well. LMAs are subject to compliance with the antitrust laws as well as the Communications Act and FCC rules and policies (collectively, the “Communications Laws”), including the requirement that the licensee must maintain independent control over the station and, in particular, its personnel, programming, and finances. The FCC has held that LMAs do not violate the Communications Laws as long as the licensee of the station maintains ultimate responsibility for, and control over, station operations and otherwise ensures compliance with the Communications Laws.

A station that brokers more than 15% of the weekly programming hours on another station in its market will be considered to have an attributable ownership interest in the brokered station for purposes of the FCC’s ownership rules. As a result, a radio station may not enter into an LMA that allows it to program more than 15% of the weekly programming hours of another station in the same market that it could not own under the FCC’s multiple ownership rules.

Joint Sales Agreements. A number of radio stations have entered into joint sales agreements, or JSAs. A typical JSA authorizes one station to sell another station’s advertising time and retain the revenue from the sale of that airtime. A JSA typically includes a periodic payment to the station whose airtime is being sold (which may include a share of the revenue being collected from the sale of airtime). Like LMAs, JSAs are subject to compliance with antitrust laws and the Communications Laws, including the requirement that the licensee must maintain independent control over the station and, in particular, its personnel, programming, and finances. The FCC has held that such agreements do not violate the Communications Laws as long as the licensee of the station whose time is being sold by another station maintains ultimate responsibility for, and control over, station operations and otherwise ensures compliance with the Communications Laws.

Under the FCC’s New Rules, a radio station that sells more than 15% of the weekly advertising time of another radio station in the same market will be attributed with the ownership of that other station. In that situation, a radio station cannot have a JSA with another radio station in the same market if the FCC’s ownership rules would otherwise prohibit that common ownership.

New Services. In 1997, the FCC awarded two licenses to separate entities (XM Satellite Radio Holding Inc. and Sirius Satellite Radio Inc.) that authorized the licensees to provide satellite-delivered digital audio radio services. XM and Sirius launched their respective satellite-delivered digital radio services shortly thereafter and subsequently filed an application in 2007 with the FCC proposing to merge their two operations into a single company. On August 5, 2008, the FCC released an order granting that application. Private parties filed appeals with the United States Court of Appeals, but the two companies nonetheless consummated their merger in the summer of 2008.

Digital technology also may be used by terrestrial radio broadcast stations on their existing frequencies. In October 2002, the FCC released a Report and Order in which it selected in-band, on channel (“IBOC”) as the technology that will permit terrestrial radio stations to introduce digital operations. The FCC now will permit operating radio stations to commence digital operation immediately on an interim basis using the IBOC systems developed by iBiquity Digital Corporation (“iBiquity”), called HD Radio™. In March 2004, the FCC (1) approved an FM radio station’s use of two separate antennas (as opposed to a single hybrid antenna) to provide both analog and digital signals of the FM owner secured Special Temporary Authorization (“STA”) from the FCC and (2) released a Public Notice seeking comment on a proposal by the National Association of Broadcasters to allow all

AM stations with nighttime service to provide digital service at night and (3) released a Public Notice seeking comment on a proposal by the National Association of Broadcasters to allow all AM stations with nighttime service to provide digital service at night. In April 2004, the FCC inaugurated a rule making proceeding to establish technical, service, and licensing rules for digital broadcasting. On May 31, 2007, the FCC released a Second Report and Order which authorized AM stations to use tan IBOC system at night, authorized FM radio stations to use separate antennas without the need for an STA, and established certain technical and service rules for digital service. The FCC also released another rulemaking notice to address other related issues. The inauguration of digital broadcasts by FM and perhaps AM stations requires us to make additional expenditures.

We entered into agreements with iBiquity pursuant to which we committed to implement HD Radio^tm technology across our station portfolio by the end of 2006, and have substantially completed this process. In exchange for reduced license fees and other consideration, we, along with other broadcasters, purchased perpetual licenses to utilize iBiquity’s HD Radio^tm technology. We cannot predict at this juncture, however, how successful implementation of HD Radio^tm technology within our platform will be, or how that implementation will affect our competitive position.

In January 2000, the FCC released a Report and Order adopting rules for a new low power FM radio service consisting of two classes of stations, one with a maximum power of 100 watts and the other with a maximum power of 10 watts. The FCC has limited ownership and operation of low power FM stations to persons and entities which do not currently have an attributable interest in any FM station and has required that low power FM stations be operated on a non-commercial educational basis. The FCC has granted numerous construction permits for low power FM stations. On December 11, 2007, the FCC released a Report and Order which made changes in the rules and provided further protection for low power FM radio stations and, in certain circumstances, required full power stations (like the ones owned by the Company) to provide assistance to low power FM stations in the event they are subject to interference or required to relocate their facilities to accommodate the inauguration of new or modified service by a full power radio station. We cannot predict what impact low power FM radio will have on our operations. Adverse effects of the new low power FM service on our operations could include interference with our stations and competition by low power stations for listeners and revenues.

From time to time Congress and the FCC have considered, and may in the future consider and adopt, additional laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of our radio stations, result in the loss of audience share and advertising revenues for our radio stations, and affect our ability to acquire additional radio stations or to finance such acquisitions.

Antitrust and Market Concentration Considerations. Potential future acquisitions, to the extent they meet specified size thresholds, will be subject to applicable waiting periods and possible review by the U.S. Department of Justice (the “DOJ”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). Transactions are subject to the HSR Act only if the acquisition price or fair market value of the stations to be acquired is greater than $65.2 million. Acquisitions that are not required to be reported under the HSR Act may still be investigated by the DOJ under the antitrust laws before or after consummation on the basis of a Complaint by a private party or on the agency’s own initiative. At any time before or after the consummation of a proposed acquisition, the DOJ could take such action under the antitrust laws as it deems necessary, including seeking to enjoin the acquisition or seeking divestiture of the business acquired or certain of our other assets. The DOJ has reviewed numerous radio station acquisitions where an operator proposes to acquire or enter into LMAs or JSAs with other stations in its existing markets or multiple stations in new markets, and has challenged a number of such transactions. Some of these challenges have resulted in consent decrees requiring the sale of certain stations, the termination of the LMA or JSA or other relief. In general, the DOJ has more closely scrutinized radio mergers and acquisitions resulting in market shares in excess of 35% of local radio advertising revenues, depending on format, signal strength and other factors. There is no precise numerical rule, however, and certain transactions resulting in more than 35% revenue shares have not been challenged, while certain other transactions may be challenged based on other criteria such as audience shares in one or more demographic groups as well as the percentage of revenue share.

As part of its review of certain radio station acquisitions, the DOJ has stated publicly that it believes that commencement of operations under LMAs and JSAs constitute transfer of ownership and cannot be commenced until the expiration of the waiting period under the HSR Act. We will not commence operation of an LMA or a JSA with any station until the HSR Act waiting period has expired or been terminated, if the LMA or JSA was entered into in conjunction with an acquisition subject to the HSR Act.

Directors and Executive Officers

Set forth below is certain information regarding our executive officers and directors.


Name	Age		Position
Lewis W. Dickey, Jr.		47	Chairman, President and Chief Executive Officer and Director
Martin R. Gausvik		52	Executive Vice President, Treasurer and Chief Financial Officer
John G. Pinch		60	Executive Vice President and Co-Chief Operating Officer
John W. Dickey		42	Executive Vice President and Co-Chief Operating Officer
David Tolley		41	Director

Lewis W. Dickey, Jr. is our Chairman, President and Chief Executive Officer and is a member of our board of directors. Mr. L. Dickey has served as Cumulus’s Chairman, President and Chief Executive Officer since December 2000. Mr. Dickey was one of Cumulus’s founders and initial investors, and served as Executive Vice Chairman of Cumulus from March 1998 to December 2000. Mr. Dickey is a nationally regarded consultant on radio strategy and the author of The Franchise — Building Radio Brands, published by the National Association of Broadcasters, one of the industry’s leading texts on competition and strategy. Mr. Dickey also serves as a member of the National Association of Broadcasters Radio Board of Directors. He holds Bachelor of Arts and Master of Arts degrees from Stanford University and a Master of Business Administration degree from Harvard University. Mr. Dickey is the brother of John W. Dickey.

Martin R. Gausvik is our Executive Vice President, Treasurer and Chief Financial Officer. Mr. Gausvik has served as Cumulus’s Executive Vice President, Chief Financial Officer and Treasurer since May 2000 and is a 20-year veteran of the radio industry, having served as Vice President Finance for Jacor Communications from 1996 until the merger of Jacor’s 250 radio station group with Clear Channel Communications in May 1999. More recently, he was Executive Vice President and Chief Financial Officer of Latin Communications Group, the operator of 17 radio stations serving major markets in the western United States. Prior to joining Jacor, from 1984 to 1996, Mr. Gausvik held various accounting and financial positions with Taft Broadcasting, including Controller of Taft’s successor company, Citicasters.

John G. Pinch is our Executive Vice President and Co-Chief Operating Officer. Mr. Pinch has served as Cumulus’s Executive Vice President and Co-Chief Operating Officer since May 2007, and prior to that served as its Chief Operating Officer since December 2000, after serving as the President of Clear Channel International Radio (“CCU International”). At CCU International, Mr. Pinch was responsible for the management of all CCU radio operations outside of the United States, which included over 300 properties in 9 countries. Mr. Pinch is a 30-year broadcast veteran and has previously served as Owner/President of WTVK-TV Ft. Myers-Naples, Florida, General Manager of WMTX-FM/WHBO-AM Tampa, Florida, General Manager/Owner of WKLH-FM Milwaukee, and General Manager of WXJY Milwaukee.

John W. Dickey is our Executive Vice President and Co-Chief Operating Officer. Mr. J. Dickey has served as Cumulus’s Executive Vice President since January 2000 and as Co-Chief Operating Officer since May 2007. Mr. J. Dickey joined Cumulus in 1998 and, prior to that, served as the Director of Programming for Midwestern Broadcasting from 1990 to March 1998. Mr. J. Dickey holds a Bachelor of Arts degree from Stanford University. Mr. J. Dickey is the brother of Lewis W. Dickey, Jr.

David M. Tolley has been a member of our and CMPSC’s board of directors since May 2006. Mr. Tolley is a Senior Managing Director at The Blackstone Group in the firm’s Private Equity group. Since joining Blackstone in 2000, Mr. Tolley has been involved in Blackstone’s investments in Centennial Communications, Freedom Communications, Montecito Broadcast Group, New Skies Satellites and Sirius Satellite Radio. He focuses on investments in the media and communications sectors. Before joining Blackstone, Mr. Tolley was a Vice President at Morgan Stanley & Co. Mr. Tolley holds a BA from the University of Michigan and an MBA from Columbia Business School. He also serves on the Board of Directors of Freedom Communications.

Intellectual Property

We own numerous domestic trademark registrations related to the business of our stations. We also license certain trademarks related to the business of our stations including the license of the “Cumulus” trademark from Cumulus. We own no patents or patent applications. We do not believe that any of our trademarks are material to our business or operations.

We lease seven studio facilities for our radio operations. We own broadcast towers for two of our radio stations and lease 27 other main broadcast towers. We own the real property under 26 of our main broadcast towers and lease the land under our other three main broadcast towers.

We believe that our properties are in good condition and suitable for our operations.

Item 1A. Risk Factors

Many statements contained in this report are forward-looking in nature. These statements are based on our current plans, intentions or expectations, and actual results could differ materially as we cannot guarantee that we will achieve these plans, intentions or expectations. See “Cautionary Statement Regarding Forward-Looking Statements.” Forward-looking statements are subject to numerous risks and uncertainties, including those specifically identified below.

Risks Related to Our Business

Our results of operations have been and could continue to be adversely affected by the downturn in the U.S. economy or in the economies of the regions in which we operate.

Revenue generated by our radio stations depends primarily upon the sale of advertising. Advertising expenditures, which we believe to be largely a discretionary business expense, generally tend to decline during an economic recession or downturn. Furthermore, because a substantial portion of our revenue is derived from local advertisers, our ability to generate advertising revenue in specific markets is directly affected by the local or regional economic condition. Consequently, a recession in the national economy and the economies of individual geographic markets in which we own or operate stations will likely continue to adversely affect our advertising revenue and, therefore, our results of operations.

A concentration of stations in any particular market intensifies our exposure to regional economic declines. We are particularly dependent on advertising revenue from the San Francisco, Dallas, Atlanta and Houston markets, which generated in the aggregate approximately 72% of our revenues and 75% of our Station Operating Income for the year ended December 31, 2008. A further economic decline in these markets could adversely impact our cash flow and results of operations.

Even with a recovery from the current recession in the economy, an individual business sector that tends to spend more on advertising than other sectors might be forced to reduce its advertising expenditures if that sector fails to recover on pace with the overall economy. If that sector’s spending represents a significant portion of our advertising revenues, any reduction in its expenditures may affect our revenue.

We operate in a very competitive business environment.

The radio broadcasting industry is very competitive. Our stations compete for listeners and advertising revenues directly with other radio stations (including satellite and internet radio) within their respective markets, and some of the owners of those competing stations have much greater financial resources than we do. Our stations also compete for advertising revenue with other media, such as cable television, newspapers, magazines, direct mail, compact discs, music videos, the Internet and outdoor advertising. In addition, many of our stations compete with groups of two or more radio stations operated by a single operator in the same market.

Audience ratings and market shares fluctuate, and any adverse change in a particular market could have a material adverse effect on the revenue of stations located in that market. While we already compete with other stations with comparable programming formats in many of our markets, any one of our stations could suffer a reduction in ratings or revenue and an increase in promotion and other expenses, and, consequently, could have a lower Station Operating Income, if:

	•		another radio station in the market we are to convert its programming format to a format similar to our station or launch aggressive promotional campaigns;

	•		a new station were to adopt a competitive format; or

	•		existing competitors were to strengthen its operations.

The Telecom Act authorized the consolidation of ownership of radio broadcasting stations in the markets in which we operate or may operate in the future. Increased consolidation in our target markets may result in greater competition, including competition for acquisition properties and a corresponding increase in purchase prices we may have to pay for these properties.

We face many unpredictable business risks that could have a material adverse effect on our future operations.

Our operations are subject to many business risks, including certain risks that specifically influence the radio broadcasting industry. These include:

	•		changing economic conditions, both generally and relative to the radio broadcasting industry in particular;

	•		shifts in population, listenership, demographics or audience tastes;

	•		the level of competition from existing or future technologies for advertising revenues including, but not limited to, other radio stations, satellite radio, television stations, newspapers, the Internet, and other entertainment and communications media; and

	•		changes in laws as well as changes in governmental regulations and policies and actions of federal regulatory bodies, including the DOJ, the Federal Trade Commission and the FCC.

Given the inherent unpredictability of these variables, we cannot with any degree of certainty predict what effect, if any, these risks will have on our future operations. Any one or more of these variables may have a material adverse effect on our future operations.

Disruptions in capital markets could restrict our ability to access further financing.

We rely in significant part on the capital markets to meet our financial commitments and short-term liquidity needs if internal funds are not available from operations. Disruptions in the capital and credit markets, as have been experienced during 2008, could adversely affect our ability to draw on our credit facilities. Access to funds under those credit facilities is dependent on the ability of our lenders to meet their funding commitments. Those lenders may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from their borrowers within a short period of time. The

disruptions in capital and credit markets have also resulted in increased costs associated with bank credit facilities. Continuation of these disruptions would increase our interest expense and adversely affect our results of operations.

Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions, could adversely affect our access to financing. Any such disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding can be arranged. Such measures could include deferring capital expenditures and reducing or eliminating future uses of cash.

We are exposed to credit risk on our accounts receivable. This risk is heightened during periods when economic conditions worsen.

Our outstanding trade receivables are not covered by collateral or credit insurance. While we have procedures to monitor and limit exposure to credit risk on our trade receivables, there can be no assurance such procedures will effectively limit our credit risk and avoid losses, which could have a material adverse effect on our financial condition and operating results.

We are exposed to risk of counterparty performance to derivative transactions.

We evaluate the credit quality of potential counterparties to derivative transactions and only enter into agreements with those deemed to have minimal credit risk at the time the agreements are executed. We carefully monitor the amount of exposure we have with any given bank. We also periodically monitor changes to counterparty credit quality as well as its concentration of credit exposure to individual counterparties. We do not hold or issue derivative financial instruments for trading or speculative purposes.

A decrease in our market ratings or market share can adversely affect our revenues.

The success of each of our radio stations is primarily dependent upon its share of the overall advertising revenue within its market. Although we believe that each of our stations can compete effectively in its market, we cannot be sure that any of our stations can maintain or increase its current audience ratings or market share. In addition to competition from other radio stations and other media, shifts in population, demographics, audience tastes and other factors beyond our control could cause us to lose our audience ratings or market share. Our advertising revenue may suffer if any of our stations cannot maintain its audience ratings or market share.

We must respond to the rapid changes in technology, services and standards that characterize our industry in order to remain competitive.

The radio broadcasting industry is subject to technological change, evolving industry standards and the emergence of new media technologies and services. In some cases, our ability to compete will be dependent on our acquisition of new technologies and our provision of new services, and we cannot assure you that we will have the resources to acquire those new technologies or provide those new services; in other cases, the introduction of new technologies and services could increase competition and have an adverse effect on our revenue. Recent new media technologies and services include the following:

	•		audio programming by cable television systems, direct broadcast satellite systems, internet content providers (both landline and wireless), Internet-based audio radio services, satellite delivered digital audio radio service and other digital audio broadcast formats;

	•		HD Radio TM digital radio, which could provide multi-channel, multi-format at digital radio serves in the same bandwidth currently occupied by traditional AM and FM radio services; and

	•		Low power FM radio, which could result in additional FM radio broadcast stations in markets where we have stations.

We also cannot assure you that we will continue to have the resources to acquire other new technologies or to introduce new services that could compete with other new technologies. We cannot predict the effect, if any, that competition arising from new technologies may have on the radio broadcasting industry or on our business.

We are dependent upon key personnel.

We have entered into a management agreement with Cumulus under which Cumulus provides management services to us, including operations services and corporate development services, and the executive officers of Cumulus serve as our executive officers. Our ability to successfully execute our strategy will depend upon, among other things, the efforts and abilities of the Cumulus management and key personnel and the integration of Cumulus management with and into our operations, as well as the operational efficiencies that we expect to result from the common management of the station portfolios of Cumulus and our company.

As a result, the duties and responsibilities of the officers of Cumulus have increased significantly. While the management agreement requires Cumulus to apply the same level of diligence and dedication in managing our businesses as it applies in managing its businesses, the individual officers do not receive separate compensation from us, including any performance-based compensation, which may reduce their incentives to devote the same level of efforts to managing our businesses. Furthermore, our management agreement with Cumulus does not restrict Cumulus or its affiliates from managing any other radio companies.

In addition, although we have the right to terminate the management agreement at any time, including in the event of specified Cumulus management changes, the management agreement does not guarantee the continued services of any of the Cumulus executive officers, and there is no assurance that any such officers will continue to remain with Cumulus and thus serve as our executive officers. The management agreement expires in May 2009, subject to our right to renew for an additional term of two years, a right we presently intend to exercise. Because we are highly reliant on Cumulus management to implement our operating policies and strategies, in the event we are not able to renegotiate the management agreement upon expiration we face the risk that no suitable replacement will be found in a timely fashion or at all. If we are unable to find a suitable replacement, we may not be able to execute our business strategy, which in turn could have a material adverse effect on our business, financial condition and results of operations. See “Certain Relationships and Related Party Transactions, and Director Independence — Cumulus Management Agreement.”

In recent years, the FCC has engaged in more vigorous enforcement of its indecency rules against the broadcast industry, which could have a material adverse effect on our business.

FCC regulations prohibit the broadcast of “obscene” material at any time and “indecent” material between the hours of 6:00 a.m. and 10:00 p.m. The FCC has recently increased its enforcement efforts with respect to these regulations. FCC regulatory oversight was augmented by recent legislation that substantially increases the penalties for broadcasting indecent programming (up to $325,000 for each incident) and subjects broadcasters to license revocation, renewal or qualification proceedings under certain circumstances in the event that they broadcast indecent material. We may in the future become subject to inquiries or proceedings related to our stations’ broadcast of allegedly indecent or obscene material. To the extent that such an inquiry or proceeding results in the imposition of fines, a settlement with the FCC, revocation of any of our station licenses or denials of license renewal applications, our results of operations and business could be materially affected.

Due to the effect of discontinued operations, SPC’s historical consolidated financial statements included in this report are not representative of our results and will not be comparable to our future financial statements.

The audited consolidated results of operations of SPC included in this report reflect as discontinued operations the results of operations of SPC’s non-radio assets. In accordance with GAAP, we are required to allocate to continuing operations substantially all of the corporate level general and administrative expenses for SPC, which were previously shared among SPC’s cable, dinnerware, real estate and radio operations. In addition, SPC’s audited consolidated statements of cash flows include the cash flows of both the continuing and discontinued operations of

SPC for the periods presented. Additionally, as a result of the Acquisition and related transactions, our assets have been recorded at fair market value in accordance with purchase accounting treatment under GAAP. Finally, for periods after the Acquisition, including the periods from Acquisition to December 31, 2008, we are reporting Radio Holdings’ consolidated financial statements in lieu of separate consolidated financial statements of CMP or SPC. Accordingly, Radio Holdings’ financial statements (included in this annual report) are not comparable to the historical financial statements of SPC included in this annual report.

There are conflicts of interest in our relationship with Cumulus.

Under the equityholders’ agreement that was entered into in connection with the Acquisition, our ultimate parent, CMP, must allow Cumulus the right to pursue first any business opportunity primarily involving markets other than the top 50 radio broadcasting markets in the United States. We are allowed to pursue such business opportunities only after Cumulus has declined to pursue them. As a result, we may be limited in our ability to pursue any strategic acquisitions or alternatives primarily involving markets other than the top 50 that may present attractive opportunities for us in the future. Similarly, Cumulus is not prohibited from pursuing any business opportunities primarily involving the top 50 radio broadcasting markets in the United States under the terms of the equityholders’ agreement but may pursue such opportunities, subject to our right of first refusal. Cumulus could, therefore, acquire other stations in our markets. Other circumstances could also arise where our interests might be different from those of Cumulus. For example, Cumulus could manage other radio companies with stations in our markets that compete with our stations.

Our radio stations depend on certain on-air personalities, the loss of whom could have a material adverse effect.

Our radio stations employ or independently contract with several on-air personalities and hosts of syndicated radio programs with significant loyal audiences in their respective broadcast areas. These on-air personalities are sometimes significantly responsible for the ranking of a station, and thus, the ability of the station to sell advertising. We cannot be assured that these individuals will remain with our radio stations or will retain their audiences. The loss of one or more of these personalities could result in a short-term loss of audience share in that particular market.

We may not be able to successfully execute our portfolio development strategy.

As part of our business strategy, we may pursue strategic acquisitions of radio station clusters and individual radio stations, as well as strategic alternatives, such as asset swaps. We cannot predict whether we will be successful in pursuing these acquisitions or alternatives or what their consequences will be. Consummation of any acquisitions or strategic alternatives in the future will be subject to various conditions, such as compliance with the FCC rules and policies, including prior approval of the FCC with respect to the transfer of control or assignment of the broadcast licenses of the acquired stations, and antitrust regulatory requirements. We cannot be certain that any of these conditions will be satisfied. In addition, the integration of acquisitions involves numerous risks, including difficulty integrating the operations, systems and management of a station or group of stations, the potential loss of key employees of acquired stations, diverting management’s attention from other business concerns, and difficulty successfully operating in markets in which we may have little or no prior experience. There can be no assurance that any future acquisitions or alternatives will be as successful as past acquisitions, and future acquisitions or alternatives may not increase our cash flow or yield other anticipated benefits. Our failure to integrate and successfully manage newly acquired stations could have a material adverse effect on our business and operating results.

We have written off, and could in the future be required to write off, a significant portion of the fair market value of our FCC broadcast licenses and goodwill, which may adversely affect our financial condition and results of operations.

As of December 31, 2008, our FCC licenses and goodwill comprised 73.1% of our assets. Each year, we are required by SFAS No. 142, Goodwill and Other Intangible Assets, to assess the fair market value of our FCC broadcast licenses and goodwill to determine whether the carrying value of those assets is impaired. In the fourth

quarter 2008 and 2007 we recorded impairment charges of approximately $669.8 million and $188.0 million, respectively, in order to reduce the carrying value of certain broadcast licenses and goodwill to their respective fair market values. Our future impairment reviews could result in additional impairment charges. Such additional impairment charges would reduce our reported earnings for the periods in which they are recorded.

Licensing and ownership rules may limit the growth of our radio broadcasting operations.

The radio broadcasting industry is subject to extensive regulation by the FCC under the Communications Act. FCC approval is required for the issuance, renewal or transfer of radio broadcast station operating licenses. Our success depends on acquiring and maintaining broadcast licenses issued by the FCC, which are typically issued for a maximum term of eight years, and are subject to renewal. While we believe that the FCC will approve applications for renewal of our existing broadcast licenses when made, we cannot guarantee that pending or future renewal applications submitted by us will be approved, or that renewals will not include conditions or qualifications that could adversely affect our operations. Part of the regulatory risk stems from the ability of interested third parties to challenge our renewal applications at the FCC and to file complaints with the DOJ. Also, if we or any of our stockholders, officers or directors violate the FCC’s rules and regulations or the Communications Act, or are convicted of a felony, the FCC may commence a proceeding to impose sanctions upon us. Examples of sanctions include the imposition of fines, the revocation of one or more of our broadcast licenses or the renewal of one or more of our broadcast licenses for a term of fewer than eight years. If the FCC were to issue an order denying a license renewal application or revoking the license of one of our stations, and we were unable to have the FCC or the courts reverse that order, we would be forced to cease operating the radio station.

In addition, the Communications Act and FCC rules impose specific limits on the number of stations an entity can own in a single market. Those ownership rules may affect our acquisition strategy because they may prevent us from acquiring additional stations in a particular market. We may also be prevented from engaging in an asset swap transaction if the asset swap would cause us to violate these rules.

The FCC has indicated that it will no longer on its own initiative examine the advertising revenue share of an entity when it proposes to acquire one or more stations in a particular market when the FCC reviews the assignment or transfer application for that acquisition. However, the FCC retains the right to consider advertising revenue shares in response to an objection to the application or its own initiatives. In addition, the DOJ, either directly through its administration of the HSR Act pre-merger notification requirements, or generally, has taken an active role in reviewing certain acquisitions of stations and, in some instances, has conditioned its clearance on the buyer’s agreement not to acquire or later sell one or more stations to limit the buyer’s revenue share in the market.

In June 2003, the FCC adopted a set of revised local and national ownership rules that further relaxed its broadcast ownership restrictions to permit some additional ownership consolidation. In August 2003, a number of parties appealed the FCC’s revised rules, and the United States Court of Appeals for the Third Circuit in Philadelphia was selected to hear all of the appeals. In September 2003, the Third Circuit in granted a stay of the new rules shortly before they were to go into effect, with the exception of the national television ownership rule which was modified in January 2004 by Congress, thereby mooting all reconsideration and appeals of that issue.

In June 2004, the Third Circuit remanded to the FCC for further explanation or modification many of the ownership rule changes that affect the radio broadcasting business, including the FCC decision to retain the existing limitations on the number of radio stations an entity can own in a particular market. However, the court indicated its approval of the FCC’s decisions to use Arbitron Metro markets to define local radio markets, to count non-commercial educational radio stations in determining the size of a market, and to attribute ownership in a radio station to a party who sells advertising on a station under a joint sales agreement if that party has another station in the same market. As to these approved changes, in September 2004, the Third Circuit granted an FCC motion and partially lifted its stay on the implementation of these rules. On February 4, 2008, the FCC issued a Report and Order and Order on Reconsideration which changed Commission rules to allow common ownership of a radio station or a television station and a daily newspaper in the top 20 DMAs and to consider waivers to allow cross- ownership of a radio or television station with a daily newspaper in other DMAs. The FCC retained all pre-existing rules relating to radio ownership without change.

Risks Related to Our Indebtedness

Even though the 2009 Exchange Offer was successfully completed, if we cannot continue to comply with the financial covenants in our debt instruments, or obtain waivers or other relief from our lenders, we may default, which could result in loss of our sources of liquidity and acceleration of our indebtedness.

As a result of the 2009 Exchange Offer, we reduced the outstanding principal amount of the Existing Notes from $187.6 million to $12.1 million. In addition, in the 2009 Exchange Offer, we sought and received the requisite consents from eligible holders of our Existing Notes to approve certain amendments to the indenture governing the Existing Notes that eliminated substantially all of the restrictive covenants, certain events of default and other related provisions in the indenture.

Despite the significant reduction in outstanding principal amount of the Existing Notes, and the removal of restrictive covenants with respect to the Existing Notes, we continue to have a substantial amount of indebtedness, and the instruments governing such indebtedness contain restrictive financial covenants. We may not be able to meet these restrictive financial covenants and may not be able to maintain compliance with certain financial ratios in our senior secured credit facility that become more restrictive effective September 30, 2009. In that event, we would need to seek an amendment to, or a refinancing of, our senior secured credit facility. There can be no assurance that we can obtain any amendment or waiver of, or refinance that facility and, even if we do, it is likely that such relief would only last for a specified period, potentially necessitating additional amendments, waivers or refinancings in the future. In the event we do not maintain compliance with the covenants under the senior secured credit facility, our lenders could declare an event of default, subject to applicable notice and cure provisions. Upon the occurrence of an event of default under the credit agreement, the lenders could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit. In addition, an event of default under the senior secured credit facilities or an acceleration of indebtedness outstanding there under would cause cross-defaults or cross-acceleration under the indentures governing our outstanding debt securities and certain of our other agreements.

We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness.

As of December 31, 2008, our long-term debt, including the current portion, was $941.8 million, representing approximately 190.5% of our stockholders’ equity. Our credit facilities have interest and principal repayment obligations that are substantial in amount. As of December 31, 2008 we have no availability for borrowing under our senior secured revolving credit facility.

Our substantial indebtedness could have important consequences for our shareholders, including:

	•		increasing our vulnerability to general economic downturns and adverse industry conditions;

	•		requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

	•		exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our senior secured credit facilities, will be at variable rates of interest;

	•		restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

	•		limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and

	•		limiting our ability to adjust to changing market conditions and placing us at a disadvantage compared to our competitors who have less debt.

We and our restricted subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in the credit agreement governing our senior secured credit facilities and the indenture governing our New Notes. If new indebtedness is added to our current debt levels, the related risks that we now face could increase.

Our debt agreements contain restrictions that limit our flexibility in operating our business.

The credit agreement governing the senior secured credit facility and the indenture governing the New Notes contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and our restricted subsidiaries’ ability to, among other things:

	•		incur additional indebtedness or issue preferred stock;

	•		pay dividends on or make distributions in respect of our capital stock or make other restricted payments;

	•		make certain investments;

	•		sell certain assets;

	•		create liens on certain assets to secure debt;

	•		consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

	•		enter into certain transactions with our affiliates; and

	•		designate our subsidiaries as unrestricted subsidiaries.

In addition, the credit agreement includes other more restrictive covenants and prohibits us from prepaying our other indebtedness, while borrowings under the senior secured credit facilities are outstanding. The credit agreement also requires us to satisfy and maintain specified financial ratios and other financial condition tests. Our ability to meet these financial ratios and tests can be affected by events beyond our control, and we cannot be sure that we will meet these ratios and tests.

A breach of any of these covenants or our inability to comply with the required financial ratios and tests could result in a default under the credit agreement or the indenture. Upon the occurrence of an event of default under the credit agreement, the lenders could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under the credit facilities could proceed against the collateral granted to them to secure that indebtedness. We have pledged substantially all of our assets as collateral under the credit agreement. If the lenders accelerate the repayment of borrowings, we may be forced to liquidate certain assets to repay all or part of the senior secured credit facilities, and we cannot be assured that sufficient assets will remain after we have paid all of the borrowings under the senior secured credit facilities and any other senior debt. This risk is exacerbated by the regulatory restrictions associated with radio stations, including FCC licensing, which may make the market for these assets less liquid and increase the chances that these assets will be liquidated at a significant loss.

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions related to, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which it operates. These statements are included in, among other places, in the sections entitled “Risk Factors” and “Business” included in this report. Forward-looking statements are subject to certain risks and uncertainties, which could cause our actual results to differ materially from those indicated by the forward-looking statements. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirely by the cautionary statements.

The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by these forward-looking statements:

	•		our substantial indebtedness and debt service obligations;

	•		our ability to refinance our debt and access adequate capital as needed on favorable terms;

	•		interest rate movement;

	•		general economic and business conditions, both nationally and in our markets;

	•		expectations and estimates concerning future financial performance;

	•		the impact of competition from other radio stations, media forms and communication service providers;

	•		the impact of existing and future regulations affecting our businesses, including radio licensing and ownership rules;

	•		increases in programming costs;

	•		the accuracy of our predictions of anticipated trends in its business;

	•		advances in technology and our ability to adapt to and capitalized on such advances;

	•		decreases in our customers’ advertising expenditures;

	•		our ability to achieve anticipated cost savings; and

	•		other factors contained in our reports filed with the SEC.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those described in this report as intended, planned, anticipated, believed, estimated or expected. Accordingly, these forward-looking statements are qualified in their entirety by reference to the factors described under the section “Risk Factors”. The risk factors included in this report are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also harm our future results. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

We do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

The types of properties required to support each of our radio stations include offices, studios, transmitter sites and antenna sites. A station’s studios are generally housed with its offices in business districts of the station’s community of license or largest nearby community. The transmitter sites and antenna sites are generally located so as to provide maximum market coverage.

At December 31, 2008, we owned studio facilities in one of our nine markets and we owned transmitter and antenna sites in seven of our nine markets. In addition, our headquarters are at the headquarters of Cumulus, which is located in leased office space in Atlanta, Georgia. We do not anticipate any difficulties in renewing any facility leases or in leasing alternative or additional space, if required. We own or lease substantially all of our other equipment, consisting principally of transmitting antennae, transmitters, studio equipment and general office equipment.

No single property is material to our operations. We believe that our properties are generally in good condition and suitable for our operations; however, we continually look for opportunities to upgrade our properties.


Item 3.		*Legal Proceedings*

We from time to time are involved in various legal proceedings that are handled and defended in the ordinary course of business. While we are unable to predict the outcome of these matters, our management does not believe, based upon currently available facts, that the ultimate resolution of any of such proceedings would have a material adverse effect on our overall financial condition or results of operations.


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

During the fourth quarter, October 1, 2008 through December 31, 2008, there were no matters submitted to a vote of security holders.

PART II


Item 5.		*Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities*

Market Information for Common Stock

Our common stock is not publicly traded and there is no established public trading market for our common stock.

Holders

As of December 31, 2008, there was one holder of record of our common stock.

Dividends

We have not declared or paid any cash dividends on our common stock since our inception and do not currently anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain future earnings for use in our business.


Item 6.		*Selected Consolidated Financial Data*

The selected consolidated financial data presented below has been derived from our audited consolidated financial statements as of and for the year ended December 31, 2008 and 2007, the audited consolidated financial statements of SPC (as of and for the period from January 1, 2006 to May 4, 2006) and of Radio Holdings (as of and for the period from May 5, 2006—the Acquisition—to December 31, 2006), and the audited consolidated financial statements of SPC as of and for the year ended December 31, 2005, each included elsewhere in this annual report, as well as the audited consolidated financial statements of SPC as of and for the year ended December 31, 2004. The unaudited pro forma condensed consolidated information for the year ended December 31, 2006, gives effect to the Pro Forma Adjustments described in further detail in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


	(Dollars in thousands)
	Radio Holdings									SPC			Radio Holdings			SPC
	Year Ended						May 5 Through			January 1			Pro Forma			Year Ended
	December 31,						December 31,			Though May 4,			December 31,			December 31,
	2008			2007			2006			2006			2006			2005			2004
													(Unaudited)
STATEMENT OF OPERATIONS DATA:
Net revenues	$	203,412		$	223,437		$	155,607		$	65,987		$	222,012		$	231,587		$	231,058
Operating expenses:
excluding depreciation, amortization, and including non-cash contract termination cost of $6,723 for the period May 5, 2006 through December 31, 2006		119,970			123,388			91,870			49,510			138,400			152,542			147,608
Corporate general and administrative expenses(1)		7,152			7,214			4,106			31,029			7,425			24,708			20,297
Depreciation and amortization, including pre-sold advertising amortization of $23,023 for the period May 5, 2006 through December 31, 2006(2)		7,353			10,393			30,798			2,421			35,343			7,401			7,759
(Gain)/Loss on sale of assets(3)		(6	)		96			—			—			—			(300	)		(10,151	)
Costs related to sale of business, principally advisory fees		—			—			—			14,513			—			—			—
Impairment of goodwill and intangible assets		669,786			188,019			—			—			—			—			—
Impairment of long-term investment		2,991			5,509			—			—			—			—			(261	)

Total operating expenses		807,246			334,619			126,774			97,473			181,168			184,351			165,252

Operating income (loss) from continuing operations		(603,834	)		(111,182	)		28,833			(31,486	)		40,844			47,236			65,806
Other income (expense) from continuing operations:
Interest expense(4)		(65,309	)		(78,509	)		(54,061	)		(4,638	)		(80,369	)		(17,141	)		(19,841	)
Gain (loss) on early extinguishment of debt(5)		20,935			1,258			—			(6,492	)		—			—			(3,024	)
Other income (expense)		(9	)		(323	)		(1,655	)		—			1,675			—			—

Income (loss) from continuing operations before income taxes and minority interests		(648,217	)		(188,756	)		(26,883	)		(42,616	)		(37,850	)		30,095			42,941
Provision (benefit) for income taxes		(122,588	)		(3,466	)		(8,276	)		(16,640	)		(12,131	)		4,541			17,543
Minority interests(6)		—			—			—			(1,368	)		—			1,795			(8,507	)

Earnings (loss) from continuing operations	$	(525,629	)	$	(185,290	)	$	(18,607	)	$	(27,344	)	$	(25,719	)	$	27,349		$	16,891
Discontinued operations:
Gain (loss) from operations of discountinued operations (including gain on sale of $498,387 in 2006)		—			—			—			502,718			—			(19,659	)		(12,866	)
Provision (benefit) for income taxes		—			—			—			195,647			—			(9,765	)		(2,321	)
Minority interest income (expense)		—			—			—			(73,966	)		—			(1,446	)		(997	)

Gain (loss) on discontinued operations		—			—			—			233,105			—			(11,340	)		(11,542	)

Net income (loss)	$	(525,629	)	$	(185,290	)	$	(18,607	)	$	205,761		$	(25,719	)	$	16,009		$	5,349

OTHER FINANCIAL DATA
Station Operating Income (7)	$	83,442		$	100,049		$	63,737		$	16,477		$	83,612		$	79,045		$	83,450
Cash provided by (used in) operating activities	$	25,977		$	14,905		$	22,706		$	(204,009	)		*	*	$	60,491		$	119,903
Cash provided by (used in) investing activities	$	1,120		$	(1,059	)	$	(1,220,515	)	$	719,806			*	*	$	(3,191	)	$	(169,868	)
Cash provided by (used) in financing activities	$	54,194		$	(19,849	)	$	1,205,707		$	(523,134	)		*	*	$	(56,766	)	$	45,469

BALANCE SHEET DATA
Total assets	$	665,222		$	1,277,692		$	1,494,386		$	454,497		$	1,494,386		$	878,796			*	*
Long-term debt (including current portion)	$	941,774		$	910,159		$	931,500		$	208,153		$	931,500		$	255,328			*	*
Total stockholder’s equity	$	(430,197	)	$	96,031		$	281,503		$	99,747		$	281,503		$	74,118			*	*


**		Calculation not meaningful

(1)		Corporate general and administrative expenses during the historical periods consist of substantially all of the corporate level general and administrative expenses for SPC, which were previously shared among SPC’s cable, dinnerware, real estate and radio operations. The portion of these expenses that were not internally allocated to the “Radio” segment is recorded in “other” segment. The portion that was internally allocated to Radio Holdings includes amounts paid to SPC and Media for SPC’s corporate management and shared services under a management agreement that was terminated in connection with the Acquisition. Corporate general and administrative expenses on a pro forma basis reflect a decrease primarily relating to the elimination of certain costs and a replacement of costs with the annual management fee payable under the management agreement with Cumulus equal to the greater of $4.0 million or 4% of Holdings’ consolidated EBITDA (as described in the management agreement with Cumulus) with certain adjustments. See the notes to the audited consolidated financial statements of SPC for segment information for continuing operations.

(2)		For the years ended December 31, 2004 and 2005, the portion of depreciation and amortization attributable to SPC’s radio operations was $6.6 million and $6.2 million, respectively. See the notes to the audited consolidated financial statements of SPC for segment information for continuing operations.

(3)		On November 12, 2004, SPC’s subsidiary, Susquehanna Media Co., sold the assets of a radio station for $11.5 million in cash. The gain on the sale recognized in 2004 was $10.2 million. An additional $0.3 million of gain was recognized in 2005. See notes to the audited consolidated financial statements of SPC for additional information.

(4)		Interest expense attributed to SPC’s radio operations for the years ended December 31, 2004 and 2005 was $8.0 million and $4.1 million, respectively. Interest expense for the year ended December 31, 2004 includes $3.6 million of interest and $0.1 million of other expense related to the summary judgment grated in favor of Bridge Capital Investors II against SPC’s indirect subsidiary, Susquehanna Radio Corp., by the United States District Court for the Northern District of Georgia on January 26, 2005. Pro forma interest expense includes amortization of capitalized debt issuance cost.

(5)		Represents a $3.0 million loss on debt extinguishment (including $0.9 million charge for unamortized deferred financing costs) incurred in 2004 relating to the redemption of SPC’s then-outstanding 8.5% senior subordinated notes due 2009. See the notes to the audited consolidated financial statements of SPC for additional information.

(6)		Represents changes in the value of (a) outstanding shares under Susquehanna Radio Corp.’s Employee Stock Plan (“ESOP”) that allowed certain key employees to purchase Susquehanna Radio Corp.’s Class B non-voting common stock and (b) outstanding shares of station subsidiaries owned by persons other than SPC and its subsidiaries. Those shares and other interests were redeemed or eliminated prior to, or in connection with the Acquistion. See the notes to the audited consolidated financial statements of SPC for additional information.

(7)		The following table sets forth a quantitative reconciliation of Station Operating Income to its most directly comparable financial measure calculated and presented in accordance with GAAP for the periods shown below.


							(Dollars in thousands)
	Radio Holdings								SPC			Radio Holdings		SPC
	Year Ended						May 5 Through		January 1			Pro Forma		Year Ended
	December 31,						December 31,		Through May 4,			December 31,		December 31,
	2008			2007			2006		2006			2006		2005			2004
Operating income (loss) from continuing operations	$	(603,834	)	$	(111,182	)	$	28,833	$	(31,486	)		40,844	$	47,236		$	65,806
Corporate general and administrative expenses		7,152			7,214			4,106		31,029			7,425		24,708			20,297
Depreciation and amortization		7,353			10,393			30,798		2,421			35,343		7,401			7,759
(Gain)/Loss on sale of assets		(6	)		96			—		—					(300	)		(10,151	)
Costs related to sale of business principally advisory fees		—			—			—		14,513			—		—			—
Impairment of goodwill and intangible assets		669,786			188,019			—		—			—		—			—
Impairment of long-term investment		2,991			5,509			—		—			—		—			(261	)

Station Operating Income	$	83,442		$	100,049		$	63,737	$	16,477			83,612	$	79,045		$	83,450


Item 7.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

The following Management’s Discussion and Analysis is intended to provide the reader with an overall understanding of our financial condition, changes in financial condition, results of operations, cash flows, sources and uses of cash, contractual obligations and financial position. This section also includes general information about our business and a discussion of our management’s analysis of certain trends, risks and opportunities in our industry. We also provide a discussion of accounting policies that require critical judgments and estimates as well as a description of certain risks and uncertainties that could cause our actual results to differ materially from our historical results. You should read the following information in conjunction with our consolidated financial statements and notes to our consolidated financial statements beginning on page F-1 in this Annual Report on Form 10-K as well as the information set forth in Item 1A “Risk Factors”.

Highlights during 2008 and Overview

The advertising environment for 2008 lagged behind 2007. The RAB has reported that trends in radio advertising revenue mirrored fluctuations in the current economic environment yielding mixed results over the last three years. In 2008, CMP’s advertising revenues decreased 9%, after decreasing 2% in 2007 and increasing only 1% in 2006. Our political revenues increased by $2.8 million compared to 2007 due to 2008 being a presidential election year.

We recorded total impairment charges of $669.8 million in order to reduce the carrying value of certain broadcast licenses and goodwill. The impairment loss in connection with our review of broadcasting licenses and goodwill during the fourth quarter of 2008 (see Note 10 in the accompanying notes to the financial statements), was primarily due to: (1) an increase in the discount rate used for valuation purposes; (2) a decrease in prevailing station transaction multiples; and (3) a decrease in advertising revenue growth projections for the broadcasting industry.

Liquidity Considerations

Based upon actions we have already taken, including the 2009 Exchange Offer and various cost reduction activities in our markets (which have mainly been head count reductions implemented in the fourth quarter 2008) management believes that CMPSC will continue to be in compliance with all of its debt covenants through at least December 31, 2009 (which become more restrictive effective September 30, 2009 and December 31, 2009). See further discussion of liquidity considerations in “— Liquidity and Capital Resources — Sources of Liquidity” below and Note 1 to the consolidated financial statements.

Our management team remains focused on our strategy of pursuing growth through acquisition. However, acquisitions are closely evaluated to ensure that they will generate incremental value to our existing portfolio of radio stations, and as such, our management is committed to completing only those acquisitions that they believe will increase our Station Operating Income. The compression of publicly traded radio broadcast company multiples since 2005, combined with a market for privately held radio stations that did not see corresponding multiples compression, translated to minimal acquisition activity for us in 2008.

As of December 31, 2008, the effective interest rate on the borrowings pursuant to the credit facility was approximately 3.65%. As of December 31, 2008, our average cost of debt, including the effects of our derivative position, was 4.89%.

Our business is managed by Cumulus under a management agreement between us and Cumulus. Pursuant to the management agreement, Cumulus provides managerial and administrative services, and assumes responsibility for all salary, benefits and related compensation expenses of our management team for these services, in exchange for an annual cash fee of the greater of $4.0 million or 4% of our consolidated EBITDA (as described in the Cumulus management agreement). From January 1, 2008 through July 30, 2008, CMP’s subsidiaries had an agreement with the equity investors, excluding Cumulus, under which an annual cash payment of $1.0 million or 1% of EBITDA is paid to cover ongoing investor expenses. Pursuant to an amendment to this agreement, after July 30, 2008, CMP’s annual aggregate payment obligation for such services was reduced by two-thirds and is payable solely to The Blackstone Group.

Advertising Revenue and Station Operation Income

Our primary source of revenues is the sale of advertising time on our radio stations. Our sales of advertising time are primarily affected by the demand for advertising time from local, regional and national advertisers and the advertising rates charged by our radio stations. Advertising demand and rates are based primarily on a station’s ability to attract audiences in the demographic groups targeted by its advertisers, as measured principally by Arbitron on a periodic basis, generally two or four times per year. Because audience ratings in local markets are crucial to a station’s financial success, we endeavor to develop strong listener loyalty. We believe that the diversification of formats on our stations helps to insulate them from the effects of changes in the musical tastes of the public with respect to any particular format.

The number of advertisements that can be broadcast without jeopardizing listening levels and the resulting ratings is limited in part by the format of a particular station. Our stations strive to maximize revenue by managing their on-air inventory of advertising time and adjusting prices based upon local market conditions. In the broadcasting industry, radio stations sometimes utilize trade or barter agreements that exchange advertising time for goods or services such as travel or lodging, instead of for cash. Trade revenue totaled $2.7 million in 2008, $3.0 million in 2007, and $1.5 million in 2006. Our advertising contracts are generally short-term. We generate most of our revenue from local and regional advertising, which is sold primarily by a station’s sales staff. Local advertising represented approximately 15.0% of our total revenues in 2008, 15.0% of our total revenues in 2007, and 13.1% of our total revenues in 2006. Our revenues vary throughout the year. As is typical in the radio broadcasting industry, we expect our first calendar quarter will produce the lowest revenues for the year, and the second and fourth calendar quarters will generally produce the highest revenues for the year. Our operating results in any period may be affected by the incurrence of advertising and promotion expenses that typically do not have an effect on revenue generation until future periods, if at all.

For 2008, 2007, and 2006, our revenues were concentrated in the Atlanta, Dallas, and San Francisco geographic markets as follows: 9%, 11% and 10%, respectively, in Atlanta; 24%, 25% and 24%, respectively, in Dallas; and 29%, 30% and 25%, respectively, in San Francisco.

Results of Operations

The following tables set forth components of our consolidated historical results of operations from continuing operations for the years ended December 31, 2008, 2007 and 2006, as well as percentage changes in results for each year. We also include, on a pro forma basis, our results of operations for the year ended December 31, 2006, to exclude certain results as discussed later in this section in “Unaudited Condensed Pro Forma Consolidated Statement of Operations” for the period of January 1, 2006 through May 4, 2006.


	Radio Holdings									Amount Change						Percent Change
	Year Ended						Pro			2008			2007 vs.			2008			2007
	December 31,						Forma			vs.			Pro Forma			vs			vs Pro
	2008			2007			2006			2007			2006			2007			Form 2006
Net revenues	$	203,412		$	223,437		$	222,012		$	(20,025	)	$	1,425			-9.0	%		0.6	%

Operating expenses:
Station operating expense excluding depreciation amortization and including non-cash contract termination costs of $6,723 for the period May 5, 2006 through December 31, 2006		119,970			123,388			138,400			(3,418	)		(15,012	)		-2.8	%		-10.8	%
Corporate general and administrative expenses		7,152			7,214			7,425			(62	)		(211	)		-0.9	%		-2.8	%
Depreciation and amortization, including pre-sold advertising amortization of $23,023 for the period May 5, 2006 through December 31, 2006		7,353			10,393			35,343			(3,040	)		(24,950	)		-29.3	%		-70.6	%
(Gain)/Loss on sale of assets		(6	)		96			—			(102	)		96			-106.3	%		*	*
Impairment of goodwill and intangible assets		669,786			188,019			—			481,767			188,019			256.2	%		*	*
Impairment of long-term investment		2,991			5,509			—			(2,518	)		5,509			-45.7	%		*	*

Total operating expenses		807,246			334,619			181,168			472,627			153,451			141.2	%		84.7	%

Operating income (loss) from continuing operations		(603,834	)		(111,182	)		40,844			(492,652	)		(152,026	)		443.1	%		**	%
Non-operating income (expense) from continuing operations:
Interest expense, net		(65,309	)		(78,509	)		(80,369	)		13,200			1,860			-16.8	%		-2.3	%
Gain on early extinguishment of debt		20,935			1,258			—			19,677			1,258			1564.1	%		*	*
Other income (expense)		(9	)		(323	)		1,675			314			(1,998	)		-97.2	%		-119.3	%

Income (loss) from continuing operations before income taxes and minority interest		(648,217	)		(188,756	)		(37,850	)		(459,461	)		(150,906	)		243.4	%		398.7	%
(Benefit) provision for income taxes		(122,588	)		(3,466	)		(12,131	)		(119,122	)		8,665			3436.9	%		-71.4	%
Minority interest income (expense)		—			—			—			—			—			*	*		*	*

Earnings (loss) from continuing operations	$	(525,629	)	$	(185,290	)	$	(25,719	)	$	(340,339	)	$	(159,571	)		183.7	%		620.4	%


**		Calculation not meaningful

The discussion of the results of operations below is significantly affected by our acquisition of SPC on May 5, 2006 and the resulting allocation of purchase price to the acquired assets and liabilities. The results of operations for the year ended December 31, 2008 and 2007 are not comparable to the fiscal year ended December 31, 2006. Please see Year Ended December 31, 2007 Compared to the Pro Forma Year Ended December 31, 2006 for a comparison of our 2007 results versus Pro forma 2006 results.

Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007

Net Revenues. Net revenues decreased by $20.0 million, or 9.0%, to $203.4 million for the period ended December 31, 2008 compared to $223.4 for the year ended December 31, 2007, reflecting a decrease in demand for advertising due to the impact of the current economic recession partially offset by a $2.8 million increase in political revenue. Management has implemented numerous sales initiatives nationwide in an effort to facilitate growth primarily by targeting new industries and markets for penetration.

Station Operating Expenses, excluding Depreciation and Amortization. Station operating expenses, excluding depreciation and amortization, decreased $3.4 million, or 2.8%, to $120.0 million for the year ended December 31, 2008 compared to $123.4 for the year ended December 31, 2007, primarily attributable to certain cost containment initiatives across our station platform. Management is focused on preserving our operating income and cash flows from operations by reducing our variable costs in an effort to keep pace with the current downturn in demand for advertising.

Corporate, General and Administrative Expenses. Corporate, general and administrative expenses remained virtually flat decreasing $0.1 million, or 0.9%, to $7.1 million for the period ending December 31, 2008 compared to $7.2 million for the year ended December 31, 2007.

Depreciation and Amortization. Depreciation and amortization decreased $3.0 million, or 29.3%, to $7.4 million for the year ended December 31, 2008 compared to $10.4 million for the year ended December 31, 2007, primarily attributable to a decrease in amortization due to certain intangible assets becoming fully amortized.

Impairment Charge. SFAS No. 142, Goodwill and Other Intangible Assets, requires us to review the recorded values of our FCC licenses and goodwill for impairment on an annual basis. We recorded total impairment charges of $669.8 million in order to reduce the carrying value of certain broadcast licenses and goodwill. The impairment loss recorded in connection with our review of broadcasting licenses and goodwill during the fourth quarter of 2008 (see Note 10 in the notes to the accompanying financial statements), was primarily due to: (1) an increase in the discount rate used for valuation purposes; (2) a decrease in prevailing station transaction multiples; and (3) a decrease in advertising revenue growth projections for the broadcasting industry.

Impairment of long-term investment. We recorded an impairment charge of $3.0 million and $5.5 million for the years ended December 31, 2008 and December 31, 2007 associated with our long-term investment in New Radio Ventures.

Other Expense (Income) Interest expense, net of interest income, decreased $13.2 million, or 16.8%, to $65.3 million for the year ended December 31, 2008 compared to $78.5 million for the year ended December 31, 2007, primarily attributable to a lower average cost of bank debt and decreased levels of Existing Notes outstanding during 2008. Given the results of the 2009 Exchange Offer, we expect that interest expense in 2009 will be significantly lower than 2008.

Gain on Early Extinguishment of Debt. Gain on early extinguishments of debt totaled $20.9 million for the year ended December 31, 2008 compared with a gain of $1.3 million for the year ended December 31, 2007, primarily attributable to the repurchase of $55.1 million of the Existing Notes in market transactions. The net gain was comprised of $22.6 million in redemption cost under the face value of the Existing Notes offset by a $1.7 million charge for unamortized deferred financing costs.

Income Taxes. Income tax benefit totaled $122.6 million for the year ended December 31, 2008 compared to a $3.5 million tax benefit for the year ended December 31, 2007. The income tax benefit in both periods is primarily due to the impairment charge on intangible assets.

Station Operating Income. As a result of the factors described above for the period ending December 31, 2008, Station Operating Income decreased by $16.6 million, or 16.6%, to $83.4 million compared to $100.0 million for the year ended December 31, 2007. (See footnote 7 to Item 6. “Selected Consolidated Financial Data” for a reconciliation of Station Operating Income to its most directly comparable financial measure, calculated and presented in accordance with GAAP).

Intangible Assets. Intangible assets, net of amortization, were $491.1 million and $1,163.9 million as of December 31, 2008 and 2007, respectively. These intangible asset balances primarily consist of broadcast licenses and goodwill. Intangible assets, net, decreased from the prior year primarily due to a $669.8 million impairment charge recorded for the year ended December 31, 2008, in connection with our annual impairment evaluation of intangible assets.

In light of the overall economic environment, we continue to monitor whether any impairment triggers are present and we may be required to record material impairment charges in future periods. The annual impairment tests require us to make certain assumptions in determining fair value, including assumptions about the cash flow growth of our businesses. Additionally, the fair values are significantly impacted by macro-economic factors, including market multiples at the time the impairments tests are performed. The current economic pressures now impacting both the national and a number of our local economies may result in non-cash impairments in future periods. More specifically, the following could adversely impact the current carrying value of our broadcast licenses and goodwill: (a) the potential for a decline in our forecasted operating profit margins or expected cash flow growth rates; (b) a decline in our industry forecasted operating profit margins; (c) the potential for a continued decline in advertising market revenues within the markets we operate stations; or (d) the sustained decline in the selling prices of radio stations.

Year Ended December 31, 2007 Compared to the Pro Forma Year Ended December 31, 2006

Unaudited Pro Forma Condensed Consolidated Statement of Operations

The following unaudited pro forma condensed consolidated statement of operations information for the year ended December 31, 2006, gives effect to the pro forma adjustments described below on the results of operations of Radio Holdings. The Acquisition occurred on May 5, 2006 and thus substantially all of the pro forma adjustments relate to the period from January 1, 2006 through May 4, 2006. The pro forma adjustments include:

	•		the Acquisition;

	•		interest expense for the issuance of $250 million of the Existing Notes;

	•		interest expense for the borrowing of $700 million of term loans under Radio Holdings’ senior secured credit facilities;

	•		the elimination of certain corporate level general and administrative expenses;

	•		the elimination of minority interest, the impact of the SPC tax-sharing agreement and certain other liabilities retained by the selling stockholders of SPC; and

	•		the elimination of minority interest, the impact of the SPC tax-sharing agreement and certain other liabilities retained by the selling stockholders of SPC; and

•

elimination of certain interest expense due to the repayment of SPC’s then-existing indebtedness.

The unaudited pro forma condensed consolidated statement of operations information gives effect to the pro forma adjustments as if they had occurred on January 1, 2006.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma condensed consolidated statement of operations information is presented for informational purposes only and does not purport to represent what our results of operations would have been had the pro forma adjustments actually occurred on the dates indicated, and they do not purport to project our results of operations for any future period or as of any future date. The unaudited pro forma condensed consolidated statement of operations information should be read in conjunction with the

information contained in other sections of this annual report, particularly the sections entitled “Business—Acquisition of SPC,” “Selected Historical Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto included elsewhere in this annual report. All pro forma adjustments and their underlying assumptions are described more fully in the notes to the unaudited pro forma condensed consolidated statement of operations information.

Unaudited Pro Forma Condensed Consolidated Statement of Operations Information
for the Year Ended December 31, 2006


	SPC			Radio Holdings
	Historical			Historical											Pro Forma
	January 1, to			May 5, to			Historical			Pro Forma					Consolidated
	May 4, 2006			December 31, 2006			Total			Adjustments					Total
	(Dollars in thousands)
Net Revenues	$	65,987		$	155,607		$	221,594		$	418		(a	)	$	222,012
Operating expenses:																—
Station operating expense excluding depreciation amortization and including non-cash contract termination costs of $6,723		49,510			91,870			141,380			(2,980	)	(b	)		138,400
Corporate, general, and administrative expenses		31,029			4,106			35,135			(27,710	)	(c	)		7,425
Depreciation and amortization		2,421			30,798			33,219			2,124		(d	)		35,343
Costs related to sale of business, principally advisory fees		14,513			—			14,513			(14,513	)	(e	)		—

Total operating expenses		97,473			126,774			224,247			(43,079	)				181,168

Operating income (loss) from continuing operations		(31,486	)		28,833			(2,653	)		43,497					40,844
Non-operating income (expense) from continuing operations:
Interest expense, net		(4,638	)		(54,061	)		(58,699	)		(21,670	)	(f	)		(80,369	)
Loss on early extinguishment of debt		(6,492	)		—			(6,492	)		6,492		(g	)		—
Other income (expense)		—			—			—			1,675		(h	)		1,675

Loss from continuing operations before income taxes and minority interest		(42,616	)		(25,228	)		(67,844	)		29,994					(37,850	)
(Benefit) provision for income taxes		(16,640	)		(8,276	)		(24,916	)		12,785		(i	)		(12,131	)
Minority interest income (expense)		(1,368	)		—			(1,368	)		1,368		(j	)		—

Loss from continuing operations	$	(27,344	)	$	(16,952	)	$	(44,296	)	$	18,577				$	(25,719	)

See accompanying notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations Information.

Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations Information


(a)		Reflects the additional revenue generated by a radio station, for the period January 1, 2006 through May 4, 2006, which was contributed to us on May 5, 2006 by an affiliate.

(b)		Reflects the decrease in station operating expense primarily related to the elimination of expenses associated with an ESOP and pension plan that was terminated in connection with the Acquisition. Ongoing benefits and overall compensation structure do not include an employee stock purchase plan or pension plan or otherwise replace this benefit. There is also an increase of station operating expenses of $0.2 million for the January 1, 2006 through May 4, 2006, resulting from stations contributed to us on May 5, 2006 by an affiliate.

(c)		Reflects the decrease in corporate, general, and administrative expenses primarily relating to the elimination of expenses that have been replaced by those contractually provided under the Cumulus management agreement for an annual cash fee that is the greater of $4 million or 4% of Holdings’ consolidated free cash flows (as described in the Cumulus management agreement) with certain adjustments. Ongoing advisory fees payable to the Sponsors pursuant to the advisory services agreement, which annually total the greater of $1 million or 1% of Holdings’ consolidated free cash flows (as described in the Cumulus management agreement) with certain adjustments, have been added to the corporate, general, and administrative expenses.

(d)		Reflects the increase in depreciation and amortization expense primarily due to the amortization of identified intangible assets using a weighted average straight-line life of 1.2 years. These intangible assets exclude broadcast licenses which are not amortized because they are classified as having indefinite lives.

(e)		Reflects the elimination of certain non-recurring costs related to the sale of the business by the previous SPC shareholders.

(f)		Reflects the increase in interest expense resulting from the issuance of debt to finance a portion of the purchase price for the Acquisition. The interest rate on the new debt of $950.0 million is assumed to be at a weighted average of 8.3%. A 1/8% fluctuation of the weighted average interest rate would result in a change in interest expense and net loss of approximately $1.2 million and approximately $0.8 million before and after taxes, respectively. Pro forma interest expense includes amortization of capitalized debt issuance costs.

(g)		Reflects the elimination of non-recurring costs related to the termination of certain credit facilities due to the repayment of all existing debt of SPC.

(h)		As of the consummation of the Acquisition, Radio Holdings incurred approximately $1.7 million in expenses related to a commitment fee for a bridge loan which could have been activated if needed to complete the transaction. The bridge loan was never utilized and the commitment was terminated and a termination fee was paid. This amount is non-recurring and was included in the unaudited pro forma a condensed consolidated statement of operations.

(i)		Reflects the income tax benefit at an effective tax rate of 30.55%. Although realization is not assured, management believes that it is more likely than not that the deferred tax assets will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the future, if estimates of future taxable income are reduced.

(j)		Reflects the elimination of minority interest that was made because those interest were redeemed or eliminated prior to, or in connection with, the Acquisition.

Net Revenues. Net revenues basically remained flat year over year, increasing by $1.4 million, or 0.6%, to $223.4 million for the year ended December 31, 2007 over the pro forma year ended December 31, 2006.

Station Operating Expenses, excluding Depreciation and Amortization. Station operating expenses, excluding depreciation and amortization, decreased $15.0 million, or 10.8%, to $123.4 million from the pro forma year ended December 31, 2006. This decrease was primarily attributable to the full-year impact of staffing reductions and other operating expense reduction activities that were implemented following the Acquisition.

Corporate, General and Administrative Expenses. Corporate, general and administrative expenses decreased $0.2 million, or 2.8%, to $7.2 million for the year ended December 31, 2007, compared to $7.4 million for the pro forma year ended December 31, 2006.

Depreciation and Amortization. Depreciation and amortization decreased $25.0 million to $10.4 million for the year ended December 31, 2007, compared to the pro forma year ended December 31, 2006. This decrease was primarily attributable to $23.0 million of amortization related to pre-sold advertising that was allocated to intangible assets in the purchase price allocation that was expensed in 2006.

Impairment Charge. SFAS No. 142 requires us to review the recorded values of our FCC broadcast licenses and goodwill for impairment on an annual basis. We recorded total impairment charges of $188.0 million in 2007 in order to reduce the carrying value of certain broadcast licenses and goodwill.

Impairment of long-term investment. We recorded an impairment charge of $5.5 million for the years ended December 31, 2007 associated with a long-term investment.

Other Expense (Income). Interest expense, net of interest income, decreased by $1.9 million, or 2.3% to $78.5 million from the year ended December 31, 2007 compared to the pro forma year ended December 31, 2006.

Gain (Loss) on Early Extinguishment of Debt. Gain on early extinguishments of debt totaled $1.3 million for the year ended December 31, 2007 as compared with $0.0 million for the pro forma year ended December 31, 2006.

Income Taxes. Income tax benefit totaled $3.5 million in 2007, compared to a $12.1 million in the pro forma year ended December 31, 2006. The 2007 benefit is primarily driven by the impairment charge recorded.

Station Operating Income. As a result of the factors described above for the period ending December 31, 2007, Station Operating Income increased by $16.4 million, a 19.7% increase over the pro forma year ended December 31, 2006 to $100.0 million from $83.6 million in 2006. (See footnote 7 to Item 6. “Selected Consolidated Financial Data” for a reconciliation of Station Operating Income to its most directly comparable financial measure, calculated and presented in accordance with GAAP).

Intangible Assets. Intangible assets, net of amortization, were approximately $1,163.9 million and $1,356.2 million as of December 31, 2007 and as of December 31, 2006 (on a pro forma basis), respectively. These intangible assets primarily consist of broadcast licenses and goodwill, although we possess certain other intangible assets obtained in connection with our acquisitions, such as non-corporate agreements. Intangible assets, decreased $192.3 million primarily due to a $188.0 million impairment charge we recorded in connection with our annual impairment testing.

Seasonality

We expect that our operations and revenues will be seasonal in nature, with generally lower revenue generated in the first quarter of the year and generally higher revenue generated in the second and fourth quarters of the year. The seasonality of our business reflects the adult orientation of our formats and relationship between advertising purchases on these formats with the retail cycle. This seasonality causes and will likely continue to cause a variation in our quarterly operating results. Such variations could have an effect on the timing of our cash flows.

Liquidity and Capital Resources

Historically, our principal needs for liquidity have been to fund expenses associated with station and corporate operations, capital expenditures, payment of the management fee and expenses under the Cumulus management agreement, interest and debt service payments, as well as possible acquisitions of radio stations. In addition, we or our affiliates may, from time to time, in our or their sole discretion, purchase, repay, redeem or retire the Existing Notes or New Notes, in privately negotiated or open-market transactions, by tender offer or otherwise, in accordance with their respective indentures, the terms and conditions of the credit agreement governing CMPSC’s credit facility, and applicable SEC and marketplace rules and regulations. Our principal sources of funds for these requirements have been, and are expected to continue to be, cash flow from operations and cash flow from financing activities, such as borrowings under our existing senior credit facilities and long-term intercompany borrowings, although as of the date of this report, we have no additional credit availability under our revolving credit facilities. See “— Sources of Liquidity.” Our cash flow from operations is subject to such factors as shifts in population, station listenership, demographics, audience tastes and fluctuations in preferred advertising media. In addition, borrowings under financing arrangements are subject to financial covenants that can restrict our financial flexibility. Further, our ability to obtain additional equity or debt financing is also subject to market conditions and operating performance.

Consideration of Recent Economic Developments and the Outlook for 2009

The current economic crisis has reduced demand for advertising in general, including advertising on our radio stations. In consideration of current and projected market conditions, overall advertising is expected to continue to decline. Therefore, in conjunction with the development of the 2009 business plan, management continues to assess the impact of recent market developments on a variety of areas, including the forecasted advertising revenues and liquidity. In response to these conditions, management refined the 2009 business plan to incorporate a reduction in the forecasted 2009 revenues and cost reductions implemented in the fourth quarter 2008 and the first quarter 2009 to mitigate the impact of CMP’s anticipated decline in 2009 revenue.

Additionally, Radio Holdings and CMPSC commenced the 2009 Exchange Offer on March 9, 2006, pursuant to which we offered to exchange all of our Existing Notes for (1) up to $15 million aggregate principal amount of the New Notes, (2) up to $35 million in shares of the New Preferred Stock, and (3) New Warrants exercisable for shares of our common stock representing, in the aggregate, up to 40% of the outstanding common stock on a fully diluted basis.

Pursuant to the 2009 Exchange Offer, on March 26, 2009, Radio Holdings and CMPSC completed the exchange of $175,464,000 aggregate principal amount which represented 93.5% of the total principal amount of Existing Notes outstanding prior to the commencement of the 2009 Exchange Offer, for $14,031,000 aggregate principal amount of New Notes, 3,273,633 shares of New Preferred Stock and New Warrants exercisable for 3,740,893 shares of our common stock. As a result, as of April 3, 2009, we reduced the amount of outstanding principal amount of the Existing Notes from $187.6 million to $12.1 million. No additional Existing Notes were tendered for exchange after March 26, 2009 but prior to April 5, 2009, the expiration date of the 2009 Exchange Offer.

Sources of Liquidity

The following table summarizes our total long-term debt as of December 31, 2008.


	2008
9.875% Senior subordinated notes	$	187,594
Term loan	$	657,500
Revolver	$	96,680

Total	$	941,774
Less amounts payable within one year		7,000

	$	934,774

On May 5, 2006, in connection with the consummation of the Acquisition, CMPSC entered into a credit agreement with Deutsche Bank Trust Company Americas, as administrative agent, and the lenders party thereto, related to CMPSC’s senior secured credit facilities. The credit agreement provides for a term-loan facility in the original aggregate principal amount of $700 million and a revolving credit facility of $100 million. In order to finance part of the Acquisition, we drew the entire $700 million term loan on May 5, 2006, and on that date our lenders used $3.3 million in letters of credit in order to cover pre-existing workers’ compensation claims.

Borrowings under the term loan bear interest at a rate of 2% above LIBOR or 1% above the alternate base rate, as defined in the credit agreement. At December 31, 2008 and 2007, CMPSC’s effective interest rate on the loan amounts outstanding under the senior secured credit facilities were 3.650% and 7.606%, respectively. Borrowings under the revolving loan bear interest at a variable rate based on the levels of leverage, ranging from 1.75% to 2.25% above LIBOR and from 0.75% to 1.25% above the alternate base rate. CMPSC is also charged a commitment fee of 0.5% on the unused portion of the revolving loan facility. During 2008 we drew down the remaining $93.7 million available under our revolving credit facility. Excluding the $3.3 million letter credit our revolver had a balance of $96.7 million at December 31, 2008.

CMPSC’s obligations under the senior secured credit facility are collateralized on a first-priority lien basis by substantially all of its assets in which a security interest may lawfully be granted (including FCC licenses held by its subsidiaries), including, without limitation, intellectual property and all of the capital stock of our direct and indirect domestic subsidiaries. In addition, CMPSC’s obligations under the senior secured credit facility are guaranteed by its subsidiaries. The term loan has a repayment schedule that requires quarterly principal payments of 0.25% of the original loan. The term loan also has required payments based on the excess cash flow (as defined in the credit agreement). The unpaid balance of the term loan is due May 2013 and the revolving loan is due May 2012.

In August 2006, CMPSC entered into an interest rate swap agreement, the “2006 Swap,” that effectively fixed the interest rate, based on LIBOR, on $225.0 million of floating rate bank borrowings through November 9, 2007. The 2006 Swap matured on November 9, 2007 and was not renewed. As a result of the maturation of the 2006 Swap, CMPSC’s aggregate borrowings under the term loan began to bear interest at variable rates starting in November 2007.

On June 12, 2008, CMPSC entered into a LIBOR-based interest rate swap arrangement (“June 2008 Swap”) to manage fluctuations in cash flows resulting from interest rate risk attributable to changes in the benchmark interest rate of LIBOR. The June 2008 Swap became effective as of June 12, 2008 and will expire on June 12, 2011. The June 2008 Swap changes the variable-rate cash flow exposure on $200 million of CMPSC’s long-term bank borrowings to fixed-rate cash flows. Under the June 2008 Swap, CMPSC receives LIBOR-based variable interest rate payments and makes fixed interest rate payments, thereby creating fixed-rate, long-term debt. The June 2008 Swap is not accounted for as a cash flow hedge instrument in accordance with SFAS No. 133. Accordingly, the changes in its fair value are reflected within interest expense in the statement of operations. The change in fair value of the June 2008 Swap for the year ended December 31, 2008 was $10.7 million.

As of December 31, 2008, prior to the effect of the June 2008 Swap, the effective interest rate of the outstanding borrowings pursuant to the senior secured credit facility was approximately 3.65%; inclusive of the June 2008 Swap, the effective interest rate was 4.23%. At December 31, 2007, our effective interest rate on loan amounts outstanding under the credit facility was 6.78%.

Under the credit agreement (and the indenture governing the New Notes, as described below) there are a number of customary covenants that restrict CMPSC’s ability to incur additional indebtedness, pay dividends, sell off pledged assets and make capital expenditures. The credit agreement also contains certain customary financial covenants, including:

	•		a maximum total leverage ratio

	•		an interest coverage ratio; and

	•		a limit on annual capital expenditures.

As of December 31, 2008, we were in compliance with all financial and non-financial covenants. Our covenant requirements and actual ratios as of December 31, 2008 were as follows:


	Covenant		Actual
	Requirement		Ratio

Maximum total leverage ratio		10.50		10.44
Interest coverage ratio		1.15		1.47

The maximum total leverage ratio in the credit agreement becomes more restrictive over its term. The total leverage ratio as of the last day of any test period (as defined in the credit agreement) must be greater than the ratio established for that date as set forth in the table below:

Fiscal Year

March 31

June 30

September 30

December 31

2009

10.25:1

10.00:1

9.50:1

2010

9.50:1

9.25:1

9.00:1

8.75:1

2011

8.50:1

8.25:1

8.00:1

7.75:1

2012

7.50:1

7.00:1

6.75:1

2013

6.75:1

We believe we will continue to be in compliance with all of our debt covenants through at least December 31, 2009 based upon actions we have already taken, including the 2009 Exchange Offer and various cost reduction activities being implemented in our markets that have been implemented in the fourth quarter 2008. However, if our revenue declines greater than the forecasted decline from 2008 or if we exceed planned spending, we may need to undertake additional cost reduction initiatives, including a mandated furlough and reduction in salaries and commissions, which management is currently evaluating, to maintain compliance with the total leverage ratio under the credit agreement governing CMPSC’s senior secured credit facilities. However, no assurances can be given that the effect of the 2009 Exchange Offer or that the other management actions described above will be successful in increasing Station Operating Income. If the foregoing does not occur, we would need to seek to raise additional equity capital from the owners of our ultimate parent, CMP or obtain waivers or amendments under the credit agreement, and no assurances can be given that we will be able to do so. If we are unable to raise additional equity capital or obtain waivers or amendments if and when necessary, CMPSC would be in default under the credit agreement, which could have a material adverse impact on our financial position. Upon the occurrence of an event of default, it would (1) preclude CMPSC from accessing any available borrowings under its revolving credit facility, (2) entitle the lenders thereunder to exercise their remedies, which includes the right to accelerate the debt outstanding under the credit agreement, and (3) trigger cross-defaults or cross-accelerations under the indentures governing our outstanding debt securities and certain of our other agreements. See Item I. A. “Risk Factors — Risks Related to Our Indebtedness.”

Customary events of default in the credit agreement include, among others, (a) the failure to pay when due the obligations owing under the credit facilities; (b) the failure to perform (and not timely remedy, if applicable) certain covenants; (c) cross default and cross acceleration; (d) the occurrence of bankruptcy or insolvency events; (e) certain judgments against us or any of our subsidiaries; (f) the loss, revocation or suspension of, or any material impairment in the ability to use any of our material FCC licenses; (g) any representation or warranty made, or report, certificate or financial statement delivered, to the lenders subsequently proven to have been incorrect in any material respect; (h) the occurrence of a Change in Control (as defined in the credit agreement); and (i) violation of certain financial covenants. Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the credit agreement and the ancillary loan documents as a secured party. On April 6, 2009, CMPSC received a notice from the agent under the credit agreement claiming that our failure to deliver audited financial statements to the lenders no later than 90 days after year-end constituted a default. The credit agreement provides that the financial statement delivery requirement may be satisfied with the filing of our annual report on Form 10-K, and with the timely filing thereof, we do not believe that any such default existed or exists.

Also on May 5, 2006, in connection with the consummation of the Acquisition, CMPSC issued $250 million in 97/8% senior subordinated notes due 2014. On July 23, 2007, CMPSC completed an exchange offer whereby it exchanged those notes for an equal amount of Existing Notes. The Existing Notes have an interest rate of 9.875% and mature on May 5, 2014.

The Existing Notes are CMPSC’s unsecured senior subordinated obligations and (1) are subordinated in right of payment to our existing and future senior debt, including CMPSC’s senior secured credit facilities; (2) are effectively subordinated in right of payment to all of our existing and future secured debt (including CMPSC’s senior secured credit facilities and the New Notes), to the extent of the value of the assets securing such debt; (3) are structurally subordinated to all obligations of each of our future subsidiaries that is not a guarantor of the senior subordinated notes; (4) rank equally in right of payment to all of our future senior subordinated debt; and (5) rank senior in right of payment to all of our future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the notes.

We may redeem some or all of the Existing Notes prior to May 15, 2010 for cash at a redemption price equal to 100% of their principal amount plus a “make-whole” premium, plus accrued and unpaid interest to the redemption date. We may redeem some or all of the Existing Notes at any time on or after May 15, 2010 at specified redemption prices set forth in the indenture.

On March 26, 2009, we, CMPSC, our subsidiary guarantors and the trustee entered into a supplemental indenture to amend the indenture governing the Existing Notes. The supplemental indenture was entered into in connection with the 2009 Exchange Offer, pursuant to which CMPSC sought and received the requisite consents from eligible holders of the Existing Notes to approve certain amendments to the indenture. The amendments to the indenture contained in the supplemental indenture eliminate substantially all of the restrictive covenants (other than, among other covenants, the covenant to pay interest and premium, if any, on, and principal of, the Existing Notes when due), certain events of default and other related provisions in the indenture.

At December 31, 2008, the Existing Notes had a fair value of 4% of face value.

Subsequent to year end and in connection with the 2009 Exchange Offer, on the Early Participation Date of March 26, 2009, CMPSC issued $14,031,000 aggregate principal amount of New Notes under an indenture, dated as of March 26, 2009 (the “New Indenture”) by and among CMPSC, us, as guarantor, the subsidiary guarantors named therein and Wells Fargo Bank, N.A., as trustee (the “New Note Trustee”). The New Indenture was executed in connection with the acceptance for exchange of Existing Notes tendered for exchange prior to the early participation deadline of the 2009 Exchange Offer. After giving effect to the acceptance of, and the issuance of the New Notes, New Preferred Stock and New Warrants being exchanged for, all of the Existing Notes tendered pursuant to the 2009 Exchange Offer, we have reduced the amount of outstanding principal amount of the Existing Notes from $187.6 million to $12.1 million.

Interest on the New Notes will accrue at a floating rate equal to LIBOR plus 3.00% and will be payable semiannually on May 15 and November 15 of each year, beginning on May 15, 2009. The New Notes will mature on May 15, 2014.

The New Notes are secured by second-priority liens on tangible and intangible assets of CMPSC and its subsidiaries to the extent they can be perfected by the filing of financing statements or other similar registrations and are permitted under agreements governing CMPSC’s other indebtedness, including its senior secured credit facility. Pledged assets do not include shares of capital stock of CMPSC or any of its subsidiaries and debt securities held by CMPSC or any of its subsidiaries.

The New Notes are (i) general obligations of CMPSC, (ii) secured on a second-priority basis by a security interest in substantially all of CMPSC’s existing and future assets to the extent pledged and assigned to the New Note Trustee pursuant to the security agreement in favor of the holders of the New Notes, subject and subordinate to the security interests securing CMPSC’s obligations under its senior secured credit facilities and certain permitted priority liens, (iii) subordinated to all first-priority senior secured indebtedness of CMPSC (including the senior secured credit facilities), (iv) effectively senior to all unsecured indebtedness of CMPSC and (v) initially guaranteed on a second-priority senior secured subordinated basis by us and each subsidiary of CMPSC that guarantees the senior secured credit facilities. Each guarantee of the New Notes is a second-priority senior subordinated secured obligation of the guarantor, is subordinated in right of payment to all existing and future first priority senior indebtedness of such guarantor, including each guarantor’s guarantee of CMPSC’s obligations under the senior secured credit facilities.

The New Indenture contains covenants that limit CMPSC’s ability and the ability of its restricted subsidiaries to, among other things, (i) incur additional indebtedness or issue certain preferred shares, (ii) pay dividends on or make distributions in respect of CMPSC’s capital stock or make other restricted payments, (iii) make certain investments, (iv) sell certain assets, (v) create liens on certain assets to secure debt, (vi) consolidate, merge, sell or otherwise dispose of all or substantially all of CMPSC’s assets, (vii) enter into certain transactions with CMPSC’s affiliates and (viii) designate CMPSC’s subsidiaries as unrestricted subsidiaries. The New Indenture also contains a covenant providing that, to the extent required to permit holders of New Notes (other than affiliates of CMPSC) to sell their New Notes without registration under the Securities Act, we or CMPSC or will make publicly available the information concerning us or CMPSC or specified in Rule 144(c)(2) under the Securities Act.

CMPSC may redeem some or all of the New Notes at any time after the issue date at a redemption price equal to 100% of their principal amount, plus any accrued and unpaid interest through the redemption date.

Upon the occurrence of a “Change of Control” (as defined in the New Indenture), each holder of the New Notes will have the right to require CMPSC to repurchase all of such holder’s New Notes at a repurchase price equal to 100% of the principal amount, plus any accrued and unpaid interest through the repurchase date.

The New Indenture is subject to events of default that are customary for agreements of this type, including failure to make required payments, failure to comply with certain agreements or covenants, failure to pay certain other indebtedness and certain events of bankruptcy and insolvency and certain judgment defaults.

In connection with the execution and delivery of the New Indenture, CMPSC, we, as guarantor and pledgor, the subsidiary guarantors party thereto, as pledgors, and Wells Fargo Bank, N.A., as collateral agent for the New Notes (the “Second-Lien Collateral Agent”), entered into a security agreement dated March 26, 2009. Pursuant to the security agreement, the New Notes are secured on a second-priority basis by a security interest in substantially all of CMPSC’s existing and future assets (the “Collateral”) to the extent pledged and assigned to the Second-Lien Collateral Agent in favor of the holders of the New Notes, subject and subordinate to the security interests securing CMPSC’s obligations under its senior secured credit facilities and certain permitted priority liens.

In connection with the execution and delivery of the New Indenture and the issuance of the New Notes, CMPSC, we, the First-Lien Collateral Agent and the Second-Lien Collateral Agent entered into an intercreditor agreement, dated March 26, 2009. The intercreditor agreement establishes the relative lien priorities and rights of the lenders under CMPSC’s senior secured credit facilities, the holders of the New Notes and other obligations with respect to the Collateral. The intercreditor agreement provides that, among other things, (i) the First-Lien Collateral Agent (as defined in the intercreditor agreement) will determine the time and method by which the security interests in the Collateral will be enforced, (ii) all liens on the Collateral securing the priority lien obligations of CMPSC will be and remain senior in right, priority, operation, effect and all other respects to all liens held by the holders of the New Notes and (iii) the amount of priority lien obligations of CMPSC may be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, refinanced or otherwise amended or modified from time to time, all without affecting the subordination of the liens held by the holders of the New Notes. In addition, the intercreditor agreement contains payment subordination provisions consistent with the subordination provisions of the New Indenture. On March 26, 2009, after CMPSC, the First-Lien Collateral Agent, the Second-Lien Collateral Agent, and the New Note Trustee (on behalf of the holders of the New Notes) executed the intercreditor agreement in the form agreed to by the parties, and subsequent to the completion of the issuance of the New Notes, the First-Lien Collateral Agent issued a letter notifying CMPSC that it, in conjunction with its execution of the increditor agreement, did not deem its execution of the intercreditor agreement to be a waiver of any rights or remedies of the lenders under the agreements governing the senior secured credit facilities and that it reserved the rights of the lenders there under. We have notified the First-Lien Collateral Agent that we believe the letter was ineffective to reserve any rights of such lenders and reserving certain rights on behalf of CMPSC.

We issued New Preferred Stock and New Warrants pursuant to the 2009 Exchange Offer, in a private transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof. In connection with the issuance of the New Warrants, on March 26, 2009, we entered into a warrant agreement with Computershare Trust Company, N.A., as warrant agent, with respect to the New Warrants. Each New Warrant is immediately exercisable to purchase all or any part of the number of shares of our common stock underlying such New Warrant, at an exercise price of $0.01 per share. The New Warrants will expire on March 26, 2019. The New Warrants will have appropriate adjustments for stock splits, stock dividends and other recapitalization events. The New Warrants will have preemptive rights, subject to customary exclusions. Holders of the New Warrants will have the right to participate on a pro rata basis in transfers by Holdings, our direct parent, of our securities representing 5% or more of our fully diluted common stock.

In connection with the issuance of the New Preferred Stock and New Warrants, we granted certain registration rights to initial holders of the New Preferred Stock and New Warrants as well as certain permitted transferees. To be eligible to exercise these registration rights, initial holders or permitted transferees must execute a joint agreement to the registration rights agreement, dated March 26, 2009, executed by us. Under the registration rights agreement, we have granted the initial holders and permitted transferees piggyback and demand registration rights with respect to the New Preferred Stock and common stock underlying the New Warrants. The registration rights agreement grants “piggyback” registration rights, which allow the holders of shares of the New Preferred Stock and New Warrants to have the shares of the New Preferred Stock or common stock underlying the New Warrants, as applicable, be included in any future public offering of our New Preferred Stock or common stock, respectively. Additionally, the registration rights agreement grants “demand” registration rights. Beginning on March 26, 2014, holders of the New Preferred Stock or New Warrants representing, as applicable, 20% or more of the aggregate stated value of then-outstanding shares of the New Preferred Stock or 20% or more of the fully-diluted outstanding common stock can require, from time to time, but in no event no more than two times for all holders of the New Preferred Stock two times for all holders of New Warrants, that we register for resale any shares of the New Preferred Stock or common stock underlying the New Warrants, as applicable, held by such holders, subject to certain conditions and exceptions.

Cash Flow from Operating Activities

The statements of cash flows included in our consolidated financial statements include both continuing and discontinued operations for the four month period ended May 4, 2006. As a result, the comparison of cash flows year-over-year during the two-year period ended December 31, 2007, is not useful in evaluating our historical cash flows generated by radio operations.


	2008		2007		2006

Net cash provided by/(used in) operating activities	$	25,977	$	14,905	$	(181,303	)

For the year ended December 31, 2008 net cash provided by operating activities increased $11.1 million to $26.0 million compared to $14.9 million for year ended December 31, 2007, primarily attributable to reduced working capital requirements primarily in the areas of accounts receivable and payable.

Cash Flow from Investing Activities


	2008		2007			2006

Net cash provided by/(used in) investing activities	$	1,120	$	(1,059	)	$	(500,709	)

For the year ended December 31, 2008, net cash provided by investing activities increased $2.2 million to $1.1 million compared to $1.1 million net cash used in investing activities for the year ended December 31, 2007, primarily attributable to proceeds received from the sale of one radio station and a building.

Cash Flow from Financing Activities


	2008		2007			2006

Net cash provided by/(used in) financing activities	$	54,194	$	(19,849	)	$	682,573

For the year ended December 31, 2008, net cash provided by financing activities increased $74.0 million to $54.2 million net cash provided by financing activities compared to $19.8 million net cash used in financing activities for the year ended December 31, 2007, primarily attributable to proceeds from our revolving credit facility offset by cash used to repurchase our senior notes.

Completed Acquisitions

There were no completed acquisitions in 2008.

Completed Dispositions

The Company completed the sale of one radio station WZZB (AM) in Seymore, Indiana for $0.3 million during the three months ended March 31, 2008. We recorded an immaterial gain on this transaction.

Early Extinguishment of Debt

For the year ended December 31, 2008, CMPSC repurchased and cancelled $55.1 million of the Existing Notes in market transactions. The $22.6 million in redemption cost under face value and the $1.7 million charge for unamortized deferred financing costs were recognized as a net gain on early extinguishment of debt.

Future Needs for Liquidity

We expect our future needs for liquidity to arise primarily from expenses associated with our station and corporate operations, capital expenditures, payment of the management fee and expenses under the Cumulus management agreement, and interest and debt service payments under CMPSC’s senior secured credit facilities and the New Notes and Existing Notes. In addition, we may from time to time engage in portfolio development by acquisition. We expect our current cash balances and our cash flows from operations to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital expenditures for a period that includes at least the next 12 months. However, our cash flow from operations is subject to such factors as shifts in population, station listenership, demographics or audience tastes, as well as general economic developments.

Further, our ability to obtain additional equity or debt financing is also subject to market conditions and operating performance. As such, there can be no assurance that we will be able to obtain funds from operations, or from financing at terms, and on the timetable, that may be necessary to meet our future capital needs, if at all. See Item I. A. “Risk Factors — Risks Related to Our Indebtedness.”

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, our management, in consultation with the Audit Committee of our Board, evaluates these estimates, including those related to bad debts, intangible assets, income taxes, and contingencies and litigation. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

We recognize revenue from the sale of commercial broadcast time to advertisers when the commercials are broadcast, subject to meeting certain conditions such as persuasive evidence that an arrangement exists and collection is reasonably assured. These criteria are generally met at the time an advertisement is broadcast.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We determine the allowance based on historical write-off experience and trends. We review our allowance for doubtful accounts monthly. Past due balances over 120 days are reviewed individually for collectability. All other balances are reviewed and evaluated on a pooled basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Although our management believes that the allowance for doubtful accounts is our best estimate of the amount of probable credit losses, if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

We have significant intangible assets recorded in our accounts. These intangible assets are comprised primarily of broadcast licenses and goodwill acquired through the acquisition of radio stations. SFAS No. 142, Goodwill and other Intangible Assets, requires that the carrying value of our goodwill and certain intangible assets be reviewed at least annually for impairment and charged to results of operations in the periods in which the recorded value of those assets is more than their fair market value. During 2008, 2007, and 2006, we recorded impairment charges of approximately $669.8 million, $188.0 million, and $0.0 million, respectively in order to reduce the carrying value of certain broadcast licenses and goodwill to their respective fair market values. As of December 31, 2008, we have $491.1 million in intangible assets and goodwill, which represent approximately 73.8% of our total assets.

The fair market value of our broadcast licenses and reporting units, for purposes of our annual impairment tests, by relying on a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. The fair value contains assumptions incorporating variables that are based on past experiences and judgments about future performance using industry normalized information for an average station within a market. These variables would include, but limited to: (1) the forecast growth rate of each radio market, including population, household income, retail sales and other expenditures that would influence advertising expenditures; (2) market share and profit margin of an average station within a market; (3) estimated capital start-up costs and losses incurred during the early years; (4) risk-adjusted discount rate; (5) the likely media competition within the market area; and (6) terminal values. The impairment loss recorded in connection with our review of broadcasting licenses and goodwill during the fourth quarter of 2008 (see Note 10 in the accompanying notes to the financial statements), was primarily due to: (1) an increase in the discount rate used for valuation purposes; (2) a decrease in prevailing station transaction multiples; and (3) a decrease in advertising revenue growth projections for the broadcasting industry.

In connection with the elimination of amortization of broadcast licenses upon the adoption of SFAS No. 142, the reversal of our deferred tax liabilities relating to those intangible assets is no longer assured within our net operating loss carry-forward period. We have established a valuation allowance of approximately $36.2 million as of December 31, 2008 based on our assessment of whether it is more likely than not these deferred tax assets will be realized. Should we determine that we would be able to realize all or part of our net deferred tax assets in the future, reduction of the valuation allowance would be recorded in income in the period such determination was made.

Summary Disclosures about Contractual Obligations and Commercial Commitments

The following table reflects our contractual cash obligations as of December 31, 2008 on a historical basis in the respective periods in which they are due (dollars in thousands).


	Total
	Amounts
Contractual Cash Obligations	Committed		2009		2010		2011		2012		2013		Thereafter
Long-term debt(1)	$	941,774	$	7,000	$	7,000	$	7,000	$	103,680	$	629,500	$	187,594
Broadcast rights(2)		11,385		9,275		617		619		621		253		—
Operating leases		28,604		4,905		4,714		3,628		2,956		2,849		9,552
Other contractual obligations(3)		13,172		9,818		1,504		1,583		267		—		—

Total	$	994,935	$	30,998	$	13,835	$	12,830	$	107,524	$	632,602	$	197,146


(1)		As a result of the 2009 Exchange Offer, as of the date of this report, our contractual cash obligation with respect to our long-term debt after 2013 will be $26.1 million, consisting of $12.1 million in aggregate principal of Existing Notes and $14.0 million in aggregate principal of New Notes.

(2)		Broadcast rights represent fees we are obligated to pay in exchange for the rights for our station, KNRB AM, to broadcast San Francisco Giant baseball games through the 2009 MLB baseball seasons and Radio Holdings, through an indirect subsidiary, holds broadcast rights for the Kansas City Chiefs NFL franchise through the 2009 football season. The contract requires minimum rights payments of $2.8 million, $2.9 million, and $3.0 million for the 2007, 2008, 2009 football seasons, respectivlely. See the notes to the accompanying audited financial consolidated financial statements for more information.

(3)		Other contractual obligations include minimum management fee payments under the management agreement with Cumulus and the advisory services agreement with the Sponsors, amounts owed under our contractual agreement with Arbitron and amounts payable to certain on air talent.

From time to time, we evaluate potential acquisitions of radio stations. In connection with future acquisition opportunities, we may incur additional debt or issue additional equity securities depending on market conditions and other factors. We have no current commitments or agreements with respect to any material acquisitions.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Recent Accounting Pronouncements

SFAS No. 141(R). In December 2007, the Financial Accounting Standards Board (“FASB”) issued FAS No. 141R, “Business Combinations” that will significantly change how business combinations are accounted for through the use of fair values in financial reporting and will impact financial statements both on the acquisition date and in subsequent periods. FAS No. 141R is effective for us as of January 1, 2009 for all business combinations that will close on or after January 1, 2009.

SFAS 157. In September 2006, FASB issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, provides guidance for measuring fair value and requires additional disclosures. This statement does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. For financial assets and liabilities, SFAS 157 is effective for financial statements issued for fiscal years beginning after December 31, 2007. We adopted these provisions of SFAS 157 effective January 1, 2008. The related disclosures are included in Note 7. On February 12, 2008, the FASB issued FSP FAS 157-2, “Effective Date of FASB Statement No. 157,” which delays the effective date of SFAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. We have evaluated the impact of this statement on our consolidated financial statements and it did not have a material impact on them.

SFAS 159. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115. SFAS No. 159 permits an entity to elect fair value as the initial and subsequent measurement attribute for many financial assets and liabilities. Entities electing the fair value option would be required to recognize changes in fair value in earnings. Such entities are also required to distinguish, on the face of the statement of financial position, the fair value of assets and liabilities for which the fair value option has been elected and similar assets and liabilities measured using another measurement attribute. SFAS No. 159 was effective for us as of January 1, 2008. We did not elect to adopt SFAS No. 159 on current assets and liabilities, but may elect to do so in the future.

SFAS No. 160. In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“SFAS 160”), which is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. SFAS 160 will require companies to present minority interest separately within the equity section of the balance sheet. We adopted SFAS 160 as of January 1, 2009 and it did not have a material impact on our consolidated financial statements.

SFAS 161. In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The Statement changes the disclosure requirements for derivative instruments and hedging activities. SFAS No. 161 will require entities to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We have assessed the impact of this statement on our consolidated financial statements and will include the relevant disclosures in our financial statements beginning with the first quarter in 2009, and it did not have a material impact on our consolidated financial statements.

FSP No. 142-3. In April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, Determination of the Useful Lives of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an intangible asset. This interpretation is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. We have assessed the impact of adoption on our consolidated financial statements, and it did not have a material impact on our consolidated financial statements.

FSP FAS 157-3. The FASB issued this FSP in October 2008 and it is effective upon issuance including prior periods for which financial statements have not been issued. This FSP clarifies the application of SFAS 157 in an inactive market, including; how internal assumptions should be considered when measuring fair value, how observable market information in a market that is not active should be considered and how the use of market quotes should be used when assessing observable and unobservable data. We adopted this FSP upon the date of issuance and it did not have a material impact on our consolidated financial statements.

FSP FAS 140-4 and FIN 46R-8. The FASB issued FSP FAS 140-4 and FIN 46R-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (“FSP”) in December 2008 and it is effective for the first reporting period ending after December 15, 2008. This FSP requires additional disclosures related to variable interest entities in accordance with SFAS 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125, (“SFAS 140”) and FIN 46R “Consolidation of Variable Interest Entities (revised December 2003)—an interpretation of ARB No. 51” (“FIN 46R”). These disclosures include significant judgments and assumptions, restrictions on assets, risks and the affects on financial position, financial performance and cash flows. We adopted this FSP as of January 1, 2009, but do not expect it to have a material impact on our consolidated financial statements.


Item 7A.		*Quantitative and Qualitative Disclosure about Market Risk*

Interest Rate Risk

As of December 31, 2008, approximately 58.8% of our long-term debt bears interest at variable rates. Accordingly, our earnings and after-tax cash flow are affected by changes in interest rates. Assuming the current level of borrowings at variable rates and assuming a one percentage point change in the average interest rate under these borrowings, it is estimated that our interest expense would have changed by $5.5 million for the year ended December 31, 2008. As part of our efforts to mitigate interest rate risk, in June 2008, we entered into a forward-starting (effective June 2008) LIBOR-based interest rate swap agreement that effectively fixed the interest rate, based LIBOR, on $200 million of our current floating rate bank borrowings for a three year period. This agreement is intended to reduce our exposure to interest rate fluctuation and was not entered into for speculative purposes. Segregating the $554.2 million of borrowing outstanding as of December 31, 2008 that is not subject to the interest rate swap and assuming a 1% change in the 2008 average interest rate under these borrowings it is estimated that our 2008 interest expense and net income would have changed by $5.5 million.

CMPSC entered into the 2008 Swap to manage fluctuations in cash flows resulting from interest rate risk attributable to changes in the benchmark interest rate of LIBOR. The transaction had an effective date of June 12, 2008 and locked in the future interest expense at 3.55% for the first $200 million of bank borrowings through June 2011. The transaction is not accounted for as a qualifying cash flow hedge of the future variable rate interest payments in accordance with SFAS No. 133. As of December 31, 2008 the fair value of the derivative was $6.9 million.

CMPSC entered into the 2006 Swap to manage fluctuations in cash flows resulting from interest rate risk attributable to changes in the benchmark interest rate of LIBOR. The transaction had an effective date of November 9, 2006 and locked in the future interest expense at 5.2075% for the first $225.0 million of bank borrowings through November 9, 2007. The transaction is accounted for as a qualifying cash flow hedge of the future variable rate interest payments in accordance with SFAS No. 133, whereby changes in the fair market value are reflected as adjustments to accumulate other comprehensive income. The 2006 Swap matured in November 2007 and was not renewed. As a result of the maturation of the 2006 Swap all of CMPSC’s borrowings under the term loan bore interest at variable rates as of December 31, 2007. As of December 31, 2007 and 2006 the fair value of the derivative was $0.0 million and $0.2 million, respectively.

In the event of an adverse change in interest rates, management would likely take actions, in addition to the interest rate hedging requirement discussed above, to further mitigate its exposure to floating interest rate risk. Due to the uncertainty of the actions that would be taken and their possible effects, additional analysis is not possible at this time. Further, such analysis could not take into account the effects of any change in the level of overall economic activity that could exist in such an environment.


Item 8.		*Financial Statements and Supplementary Data*

The information in response to this item is included in our consolidated financial statements, together with the reports thereon of PricewaterhouseCoopers LLP and KPMG LLP, beginning on page F-1 of this Annual Report on Form 10-K, which follows the signature page hereto.


Item 9.		*Changes in and Disagreements with Accountants on Accounting and Financial Disclosure*

On June 17, 2008, following an extensive review and request-for-proposal process, the Audit Committee of the Company determined not to renew its engagement of KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm (“auditors”) and dismissed them as the Company’s auditors. The Company appointed PricewaterhouseCoopers LLP as the Company’s auditors for the fiscal year ending December 31, 2008.

KPMG’s audit reports on the Company’s consolidated financial statements as of December 31, 2006 and 2007 and for the year ended December 31, 2007 and for the period from May 5, 2006 through December 31, 2006 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles except as follows:

KPMG’s audit report on the Company’s consolidated financial statements as of December 31, 2006 and 2007 and for the year ended December 31, 2007 and for the period from May 5, 2006 through December 31, 2006 contained a separate paragraph stating that “As discussed in Note 1 to the consolidated financial statements, effective January 1, 2007, the Company adopted the Financial Accounting Standards Board interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.”

During the two most recent fiscal years ended December 31, 2007, and through the date hereof, there were no: (1) disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to KPMG’s satisfaction, would have caused KPMG to make reference to the subject matter of the disagreement(s) in connection with its reports, or (2) “reportable events” as defined in Regulation S-K, Item 304(a)(1)(v); except that in the Company’s quarterly reports on Form 10-Q for the quarters ended June 30, 2007 and September 30, 2007, management concluded in its reviews of the Company’s disclosure controls and procedures that, based on the existence of a material weakness related to the sufficiency and adequate training of personnel in the Cumulus Media Inc. (“Cumulus”) corporate accounting function (which, pursuant to the Company’s management agreement with Cumulus, serves as the Company’s corporate accounting function), the Company’s disclosure controls and procedures were not effective. The Company has authorized KPMG to respond fully to any inquiries from PricewaterhouseCoopers regarding this matter.


Item 9A.		*Controls and Procedures*

(a) Evaluation of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures (as defined in 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, “the Exchange Act”) designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Such disclosure controls and procedures are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chairman, President and Chief Executive Officer (“CEO”) and Executive Vice President, Treasurer and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. At the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded our disclosure controls and procedures were not effective as of December 31, 2008 because of the material weakness described below in Management’s Report on Internal Control Over Financial Reporting.

(b) Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Management identified the following material weakness in our internal control over financial reporting as of December 31, 2008:

We did not maintain a sufficient complement of personnel with the level of financial accounting technical expertise necessary to facilitate an effective review of certain corporate accounting transactions. As a result of this deficiency, we did not timely identify errors related to the annual goodwill impairment test as of December 31, 2008. This deficiency resulted in audit adjustments to the consolidated financial statements as of December 31, 2008 to correct misstatements of the goodwill impairment charge and misstatements of goodwill. Additionally, this control deficiency could result in misstatements that would result in a material misstatement of the consolidated financial statements that would not be prevented or detected. Accordingly, our management has determined that this control deficiency constitutes a material weakness.

As a result of the material weakness described above, our management has concluded that, as of December 31, 2008, our internal control over financial reporting was not effective based on these criteria.


Lewis W. Dickey, Jr.		Martin R. Gausvik

Chairman, President, Chief Executive		Executive Vice President, Treasurer,
Officer and Director		and Chief Financial Officer

(c) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are currently assessing potential alternatives to remediate the material weakness described above.


Item 9B.		*Other Information*

None.

PART III


Item 10.		*Directors and Executive Officers and Corporate Governance*

See “Item. 1. Business-Directors and Executive Officers” for certain information regarding our executive officers and directors.

Board of Directors and Committees of the Board of Directors

Neither we nor CMPSC is a “listed issuer” (i.e., neither has a security listed on a national securities exchange or in an inter-dealer quotation system), and therefore, our respective boards are exempt from certain corporate governance requirements, including the requirement that independent directors constitute a majority of our respective boards and the requirement for an “audit committee financial expert.”

Our board of directors of has established an Audit Committee, currently comprised of David Tolley. Our board has no other standing committees of its board, and the board of CMPSC has not to date established any committees of its board.

Code of Ethics

We have not formally adopted a Code of Business Conduct and Ethics that applies to all of our employees, executive officers and directors and meets the requirements of the rules of the SEC. However, the Cumulus Code of Business Ethics applies to our executive officers (including our principal executive, financial and accounting officers, as is required by the SEC) and they operate our business under the provisions thereof. The Cumulus Code of Ethics can be obtained without charge by written request to Richard S. Denning, Corporate Secretary, at our principal executive offices. If Cumulus make any substantive amendments to its Code of Ethics, if our Board grants any waiver, including any implicit waiver, from a provision thereof to our executive officers or directors, we will disclose the nature of such amendment or waiver, the name of the person to whom the waiver was granted and the date of the waiver in a current report on Form 8-K. Finally, if we formally adopt a Code of Business Conduct and Ethics, we will also disclose such code in a current report on Form 8-K.


Item 11.		*Executive Compensation*

Executive Compensation

Under the Cumulus Management Agreement, Cumulus maintains responsibility for all salaries, benefits and related employment compensation expenses of our executive officers. In exchange for its management services, Cumulus receives an annual management fee equal to the greater of $4.0 million or 4% of our consolidated EBITDA (as described therein), payable on a quarterly basis. Messrs. L. Dickey, M. Gausvik, J. Pinch and J. Dickey are parties to employment agreements with Cumulus and participate in a series of equity-based incentive plans of Cumulus. We do not separately compensate our executive officers in salary, bonus or non-cash compensation. See “Certain Relationships and Related Party, and Director Independence Transactions — Cumulus Management Agreement.”

Compensation of Directors

Except for Mr. Holcombe T. Green, a former director of the Company, who received a cash stipend of $12,500 per calendar quarter prior to his retirement in February 2009, our directors do not receive any compensation for fulfilling their duties as directors.


Item 12.		*Security Ownership of Certain Beneficial Owners & Management and Related Stockholder Matters*

As of the date of the report, all of CMPSC’s issued and outstanding capital stock is held by us, all of our issued and outstanding capital stock is held by Holdings, and all of the issued and outstanding capital stock of Holdings is held by CMP. Cumulus and each of the respective investment funds affiliated with Bain Capital, The Blackstone Group and Thomas H. Lee (the “Sponsors”) beneficially own membership interests representing a 25% equity ownership interest in CMP. Notwithstanding the beneficial ownership of membership interests in CMP, the equityholders’ agreement of CMP governs the members’ exercise of their voting rights with respect to the election of the board of directors and certain other significant matters. The members have agreed to vote for the election of the board of directors as set forth therein. See “Certain Relationships and Related Transactions, and Director

Independence — Equityholders’ Agreement.” Certain members of our board of directors affiliated with Cumulus or a Sponsor may be deemed to beneficially own membership interests in CMP held by Cumulus or the investment fund affiliated with that Sponsor, respectively. Each such individual disclaims beneficial ownership of any such membership interests in which such individual does not have a pecuniary interest.


Item 13.		*Certain Relationships and Related Transactions, and Director Independence*

The Capital Contribution Agreement

On October 31, 2005, CMP, Cumulus and the Sponsors entered into a capital contribution agreement pursuant to which Cumulus agreed to contribute four radio stations (including the related licenses and assets), and $6.2 million in cash and each of the Sponsors ultimately contributed $81.2 million in cash, in exchange for units representing limited liability company membership interests in CMP. The agreement also provided that in consideration of Cumulus performing industry analysis, due diligence investigations, other advice and negotiation assistance necessary for the consummation of the Acquisition, CMP was to, and subsequently did, pay to Cumulus a transaction and advisory fee of approximately $3.5 million at the closing of the Acquisition.

CMP LLC Agreement

Cumulus and the Sponsors invested in our company through CMP. The limited liability company agreement of CMP provides that each member’s interest in CMP is represented by units and provides for the capital contributions and distributions with respect to the units representing the members’ membership interests in CMP. Under the terms of the CMP agreement, Cumulus may be increased up to 40%, with the respective participations in such distributions by each of the investments funds affiliated with the Sponsors reduced to as low as 20%.

Cumulus Management Agreement

In connection with the closing of the Acquisition, Cumulus entered into a management agreement with Holdings, for an initial term of three years, which ends in May 2009, subject to one two-year renewal or early termination, under which Cumulus provides management services to us and our subsidiaries. Specifically, Cumulus provides (i) operations services, which includes corporate level sales, programming, marketing, technical, finance, accounting, treasury, administrative, internal audit, use of corporate headquarters, legal, human resources, risk management and information technology and (ii) corporate development services, which includes evaluation and consummation of divestitures, acquisitions, swaps, signal upgrades, move-ins, format changes, new revenue streams and high definition build-out and development.

Pursuant to the management agreement, Cumulus provides services of its senior management who perform equivalent functions and duties for us and uses the services of its other officers and other corporate level employees as may be necessary to perform the management services in accordance with the agreement. In exchange for its management services, Cumulus receives an annual management fee equal to the greater of $4.0 million or 4% of our consolidated EBITDA (defined as our consolidated earnings before interest, taxes, depreciation and amortization, calculated before deducting the annual management fee and the advisory fee payable to the affiliates of the Sponsors under the Advisory Services Agreement described below). The annual management fee is payable on a quarterly basis. Cumulus is also reimbursed for all direct professional and similar third party expenses incurred by it in performing the management services. Any installment of the management fee not paid on the scheduled due date will bear interest at the annual rate of 10%, compounded quarterly from the due date until the date of payment.

We may terminate the agreement at any time without cause, upon thirty days’ prior written notice. If such termination occurs prior to the second anniversary of the date of the agreement, we will continue to pay the management fee when and as due based on 110% of our consolidated free cash flows for the last twelve months prior to such termination, and if it occurs on or subsequent to the second anniversary of the date hereof, based on Holdings’ consolidated free cash flows for the last twelve months prior to such termination. We may also terminate the management agreement immediately by written notice given within 90 days of the occurrence of a “change of

control” (as defined therein) or in the event three or more of the following persons cease to be executive officers of Cumulus: Lewis W. Dickey, Jr.; John W. Dickey; John G. Pinch; or Martin R. Gausvik, or two or more of the foregoing persons cease to be executive officers of Cumulus if one of the two includes Mr. L. Dickey. In the event of a material act of fraud or gross misconduct by Cumulus, we may terminate the agreement, subject to specified prior written notice, by a majority vote of its directors not designated or employed by Cumulus. In the event of a termination under these circumstances, Cumulus will be entitled to any accrued and unpaid compensation pursuant to the terms of this agreement owed through the date of such termination. We have the right to renew the agreement after the expiration of the initial term for an additional twenty-four months by prior written notice to Cumulus.

In the event of any termination of the management agreement, Cumulus will, if requested by us, either continue to provide the same management services to us or provide some but not all of the management services to us, to facilitate an orderly transition for a maximum period of six months from the effective date of the termination.

Under the management agreement, we have agreed to indemnify Cumulus, its subsidiaries and its and their respective directors, officers, employees, agents and representatives for any actions, claims, losses, damages, liabilities or costs arising out of or in connection with the management services contemplated by the management agreement, except to the extent they have resulted from the indemnified party’s gross negligence or willful misconduct or they apply to claims arising out of employment matters of Cumulus or its affiliates.

Equityholders’ Agreement

CMP, Cumulus and the Sponsors have entered into an equityholders’ agreement that governs the economic and voting characteristics of the units representing limited liability company membership interests in CMP and, if an initial public offering of our common stock occurs (at which time it is contemplated that our common stock held by CMP would be distributed to Cumulus and the Sponsors), of our common stock.

Board Representation. The equityholders agreement, as amended, provides that each of CMP’s and Holdings’ board of directors will be designated by each of Cumulus and each of the Sponsors, and Cumulus and the Sponsors will agree to vote for the board nominees of the others. In connection with an initial public offering by either CMP or Holdings, the board of directors may be reconstituted, subject to compliance with applicable law and the listing rules of the applicable securities exchange. Generally, any significant action taken by the board of directors of CMP or Holdings during the three years following the closing of the Acquisition will need the approval of a director designated by Cumulus and the approval of directors designated by at least two of the Sponsors and, thereafter, a majority of the directors present at the board meeting and the approval of directors designated by at least two of the Sponsors.

Pursuant to an amendment to the Equityholders’ Agreement, which took effect on July 30, 2008, two of the members of CMP have elected to assume non-attributable ownership status for their interests in CMP for regulatory purposes, and therefore have waived their rights to designate board members of the registrant and agreed that their respective board designees will resign. Consequently, Cumulus and an affiliate of The Blackstone Group (“Blackstone”), as the remaining members who have not assumed non-attributable ownership status of CMP, will each have the right to appoint one-half of the directors on the boards of CMP and its applicable subsidiaries (including the Company), and have agreed that any significant action taken by the board of directors of CMP or its direct subsidiary, Holdings, including certain significant actions with respect to the Company, must be approved by a majority of the directors present at the board meeting and by a majority of the directors designated by Blackstone.

Preemptive Rights; Restrictions on Transfer. Prior to the occurrence of certain events, Cumulus and the Sponsors will have preemptive rights with respect to any new issuance of equity securities by CMP Holdings, subject to certain exceptions. In addition, the parties may not transfer their equity interests in CMP or Holdings, except under certain circumstances.

Right of First Offer; Tag-Along and Drag-Along Rights. Cumulus and the Sponsors also have rights of first offer, “tag-along” rights and “drag-along” rights in the event of proposed transfers of equity interests in CMP or Holdings.

Corporate Opportunities. The equityholders’ agreement also provides that CMP will have the right to pursue first any business opportunities involving radio broadcasting operations in a market or markets primarily relating to the top 50 radio broadcasting markets in the United States, referred to as “large markets”. If CMP declines such an opportunity, then Cumulus will have the right to pursue it. With regard to business opportunities involving U.S. markets other than large markets, CMP must allow Cumulus the right to pursue first any such opportunity. If Cumulus declines such an opportunity, then CMP will have the right to pursue it. These provisions do not restrict the ability of the Sponsors to pursue business opportunities outside the large markets. The provisions of the equityholders’ agreement relating to corporate opportunities will cease to be effective with respect to Cumulus upon the expiration of the two year period following the termination of the Cumulus management agreement and with respect to each of the Sponsors upon the expiration of the three-month period following the date that such Sponsor’s equity ownership in CMP first falls below 25% of such Sponsor’s initial equity ownership.

Registration Rights Agreement

Holdings, CMP, Cumulus and the Sponsors entered into a registration rights agreement. Pursuant to the agreement, following an initial public offering of Holdings’ common stock, Cumulus and the Sponsors will be entitled to customary demand and piggyback registration rights with respect to the registration and sale of their shares of Holdings’ common stock.

Advisory Services Agreement

Holdings, CMP, CMPSC and the Sponsors have entered into an advisory services agreement. Under this agreement, in consideration for the Sponsors having performed the financial analysis, due diligence investigations, other advice and assistance necessary for the consummation of the Acquisition, we paid each of the Sponsors a transaction and advisory fee equal to approximately $3.5 million at the closing of the Acquisition. In addition, each of the Sponsors agreed to provide certain ongoing advisory and consulting services for an aggregate cash annual fee equal to the greater of $1.0 million or 1% of our consolidated EBITDA (as described in the Cumulus management agreement), payable on a quarterly basis, which will be allocated among the Sponsors pro rata according to their weighted average ownership interest in CMP. Such ongoing advisory fee does not include direct payment or reimbursement for customarily reimbursable expenses in connection with services provided by the Sponsors. Any installment of the ongoing advisory fee not paid on the scheduled due date will bear interest at the per annum rate of 10%. The Sponsors are entitled to receive additional fees for any investment banking or other financial advisory service relating to any specific acquisition, divestiture, refinancing or recapitalization by us or any of our affiliates. This agreement will terminate with respect to each Sponsor on the earliest to occur of (i) the consummation of an initial public offering of our common stock or (ii) the date on which affiliates of such Sponsor own less than 20% of the number of units in CMP held by it immediately following the closing of the Acquisition.

In connection with the amendment to the Equityholders’ Agreement described above, the Sponsors and Cumulus also amended the Advisory Services Agreement. Pursuant to the amendment, Thomas H. Lee and Bain Capital, which elected to assume non-attributable ownership status of CMP for regulatory purposes ceased providing such services effective July 30, 2008 and, as a result, CMP’s annual aggregate payment obligation for such services was reduced by two-thirds and is payable solely to Blackstone, as the sole remaining member continuing to provide such services.

Non-Solicitation Agreement

CMP, Cumulus and the Sponsors have entered into a non-solicitation agreement. This agreement provides that (i) each of the Sponsors will not solicit for employment any employee of CMP or Cumulus or hire any executive of Cumulus having a title of Vice President or above other than any executive who spends a majority of his or her time on matters relating to CMP, (ii) Cumulus will not solicit for employment any employee of CMP; and (iii) CMP will not solicit for employment any employee of Cumulus or hire any executive or regional manager of Cumulus having a title of Vice President or above other than any executive who spends a majority of his or her time on matters

relating to CMP. These covenants will be effective with respect to each of the Sponsors until the expiration of the three-month period following the date such Sponsor’s ownership in CMP first falls below 25% of the Sponsor’s initial equity ownership and with respect to Cumulus and CMP, until the expiration of the three-month period following the date that Cumulus’s ownership in CMP first falls below 25% of its initial equity ownership; provided that such period will be extended, in each case, until such later date as is six months following termination of the Cumulus management agreement.

Service Mark License

Cumulus has granted to CMP a non-exclusive, royalty-free license to use the trademark, service mark and trade name “Cumulus” for a term of ten years, subject to automatic renewal for additional periods of ten years each, unless earlier terminated. CMP may grant a sublicense of the “Cumulus” mark to its subsidiaries without the prior written consent of Cumulus.

Director Independence

See “Directors and Executive Officers and Corporate Governance—Board of Directors and Committees of the Board of Directors.”


Item 14.		*Principal Accountant Fees and Services*

Audit Fees

PricewaterhouseCoopers LLP has billed us $368,750 in the aggregate, for professional services rendered by PricewaterhouseCoopers LLP for the audit of our annual financial statements for the fiscal year ended December 31, 2008 and reviews of the interim financial statements included in our quarterly reports on Form 10-Q filed during the fiscal year ended December 31, 2008.

For audit services related to the fiscal year ended December 31, 2007, KPMG LLP billed us $495,000.

Audit Related Fees

KPMG has billed us $625,000 for services related to the registration statement on Form S-4 filed in fiscal 2006. No such services were performed for the years ended December 31, 2008 and 2007, respectively.

Tax Fees

KPMG fees, for tax consulting and tax return preparation services relating to fiscal 2006, billed in 2007 were $220,000. PricewaterhouseCoopers LLP has billed us $80,000 for tax return preparation services relating to fiscal 2007 during the year ended December 31, 2008.

All Other Fees

KPMG has billed us $1,500 for access to its on-line research library during each of 2008 and 2007.

Policy on Pre-Approval of Services Performed by Independent Auditors

The policy of the Audit Committee is to pre-approve all audit and permissible non-audit services to be performed by the independent auditors during the fiscal year. The Audit Committee regularly considers all non-audit fees when reviewing the independence of our independent auditors.

PART IV


Item 15.		*Exhibits and Financial Statement Schedules*

(a) (1)-(2) Financial Statements. The financial statements and financial statement schedule listed in the Index to Consolidated Financial Statements appearing on page F-1 of this annual report on Form 10-K are filed as a part of this report. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted either because they are not required under the related instructions or because they are not applicable.

(a)(3) Exhibits.



	3.1			Amended and Restated Certificate of Incorporation of CMP Susquehanna Radio Holdings Corp., (incorporated herein by reference to Exhibit 3.1 of our current report on Form 8-K, filed on April 1, 2009)



	3.2			Bylaws of CMP Susquehanna Guarantor Corp. (former name of CMP Susquehanna Radio Holdings Corp.) (Incorporated herein by reference to Exhibit 3.2 of our registration statement on Form S-4, filed on June 6, 2007 (Commission File 333-143558))



	4.1			Form of Preferred Stock Certificate of CMP Susquehanna Radio Holdings Corp. (incorporated by reference to Exhibit 4.1 of our current report on Form 8-K, filed April 1, 2009)



	4.2			Form of Warrant Certificate of CMP Susquehanna Radio Holdings Corp. (incorporated by reference to Exhibit 4.2 of our current report on Form 8-K, filed April 1, 2009)



	4.3			Form of Common Stock Certificate of CMP Susquehanna Radio Holdings Corp. (incorporated by reference to Exhibit 4.3 of our current report on Form 8-K, filed April 1, 2009)



	4.4			Indenture, dated May 05, 2006 among CMP Susquehanna Corp., the Guarantors party thereto, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 of our registration statement on Form S-4, filed June 6, 2006 (Commission File 333-143558)



	4.5			First Supplemental Indenture, dated as of March 26, 2009, among CMP Susquehanna Corp., CMP Susquehanna Radio Holdings Corp., as guarantor, the subsidiary guarantors party thereto and Wells Fargo Bank, N.A., as trustee (incorporated by reference to Exhibit 4.4 of our current report on Form 8-K, filed April 1, 2009)



	4.6			Indenture, dated as of March 26, 2009, among CMP Susquehanna Corp., CMP Susquehanna Radio Holdings Corp., as guarantor, the subsidiary guarantors party thereto and Wells Fargo Bank, N.A., as trustee (incorporated by reference to Exhibit 4.5 of our current report on Form 8-K, filed April 1, 2009)



	4.7			Form of Variable Rate Senior Subordinated Secured Second Lien Notes due 2014 of CMP Susquehanna Corp. (incorporated by reference to Exhibit 4.6 of our current report on Form 8-K, filed April 1, 2009)



	4.8			Registration Rights Agreement, dated May 5, 2006, among CMP Susquehanna Corp., the Guarantors party thereto, and the initial purchasers of the Notes (incorporated herein by reference to Exhibit 4.2 of our registration statement on Form S-4, filed on June 6, 2007 (Commission File 333-143558))



	10.1			Credit Agreement, dated as of May 5, 2006, among CMP Susquehanna Corp., CMP Susquehanna Radio Holdings Corp., Deutsche Bank Trust Company Americas, as administrative agent, and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 of our registration statement on Form S-4, filed on June 6, 2007 (Commission File 333-143558))



	10.2			Guarantee Agreement, dated as of May 5, 2006, among CMP Susquehanna Radio Holdings Corp., CMP Susquehanna Corp., the subsidiaries of CMP Susquehanna Corp. identified therein and Deutsche Bank Trust Company Americas, as administrative agent (incorporated herein by reference to Exhibit 10.2 of our registration statement on Form S-4, filed on June 6, 2007 (Commission File 333-143558))

	10.3			Security Agreement, dated as of May 5, 2006, among CMP Susquehanna Radio Holdings Corp., CMP Susquehanna Corp., the subsidiaries of CMP Susquehanna Corp. identified therein and Deutsche Bank Trust Company Americas, as collateral agent (incorporated herein by reference to Exhibit 10.3 of our registration statement on Form S-4, filed on June 6, 2007 (Commission File 333-143558))

	10.4			Security Agreement, dated as of March 26, 2009, among CMP Susquehanna Corp., CMP Susquehanna Radio Holdings Corp., as guarantor and pledgor, the other guarantors party thereto, as pledgors, and Wells Fargo Bank, N.A., as collateral agent (incorporated by reference to Exhibit 10.1 of our current report on Form 8-K, filed April 1, 2009)

	10.5			Intercreditor Agreement, dated as of March 26, 2009, among CMP Susquehanna Corp., CMP Susquehanna Radio Holdings Corp., as grantor, the other guarantors party thereto, Deutsche Bank Trust Company Americas, as collateral agent under the first-lien credit documents, and Wells Fargo Bank, N.A., as collateral agent under the second-lien subordinated notes documents (incorporated by reference to Exhibit 10.2 of our current report on Form 8-K, filed April 1, 2009)

	10.6			Warrant Agreement, dated as of March 26, 2009, between CMP Susquehanna Radio Holdings Corp. and Computershare Trust Company, N.A., as warrant agent (incorporated by reference to Exhibit 10.3 of our current report on Form 8-K, filed April 1, 2009)

	10.7			Registration Rights Agreement, dated as of March 26, 2009, among CMP Susquehanna Radio Holdings Corp. and Holders of Preferred Stock and Warrants (incorporated by reference to Exhibit 10.4 of our current report on Form 8-K, filed April 1, 2009)

	10.8			Management Agreement, dated as of May 3, 2006, by and between CMP Susquehanna Holdings Corp. and Cumulus Media Inc. (incorporated herein by reference to Exhibit 10.4 of our registration statement on Form S-4, filed on June 6, 2007 (Commission File 333-143558))

	16.1			Letter regarding change in certifying accountant, dated as of June 23, 2008 from KPMG LLP to the Securities and Exchange Commission (incorporated herein by reference to Exhibit 16.1 to our current report of Form 8-K, filed on June 23, 2008)

	21.1*			Subsidiaries

	23.1*			Consent of PricewaterhouseCoopers LLP

	23.2*			Consent of KPMG, LLP

	23.3*			Consent of KPMG, LLP

	31.1*			Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2*			Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1*			Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*		Filed herewith

(b)		Exhibits. See Item 15(a) (3).

(c)		Financial Statement Schedules. Schedule II — Valuation and Qualifying Accounts

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 15^th day of April 2009.


	CMP Susquehanna Radio Holdings Corp.
	By:	/s/ Martin R. Gausvik
		Martin R. Gausvik
		Executive Vice President, Treasurer And Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date
/s/ Lewis W. Dickey Lewis W. Dickey, Jr.	Chairman, President, Chief Executive Officer and Director (Principal Executive Officer)	April 15, 2009
/s/ Martin R. Gausvik Martin R. Gausvik	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)	April 15, 2009
/s/ David M. Tolley David M. Tolley	Director	April 15, 2009

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Annual Consolidated Financial Statements


Reports of Independent Registered Public Accounting Firms (CMP Susquehanna Radio Holdings Corp. “Radio Holdings”)			F-2

Independent Auditors’ Report (Susquehanna Pfaltzgraff Co. “Predecessor”)			F-3

Consolidated Balance Sheets as of December 31, 2008 and 2007 (CMP Susquehanna Radio Holdings Corp. “Radio Holdings”)			F-5

Consolidated Statements of Operations for the Years Ended December 31, 2008 and 2007 and for the Period from May 5, 2006 (date of inception) through December 31, 2006 (CMP Susquehanna Radio Holdings Corp. “Radio Holdings”), the Period from January 1, 2006 through May 4, 2006.			F-6

Consolidated Statements of Stockholders’ (Deficit) Equity and Comprehensive Income (Loss) for the Years Ended December 31, 2008, 2007, and for the Period from May 5, 2006 (date of inception) through December 31, 2006 (CMP Susquehanna Radio Holdings Corp. “Radio Holdings”), the Period from January 1, 2006 through May 4, 2006			F-7

Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007, and for the Period from May 5, 2006 (date of inception) through December 31, 2006 (CMP Susquehanna Radio Holdings Corp. “Radio Holdings”), the Period from January 1, 2006 through May 4, 2006.			F-8

Notes to Consolidated Financial Statements (CMP Susquehanna Radio Holdings Corp. Radio Holdings and Susquehanna Pflatzgraff Co. “Predecessor”)			F-9

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors of CMP Susquehanna Radio Holdings Corp.:

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of stockholders’ deficit and comprehensive loss, and cash flows present fairly, in all material respects, the financial position of CMP Susquehanna Radio Holdings Corp. and its subsidiaries at December 31, 2008, and the results of their operations and their cash flows for the year ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the year ended December 31, 2008 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Note 7 to the consolidated financial statements, effective January 1, 2008, the Company adopted Financial Accounting Standards Board Statement No. 157, Fair Value Measurements.



/s/ PricewaterhouseCoopers LLP

Atlanta, GA
April 15, 2009

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors
CMP Susquehanna Radio Holdings Corp.:

We have audited the accompanying consolidated balance sheet of CMP Susquehanna Radio Holdings Corp. and subsidiaries (“Radio Holdings”) as of December 31, 2007 and the related consolidated statements of operations, stockholders’ (deficit) equity and comprehensive income (loss), and cash flows for the year ended December 31, 2007 and for the period from May 5, 2006 (date of inception) through December 31, 2006. In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedule for the year ended December 31, 2007 and for the period from May 5, 2006 (date of inception) through December 31, 2006. These consolidated financial statements and financial statement schedule are the responsibility of Radio Holdings’ management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CMP Susquehanna Radio Holdings Corp. and subsidiaries as of December 31, 2007 and the results of their operations and their cash flows for the year ended December 31, 2007 and for the period from May 5, 2006 (date of inception) through December 31, 2006 in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2007, the Company adopted the Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109.

/s/ KPMG LLP

Atlanta, GA
March 31, 2008

F-3

Independent Auditors’ Report

The Board of Directors
CMP Susquehanna Radio Holdings Corp. (formerly Susquehanna Pfaltzgraff Co., the Predecessor):

We have audited the accompanying consolidated statements of operations, stockholders’ (deficit) equity and comprehensive income (loss), and cash flows of Susquehanna Pfaltzgraff Co. and subsidiaries (the Predecessor) for the period from January 1, 2006 through May 4, 2006. In connection with our audit of the consolidated financial statements, we have also audited the financial statement schedule of consolidated valuation accounts for the period from January 1, 2006 through May 4, 2006. These consolidated financial statements and financial statement schedule are the responsibility of Predecessor management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Susquehanna Pfaltzgraff Co. and subsidiaries for the period from January 1, 2006 through May 4, 2006, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Harrisburg, PA
February 23, 2007

F-4

CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES (“Radio Holdings”)

CONSOLIDATED BALANCE SHEETS
December 31, 2008 and 2007
(Dollars in thousands, except for share data)


	December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	83,186		$	1,895
Accounts receivable, less allowance for doubtful accounts of $1,280 in 2008 and $1,050 in 2007, respectively		38,580			47,270
Prepaid expenses and other current assets		3,246			2,174

Total current assets		125,012			51,339

Property, plant and equipment, net		31,074			36,503
Intangible assets, net		411,406			751,135
Goodwill		79,700			412,795
Deferred financing costs, net (including accumulated amortization of $9,092 in 2008 and $5,836 in 2007, respectively)		14,030			18,929
Long term investments		4,000			6,991

Total assets	$	665,222		$	1,277,692


LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	2,873		$	483
Current portion of long-term debt		7,000			25,160
Accrued interest		3,391			4,574
Accrued state income taxes		1,696			1,211
Other current liabilities		7,635			9,338

Total Current Liabilities		22,595			40,766

Long-term debt		934,774			884,999
Other liabilities		15,077			9,196
Deferred income taxes		122,374			246,700

Total liabilities		1,094,820			1,181,661

Stockholders’ (deficit) equity
Common stock — Voting $.01 par value, authorized 1,000 shares and issued 100 shares		—			—
Additional paid-in capital		299,928			299,928
Accumulated deficit		(729,526	)		(203,897	)

Total stockholders’ (deficit) equity		(429,598	)		96,031

Total liabilities and stockholders’ (deficit) equity	$	665,222		$	1,277,692

See accompanying notes to consolidated financial statements

F-5

CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES (“Radio Holdings”)
And SUSQUEHANNA PFALTZGRAFF CO. AND SUBSIDIARIES (“Predecessor”)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)


	Radio Holdings									Predecessor
	Year Ended						Through May 5			January 1
	December 31,						December 31,			Through May 4,
	2008			2007			2006			2006

Net revenues	$	203,412		$	223,437		$	155,607		$	65,987

Operating expenses:
Station operating expense excluding depreciation amortization and including non-cash contract termination costs of $6,723 for the period May 5, 2006 through December 31, 2006		119,970			123,388			91,870			49,510
Corporate general and administrative expenses		7,152			7,214			4,106			31,029
Depreciation and amortization, including pre-sold advertising amortization of $23,023 for the period May 5, 2006 through December 31, 2006		7,353			10,393			30,798			2,421
(Gain) loss on sale of assets		(6	)		96			—			—
Costs related to sale of business, principally advisory fees		—			—			—			14,513
Impairment of goodwill and intangible assets		669,786			188,019			—			—
Impairment of long-term investment		2,991			5,509			—			—

Total operating expenses		807,246			334,619			126,774			97,473

Operating income (loss) from continuing operations		(603,834	)		(111,182	)		28,833			(31,486	)
Non-operating income (expense) from continuing operations:
Interest expense, net		(65,309	)		(78,509	)		(54,061	)		(4,638	)
Gain (loss) on early extinguishment of debt		20,935			1,258			—			(6,492	)
Other income (expense)		(9	)		(323	)		(1,655	)		—

Loss from continuing operations before income taxes and minority interest		(648,217	)		(188,756	)		(26,883	)		(42,616	)
Provision (benefit) for income taxes		(122,588	)		(3,466	)		(8,276	)		(16,640	)
Minority interest income (expense)		—			—			—			(1,368	)

Loss from continuing operations	$	(525,629	)	$	(185,290	)	$	(18,607	)	$	(27,344	)

Discontinued operations:
Income from operations of discontinued operations (including gain on sale of $498,387 in 2006)		—			—			—			502,718
Provision for income taxes		—			—			—			(195,647	)
Minority interest income (expense)		—			—			—			(73,966	)

Income on discontinued operations		—			—			—			233,105

Net (loss) income	$	(525,629	)	$	(185,290	)	$	(18,607	)	$	205,761

See accompanying notes to consolidated financial statements

F-6

CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES (“Radio Holdings”)
For the years ended December 31, 2008, 2007, and for the period May 5, 2006 through December 31, 2006
And SUSQUEHANNA PFALTZGRAFF CO. AND SUBSIDIARIES (“Predecessor”)
For the period January 1, 2006 through May 4, 2006

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY AND COMPREHENSIVE
INCOME (LOSS)
(Dollars in thousands)


							Retained
				Additional			Earnings			Accumulated			Unearned			Total
	Common			Paid-In			(Accumulated			Comprehensive			ESOP			Stockholders’s
	Stock			Capital			Deficit)			Income (Loss)			Shares			(Deficit) Equity
Predecessor

Balance as of January 1, 2006	$	268		$	162,197		$	45,106		$	(8,964	)	$	(124,489	)	$	74,118

Net income		—			—			205,761			—			—			205,761
Cash dividends		—			—			(268	)		—			—			(268	)
Distribution of net equity in subsidiaries to Trusts		—			887			(129,884	)		8,964			—			(120,033	)
Purchase of Radio minority interest from control group		—			—			(59,959	)		—			—			(59,959	)
ESOP shares repurchased		(1	)		(35	)		(22	)		—			—			(58	)
Return of ESOP shares		(2	)		(10,558	)		—			—			10,560			—
Stock options		—			186			—			—			—			186

Balance as of May 4, 2006		265			152,677			60,734			—			(113,929	)		99,747
Radio Holdings

Eliminate Predecessor balances upon acquisition		(265	)		(152,677	)		(60,734	)		—			113,929			(99,747	)

Subtotal		—			—			—			—			—			—
Contributed capital, net		—			299,928			—			—			—			299,928

Balance as of May 5, 2006		—			299,928			—			—			—			299,928

Net loss		—			—			(18,607	)		—			—			(18,607	)
Other comprehensive income:
Change in fair value of derivative		—			—			—			182			—			182

Total comprehensive income (loss)		—			—			(18,607	)		182			—			(18,425	)

Balance as of December 31, 2006	$	—		$	299,928		$	(18,607	)	$	182		$	—		$	281,503


Net loss	$	—		$	—			(185,290	)	$	—		$	—			(185,290	)
Other comprehensive income:
Change in fair value of derivative		—			—			—			(182	)		—			(182	)

Total comprehensive income (loss)		—			—			(185,290	)		(182	)		—			(185,472	)

Balance as of December 31, 2007	$	—		$	299,928		$	(203,897	)	$	—		$	—		$	96,031


Net loss	$	—		$	—			(525,629	)	$	—		$	—			(525,629	)

Total comprehensive income (loss)		—			—			(525,629	)		—			—			(525,629	)

Balance as of December 31, 2008	$	—		$	299,928		$	(729,526	)	$	—		$	—		$	(429,598	)

See accompanying notes to consolidated financial statements

F-7

CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES (“Radio Holdings”)
And SUSQUEHANNA PFALTZGRAFF CO. AND SUBSIDIARIES (“Predecessor”)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)


	Radio Holdings									Predecessor
	Year Ended						May 5 Through			January 1
	December 31,						December 31,			to May 4,
	2008			2007			2006			2006

Cash flows from operating activities:
Net (loss) income	$	(525,629	)	$	(185,290	)	$	(18,607	)	$	205,761
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		7,353			10,393			30,798			15,143
Amortization debt issue costs		3,256			4,244			2,303			197
Radio Employee Stock Plan		—			—			—			118
Provision for doubtful accounts		2,117			351			1,497			—
(Gain)/Loss on extinguishment of debt		(20,935	)		(1,258	)		—			6,492
Non-cash contract termination charge		—			—			6,723			—
Deferred income taxes		(124,327	)		(4,177	)		(11,117	)		2,633
Impairment of long-term investment		2,991			5,509			—			—
Impairment of goodwill and intangibles		669,786			188,019			—			—
SusQtech and Pfaltzgraff		—			—			—			(498,528	)
Loss (gain) on sale of assets or stations		(6	)		96			—			—
Minority Interests		—			—			—			75,334
Change in the fair value of derivative instruments		5,944			—			—			—
Changes in assets and liabilities:
Accounts receivable		6,573			1,420			(8,386	)		825
Prepaid expenses and other current assets		(1,073	)		1,338			1,754			(8,694	)
Accounts payable and other accrued expenses		(10	)		(6,338	)		15,866			16,835
Other liabilities		(63	)		598			1,875			(20,125	)

Net cash provided by (used in) operating activities		25,977			14,905			22,706			(204,009	)


Cash flows from investing activities:
Purchase of property, plant and equipment, net		(1,336	)		(1,573	)		(472	)		(8,522	)
Proceeds from sale of assets or radio stations		2,460			—			—			—
(Acquisitions) dispositions		(4	)		192			(1,220,043	)		728,328
Purchase accounting adjustment		—			322			—			—

Net cash provided by (used in) investing activities		1,120			(1,059	)		(1,220,515	)		719,806

See accompanying notes to consolidated financial statements

F-8


	Radio Holdings									Predecessor
	Year Ended						May 5 Through			January 1
	December 31,						December 31,			to May 4,
	2008			2007			2006			2006

Cash flows from financing activities:
Increase in cash overdrafts		—			—			—			2,214
Proceeds from bank facilities		—			—			700,000			(466,219	)
Subordinated debt		—			(5,849	)		250,000			—
Increase in revolving credit facilities		108,680			14,000			—			113,200
Repurchase of senior notes		(32,486	)		—			—			—
Repayment of credit facilities		(22,000	)		(28,000	)		(18,500	)		—
Capital contributions		—			—			299,928			—
Payment of debt issuance costs		—			—			(25,721	)		—
Repurchase of ESOP shares		—			—			—			(58	)
Proceeds from stock options		—			—			—			186
Payment of dividends		—			—			—			(268	)
Distribution of cash accounts to Trusts		—			—			—			(48,579	)
Purchase of minority interest		—			—			—			(123,610	)

Net cash provided by (used in) financing activities		54,194			(19,849	)		1,205,707			(523,134	)

Net increase (decrease) in cash and cash equivalents		81,291			(6,003	)		7,898			(7,337	)
Cash and cash equivalents, beginning of period		1,895			7,898			—			7,337

Cash and cash equivalents, end of period	$	83,186		$	1,895		$	7,898		$	—


Supplemental disclosures of cash flow information
Interest paid	$	56,482		$	77,174		$	44,017		$	17,309
Taxes paid		1,767			1,800			—			219,600
Non-cash distribution to Trusts		—			—			—			81,305

See accompanying notes to consolidated financial statements

F-9

CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES (“Radio Holdings”)
And SUSQUEHANNA PFALTZGRAFF CO. AND SUBSIDIARIES (“Predecessor”)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Formation, Nature of Operations and Financial Statement Presentation

Formation and Nature of Operations of CMP Susquehanna Radio Holdings Corp.

CMP Susquehanna Radio Holdings Corp. and subsidiaries (“Radio Holdings” or the “Company”) is a radio broadcasting corporation incorporated in the state of Delaware, focused on acquiring, operating and developing commercial radio stations in the top 50 radio markets in the United States. Radio Holdings is a second-tier subsidiary of Cumulus Media Partners LLC (“CMP”). CMP came into existence on October 31, 2005, when Cumulus Media Inc. (“Cumulus”), together with the respective investment funds affiliated with Bain Capital Partners (“Bain”), The Blackstone Group (“Blackstone”) and Thomas H. Lee Partners (“THLee”), formed a new private partnership. Cumulus, Bain, Blackstone and THLee entered into a definitive capital contribution agreement with CMP in order to provide for the capitalization of CMP and its subsidiaries. CMP was created by Cumulus and the equity partners to acquire the radio broadcasting business of Susquehanna Pfaltzgraff Co. and subsidiaries (the “Predecessor”) through one of its subsidiaries. Each of the equity partners initially holds a 25% equity ownership in CMP. A total of one hundred common shares were issued and distributed equally to the equity partners in the ratio of their capital contributions.

In connection with the formation of CMP, Cumulus contributed four radio stations (including related licenses and assets) in the Houston, Texas and Kansas City, Missouri markets with a fair value of approximately $75 million plus $6.2 million in cash, in exchange for its 25% initial membership interest. The other partners contributed approximately $243.8 million in cash for the remaining 75% (25% each) equity interest in CMP. In connection with the transaction, CMP paid $14.2 million to the partners for their equity raising efforts; these payments were netted against the contributed capital.

Radio Holdings is the 100% owner of CMP Susquehanna Corp. (“CMPSC”), which is the principal operating subsidiary of CMP. Radio Holdings received and recorded as equity: the capital raised as described above, and proceeds from third party financing of the three radio stations contributed by Cumulus (approximately $64.1 million) and established in a separate second-tier subsidiary (CMP KC, LLC). Radio Holdings acquired the Predecessor on May 5, 2006 (see Note 9). Subsequent to the acquisition, Radio Holdings allocated the purchase price to the acquired tangible and intangible assets of the Predecessor. The acquired assets were allocated based upon standard valuation methodology (primarily discounted cash flow for intangibles and actual value of the tangible assets). Management is responsible for the value assigned to the assets, and was assisted by an independent external appraiser. This purchase accounting allocation established the new basis of accounting. For tax purposes, Radio Holdings assumed the tax basis of the Predecessor which was substantially less than the acquisition price.

Nature of Operations and Sales of Businesses of Susquehanna Pfaltzgraff Co.

The Predecessor had two major subsidiaries, Susquehanna Media Co. (“Media”) and TPC York Inc., formerly The Pfaltzgraff Co. (“Pfaltzgraff”).

Media had two major subsidiaries, Susquehanna Radio Corp. (“Radio”) and Susquehanna Cable Co. (“Cable”). Radio operated radio stations in major domestic markets. Cable operated cable television systems in Pennsylvania, Maine, Mississippi, Illinois, New York and Indiana. Pfaltzgraff sold the majority of its assets in 2005. Pfaltzgraff formerly manufactured, wholesaled, and retailed dinnerware and complementary house wares, primarily in the United States.

A Predecessor operation developed commercial and residential real estate and leased real estate to businesses and individuals (“Real Estate”), and another operation provided consulting services (“SusQtech”).

F-10

On October 31, 2005, the Predecessor agreed to sell its Cable assets to Comcast Corporation (“Comcast”), which owned 30% of Cable.

On October 31, 2005 the Predecessor’s stockholders entered into a definitive agreement to sell its Radio business to CMP. Prior to the merger transaction, the Predecessor sold, or otherwise disposed of, any non-Radio assets and liabilities, including the distribution to other entities (trusts) owned by the Predecessor’s former stockholders. In addition, minority interests of the Predecessor’s Radio operations were acquired by Radio from parties related to the Predecessor’s controlling stockholder group. This transaction was accounted for at historical cost and the difference of approximately $60 million was treated as an equity transaction.

Since the Predecessor’s stockholders agreed to sell Predecessor’s Radio operations in a stock transaction, Radio and general corporate activities are classified as continuing operations. All other operations are classified as discontinued operations. The statement of cash flows includes both continuing and discontinued operations.

Liquidity Considerations

The current economic crisis has reduced demand for advertising in general, including advertising on the Company’s radio stations. In consideration of current and projected market conditions, overall advertising is expected to continue to decline. Therefore, in conjunction with the development of the 2009 business plan, management continues to assess the impact of recent market developments on a variety of areas, including the forecasted advertising revenues and liquidity. In response to these conditions, management refined the 2009 business plan to incorporate a reduction in the forecasted 2009 revenues and cost reductions implemented in the fourth quarter 2008 and the first quarter 2009 to mitigate the impact of the Company’s anticipated decline in 2009 revenue.

Based upon actions the Company has already taken, including the exchange offer completed on April 3, 2009 (see Note 14), and various cost reduction activities in its markets that have mainly been head count reductions implemented in the fourth quarter 2008, management believes that CMPSC will continue to be in compliance with all of CMPSC’s debt covenants through December 31, 2009 (which become more restrictive effective September 30, 2009 and December 31, 2009). However, despite the significant reduction in outstanding principal amount of CMPSC’s senior subordinated notes (“Existing Notes”) in the exchange offer and the removal of restrictive covenants with respect to the Existing Notes, both as a result of the exchange offer, the Company continues to have a substantial amount of indebtedness, and the instruments governing such indebtedness contain restrictive financial covenants. Additionally, if the Company’s revenue declines greater than the forecasted decline from 2008 or if the Company exceeds planned spending, the Company may need to undertake additional cost reduction initiatives, including a mandated furlough and reduction in salaries and commissions (which management is currently evaluating) to maintain compliance with the total leverage ratio under the credit agreement. The Company may not be able to meet these restrictive financial covenants and may not be able to maintain compliance with certain financial ratios in the credit agreement that become more restrictive in future periods. In that event, the Company would need to seek an amendment to, or a refinancing of, the senior secured credit facilities or a permitted equity issuance (as defined in the credit agreement).

There can be no assurance that the Company can obtain a permitted equity issuance or any amendment or waiver of, or refinance the senior secured credit facilities and, even if so, it is likely that such relief would only last for a specified period, potentially necessitating additional amendments, waivers or refinancings in the future. In the event the Company does not maintain compliance with the covenants under the credit agreement, the lenders could declare an event of default, subject to applicable notice and cure provisions, resulting in a material adverse impact on the Company’s financial position. Upon the occurrence of an event of default under the credit agreement, the lenders could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable and terminate all commitments to extend further credit. In addition, an event of default under the senior secured credit facilities or an acceleration of indebtedness outstanding thereunder would cause cross-defaults or cross-acceleration under the indentures governing the Company’s outstanding debt securities and certain other agreements. If the Company were unable to repay those amounts, the lenders under the credit facilities could proceed against the collateral granted to them to secure that indebtedness. The Company has pledged substantially all of its assets as collateral under the credit agreement. If the lenders accelerate the repayment of borrowings, the Company may be forced to liquidate certain assets to repay all or part of the senior secured credit facilities, and the Company cannot be assured that sufficient assets will remain after it has paid all of the borrowings under the senior secured credit facilities and any other senior debt. The ability to liquidate assets is affected by the regulatory restrictions associated with radio stations, including FCC licensing, which may make the market for these assets less liquid and increase the chances that these assets will be liquidated at a significant loss. See further discussion of liquidity considerations in Note 5.

Financial Statement Presentation

The Predecessor’s financial statements have been presented for the period January 1, 2006 to May 4, 2006, since Radio Holdings did not previously have its own operations. The post-acquisition financial statements of Radio Holdings reflect the new basis of accounting. The principal intangibles arising from the acquisition are broadcast licenses, goodwill and pre-sold advertising contracts. Radio Holdings and Predecessor together are referred to as the “Companies.”

Change in Entity

Effective March 1, 2007, KCHZ-FM, which was an asset of a non-guarantor, indirect subsidiary of Radio Holdings, was transferred to another wholly owned, second-tier subsidiary of CMP that is neither directly or indirectly owned by Radio Holdings, and the entity that previously held KCHZ-FM was dissolved. Radio Holdings accounted for this transaction as a change in entity and has retrospectively applied this change to all periods presented such that the entity that previously owned KCHZ-FM is no longer included in any financial statements of Radio Holdings. This change in entity occurred as a result of final FCC approval of the transfer of the KCHZ-FM broadcast license.

KCHZ-FM had assets of $9.7 million, liabilities of $0.5 million, and equity of $9.2 million as of December 31, 2006. The station contributed net income of $0.0 million from May 5, 2006 (date of inception) to December 31, 2006, and net income of $0.1 million from January 1, 2007 to February 28, 2007.

2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Reportable Segment

The Company operates under one reportable business segment, radio broadcasting, for which segment disclosure is consistent with the management decision-making process that determines the allocation of resources and the measuring of performance.

Reclassification

During 2007, a reclassification was made to increase goodwill and deferred income taxes by approximately $1.2 million relating to the original purchase accounting allocations for tax basis differences.

F-11

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to bad debts, intangible assets, derivative financial instruments, income taxes, restructuring and contingencies and litigation. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Accounts Receivable and Concentration of Credit Risks

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience and trends. The Company reviews its allowance for doubtful accounts monthly. Past due balances over 120 days are reviewed individually for collectability. All other balances are reviewed and evaluated on a pooled basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.

In the opinion of management, credit risk with respect to accounts receivable is limited due to the large number of diversified customers and the geographic diversification of the Company’s customer base. The Company performs ongoing credit evaluations of its customers and believes that adequate allowances for any uncollectible accounts receivable are maintained.

Property, Plant and Equipment

Property and equipment are stated at cost. Property and equipment acquired in business combinations are recorded at their estimated fair values on the date of acquisition under the purchase method of accounting. Equipment under capital leases is stated at the present value of minimum lease payments.

Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. Equipment held under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the remaining term of the lease. Routine maintenance and repairs are expensed as incurred. Depreciation of construction in progress is not recorded until the assets are placed into service.

Capitalized Software Costs

The Company capitalizes certain internal software development costs under the provisions of Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use (“SOP 98-1”). SOP 98-1 requires computer software costs associated with internal use software to be charged to operations as incurred until certain capitalization criteria are met. Costs incurred during the preliminary project stage and the post-implementation stages are expensed as incurred. Certain qualifying costs incurred during the application development stage are capitalized. These costs generally consist of coding, and testing activities. Capitalization begins when the preliminary project stage is complete, management with the relevant authority authorizes and

F-12

commits to the funding of the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. These costs are amortized using the straight-line method over the estimated useful life of the software, generally three years.

Accounting for National Advertising Agency Contract

The Company’s national advertising agency contract with Katz Media (“Katz”) has several economic elements that principally reduce the overall expected commission rate below the stated base rate. The Company estimates the overall expected commission rate over the entire contract period and applies that rate to commissionable revenue throughout the contract period with the goal of estimating and recording a stable commission rate over the life of the contract.

The following are the principal economic elements of the contract that can affect the base commission rate:

	•		A $6.7 million non-cash charge recorded by the Company related to the termination of its contract with the Company’s former national advertising agent in 2006.

	•		Potential commission rebates from Katz should national revenue not meet certain targets for certain periods during the contract term. These amounts are measured annually with settlement to occur shortly thereafter. The rebate amounts currently deemed probable of settlement relate to the first two years of the contract.

•

Potential additional commissions in excess of the base rates if Katz should exceed certain revenue targets. No additional commission payments have been assumed.

The potential commission adjustments are estimated and combined in the balance sheet with the contractual termination liability. That liability is accreted to commission expense to effectuate the stable commission rate over the course of the Katz contract.

The Company’s accounting for and calculation of commission expense to be realized over the life of the Katz contract requires management to make estimates and judgments that affect reported amounts of commission expense. Actual results may differ from management’s estimates. Over the course of the Company’s contractual relationship with Katz, management will continually update its assessment of the effective commission expense attributable to national sales in an effort to record a consistent commission rate over the term of the Katz contract.

Fair Values of Financial Instruments

The carrying values of receivables, payables, and accrued expenses approximate fair value due to the short maturity of these instruments. As of December 31, 2008, the fair value of the Company’s term loan was $448.0 million which was based on a risk adjusted rate. At December 31, 2008 and 2007, the senior subordinated notes had a fair value of 4.0% and 75% of face value, respectively.

Impairment of Long-Lived Assets

In accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

F-13

Goodwill and Intangible Assets

The Company’s intangible assets are comprised of broadcast licenses, goodwill and certain other intangible assets. Goodwill represents the excess of costs over fair value of assets of businesses acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life, which include our broadcast licenses, are not amortized, but instead tested for impairment at least annually. SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets.

In determining that the Company’s broadcast licenses qualified as indefinite lived intangibles, management considered a variety of factors including the Federal Communications Commission’s historical track record of renewing broadcast licenses, the very low cost to us of renewing the applications, the relative stability and predictability of the radio industry, and the relatively low level of capital investment required to maintain the physical plant of a radio station.

Impairment of Goodwill and Indefinite Life Intangible Assets

The Company evaluates the recoverability of its indefinite-lived assets, which include broadcasting licenses, goodwill, deferred charges, and other assets, in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” and measurement of an impairment loss under these accounting standards requires the use of significant judgments and estimates. Future events may impact these judgments and estimates. If events or changes in circumstances were to indicate that an asset’s carrying value is not recoverable, a write-down of the asset would be recorded through a charge to operations.

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which was amended by SFAS No. 137 and SFAS No. 138. This standard requires the Company to recognize all derivatives on the balance sheet at fair value. Fair value changes are recorded in income for any contracts not classified as qualifying hedging instruments. For derivatives qualifying as cash flow hedge instruments, the effective portion of the derivative fair value change must be recorded through other comprehensive income, a component of stockholders’ equity.

Debt Issuance Costs

The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the related debt. For 2008, 2007, the period from acquisition through December 31, 2006, and the period from January 1, 2006 through May 4, 2006, the Company recognized amortization expense related to debt issuance costs of $3.3 million, $3.5 million, $2.3 million, and $0.2 million, respectively. During 2008, the Company wrote off approximately $1.7 million of debt issuance costs associated with unscheduled prepayments of debt.

Revenue Recognition

Revenue is derived primarily from the sale of commercial airtime to local and national advertisers. Revenue is recognized as commercials are broadcast. Revenues presented in the financial statements are reflected on a net basis, after the deduction of advertising agency fees by the advertising agencies, usually at a rate of 15%. All revenue is recognized in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition.”

F-14

Trade Agreements

The Company trades commercial airtime for goods and services used principally for promotional, sales and other business activities. An asset and liability is recorded at the fair market value of the goods or services received, which approximates the fair value of the air time surrendered in the trade. Trade revenue is recorded and the liability is relieved when commercials are broadcast and trade expense is recorded and the asset relieved when goods or services are consumed.

Station Operating Expenses

Station operating expenses include direct operating, selling and general and administrative expenses incurred at the market cluster excluding depreciation and amortization expense. Station operating expenses do not include corporate general and administrative expenses for centralized corporate business support and other expenses not directly incurred at the market cluster level. Prior to May 5, 2006, ESOP expense and other retirement costs for station employees are included in station operating expenses.

Advertising

Advertising costs are expensed as incurred.

Comprehensive Income

SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting comprehensive income. Comprehensive income includes net income as currently reported under accounting principles generally accepted in the United States of America, and also considers the effect of additional economic events that are not required to be reported in determining net income, but rather are reported as a separate component of stockholders’ equity. The Company reports changes in the fair value of derivatives qualifying as cash flow hedges as a component of comprehensive income.

Income Taxes

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. (“SFAS 109”) SFAS No. 109 requires the liability method of accounting for deferred income taxes. Deferred income taxes are recognized for all temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded for a net deferred tax asset balance when it is more likely than not that the benefits of the tax asset will not be realized. The Company continues to assess the need for its deferred tax asset valuation allowance in the jurisdictions in which it operates. Any adjustment to the deferred tax asset valuation allowance would be recorded in the income statement of the period that the adjustment is determined to be required. For a discussion of FIN 48, “Accounting for Uncertainty in Income Taxes, and Related Implementation Issues,” which was effective for the Company as of January 1, 2007, see Note 12, Income Taxes.

The Company’s results of operations are included in the consolidated federal income tax return filed by CMP; however, the Company has provided for income taxes as if it were filing a separate federal income tax return.

Extinguishment of Debt

The Predecessor’s losses on extinguishment of debt have been reflected as a component of income (loss) from continuing operations, consistent with the provisions of SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The gain and loss recognized in 2008, 2007 and 2006 relate to the retirement of certain senior subordinated notes and term loan borrowings under the Radio Holdings’ and the Predecessor’s credit facilities.

F-15

Recent Accounting Pronouncements

SFAS No. 141(R). In December 2007, the Financial Accounting Standards Board (“FASB”) issued FAS No. 141R, “Business Combinations” that will significantly change how business combinations are accounted for through the use of fair values in financial reporting and will impact financial statements both on the acquisition date and in subsequent periods. FAS No. 141R is effective for the Company as of January 1, 2009 for all business combinations that will close on or after January 1, 2009.

SFAS 157. In September 2006, FASB issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, provides guidance for measuring fair value and requires additional disclosures. This statement does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. For financial assets and liabilities, SFAS 157 is effective for financial statements issued for fiscal years beginning after December 31, 2007. The Company adopted these provisions of SFAS 157 effective January 1, 2008. The related disclosures are included in Note 7. On February 12, 2008, the FASB issued FSP FAS 157-2, “Effective Date of FASB Statement No. 157”, which delays the effective date of SFAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. The Company has evaluated the impact of this statement on its consolidated financial statements and it did not have a material impact on them.

SFAS 159. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115. SFAS No. 159 permits an entity to elect fair value as the initial and subsequent measurement attribute for many financial assets and liabilities. Entities electing the fair value option would be required to recognize changes in fair value in earnings. Such entities are also required to distinguish, on the face of the statement of financial position, the fair value of assets and liabilities for which the fair value option has been elected and similar assets and liabilities measured using another measurement attribute. SFAS No. 159 was effective for the Company as of January 1, 2008. The Company did not elect to adopt SFAS No. 159 on current assets and liabilities, but may elect to do so in the future.

SFAS No. 160. In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“SFAS 160”), which is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. SFAS 160 will require Companies to present minority interest separately within the equity section of the balance sheet. The Company adopted SFAS 160 as of January 1, 2009 and does not expect it to have a material impact on its consolidated financial statements.

SFAS 161. In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The Statement changes the disclosure requirements for derivative instruments and hedging activities. SFAS No. 161 will require entities to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has assessed the impact this statement has on its consolidated financial statements and will include the relevant disclosures in its financial statements beginning with the first quarter in 2009 and does not expect it to have a material impact on its consolidated financial statements.

FSP No. 142-3. In April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, Determination of the Useful Lives of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an intangible asset. This interpretation is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. The Company has assessed the impact of adoption on its consolidated financial statements, but does not expect it to have a material impact on its consolidated financial statements.

F-16

should be used when assessing observable and unobservable data. The Company adopted this FSP upon the date of issuance and it did not have a material impact on its consolidated financial statements.

FSP FAS 140-4 and FIN 46R-8. The FASB issued FSP FAS 140-4 and FIN 46R-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (“FSP”) in December 2008 and it is effective for the first reporting period ending after December 15, 2008. This FSP requires additional disclosures related to variable interest entities in accordance with SFAS 140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125, (“SFAS 140”) and FIN 46R “Consolidation of Variable Interest Entities (revised December 2003)—an interpretation of ARB No. 51” (“FIN 46R”). These disclosures include significant judgments and assumptions, restrictions on assets, risks and the affects on financial position, financial performance and cash flows. The Company adopted this FSP as of January 1, 2009, but does not expect it to have a material impact on our consolidated results of operations, cash flows or financial condition.

3. Discontinued Operations of the Predecessor

Discontinued operations of the Predecessor include Cable, Pfaltzgraff, SusQtech and Real Estate. Continuing operations include radio broadcasting and certain general corporate overhead.

2006

On May 1, 2006, the Predecessor sold the assets of its cable business to Comcast for approximately $772 million cash. Cable subsequently redeemed Susquehanna’s stock ownership for approximately $185 million cash. A pretax gain of approximately $490 million and related income taxes of approximately $190 million were recognized related to the sale.

Pursuant to the terms of the acquisition merger agreement (Note 1), substantially all non-Radio assets and liabilities were distributed to entities (trusts) owned by the Predecessor’s former shareholders prior to May 4, 2006.

Included in the gain from operations of discontinued subsidiaries for the period from January 1, 2006 through May 4, 2006 are (in thousands):


	2006
Revenues from discontinued operations	$	70,394
Interest expense, net		6,065

Disposals included in discontinued operations for the period from January 1, 2006 through May 4, 2006 are as follows (in thousands):


	2006
Gain on disposal of businesses included in discontinued operations before income taxes and minority interests	$	498,387
Income taxes related to gain on disposal of businesses included in discontinued operations		(194,371	)

Gain on disposal of business, net		304,016

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4. Property, Plant and Equipment

Property, plant and equipment consist of the following as of December 31, 2008 and 2007 (in thousands):


	Estimated
	Useful Life		2008			2007
Land			$	6,129		$	6,257
Machinery and equipment		3 to 20 years		32,015			31,129
Buildings and improvements		10 to 40 years		7,896			7,790
Construction in progress				375			755

				46,415			45,931
Less accumulated depreciation				(15,341	)		(9,428	)

			$	31,074		$	36,503

Depreciation expense for continuing operations was $6.1 million, $5.7 million, $3.7 million, and $2.2 million for 2008, 2007, the period from May 5 through December 31, 2006, and the period from January 1 through May 4, 2006, respectively.

5. Long-term Debt

Total long-term debt as of December 31, included (in thousands):


	2008		2007
9.875% Senior subordinated notes	$	187,594	$	242,659
Term loan		657,500		664,500
Revolver		96,680		3,000

Total	$	941,774	$	910,159


Less amounts payable within one year		7,000		25,160

	$	934,774	$	884,999

A summary of the future contractual maturities of long-term debt follows (in thousands):


2009	$	7,000
2010		7,000
2011		7,000
2012		103,680
2013		629,500
Thereafter		187,594

	$	941,774

F-18

Pursuant to the acquisition of the Predecessor, CMPSC raised $250 million in senior subordinated notes and established a $700 million term loan and $97.0 million in revolving bank facilities. At the acquisition closing, only the $700 million term loan was drawn on and $3.3 million in letters of credit were issued to cover pre-existing workers’ compensation claims, reducing revolving bank facilities capacity to $96.7 million. CMPSC is charged a commitment fee of 0.5% on the unused portion of the revolver. All proceeds of the financing were used to fund the acquisition of the Predecessor’s common stock. In connection with the acquisition and closing $208.1 million outstanding under Predecessor’s credit facilities were repaid and a loss on extinguishment of debt was recorded for the unamortized deferred loan costs.

During 2008, CMPSC drew down the remaining $93.7 million available under it’s revolving credit facility. Excluding the $3.3 million letter credit, the revolver had a balance of $96.7 million at December 31, 2008.

On June 12, 2008, CMPSC entered into interest rate swap agreement (“the 2008 Swap”) that effectively fixed the interest rate, based on LIBOR, on $200 million of our current floating rate bank borrowings for a three year period.

The interest rate for the term loan is 2% above LIBOR (0.4325% at December 31, 2008) or 1% above the alternate base rate. At December 31, 2008 and 2007, CMPSC’s effective interest rate on the loan amounts outstanding under CMPSC’s senior secured credit facilities were 3.650% and 7.606% (2008 excludes the fixed component of the 2008 Swap), respectively. The effective interest rate as of December 31, 2008 inclusive of the June 2008 Swap was 4.229%. The revolving loan rate is variable based on the levels of leverage, and range from 1.75% to 2.25% above LIBOR and from 0.75% to 1.25% above the alternate base rate.

In August 2006 CMPSC entered into an interest rate swap agreement (“2006 Swap”) that effectively fixed the interest rate, based on LIBOR, on $225.0 million of floating rate bank borrowings through November 9, 2007. The 2006 Swap matured on November 9, 2007 and was not renewed. As a result of the maturation of the 2006 Swap, CMPSC’s aggregate borrowings under the term loan bore interest at variable rates as of December 31, 2007.

The term loan has a repayment schedule which requires quarterly principal payments of 0.25% of the original loan beginning September 30, 2006. The term loan also has required payments based on the excess cash flow as defined in the agreement. The unpaid balance of the term loan is due May 2013 and the revolving loan is due May 2012.

The representations, covenants and events of default in the credit agreement governing the senior secured credit facility are customary for financing transactions of this nature. Events of default in the credit agreement include, among others, (a) the failure to pay when due the obligations owing under the credit facilities; (b) the failure to perform (and not timely remedy, if applicable) certain covenants; (c) cross default and cross acceleration; (d) the occurrence of bankruptcy or insolvency events; (e) certain judgments against the Company or any of its subsidiaries; (f) the loss, revocation or suspension of, or any material impairment in the ability to use any of our material FCC licenses; (g) any representation or warranty made, or report, certificate or financial statement delivered, to the lenders subsequently proven to have been incorrect in any material respect; (h) the occurrence of a Change in Control (as defined in the credit agreement); and (i) violation of certain financial covenants. Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the credit agreement and the ancillary loan documents as a secured party. On April 6, 2009, CMPSC received a notice from the agent under the credit agreement claiming that the Company’s failure to deliver audited financial statements to the lenders no later than 90 days after year-end constituted a default and that the 30 day cure period began on April 6, 2009. The financial statement delivery requirement is expected to be satisfied upon the filing of the Company’s Annual Report on Form 10-K.

F-19

As mentioned above, the credit agreement contains certain customary financial covenants including:

	•		a maximum total leverage ratio;

	•		a minimum leverage ratio; and

	•		a limit on annual capital expenditures.

Our covenant requirements as of December 31, 2008 are as follows:


	Covenant
	Requirement
Maximum total leverage ratio		10.50
Interest coverage ratio		1.15

The maximum total leverage ratio in the credit agreement becomes more restrictive over the term of the agreement. The total leverage ratio as of the last day of any test period must be greater than the ratio established for that date as set forth in the table below:

Fiscal Year

March 31

June 30

September 30

December 31

2009

10.25:1

10.00:1

9.50:1

2010

9.50:1

9.25:1

9.00:1

8.75:1

2011

8.50:1

8.25:1

8.00:1

7.75:1

2012

7.50:1

7.00:1

6.75:1

2013

6.75:1

The current economic crisis has reduced demand for advertising in general, including advertising on the Company's radio stations. In consideration of current and projected market conditions, overall advertising is expected to continue to decline. Therefore, in conjunction with the development of the 2009 business plan, management continues to assess the impact of recent market developments on a variety of areas, including the forecasted advertising revenues and liquidity. In response to these conditions, management refined the 2009 business plan to incorporate a reduction in the forecasted 2009 revenues and cost reductions implemented in the fourth quarter 2008 and the first quarter 2009 to mitigate the impact of CMP’s anticipated decline in 2009 revenue (see Note 1 for further discussion).

The senior subordinated notes have a rate of 9.875% and mature in May 2014. Pursuant to the registration rights agreement entered into with respect to the senior subordinated notes at the time of original issuance, because CMPSC did not consummate a registered exchange offer for such notes within 360 days after their issue date commenced on May 1, 2007, additional interest began to accrue at a rate of 0.25% per annum, subject to certain additional upward adjustments until the exchange offer is consummated. Upon expiration of the exchange offer, on July 23, 2007, the additional interest ceased to accrue.

The senior subordinated notes are unsecured and the bank term loan is secured by a blanket lien over all assets of Radio Holdings. Under the bank credit agreement and the original indenture (see Note 14. Subsequent Events), there are a number of standard covenants that restrict CMPSC’s ability to incur additional indebtedness, pay dividends, sell off pledged assets, and make capital expenditures as well as financial covenant such as interest coverage and leverage ratio. At December 31, 2008, the senior subordinated notes had a fair value of 4.0% of face value.

Pursuant to the exchange offer described in Note. 14, Subsequent Events, as of April 3, 2009, the Company reduced the outstanding principal amount of senior subordinated notes from $187.6 million to $12.1 million.

F-20

Early Extinguishment of Debt

A committed bridge line was terminated with the closing of the senior subordinated notes and a $1.7 million commitment fee was expensed in May 2006. In connection with the senior secured credit facility, Radio Holdings capitalized approximately $25.1 million of debt issuance costs, which is being amortized to interest expense over the life of the debt.

At December 31, 2006, including the fixed component of the swap, CMPSC’s effective interest rate on the loan amounts outstanding under the credit agreement was 7.509%.

In December 2007, CMPSC repurchased and cancelled $7.3 million of the senior subordinated notes in market transactions. The purchase price was $1.5 million less than the face value the repurchased notes and the $0.2 million charge for unamortized deferred financing costs were recognized as a net gain on early extinguishment of debt for the year ended December 31, 2007.

For the year ended December 31, 2008, CMPSC repurchased and cancelled $55.1 million of the senior subordinated notes in market transactions. The purchase price was $22.6 million less than the face value of the repurchased notes and the $1.7 million charge for unamortized deferred financing costs were recognized as a net gain on early extinguishment of debt.

Predecessor

On February 1, 2006, Media redeemed all the then-outstanding senior subordinated notes for $162.3 million. The $12.3 million in redemption cost over face value, the $1.4 million charge for unamortized deferred financing costs and $0.2 million in associated costs were recognized as a loss on early extinguishment of debt in the period from January 1, 2006 through May 4, 2006.

6. Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with SFAS No. 133. This statement requires the Company to recognize all derivatives on the balance sheet at fair value. Derivative value changes are recorded in income for any contracts not classified as qualifying hedging instruments. For derivatives qualifying as cash flow hedge instruments, the effective portion of the derivative fair value change must be recorded through accumulated other comprehensive income, a component of stockholders’ equity. Derivative financial instruments are used solely to limit interest rate exposure and are not used for trading purposes.

2008 Swap

During June 2008, CMPSC entered into a LIBOR-based interest rate swap arrangement to manage fluctuations in cash flows resulting from interest rate risk attributable to changes in the benchmark interest rate of LIBOR. The June 2008 Swap became effective as of June 12, 2008 and will expire on June 12, 2011. The June 2008 Swap changes the variable-rate cash flow exposure on $200 million of the Company’s long-term bank borrowings to fixed-rate cash flows. Under the June 2008 Swap, CMPSC receives LIBOR-based variable interest rate payments and makes fixed interest rate payments, thereby creating fixed-rate, long-term debt. The June 2008 Swap is not accounted for as a cash flow hedge instrument in accordance with SFAS No. 133. Accordingly, the changes in its fair value are reflected within interest expense in the statement of operations. The changes in fair value of the June 2008 Swap for the year ended December 31, 2008 was $10.7 million.

The fair value of the June 2008 Swap was determined under the provisions of SFAS 157 using observable market based inputs (a level 2 measurement). The fair value represents an estimate of the net amount that CMPSC would receive if the agreement was transferred to another party or cancelled as of the date of the valuation. The balance sheet as of December 31, 2008 contains a long-term liability in the amount of $5.9 million, which includes the fair value adjustment of the June 2008 Swap. During the year ended December 31, 2008, the Company charged $0.9 million, to interest expense related to yield adjustment payments on the June 2008 Swap.

F-21

2006 Swap

In August 2006, CMPSC entered into an interest rate swap agreement (the “2006 Swap”) that effectively fixed the interest rate, based on LIBOR, on $225.0 million of its floating rate bank borrowings through November 9, 2007.

The fair value of the 2006 Swap was determined periodically by obtaining quotations from the financial institution that were the counterparty to the swap arrangement. The fair value represented an estimate of the net amount that CMPSC would receive if the agreement was transferred to another party or cancelled as of the date of the valuation. Changes in the fair value of the 2006 Swap were reported in accumulated other comprehensive income, or AOCI, which is an element of stockholders’ equity.

As previously mentioned, the 2006 Swap matured on November 9, 2007 and was not renewed. At December 31, 2006 the fair value of the derivative was $0.2 million.

7. Fair Value Measurements

The Company adopted the provisions of SFAS No. 157 on January 1, 2008 as they relate to certain items, including those within the scope of SFAS No. 107, Disclosures about Fair Value of Financial Instruments, and financial and nonfinancial derivatives within the scope of SFAS No. 133. SFAS No. 157 requires, among other things, enhanced disclosures about investments that are measured and reported at fair value and establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. The three levels of the fair value hierarchy under SFAS No. 157 are described below:

Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2 — Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

Level 3 — Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

F-22

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s financial liabilities are measured at fair value on a recurring basis. Financial liabilities measured at fair value on a recurring basis as of December 31, 2008 were as follows (dollars in thousands):


				Value Measurement at Reporting Date Using
				Quoted Prices		Significant Other			Significant
	Total			in Active Markets		Observable Inputs			Unobservable Inputs
	Fair Value			(Level 1)		(Level 2)			(Level 3)
Liabilities
Interest Rate Swap	$	(5,944	)	$	—	$	(5,944	)	$	—

Total Liabilities	$	(5,944	)	$	—	$	(5,944	)	$	—

Interest Rate Swap. The Company’s derivative financial instruments consist solely of an interest rate swap which the Company pays a fixed rate and receives a variable interest rate that is observable based upon a forward interest rate curve and is therefore considered a Level 2 input.

The fair value of our interest rate swap is determined based on the present value of future cash flows using observable inputs, including interest rates and yield curves. In accordance with the requirements of FAS 157, derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability of default by the Company.

8. Income Taxes

Income tax expense (benefit) for the years ended December 31, 2008, 2007, and the periods May 5, through December 31, 2006 and January 1, through May 4, 2006 consisted of the following (dollars in thousands):


	Radio Holdings									Predecessor
	Year ended						May 5 Through			January 1
	December 31,						December 31,			Though May 4,
	2008			2007			2006			2006
Current:
Federal	$	193		$	(500	)	$	558		$	4,839
State		1,546			1,211			2,283			854

Total current		1,739			711			2,841			5,693

Deferred:
Federal		(103,014	)		(3,549	)		(9,547	)		(18,983	)
State		(20,342	)		(628	)		(1,570	)		(3,350	)
State tax rate changes		(971	)		—			—			—

Total deferred		(124,327	)		(4,177	)		(11,117	)		(22,333	)

Income tax expense (benefit)	$	(122,588	)	$	(3,466	)	$	(8,276	)	$	(16,640	)

Prior to the acquisition on May 5, 2006, all members of the Predecessor’s consolidated federal income tax returns were party to a tax sharing agreement. The tax sharing agreement required each member’s federal income taxes to be computed initially on a separate return basis. Consolidated return member losses utilized in the consolidated return could reduce other members’ tax payments. A member’s income taxes receivable or payable were required to be settled on exit from the federal consolidated return group. Income taxes on continuing operations and discontinued operations have been calculated separately for the Predecessor.

F-23

Reconciliations of the difference between income taxes at the U.S. statutory rate and the effective book income tax rate for continuing operations follow (in thousands):


	Radio Holdings									Predecessor
	Year Ended						May 5 Through			January 1
	December 31,						December 31,			Though May 4,
	2008			2007			2006			2006
U.S. statutory rate	$	(226,876	)	$	(66,065	)	$	(9,423	)	$	(14,916	)
State income taxes, net of Federal income tax effect		(12,328	)		(8,412	)		420			(1,622	)
Change in state tax rates		(971	)		—			—			—
Permanent differences/Other		(44	)		738			727			(102	)
Impairment charge		115,563			52,941			—			—
Increase in valuation allowance		2,068			17,332			—			—

Income tax expense (benefit)	$	(122,588	)	$	(3,466	)	$	(8,276	)	$	(16,640	)

F-24

At December 31, 2008 and 2007, deferred tax assets and liabilities resulted from the following temporary differences (in thousands):


	2008			2007
Current deferred tax assets:
Accounts receivable	$	487		$	404
Accrued expenses and other		650			514

Current deferred tax assets		1,137			918
Less: valuation allowance		(1,137	)		(918	)

Net current deferred tax assets		—			—


Non-current deferred tax assets:
Intangibles & others		9,034			12,167
Other liabilities		8,658			6,222
Net operating loss and other carryforwards		21,871			21,632

Noncurrent deferred tax assets		39,563			40,021
Less: valuation allowance		(35,017	)		(33,035	)

Net noncurrent deferred tax assets		4,546			6,986


Noncurrent deferred tax liabilities:
Tangible assets, primarily property & equipment		2,780			4,313
Intangible assets		122,374			246,700
Other liabilities		1,766			2,673

Noncurrent deferred tax liabilities		126,920			253,686

Net noncurrent deferred tax liabilities		122,374			246,700

Net deferred tax liabilities	$	122,374		$	246,700

During 2007, a reclassification was made to increase goodwill and deferred income taxes by approximately $1.2 million relating to the original purchase accounting allocations.

Deferred tax assets and liabilities are computed by applying the Federal income and estimated state tax rate in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carry-forwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these temporary differences become deductible.

During the year ended December 31, 2008, the Company recorded deferred tax expense of $4.6 million resulting from amortization of goodwill and broadcast licenses that is deductible for tax purposes, but is not amortized in the financial statements. This charge was offset by a $126.6 million deferred tax benefit resulting from the reversal of deferred tax liabilities in connection with the impairment of certain broadcast licenses and goodwill.

As of December 31, 2008 and 2007, the Company had approximately $0.0 million and $10.0 million, respectively, of federal net operating loss carryforwards and approximately $255.2 million and $199.0 million, respectively, of state net operating loss carryforwards.

F-25

The Company adopted the provisions of FIN 48 on January 1, 2007. The Company classifies interest and penalties relating to uncertain tax positions in income taxes. The Company files numerous income tax returns at the United States federal level and with various state jurisdictions. Radio Holdings is indemnified by Predecessor’s selling stockholders against realized tax uncertainties for periods prior to acquisition (May 5, 2006); the Company’s open tax periods are those after May 6, 2006. Consequently, it has not recorded a reserve for tax uncertainties for the period prior to acquisition. At December 31, 2008, the Company had no known material tax positions and, therefore, did not establish a reserve for tax uncertainties.

9. Acquisitions and Dispositions

2008

The Company completed the sale of the radio station WZZB-AM in Seymore, Indiana for $0.3 million during the three months ended March 31, 2008. The Company recorded an immaterial gain on this transaction in connection with the sale,.

2007

On December 5, 2007, the Company completed a transaction with Entercom Communications Corp (“Entercom”) to exchange WSWD-FM for WGRR-FM and certain other intellectual property. Each of the stations included in the exchange, WSWD-FM and WGRR-FM, serves the Cincinnati, Ohio radio market. Concurrently with entering into the asset exchange agreement, the Company also entered into an LMA. Pursuant to the LMA, on November 1, 2006, the Company commenced operation of WGRR-FM and Entercom commenced operations of WSWD-FM. The Company included the net revenues and station operating expenses associated with operating WGRR-FM in the Company’s consolidated financial statements for the years ended December 31, 2007 and 2006. Under the asset purchase agreement and the LMA, there were very few employees hired and a minimal number of contracts assumed. The fair value of the assets acquired in exchange for the assets disposed, were accounted for under SFAS No. 141, which resulted in a fair value of $31.0 million.

2006

Acquisition of Predecessor

On May 5, 2006, a subsidiary of Radio Holdings acquired the stock of the Predecessor with only radio assets remaining, for approximately $1.2 billion. Subsequent to the acquisition, Radio Holdings allocated the purchase price to the tangible and intangible assets of the Predecessor, according to fair value appraisals performed after the closing. The difference between purchase price and the appraised values assigned to tangible and intangibles assets was recorded as goodwill. This purchase accounting allocation of the acquisition price established the new basis of accounting. Included in intangible assets are FCC licenses and goodwill, neither of which is amortized. Other intangibles consist primarily of pre-sold advertising contracts which were substantially fully amortized by December 31, 2006.

F-26

The purchase price and the purchase price allocation for the acquisition are summarized below (in thousands):


Purchase price	$	1,207,991
Acquisition costs		12,052

Total purchase price consideration	$	1,220,043
Allocated to:
Current assets		(47,776	)
Property, plant, and equipment, net		(44,081	)
Broadcast licenses, non-amortizable		(795,572	)
Other intangible assets, amortizable		(37,611	)
Investments and other assets (including assets held for sale of $13,500)		(17,640	)
Current liabilities and long-term liabilities		6,293
Income tax holdback		5,692
Deferred income taxes		260,815

Allocation of excess purchase price over the assets acquired	$	550,163

The table below reflects unaudited pro forma results of Radio Holdings for the year ended December 31, 2006 as if the acquisition and related financing had taken place on January 1. The pro-forma results are not necessarily indicative of the results that would have occurred if the acquisition had been in effect for the periods presented. In addition, the pro-forma results are not intended to be a projection of future results. Radio Holdings results of operations for 2006 include 4 months of the acquired operations of the Predecessor.


	(In thousands)
		2006

Net revenues	$	223,109
Loss before cumulative effect of change in accounting principle		(65,205	)
Net loss	$	(65,205	)

The net loss for 2006 includes non-recurring amortization of approximately $16.0 million net of taxes.

As indicated above, Radio Holdings acquired the stock of the Predecessor on May 5, 2006. Proceeds for the May 5, 2006 acquisition were derived from bank financing, high yield unsecured senior subordinated notes, and $250 million in sponsor equity. In addition, Radio Holdings obtained $64 million of cash as equity from the asset-based financing, by a third party, of CMP KC, LLC’s radio assets which were three radio stations contributed by Cumulus as part of its equity contribution to CMP. Management consulted the guidelines issued by the SEC staff under Staff Accounting Bulletin 73 and determined the cash from CMP KC, LLC constituted equity in Radio Holdings.

In addition, Radio Holdings recognized approximately $1.5 million in exit activity costs for employee severance, and contract termination costs. In accordance with the guidance set forth in Emerging Issue Task Force 95-3 Recognition of Liabilities in Connection with a purchase business combination Radio Holdings capitalized these costs on the consolidated balance sheet and at December 31, 2006 had paid out approximately $1.0 million. The remainder of accrued costs was paid out in fiscal 2007.

In conjunction with the acquisition, management made the decision to sell the programming assets of a station consisting of: (i) intellectual property rights and goodwill, (ii) rights to music library and (iii) rights to certain other assets for $5.0 million. The transaction was completed on September 20, 2006 and recorded as a reduction of goodwill. Radio Holdings also has recorded in purchase accounting an asset held for sale for $8.5 million, relating primarily to a note receivable from another radio company.

F-27

CMP Susquehanna Holdings Corp. (“Holdings”), the parent company of the Company, is a party to a management agreement with Cumulus to manage the operations of CMP’s subsidiaries. The agreement provides for Holdings to pay a management fee that is expected to be approximately 4% of Holdings’ and its subsidiaries’ annual EBITDA, or $4.0 million, whichever is greater. In addition, Holdings is a party to an advisory services agreement in which it has paid an investor fee of $1.0 million or 1% of EBITDA, whichever is greater, to cover ongoing investor expenses.

On July 30, 2008, the registrant received the resignations of Kent Weldon, Soren Oberg, Ian Loring and John Connaughton from the registrant’s board of directors, each effective on such date. The foregoing resignations were in connection with certain modifications to corporate governance rights related to the Company. As previously disclosed, in October 2005, the registrant’s ultimate parent, CMP, and its four members entered into an equityholders’ agreement (the “Equityholders’ Agreement”) that, among other things, governs the economic and voting characteristics of the units representing limited liability company membership interests in CMP, and certain rights and obligations regarding CMP’s subsidiaries. The Equityholders’ Agreement originally provided that the boards of directors of each of CMP and its applicable subsidiaries (including the Company) would be comprised of eight members: two directors designated by each member, and each member would agree to vote for the board nominees of the others. Pursuant to an amendment to the Equityholders’ Agreement, which took effect on July 30, 2008, two of the members of CMP have elected to assume non-attributable ownership status for their interests in CMP for regulatory purposes, and therefore have waived their rights to designate board members of the registrant and agreed that their respective board designees will resign. Consequently, Cumulus and an affiliate of The Blackstone Group (“Blackstone”), as the remaining members who have not assumed non-attributable ownership status of CMP, will each have the right to appoint one-half of the directors on the boards of CMP and its applicable subsidiaries (including the Company), and have agreed that any significant action taken by the board of directors of CMP, or its direct subsidiary, Holdings, including certain significant actions with respect to the Company, must be approved by a majority of the directors present at the board meeting and by a majority of the directors designated by Blackstone.

In connection with the amendment to the Equityholders’ Agreement described above, the members of CMP also amended the previously disclosed advisory services agreement pursuant to which the members of CMP other than Cumulus provide certain ongoing advisory and consulting services for an aggregate cash annual fee equal to the greater of $1.0 million, or 1%, of Holdings’s Adjusted EBITDA (as defined in the advisory services agreement). Pursuant to the amendment, those members of CMP who have elected to assume non-attributable ownership status of CMP for regulatory purposes have ceased providing such services effective July 30, 2008 and, as a result, CMP’s annual aggregate payment obligation for such services will be reduced by two-thirds and will be payable solely to Blackstone, as the sole remaining member continuing to provide such services. For the years ending December 31, 2008, 2007, and 2006 CMP recorded $0.7 million, $1.0 million, and $0.6 million of expense associated with advisory services fees.

F-28

10. Goodwill and Intangible Assets

Intangible assets of continuing operations are comprised of the following at December 31, (in thousands):


	Year Ended
	December 31,
	2008			2007
Indefinite-lived, at carrying value:
Federal Communications Commission licenses	$	406,767		$	745,265
Goodwill		79,700			412,795

Subtotal		486,467			1,158,060

Definite-lived favorable transmitter leases		2,413			2,413
Other, primarily pre-sold advertising and talent agreements		35,198			35,198

		37,611			37,611
Less accumulated amortization		(32,972	)		(31,741	)

Subtotal		4,639			5,870
	$	491,106		$	1,163,930

Favorable leases and pre-sold advertising contracts are amortized using the straight-line method over their respective terms. Total amortization for continuing operations for year ended December 31, 2008, December 31, 2007, the periods from May 5, 2006 through December 31, 2006, and from January 1, 2006 through May 4, 2006, was approximately $1.2 million, $4.6 million, $27.1 million, and $0.2 million, respectively.

Amortization expense relative to intangible assets is estimated to be as follows (in thousands):


Years ended December 31,
2009	$	694
2010		530
2011		465
2012		461
2013		454
Thereafter		2,035

	$	4,639

In connection with the acquisition of the Predecessor discussed in Note 9, Radio Holdings allocated portions of the purchase price to identifiable intangible assets consisting of (1) broadcast licenses, (2) pre-sold commercial advertising contracts, (3) on-air talent agreements, (4) favorable transmitter site leasehold interests and (5) others. Radio Holdings also recorded a deferred tax liability of $260.8 million for the difference between the fair value of book basis for the assets acquired and their tax basis. In addition to the identifiable intangibles, goodwill has been recorded in the amount by which the purchase price exceeded the fair value of the net assets acquired, including identified intangibles.

The Company accounts for goodwill and intangible assets in accordance with SFAS No. 142, which: (i) prohibits the amortization of goodwill and indefinite-lived intangible assets, (ii) requires that goodwill and indefinite-lived intangible assets be tested annually for impairment (and in interim periods if certain events occur indicating that the carrying value may be impaired), and (iii) requires that reporting units be identified for the purpose of assessing potential future impairments of goodwill.

F-29

Goodwill

SFAS No. 142 requires the Company to test goodwill for impairment on an annual basis and more frequently if events or circumstances indicate that the asset may be impaired. The Company performs its annual test in the fourth quarter of each year and, in doing so, SFAS No. 142 requires that the Company determine the appropriate reporting unit and compare the fair value of the reporting unit with its carrying amount. If the fair value of any reporting unit is less than the carrying amount, an indication exists that the amount of goodwill attributed to the reporting unit may be impaired and the Company is required to perform a second step of the impairment test. In the second step, the Company compares the implied fair value of each reporting unit’s goodwill, determined by allocating the reporting unit’s fair value to all of its assets and liabilities, to the carrying amount of the reporting unit. Consistent with prior years, for 2008 we determine the reporting unit as a radio market.

The fair value of reporting units was determined primarily by using a discounted cash flows approach. The fair values derived are based on assumptions that contain a variety of variables. These variables are based on industry data, historical experience and estimates of future performance and include, but are not limited to, revenue and expense growth rates for each radio market, revenue and expense growth rates for the Company’s stations in each market, overall discount rates based on the Company’s weighted average cost of capital and acquisition multiples. The assumptions used in estimating the fair values of goodwill are based on currently available data and management’s best estimates and, accordingly, a change in market conditions or other factors could have a material effect on the estimated values.

For the year ended December 31, 2008 and December 31, 2007 the Company determined that the carrying value of certain reporting units exceeded their fair values. Accordingly, the Company recorded an impairment charge of $331.3 million and $137.7 million, respectively as reflected in the Consolidated Statements of Operations, to reduce the carrying value of goodwill.

Several factors and variables contributed to the decrease in the fair value of certain of its reporting units, including (1) an increase in the discount rate used; (2) a decrease in station transaction multiples, and (3) a decrease in advertising revenue growth projections for the broadcasting industry.

Indefinite-Lived Intangibles

SFAS No. 142 requires the Company to test FCC broadcast licenses for impairment on an annual basis and more frequently if events or circumstances indicate that the asset may be impaired. The Company performs its annual impairment evaluation of existing intangible assets with indefinite lives during the fourth quarter of each year. Accordingly, we determine the appropriate reporting unit and then compare the carrying amount of each reporting unit’s broadcast licenses with their fair value. Consistent with prior years, for 2008 we determined the reporting unit as a radio market.

Broadcast Licenses

The fair values derived utilize a direct value method and is based on assumptions that contain a variety of variables. These variables are based on available industry data, historical experience and estimates of future performance and include, but are not limited to, revenue and expense growth rates for each radio market, revenue and expense growth rates for our stations in each market, overall discount rates based on our weighted average cost of capital and acquisition multiples. The assumptions used in estimating the fair values of broadcast licenses are based on currently available data and management’s best estimates and, accordingly, a change in market conditions or other factors could have a material effect on the estimated value.

For the year ended December 31, 2008 and December 31, 2007, the Company determined that the carrying value of broadcast licenses in certain of its reporting units exceeded their fair value. Accordingly, the Company recorded an impairment charge of $338.5 million and $50.3 million, respectively, as reflected in the consolidated statements of operations, to reduce the carrying value of broadcast licenses.

F-30

Several factors and variables contributed to the decrease in the fair value of certain of our broadcast licenses, including (1) an increase in the discount rate used; (2) a decrease in station transaction multiples, and (3) a decrease in advertising revenue growth projections for the broadcasting industry.

11. Other Current Liabilities

Other current liabilities classified as continuing operations are comprised of the following (in thousands):


	2008		2007
Accrued employee-related costs	$	839	$	1,242
Deferred revenue		136		104
Accrued real estate costs		432		360
Accrued external commissions		1,762		2,034
Trade expense		218		246
Accrued advertising fees		—		1,069
Accrued professional fees		134		588
Other accrued expenses		4,114		3,695

	$	7,635	$	9,338

12. Lease Commitments

Total operating lease expense for continuing operations was $5.6 million, $5.7 million, $3.8 million, and $1.8 million for 2008, 2007, the period from May 5, 2006 through December 31, 2006, and the period from January 1, 2006 through May 4, 2006, respectively. Annual aggregate minimum rental commitments under non-cancelable operating leases as are as follows (in thousands):


Years ended December 31,
2009	$	4,905
2010		4,714
2011		3,628
2012		2,956
2013		2,849
Thereafter		9,552

	$	28,604

13. Commitments and Contingencies

The Company is a defendant from time to time in various lawsuits, which are generally incidental to its business. The Company is vigorously contesting all matters and believes that their ultimate resolution will not have a material adverse effect on its condensed consolidated financial position, results of operations or cash flow. The Company is not a party to any lawsuit or proceeding, which, in our opinion, is likely to have a material adverse effect on the Company’s consolidated financial statements.

F-31

The Company is a limited partner in San Francisco Baseball Associates L.P. On June 7, 2004, the Predecessor renewed its broadcast rights to broadcast San Francisco Giants games for the 2005 through 2009 baseball seasons. Required rights fees range from $7.6 million in 2005 to $8.7 million in 2009. The Company concurrently invested an additional $1.5 million in the partnership that owns the Giants. The Company expensed rights payments of $8.3 million, $8.0 million and $8.0 million during the baseball seasons of 2008, 2007, and 2006, respectively.

The Company has the broadcast rights for the Kansas City Chiefs NFL franchise through the 2009 football season. The contract requires minimum rights payments of $2.8 million, $2.9 million, and $3.0 million for the 2007, 2008 and 2009 football seasons, respectively.

The radio broadcast industry’s principal ratings service is Arbitron, which publishes periodic ratings surveys for domestic radio markets. The Company has a five-year agreement with Arbitron under which we receive programming ratings materials in a majority of our markets. The Company remaining obligation under the agreement with Arbitron totals approximately $4.3 million as of December 31, 2008 and will be paid in accordance with the agreement through 2010.

The contract with Katz contains termination provisions which, if exercised by The Company during the term of the contract, would obligate it to pay a termination fee to Katz, calculated based upon a formula set forth in the contract.

The liability pertaining to the summary judgment ordered by the United States District Court for the Northern District of Georgia awarding Bridge Capital Investors II (“BCI”) $10.0 million was not assumed by the Company. See discussion below for further details.

SPC moved WHMA-FM from Anniston, Alabama in 2001 to serve the Atlanta, Georgia metropolitan area based upon a FCC Report and Order. The original purchase agreement provided that if a Final Order was received by May 2003, Media would pay the sellers an additional $10.0 million. A Final Order was not issued by that date. On July 29, 2004, BCI sued Radio for $10.0 million alleging breach of contract and unjust enrichment in connection with the acquisition of Radio Station WHMA-FM. On January 26, 2005, the United States District Court for the Northern District of Georgia granted summary judgment in favor of BCI against Radio. The summary judgment granted BCI $10.0 million plus interest at 9% per annum from January 22, 2001 and recovery of attorney’s costs. Indefinite-lived intangible assets (FCC licenses) for continuing operations were increased by $10.0 million as of December 31, 2004. On February 22, 2005, Predecessor appealed the judgment. Oral arguments were heard on March 14, 2006 and the grant of summary judgment was affirmed by the appellate court on August 1, 2006. Under the merger agreement with SPC, Radio Holdings placed into an escrow account at the closing of the Acquisition an amount estimated to be sufficient to cover anticipated losses relating to this litigation matter. On or around August 15, 2006, a satisfaction of judgment, costs, attorneys’ fees and expenses were paid in full out of the escrow agreement with the remaining amount in escrow distributed to the SPC selling stockholders, and satisfaction of judgment was filed with the United States District Court in the Atlanta Division of the Northern District of Georgia on August 16, 2006. Continuing operations for the period from January 1, 2006 through May 4, 2006 includes $1.2 million of interest expense related to this judgment.

14. Subsequent Event

Radio Holdings and CMPSC commenced an exchange offer (the “2009 Exchange Offer”) on March 9, 2009, pursuant to which they offered to exchange all of CMPSC’s 9 7/8% senior subordinated notes due 2014 (the “Existing Notes”) (1) up to $15 million aggregate principal amount of Variable Rate Senior Subordinated Secured Second Lien Notes due 2014 of CMPSC (the “New Notes”), (2) up to $35 million in shares of Series A preferred stock of Radio Holdings (the “New Preferred Stock”), and (3) warrants exercisable for shares of Radio Holdings’ common stock representing, in the aggregate, up to 40% of the outstanding common stock on a fully diluted basis (the “New Warrants”).

F-32

On March 26, 2009, Radio Holdings and CMPSC completed the exchange of, $175,464,000 aggregate principal amount of Existing Notes, which represented 93.5% of the total principal amount outstanding prior to the commencement of the 2009 Exchange Offer, for $14,031,000 aggregate principal amount of New Notes, 3,273,633 shares of New Preferred Stock and New Warrants exercisable for 3,740,893 shares of Radio Holdings’ common stock. The Company is currently evaluating the accounting treatment for this transaction.

15. Guarantor and Non Guarantor Financial Information

In connection with the sale of the senior subordinated notes (and subsequent exchange for the Existing Notes), all but one of Radio Holdings’ and CMPSC’s wholly owned subsidiaries (the “Guarantor Subsidiaries”) jointly, severally and unconditionally guaranteed the payment obligations under the Existing Notes. As of March 1, 2006, there no longer are any non-guarantor subsidiaries. The following supplemental financial information sets forth on a consolidating basis the balance sheet, statement of operations and cash flow information for Radio Holdings.

The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include all disclosures included in annual financial statements, although we believe that the disclosures made are adequate to make the information presented not misleading. The principal eliminating entries eliminate investments in subsidiaries and intercompany balances; there are no intercompany revenues and expenses.

F-33

CMP Susquehanna Radio Holdings Corp.
Supplemental Condensed Consolidating Balance Sheet
As of December 31, 2008
(In thousands)



	CMP Susquehanna Radio			CMP
	Holdings Corp.			Susquehanna
	(Parent			Corp			Guarantor
	Guarantor)			(Issuer)			Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—		$	83,186		$	—		$	83,186
Accounts receivable, net		—			—			38,580			—			38,580
Inter-company receivable		—			758,408			3,175,109			(3,933,517	)		—
Prepaid expenses and other current assets		—			—			3,246			—			3,246

Total current assets		—			758,408			3,300,121			(3,933,517	)		125,012

Property, plant and equipment, net		—			—			31,074			—			31,074
Intangible assets, net		—			—			491,106			—			491,106
Deferred financing costs, net		—			14,030			—			—			14,030
Long Term Investments		—			—			4,000			—			4,000
Intercompany Investment		(429,598	)		—			—			429,598			—

Total assets	$	(429,598	)	$	772,438		$	3,826,301		$	(3,503,919	)	$	665,222


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—		$	—		$	2,873		$	—		$	2,873
Current portion of long-term debt					7,000			—			—			7,000
Accrued interest		—			3,391			—			—			3,391
Accrued state income taxes		—			—			1,696			—			1,696
Intercompany payable		—			—			3,933,517			(3,933,517	)		—
Other current liabilities		—			—			7,635			—			7,635

Total Current Liabilities		—			10,391			3,945,721			(3,933,517	)		22,595

Long-term debt		—			934,774			—			—			934,774
Other liabilities		—			5,944			9,133			—			15,077
Deferred income taxes					(27,014	)		149,388			—			122,374

Total liabilities		—			924,095			4,104,242			(3,933,517	)		1,094,820

Stockholders’ equity
Common stock — Voting $.01 par		—			—			—			—			—
value, authorized 1,000 shares and issued 100 shares		—			—			—			—			—
Additional paid-in capital		299,928			—			299,928			(299,928	)		299,928
Retained earnings (accumulated deficit)		(729,526	)		(151,657	)		(577,869	)		729,526			(729,526	)

Total stockholders’ equity		(429,598	)		(151,657	)		(277,941	)		429,598			(429,598	)

Total liabilities and stockholders’ equity	$	(429,598	)	$	772,438		$	3,826,301		$	(3,503,919	)	$	665,222

F-34

Supplemental Condensed Consolidating Statement of Operations
For the year ending December 31, 2008
(In thousands)



	CMP Susquehanna Radio			CMP
	Holdings Corp.			Susquehanna
	(Parent			Corp			Guarantor
	Guarantor)			(Issuer)			Subsidiaries			Eliminations		Consolidated
Net revenues	$	—		$	—		$	203,412		$	—	$	203,412

Operating expenses:
Station operating expense excluding depreciation amortization		—			—			119,970			—		119,970
Corporate general and administrative expenses		—			—			7,152			—		7,152
Depreciation and amortization		—			—			7,353			—		7,353
(Gain) Loss on sale of assets		—			—			(6	)		—		(6	)
Impairment of goodwill and intangible assets		—			—			669,786			—		669,786
Impairment of long-term investment		—			—			2,991			—		2,991
Total operating expenses		—			—			807,246			—		807,246

Operating income (loss) from continuing operations					—			(603,834	)		—		(603,834	)
Non-operating income (expense) from continuing operations:
Interest expense, net		—			(65,530	)		221			—		(65,309	)
Gain (Loss) on early extinguishment of debt		—			20,935			—			—		20,935
Other income (expense)		(525,629	)		—			(9	)		525,629		(9	)

Income (loss) from continuing operations before income taxes and minority interest		(525,629	)		(44,595	)		(603,622	)		525,629		(648,217	)
Provision (benefit) for income taxes		—			(8,428	)		(114,160	)		—		(122,588	)

Earnings (loss) from continuing operations	$	(525,629	)	$	(36,167	)	$	(489,462	)	$	525,629		(525,629	)

F-35

CMP Susquehanna Radio Holdings Corp.
Supplemental Condensed Consolidating Statement of Cash Flows
For the year ending December 31, 2008
(In thousands)



	CMP Susquehanna Radio		CMP
	Holdings Corp.		Susquehanna
	(Parent		Corp.			Guarantor
	Guarantor)		(Issuer)			Subsidiaries			Eliminations		Consolidated
Net cash provided by (used in) operating activities		—		(54,194	)		80,171			—		25,977


Cash flows from investing activities:
Purchase of property, plant and equipment, net		—		—			(1,336	)		—		(1,336	)
Proceeds from sales of assets or radio stations		—		—			2,460			—		2,460
(Acquisitions) dispositions		—		—			(4	)		—		(4	)

Net cash provided by (used in) investing activities		—		—			1,120			—		1,120


Cash flows from financing activities:
Subordinated debt		—		(32,486	)		—			—		(32,486	)
Increase in revolving credit facilities		—		108,680			—			—		108,680
Repayment of credit facilities		—		(22,000	)		—			—		(22,000	)

Net cash provided by (used in) by financing activities		—		54,194			—			—		54,194

Net Increase (Decrease) in Cash and Cash Equivalents		—		—			81,291			—		81,291
Cash and Cash Equivalents, beginning of period		—		—			1,895			—		1,895

Cash and Cash Equivalents, end of period	$	—	$	—		$	83,186		$	—	$	83,186

F-36

CMP Susquehanna Radio Holdings Corp.
Supplemental Condensed Consolidating Balance Sheet
As of December 31, 2007
(In thousands)


	CMP Susquehanna
	Radio Holdings
	Corp.			CMP Susquehanna
	(Parent			Corp.			Guarantor
	Guarantor)			(Issuer)			Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—		$	1,895		$	—		$	1,895
Accounts receivable, net		—			—			47,270			—			47,270
Inter-company receivable		—			761.729			2,153,010			(2,914,739	)		—
Prepaid expenses and other current assets		—			—			2,174			—			2,174

Total current assets		—			761,729			2,204,349			(2,914,739	)		51,339

Property, plant and equipment, net		—			—			36,503			—			36,503
Intangible assets, net		—			—			1,163,930			—			1,163,930
Deferred financing costs, net		—			18,929			—			—			18,929
Long Term Investments		—			—			6,991			—			6,991
Intercompany Investment		96,031			—			—			(96,031	)		—

Total assets	$	96,031		$	780,658		$	3,411,773		$	(3,010,770	)	$	1,277,692


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—		$	—		$	483		$	—		$	483
Current portion of long-term debt		—			25,160			—			—			25,160
Accrued interest		—			4,574			—			—			4,574
Accrued state income taxes		—			—			1,211			—			1,211
Intercompany payable		—			—			2,914,739			(2,914,739	)		—
Other current liabilities		—			—			9,338			—			9,338

Total Current Liabilities		—			29,734			2,925,771			(2,914,739	)		40,766

Long-term debt		—			884,999			—			—			884,999
Other liabilities		—			—			9,196			—			9,196
Deferred income taxes		—			(18,585	)		265,285			—			246,700

Total liabilities		—			896,148			3,200,252			(2,914,739	)		1,181,661

Stockholders’ equity
Common stock — Voting $.01 par value, authorized 1,000 shares and issued 100 shares		—			—			—			—			—
Additional paid-in capital		299,928			—			299,928			(299,928	)		299,928
Retained earnings (accumulated deficit)		(203,897	)		(115,490	)		(88,407	)		203,897			(203,897	)

Total stockholders’ equity		96,031			(115,490	)		211,521			(96,031	)		96,031

Total liabilities and stockholders’ equity	$	96,031		$	780,658		$	3,411,773		$	(3,010,770	)	$	1,277,692

F-37

CMP Susquehanna Radio Holdings Corp.
Supplemental Condensed Consolidating Statement of Operations
For the year ending December 31, 2007
(In thousands)


	CMP Susquehanna			CMP
	Radio Holdings			Susquehanna
	Corp.			Corp.
	(Parent						Guarantor
	Guarantor)			(Issuer)			Subsidiaries			Eliminations		Consolidated
Net revenues	$	—		$	—		$	223,437		$	—	$	223,437

Operating expenses:
Station operating expense excluding depreciation amortization		—			—			123,388			—		123,388
Corporate general and administrative expenses		—			—			7,214			—		7,214
Depreciation and amortization		—			—			10,393			—		10,393
Gain (Loss) on sale of assets		—			—			96			—		96
Impairment of goodwill and intangible assets		—			—			188,019			—		188,019
Impairment of long-term investment		—			—			5,509			—		5,509

Total operating expenses		—			—			334,619			—		334,619

Operating income (loss) from continuing operations					—			(111,182	)		—		(111,182	)
Non-operating income (expense) from continuing operations:
Interest expense, net		—			(78,818	)		309			—		(78,509	)
Gain (Loss) on early extinguishment of debt		—			1,258			—			—		1,258
Other income (expense)		(185,290	)		(361	)		38			185,290		(323	)

Income (loss) from continuing operations before income taxes and minority interest		(185,290	)		(77,921	)		(110,835	)		185,290		(188,756	)
Provision (benefit) for income taxes		—			(1,402	)		(2,064	)		—		(3,466	)

Earnings (loss) from continuing operations	$	(185,290	)	$	(76,519	)	$	(108,771	)	$	185,290	$	(185,290	)

F-38

CMP Susquehanna Radio Holdings Corp.
Supplemental Condensed Consolidating Statement of Cash Flows
For the year ending December 31, 2007
(In thousands)


	CMP Susquehanna
	Radio Holdings		CMP
	Corp.		Susquehanna
	(Parent		Corp.			Guarantor
	Guarantor)		(Issuer)			Subsidiaries			Eliminations		Consolidated
Net cash provided by (used in) operating activities		—		19,849			(4,944	)		—		14,905


Cash flows from investing activities:
Purchase of property, plant and equipment, net		—		—			(1,573	)		—		(1,573	)
(Acquisitions) dispositions		—		—			192			—		192
Purchase accounting adjustment		—		—			322			—		322

Net cash provided by (used in) investing activities		—		—			(1,059	)		—		(1,059	)


Cash flows from financing activities:
Subordinated debt		—		(5,849	)		—			—		(5,849	)
Increase in revolving credit facilities		—		14,000			—			—		14,000
Repayment of credit facilities		—		(28,000	)		—			—		(28,000	)

Net cash provided by (used in) by financing activities		—		(19,849	)		—			—		(19,849	)

Net Increase (Decrease) in Cash and Cash Equivalents		—		—			(6,003	)		—		(6,003	)
Cash and Cash Equivalents, beginning of period		—		—			7,898			—		7,898

Cash and Cash Equivalents, end of period	$	—	$	—		$	1,895		$	—	$	1,895

F-39

CMP Susquehanna Radio Holdings Corp.
Supplemental Condensed Consolidating Statement of Operations
For the period from May 05, 2006 (date of inception) to December 31, 2006
(In thousands)


	CMP
	Susquehanna
	Radio Holdings			CMP
	Corp.			Susquehanna
	(Parent			Corp.			Guarantor		Non-guarantor
	Guarantor)			(Issuer)			(Subsidiaries)		Subsidiary			Eliminations		Consolidated

Net Revenues	$	—		$	—		$	155,607	$	1,097		$	—	$	156,704
Operating Expenses:
Station operating expenses, excluding depreciation and amortization		—			—			91,870		790			—		92,660
Corporate general and administrative		—			—			4,106		—			—		4,106
Depreciation and amortization		—			—			30,798		165			—		30,963

Total operating expenses		—			—			126,774		955			—		127,729

Operating income		—			—			28,833		142			—		28,975
Non-operating income (expense):
Interest expense		—			(52,771	)		385		—			—		(52,386	)
Gain (loss) on early extinguishment of debt		—			(1,675	)		—		—			—		(1,675	)
Other income (expense), net		(18,603	)		(1,708	)		53		(47	)		18,603		(1,702	)

Income (loss) from continuing operations before income taxes and minority interest		(18,603	)		(56,154	)		29,271		95			18,603		(26,788	)
Provision (benefit) for income taxes		—			(17,183	)		8,907		91			—		(8,185	)

Earnings (loss) from continuing operations	$	(18,603	)	$	(38,971	)	$	20,364	$	4		$	18,603	$	(18,603	)

F-40

CMP Susquehanna Radio Holdings Corp.
Supplemental Condensed Consolidating Statement of Cash Flows
For the period from May 5, 2006 (date of inception) to December 31, 2006
(In thousands)


	CMP
	Susquehanna
	Radio
	Holdings			CMP
	Corp.			Susquehanna
	(Parent			Corp.			Guarantor			Non-guarantor
	Guarantor)			(Issuer)			Subsidiaries			Subsidiary			Eliminations			Consolidated

Net cash provided by (used in) operating activities		—			14,336			8,370			(50	)		—			22,656


Cash flows from investing activities:
Purchase of property, plant and equipment, net		—			—			(472	)		—			—			(472	)
(Acquisitions) dispositions		(299,928	)		(1,220,043	)		—			—			299,928			(1,220,043	)
Purchase accounting adjustment		—			—			—			—			—			—

Net cash provided by (used in) investing activities		(299,928	)		(1,220,043	)		(472	)		—			299,928			(1,220,515	)


Cash flows from financing activities:
Proceeds from contributed capital		299,928			299,928			—			—			(299,928	)		299,928
Subordinated debt		—			250,000			—			—			—			250,000
Proceeds from bank credit facilities		—			700,000			—			—			—			700,000
Payments for debt issue costs		—			(25,721	)		—			—			—			(25,721	)
Repayment of credit facilities		—			(18,500	)		—			—			—			(18,500	)

Net cash provided by (used in) by financing activities		299,928			1,205,707			—			—			(299,928	)		1,205,707

Net Increase (Decrease) in Cash and Cash Equivalents		—			—			7,898			(50	)		—			7,848
Cash and Cash Equivalents, beginning of period		—			—			—			—			—			—

Cash and Cash Equivalents, end of period	$	—		$	—		$	7,898		$	(50	)	$	—		$	7,848

F-41

16. Quarterly Results (Unaudited)

The following table presents the Company’s selected unaudited quarterly results for the eight quarters ended December 31, 2008 (in thousands, except per share data).


	First			Second		Third			Fourth
	Quarter			Quarter		Quarter			Quarter

FOR THE YEAR ENDED DECEMBER 31, 2008
Net revenue	$	44,936		$	56,350	$	53,572		$	48,554
Operating income (loss)(1)		15,507			19,435		17,455			(656,231	)
Net loss(1)	$	2,210		$	9,509	$	2,441		$	(540,388	)
FOR THE YEAR ENDED DECEMBER 31, 2007
Net revenue	$	46,127		$	60,051	$	59,814		$	57,445
Operating income (loss)(1)		15,235			22,045		23,000			(171,462	)
Net income (loss)(1)	$	(2,328	)	$	4,910	$	(2,114	)	$	(185,758	)


(1)		During the fourth quarter of 2007 and 2008, the Company recorded impairment charges of $188.0 million and $669.8 million, respectively, related to its annual FAS 142 impairment testing.

F-42

Schedule II

CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES (“Radio Holdings”)
And SUSQUEHANNA PFALTZGRAFF CO. AND SUBSIDIARIES (“Predecessor”)

(Dollars in thousands, except for share data)


	Balance at							Balance
	Beginning							at End of
Fiscal Year	of Year		Additions		Deductions			Year

Allowance for doubtful accounts
2008	$	1,050	$	2,117	$	(1,887	)	$	1,280
2007		1,520		351		(821	)		1,050
2006 (CMP)		578		1,497		(555	)		1,520
2006 (Predecessor)		878		207		(507	)		578
Valuation allowance on deferred taxes
2008		33,953		2,201		-			36,154

F-43

CMP Susquehanna Radio Holdings Corp. 10-K