United States
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

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

Commission file number 0-14691

 

WESTWOOD ONE, INC.

(Exact name of registrant as specified in its charter)

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

1166 Avenue of the Americas, 10th Floor New York, NY		10036
(Address of principal executive offices)		(Zip Code)

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

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

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

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

Large Accelerated Filer o		Accelerated Filer o		Non-Accelerated Filer o		Smaller Reporting Company þ

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

Number of shares of common stock, par value $.01 per share outstanding at April 30, 2010 (excluding treasury shares): 20,543,873 shares

 

 

WESTWOOD ONE, INC.

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets			3
Consolidated Statements of Operations			4
Consolidated Statements of Cash Flows			5
Consolidated Statements of Stockholders’ Equity			6
Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			43
Item 4. Controls and Procedures			43
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			44
Item 1A. Risk Factors			44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 3. Reserved			44
Item 4. Reserved			44
Item 5. Other Information			44
Item 6. Exhibits			45
SIGNATURES			46
Exhibit Index			47
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 31.a
Exhibit 31.b
Exhibit 32.a
Exhibit 32.b

PART I. FINANCIAL INFORMATION

WESTWOOD ONE, INC.

		March 31, 2010				December 31, 2009
		(unaudited)				(audited)
ASSETS
Current assets:
Cash and cash equivalents		$	6,794			$	4,824
Accounts receivable, net of allowance for doubtful accounts of $1,006 (2010) and $2,723 (2009)			86,487				87,568
Federal income tax receivable			12,945				12,355
Prepaid and other assets			19,467				20,994
Total current assets			125,693				125,741
Property and equipment, net			35,446				36,265
Intangible assets, net			100,671				103,400
Goodwill			38,945				38,917
Other assets			3,276				2,995
TOTAL ASSETS		$	304,031			$	307,318
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	44,592			$	40,164
Amounts payable to related parties			490				129
Deferred revenue			2,517				3,682
Accrued expenses and other liabilities			30,183				28,864
Current maturity of long-term debt			10,000				13,500
Total current liabilities			87,782				86,339
Long-term debt			126,967				122,262
Deferred tax liability			46,981				50,932
Due to Gores			10,984				11,165
Other liabilities			20,067				18,636
TOTAL LIABILITIES			292,781				289,334
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Common stock, $.01 par value: authorized: 5,000,000 shares issued and outstanding: 20,544 (2010) and 20,544 (2009)			205				205
Class B stock, $.01 par value: authorized: 3,000 shares; issued and outstanding: 0			—				—
Additional paid-in capital			81,171				81,268
Net unrealized gain			197				111
Accumulated deficit			(70,323	)			(63,600	)
TOTAL STOCKHOLDERS’ EQUITY			11,250				17,984
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	304,031			$	307,318

See accompanying notes to consolidated financial statements

WESTWOOD ONE, INC.

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

See accompanying notes to consolidated financial statements

WESTWOOD ONE, INC.

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

See accompanying notes to consolidated financial statements

WESTWOOD ONE, INC.

																		Unrealized
										Additional								Gain on				Total
		Common Stock								Paid-in				(Accumulated				Available for				Stockholders’
		Shares				Amount				Capital				Deficit)				Sale Securities				Equity
Balance as of January 1, 2010			20,544			$	205			$	81,268			$	(63,600	)		$	111			$	17,984
Net loss			—				—				—				(6,723	)			—				(6,723	)
Comprehensive income			—				—				—				—				86				86
Equity-based compensation			—				—				1,059				—				—				1,059
Issuance common stock under equity-based compensation plans			1				—				(449	)			—				—				(449	)
Cancellations of vested equity grants			—				—				(707	)			—				—				(707	)
Balance as of March 31, 2010			20,545			$	205			$	81,171			$	(70,323	)		$	197			$	11,250

See accompanying notes to consolidated financial statements

NOTE 1 – Basis of Presentation:

In this report, “Westwood One,” “Company,” “registrant,” “we,” “us” and “our” refer to Westwood One, Inc. The accompanying unaudited consolidated financial statements have been prepared by us pursuant to the rules of the Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the audited financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC on March 31, 2010.

We have incurred a significant decline in our available liquidity. As of May 17, 2010, our available liquidity has decreased approximately $6,700 to $6,900 from $13,605 at December 31, 2009, in part due to $6,400 in payments made in April 2010 for the CBS Radio annual bonus and for license and broadcast rights for sports programming and a final installment payment of $1,600 related to a contract termination. As described elsewhere in Note 7 — Debt, our Senior Notes and Senior Credit Facility contain debt leverage ratios with which we must comply and which are calculated on a quarterly basis. As of March 31, 2010, we were in compliance with such covenants. While management believes we will maintain sufficient liquidity to fund operations and that we will maintain compliance with our covenants for the next twelve months, given the decline in our liquidity and the fact that we have had difficulty in achieving our Adjusted EBITDA projections, we cannot provide assurance that we will have sufficient liquidity to maintain compliance with our covenants and fund future operations. We have certain cost containment and liquidity-producing measures available to us that we could utilize to the extent necessary, including management of workforce costs, the elimination of non-essential expenses, extending payables and reducing capital expenditures. We believe these actions, to the extent necessary, will allow us to maintain sufficient liquidity to fund our operations for at least the next twelve months through March 31, 2011 and to maintain compliance with our covenants. However, no assurance can be provided that these actions will be sufficient for us to have sufficient liquidity to fund operations or to maintain compliance with our covenants.

In the opinion of management, all adjustments, consisting of normal and recurring adjustments necessary for a fair statement of the financial position, the results of operations and cash flows for the periods presented have been recorded.

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

Additionally and simultaneously, we entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with: (1) holders of our then outstanding senior notes, which were issued under the Note Purchase Agreement, dated as of December 3, 2002 and (2) lenders under the Credit Agreement, dated as of March 3, 2004. Gores purchased at a discount approximately $22,600 in principal amount of our then existing debt held by debt holders who did not wish to participate in the new 15.00% Senior Secured Notes due July 15, 2012 (the “Senior Notes”) being offered by us, which upon completion of the Refinancing was exchanged for $10,797 of the Senior Notes. We also entered into a senior credit facility pursuant to which we have a $15,000 revolving credit facility on a senior unsecured basis and a $20,000 unsecured non-amortizing term loan (collectively, the “Senior Credit Facility”), which obligations are subordinated to the Senior Notes. Gores also agreed to guarantee our Senior Credit Facility and payments due to the NFL for the license and broadcast rights to certain NFL games and NFL-related programming.

As a result of the Refinancing on April 23, 2009, Gores increased its equity ownership to approximately 75.1% of our then outstanding equity (in preferred and common stock) and our then existing lenders to approximately 22.7% of our then outstanding equity (in preferred and common stock). We have considered the ownership held by Gores and our existing debt holders as a collaborative group in accordance with the authoritative guidance. As a result, we have followed the acquisition method of accounting, as required by the authoritative guidance, and have applied the SEC rules and guidance regarding “push down” accounting treatment. Accordingly, our consolidated financial statements and transactional records prior to the closing of the Refinancing reflect the historical accounting basis in our assets and liabilities and are labeled Predecessor Company, while such records subsequent to the Refinancing are labeled Successor Company and reflect the push down basis of accounting for the new fair values in our financial statements. This is presented in our consolidated financial statements by a vertical black line division which appears between the columns entitled Predecessor Company and Successor Company on the statements and relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the Refinancing are not comparable.

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

We used a multi-year DCF model to derive a Total Invested Capital value which was adjusted for cash, non-operating assets and any negative net working capital to calculate a Business Enterprise Value which was then used to value our equity. In connection with the Income Approach portion of this exercise, we made the following assumptions: (1) the discount rate was based on an average of a range of scenarios with rates between 15% and 16%; (2) management’s estimates of future performance of our operations; and (3) a terminal growth rate of 2%. The discount rate and market growth rate reflect the risks associated with the general economic pressure impacting both the economy in general and more specifically and substantially the advertising industry. All costs and professional fees incurred as part of the Refinancing totaling $13,895 have been expensed as special charges in 2009 ($12,699 on and prior to April 23, 2009 for the Predecessor Company and $1,196 on and after April 24, 2009 for the Successor Company).

The allocation of the Business Enterprise Value for all accounts at April 24, 2009 was as follows:

Current assets		$	104,641
Goodwill			86,414
Intangibles			116,910
Property and equipment			36,270
Other assets			21,913
Current liabilities			81,160
Deferred income taxes			77,879
Due to Gores			10,797
Other liabilities			10,458
Long-term debt			106,703
Total Business Enterprise Value		$	79,151

On March 31, 2010, we recorded an adjustment to increase goodwill related to a correction of our current liabilities as of April 24, 2009. This under accrual of liabilities of $428 was related to the purchase in cash of television advertising airtime that occurred in the predecessor company prior to April 24, 2009.

The following unaudited pro forma financial summary for the three months ended March 31, 2009 gives effect to the Refinancing and the resultant acquisition accounting. The pro forma information does not purport to be indicative of what the financial condition or results of operations would have been had the Refinancing been completed on the applicable dates of the pro forma financial information.

		Unaudited Pro Forma
		Three Months Ended
		March, 31, 2009
Revenue		$	85,867
Net Loss			(22,889	)

Financial Statement Presentation

The preparation of our financial statements in conformity with the authoritative guidance of the Financial Accounting Standards Board (“FASB”) for generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities. Management continually evaluates its estimates and judgments including those related to allowances for doubtful accounts, useful lives of property, plant and equipment and intangible assets and the valuation of such, barter inventory, fair value of stock options granted, forfeiture rate of equity based compensation grants, income taxes and valuation allowances on such and other contingencies. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable in the circumstances. Actual results may differ from those estimates under different assumptions or conditions.

Reclassification and Revisions

Certain reclassifications to our previously reported financial information have been made to the financial information that appears in this report to conform to the current period presentation.

For the year ended December 31, 2009, we understated our income tax receivable asset due to an error in how the deductibility of certain costs for the twelve months ended December 31, 2009 was determined. This resulted in an additional income tax benefit of $650, recorded in the current quarter ended March 31, 2010, that should have been recorded in the successor period ended December 31, 2009. We overstated accounts receivable at December 31, 2009 by $250 in connection with our failure to record a billing adjustment as a result of a renegotiated customer contract and understated accrued expenses for certain general and administrative costs incurred by $278 at December 31, 2009. We understated accrued liabilities at December 31, 2009 by $375 in connection with our failure to record an employment claim settlement related to an employee termination that occurred prior to 2008, but which was probable and estimable as of December 31, 2009. Finally, we understated our program and operating liabilities by $428 in the predecessor period ended April 23, 2009 and have adjusted our opening balance sheet and goodwill accordingly. We have determined that the impact of these adjustments recorded in the first quarter of fiscal 2010 were immaterial to our results of operations in all applicable prior interim and annual periods. As a result, we have not restated any prior period amounts.

NOTE 2 – Earnings Per Share:

Prior to the Refinancing, we had outstanding two classes of common stock (common stock and Class B stock) and a class of preferred stock 7.5% Series A Convertible Preferred Stock, (referred to herein as the “Series A Preferred Stock). Both the Class B stock and the Series A Preferred Stock were convertible into common stock. To the extent declared by our Board of Directors (the “Board”), the common stock was entitled to cash dividends of at least ten percent higher than those declared and paid on our Class B stock, and the Series A Preferred Stock was also entitled to receive such dividends on an as-converted basis if and when declared by the Board.

As part of the Refinancing, we issued Series A-1 Preferred Stock and Series B Preferred Stock. To the extent declared by our Board, the Series A-1 Preferred Stock and Series B Preferred Stock were also entitled to receive such dividends on an as-converted basis if and when declared by the Board. The Series A Preferred Stock, Series A-1 Preferred Stock and Series B Preferred Stock are considered “participating securities” requiring use of the “two-class” method for the computation of basic net income (loss) per share. Losses were not allocated to the Series A Preferred Stock, Series A-1 Preferred Stock or Series B Preferred Stock in the computation of basic earnings per share (“EPS”) as the Series A Preferred Stock, Series A-1 Preferred Stock and the Series B Preferred Stock were not obligated to share in losses. Diluted earnings per share is computed using the “if-converted” method.

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

Common equivalent shares are excluded in periods in which they are anti-dilutive. Options, restricted stock, restricted stock units (“RSUs”) (see Note 9 – Equity-Based Compensation), warrants and Series A Preferred Stock were excluded from the Predecessor Company calculations of diluted earnings per share because the conversion price, combined exercise price, unamortized fair value and excess tax benefits were greater than the average market price of our common stock for the periods presented. Options, restricted stock and RSUs were excluded from the Successor Company calculations of diluted earnings per share because combined exercise price, unamortized fair value and excess tax benefits were greater than the average market price of our common stock for the periods presented. EPS calculations for all periods reflect the effect of the 200 for 1 reverse stock split that occurred on August 3, 2009.

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

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

NOTE 3 – Related Party Transactions:

Gores Radio Holdings

We have a related party relationship with Gores. As a result of our Refinancing, Gores created a holding company which currently owns approximately 74.3% of our equity and is our ultimate parent company. Gores currently also holds $10,984 (including paid in kind interest) of our Senior Notes as a result of purchasing debt from certain of our former debt holders who did not wish to participate in the issuance of the Senior Notes on April 23, 2009 in connection with our Refinancing. Such debt is classified as Due to Gores on our balance sheet.

We recorded fees related to consultancy and advisory services rendered by, and incurred on behalf of, Gores and Glendon Partners, an operating group affiliated with Gores as follows:

		Successor Company					Predecessor Company
		Three Months Ended					Three Months Ended
		March 31, 2010					March 31, 2009
Glendon Partners fees		$	312	(1)			$	650
Reimbursement of legal fees			8					1,063
Reimbursement of letter-of-credit fees			63	(2)				—
		$	383				$	1,713

POP Radio

We also have a related party relationship, including a sales representation agreement, with our investee, POP Radio, L.P. We recorded fees as follows:

		Successor Company					Predecessor Company
		Three Months Ended					Three Months Ended
		March 31, 2010					March 31, 2009
Program commission expense		$	361				$	331

CBS Radio

As a result of the Refinancing, CBS Radio, which previously owned approximately 15.8% of our common stock, now owns less than 1% of our common stock. As a result of this change in ownership and the fact that CBS Radio ceased to manage us in March 2008, we no longer consider CBS Radio to be a related party. This change became effective as of August 3, 2009 because on such date, all of the Preferred Stock then outstanding was converted into common stock. As of August 3, 2009, we ceased recording payments to CBS as related party expenses or amounts due to related parties.

On March 3, 2008, we closed on the new Master Agreement with CBS Radio, which documents a long-term arrangement through March 31, 2017. As part of the new arrangement, CBS Radio agreed to broadcast certain of our local/regional and national commercial inventory through March 31, 2017 in exchange for certain programming and/or cash compensation. Additionally, the News Programming Agreement, the Technical Services Agreement and the Trademark License Agreement were amended and restated and extended through March 31, 2017.

We incurred programming and affiliate arrangements expenses of $16,773 and news agreement expenses of $3,247 for the three months ended March 31, 2009, relating to transactions with CBS Radio and/or its affiliates. Expenses incurred for programming and affiliate arrangements are included as a component of operating costs in the accompanying Consolidated Statement of Operations. The description and amounts regarding related party transactions set forth in these consolidated financial statements and related notes, also reflect transactions between the Company and Viacom. Viacom is an affiliate of CBS Radio, as National Amusements, Inc. beneficially owns a majority of the voting power of all classes of common stock of each of CBS Corporation and Viacom.

A summary of related party expense by expense category is as follows:

		Successor Company					Predecessor Company
		Three Months Ended					Three Months Ended
		March 31, 2010					March 31, 2009
Operating costs		$	361				$	20,351
Special charges			320					1,713
Interest expense			63					—
		$	744				$	22,064

NOTE 4 – Property and Equipment:

Property and equipment is recorded at cost and is summarized as follows:

		March 31, 2010				December 31, 2009
Land, buildings and improvements		$	9,900			$	10,830
Recording, broadcasting and studio equipment			22,411				20,581
Furniture, equipment and other			11,467				11,592
			43,778				43,003
Less: Accumulated depreciation and amortization			8,332				6,738
Property and equipment, net		$	35,446			$	36,265

Depreciation expense was $2,070 and $1,880 for the quarters ended March 31, 2010 and 2009, respectively. In 2001, we entered into a capital lease for satellite transponders totaling $6,723. The allocation of the business enterprise value for the capital lease at April 24, 2009 was $7,355. Accumulated amortization related to the capital lease was $6,023 and $5,787 as of March 31, 2010 and December 31, 2009, respectively.

NOTE 5 – Intangible Assets:

In accordance with the authoritative guidance which is applicable to the Refinancing, we revalued our intangibles using our best estimate of current fair value. The value assigned to our only indefinite lived intangible assets, our trademarks, are not amortized to expense but tested at least annually for impairment or upon a triggering event. Our identified definite lived intangible assets are: our relationships with radio and television affiliates, and other distribution partners from whom we obtain commercial airtime that we sell to advertisers; internally developed software for systems unique to our business; contracts which provide information and talent for our programming; real estate leases; and insertion order commitments from advertisers. The values assigned to definite lived assets are amortized over their estimated useful life using, where applicable, contract completion dates, lease expiration dates, historical data on affiliate relationships and software usage. On an annual basis and upon the occurrence of certain events, we are required to perform impairment tests on our identified intangible assets with indefinite lives, including goodwill, which testing could impact the value of our business.

Intangible assets by asset type and estimated life as of March 31, 2010 and December 31, 2009 are as follows:

						As of March 31, 2010												As of December 31, 2009
						Gross								Net				Gross								Net
		Estimated				Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
		Life				Value				Amortization				Value				Value				Amortization				Value
Trademarks		Indefinite				$	20,800			$	—			$	20,800			$	20,800			$	—			$	20,800
Affiliate relationships		10 years					72,100				(6,755	)			65,345				72,100				(4,953	)			67,147
Software and technology		5 years					7,896				(1,287	)			6,609				7,896				(890	)			7,006
Client contracts		5 years					8,930				(1,858	)			7,072				8,930				(1,363	)			7,567
Leases		7 years					980				(135	)			845				980				(100	)			880
Insertion orders		9 months					—				—				—				8,400				(8,400	)			—
						$	110,706			$	(10,035	)		$	100,671			$	119,106			$	(15,706	)		$	103,400

Amortization expense of intangible assets was $2,729 and $183 for the three months ended March 31, 2010 and 2009, respectively.

NOTE 6 – Goodwill:

Goodwill represents the excess of cost over fair value of net assets of businesses acquired. In accordance with authoritative guidance, the value assigned to goodwill and indefinite lived intangible assets is not amortized to expense, but rather the estimated fair value of the reporting unit is compared to its carrying amount on at least an annual basis to determine if there is a potential impairment. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit goodwill and intangible assets is less than their carrying value. On an annual basis and upon the occurrence of certain events, we are required to perform impairment tests on our identified intangible assets with indefinite lives, including goodwill, which testing could impact the value of our business. We did not perform an impairment test on our identified intangible assets with indefinite lives, including goodwill, as of March 31, 2010.

On March 31, 2010, we recorded a prior period adjustment of $428 to increase goodwill related to a correction of our current liabilities as of April 24, 2009 (See Note 1 — Basis of Presentation).

The changes in the carrying amount of goodwill for the three months ended March 31, 2010 are as follows:

		Total				Metro Traffic				Network
Balance January 1, 2010		$	38,917			$	13,005			$	25,912
Adjustments to opening balance			28				144				(116	)
Balance at March 31, 2010		$	38,945			$	13,149			$	25,796

The gross amount of goodwill, accumulated impairment losses and carrying amount of goodwill for the three months ended March 31, 2010 are as follows:

		Total				Metro Traffic				Network
Goodwill at April 24, 2009		$	89,346			$	63,550			$	25,796
Accumulated impairment losses from April 24, 2009 to March 31, 2010			(50,401	)			(50,401	)			—
Balance at March 31, 2010		$	38,945			$	13,149			$	25,796

NOTE 7 – Debt:

On April 23, 2009, we completed the Refinancing and entered into our Senior Credit Facility and a Securities Purchase Agreement. The Senior Credit Facility includes a $15,000 senior unsecured revolving credit facility, which has a $2,000 letter of credit sub-facility and a $20,000 unsecured non-amortizing term loan. As of March 31, 2010 and December 31, 2009, respectively, we had borrowed the entire amount under the term loan and $8,000 and $5,000 under the revolving credit facility.

Our present financial condition has caused us to amend the agreements governing our indebtedness and to institute certain cost saving measures. If our financial condition does not improve, we may need to take additional actions designed to respond to or improve our financial condition and we cannot assure you that any such actions would be successful in improving our financial position. As a result of the on-going variability in our financial position we have taken certain actions designed to respond to and improve our current financial position. On October 14, 2009, we entered into separate agreements with the holders of our Senior Notes and Wells Fargo Capital Finance, LLC (“Wells Fargo”) to amend the terms of our Securities Purchase Agreement (governing the Senior Notes) and Credit Agreement (governing the Senior Credit Facility), respectively, to waive compliance with our debt leverage covenants which were to be measured on December 31, 2009 on a trailing four-quarter basis. As part of the Securities Purchase Agreement amendment, we paid down our Senior Notes by $3,500 on March 31, 2010.

On March 30, 2010, we entered into additional agreements with the holders of our Senior Notes and Wells Fargo to amend the terms of our Securities Purchase Agreement (governing the Senior Notes) and Credit Agreement (governing the Senior Credit Facility), respectively, to modify our debt leverage covenants for periods to be measured (on a trailing four-quarter basis) on March 31, 2010 and beyond. As part of the amendment to the Securities Purchase Agreement, the quarterly debt leverage covenants for 2010 have been eased to levels of 8.00, 7.50, 7.00 and 6.50, respectively and the original quarterly covenants for 2010 now apply to 2011. The original quarterly covenants for 2012 remain unchanged. The amendment to the Securities Purchase Agreement also states that we will pay down our Senior Notes out of the proceeds of the tax refund we anticipate receiving in the second or third quarter of 2010. The first $12,000 of such refund and any refund amount in excess of $17,000 will be used to pay down our Senior Notes. Gores has agreed to guarantee up to a $10,000 pay down of the Senior Notes if such refund is not received on or prior to August 16, 2010. The quarterly debt leverage covenants that appear in the Credit Agreement (governing the Senior Credit Facility) have also been amended to maintain the additional 15% cushion that exists between the debt leverage covenants applicable to the Senior Credit Facility and the corresponding covenants applicable to the Senior Notes. By way of example, the 8.00, 7.50, 7.00 and 6.50 covenants in the Securities Purchase Agreement (applicable to the Senior Notes) are 9.20, 8.65, 8.05 and 7.50, respectively, in the Credit Agreement (governing the Senior Credit Facility).

Long-term debt, including current maturities of long-term debt and due to Gores are as follows:

		March 31, 2010				December 31, 2009
Senior Secured Notes due on July 15, 2012 (1)		$	108,967			$	110,762
Due to Gores (1)			10,984				11,165
Term Loan (2)			20,000				20,000
Revolving Credit Facility (2)			8,000				5,000
		$	147,951			$	146,927

NOTE 8 – Fair Value Measurements:

Fair Value of Financial Instruments

Our financial instruments include cash, cash equivalents, receivables, accounts payable and borrowings. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximated carrying values because of the short-term nature of these instruments. The estimated fair value of the borrowings was based on estimated rates for long-term debt with similar debt ratings held by comparable companies. The carrying amount and estimated fair value for borrowings are as follows:

		March 31, 2010								December 31, 2009
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
Borrowings (short and long term)		$	139,951			$	146,225			$	141,927			$	148,425

The authoritative guidance establishes a common definition of fair value to be applied under GAAP, which requires the use of fair value, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Fair Value Hierarchy

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

•

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

•

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

•

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

The authoritative guidance requires the use of observable market data if such data is available without undue cost and effort.

Items Measured at Fair Value on a Recurring Basis

The following table sets forth our financial assets and liabilities that were accounted for, at fair value on a recurring basis:

		Level 1								Level 2								Level 3
		Quoted Prices in Active								Significant Other								Significant
		Markets for Identical Assets								Observable Inputs								Unobservable Inputs
		March 31, 2010				December 31, 2009				March 31, 2010				December 31, 2009				March 31, 2010				December 31, 2009
Assets:
Investments (1)		$	1,108			$	968			$	—			$	—			$	—			$	—
		$	1,108			$	968			$	—			$	—			$	—			$	—

NOTE 9 – Equity-Based Compensation:

We have issued equity compensation to our directors, officers and key employees under three plans, the 1999 Stock Incentive Plan (the “1999 Plan”), the 2005 Equity Compensation Plan (the “2005 Plan”) and the 2010 Equity Compensation Plan (defined below as the “2010 Plan”). Although the 1999 Plan expired in early 2009 and no additional equity compensation may be issued pursuant to such plan, certain awards remain outstanding thereunder. Only stock options were issued under the 1999 Plan.

In 2005, our stockholders approved the 2005 Plan that allowed us to grant stock options, restricted stock and RSUs to our directors, officers and key employees. Effective February 12, 2010, the Board amended and restated the 2005 Plan because we had a limited number of shares available for issuance thereunder (such plan, as amended and restated, the “2010 Plan”).

Stock Options

Options granted under our equity compensation plans vest over periods ranging from 2 to 5 years, generally commencing on the anniversary date of each grant. Options expire within ten years from the date of grant. On February 12, 2010, we granted 1,998 options with an exercise price of $6.00 to 56 employees, which vest over 3 years. These stock options awarded in 2010 by the Board (and reflected in the tables below) remain subject to formal stockholder approval. In accordance with the authoritative guidance, the options are considered outstanding since formal approval is essentially a formality, given that Gores controls enough votes on the Board to approve the 2010 Plan and options.

Stock option activity for the period from January 1, 2010 to March 31, 2010 is as follows:

						Weighted Average
		Shares				Exercise Price
Outstanding January 1, 2010			28.6			$	1,345
Granted			1,998.0			$	6
Exercised			—			$	—
Cancelled, forfeited or expired			(0.6	)		$	5,747
Outstanding March 31, 2010			2,026.0			$	23
Options exercisable March 31, 2010			15.6			$	2,081
Aggregate estimated fair value of options vesting during three months ended March 31, 2010		$	692

At March 31, 2010, vested and exercisable options had an aggregate intrinsic value of $0 and a weighted average remaining contractual term of 6.37 years. Additionally, at March 31, 2010, 1,673 options were expected to vest with a weighted average exercise price of $27, a weighted average remaining term of 9.83 years and an aggregate intrinsic value of $3,240. No options were exercised during the three months ended March 31, 2010. The aggregate intrinsic value of options represents the total pre-tax intrinsic value (the difference between our closing stock price at the end of the period and the option’s exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options at that time.

As of March 31, 2010, there was $9,475 of unearned compensation cost related to stock options granted under all of our equity compensation plans. That cost is expected to be recognized over a weighted-average period of 2.71 years.

The estimated fair value of options granted during the first quarter of 2010 was measured on the date of grant using the Black-Scholes option pricing model using the weighted average assumptions as follows:

Risk-free interest rate			2.35	%
Expected term (years)			5.0
Expected volatility			98.6	%
Expected dividend yield			0.00	%
Weighted average fair value of options granted		$	4.47

Restricted Stock

Restricted stock granted under our 2005 Plan vest over periods ranging from 2 to 4 years, generally commencing on the anniversary date of each grant. Recipients of restricted stock are entitled to the same dividends and voting rights as common stock and, once issued, such stock is considered to be currently issued and outstanding (even when unvested). The cost of restricted stock awards, calculated as the fair market value of the shares on the date of grant, net of estimated forfeitures, was expensed ratably over the vesting period. As of March 31, 2010, there was no unearned compensation cost related to restricted stock.

Restricted stock activity for the period from January 1, 2010 to March 31, 2010 is as follows:

						Weighted Average
		Shares				Grant Date Fair Value
Outstanding January 1, 2010			0.8			$	1,504
Granted			—				—
Converted to common stock			(0.8	)		$	1,504
Forfeited			—				—
Outstanding March 31, 2010			—				—

Restricted Stock Units

With rare exceptions, RSUs are typically awarded only to directors, not officers or key employees. Under the 2005 Plan (the only plan under which RSU awards have been issued), RSUs awarded to directors vested over 3 years. Directors’ RSUs vest automatically, in full, upon a change in control or upon their retirement, as defined in the 2005 Plan. RSUs are payable in newly issued shares of our common stock. Recipients of RSUs are entitled to receive dividend equivalents (subject to vesting) when and if we pay a cash dividend on our common stock. Such dividend equivalents are payable, in newly issued shares of common stock, only upon the vesting of the related restricted shares. Unlike restricted stock, RSUs do not have the same voting rights as common stock, and the shares underlying the RSUs are not considered to be issued and outstanding until they vest. In 2010, the Company moved to a different compensation structure to compensate its directors. As part of this change, our independent non-employee directors will once again receive annual awards of RSUs valued in an amount of $35, which awards will vest in 2 year installments, beginning on the anniversary of the grant date. The awards will vest automatically upon a change in control (as defined in the 2010 Plan). The terms of the awards will be governed by the terms of the 2010 Plan. No RSUs have been granted under the 2010 Plan and we anticipate that such RSU awards will be granted on the date the Company’s 2010 annual stockholders meeting is held. There were no RSUs awarded during the three months ended March 31, 2010 and accordingly, as of March 31, 2010, there was no unearned compensation cost related to RSUs.

RSU activity for the period from January 1, 2010 to March 31, 2010 is as follows:

						Weighted Average
		Shares				Grant Date Fair Value
Outstanding January 1, 2010			0.1			$	1,314
Granted			—				—
Converted to common stock			—				—
Forfeited			—				—
Outstanding March 31, 2010			0.1			$	1,314

Compensation expense in the Statement of Operations related to equity-based awards is as follows:

		Successor Company					Predecessor Company
		For the Three Months Ended					For the Three Months Ended
		March 31, 2010					March 31, 2009
Operating costs		$	814				$	918
General and administrative expense			245					434
		$	1,059				$	1,352

NOTE 10 – Comprehensive Income (Loss):

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

		Successor Company					Predecessor Company
		For the Three Months					For the Three Months
		Ended March 31, 2010					Ended March 31, 2009
Net loss		$	(6,723	)			$	(15,186	)
Unrealized gain on marketable securities, net effect of income taxes			86					135
Comprehensive loss		$	(6,637	)			$	(15,051	)

NOTE 11– Income Taxes:

We use the asset and liability method of financial accounting and reporting for income taxes. Deferred income taxes reflect the tax impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. We classified interest expense and penalties related to unrecognized tax benefits as income tax expense.

The authoritative guidance clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the recognition and measurement of a tax position taken or expected to be taken in a tax return. The evaluation of a tax position in accordance with this interpretation is a two-step process. The first step is recognition, in which the enterprise determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of the liability to recognize in the financial statements.

We determined, based upon the weight of available evidence, that it is more likely than not that our deferred tax asset will be realized. We have taxable temporary differences that can be used as a source of income. As such, no valuation allowance was recorded during the quarters ended March 31, 2010 or 2009 or for the year ended December 31, 2009. We will continue to assess the need for a valuation allowance at each future reporting period.

We have substantially completed our allocation of the purchase price / enterprise value for purposes of the April 24, 2009 opening balance sheet with respect to income taxes.

NOTE 12 – Restructuring Charges:

In the third quarter of 2008, we announced a plan to restructure our Metro Traffic segment (the “Metro Traffic re-engineering”) and to implement other cost reductions. The Metro Traffic re-engineering entailed reducing the number of our Metro Traffic operational hubs from 60 to 13 regional centers and produced meaningful reductions in labor expense, aviation expense, station compensation, program commissions and rent.

The Metro Traffic re-engineering initiative began in the second half of 2008 and continued in 2009. In the first half of 2009, we undertook additional reductions in our workforce and terminated certain contracts. In connection with the Metro Traffic re-engineering and other cost reduction initiatives, we recorded $743, $3,976, $3,976 and $14,100, of restructuring charges in the first quarter of 2010, the period ended December 31, 2009, the period ended April 23, 2009 and the second half of 2008, respectively. The Metro Traffic re-engineering initiative has been completed. We do not expect to incur any further material costs in connection with this initiative (other than adjustments for changes, if any, resulting from revisions to estimated facilities sub-lease cash flows after the cease-use date (i.e., the day we exited the facilities) and we anticipate that the accrued expense balances will be paid over the next 8.25 years.

The restructuring charges identified in the Consolidated Statement of Operations are comprised of the following:

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

NOTE 13 – Special Charges:

The special charges line item on the Consolidated Statement of Operations is comprised of the following:

		Successor Company					Predecessor Company
		For the Quarter Ended					For the Quarter Ended
		March 31, 2010					March 31, 2009
Senior Credit Agreement amendment costs		$	579				$	—
Employment claim settlements			483					—
Gores fees			320					1,713
Fees related to the Refinancing			114					4,000
Corporate development costs			201					—
Regionalization costs			126					96
		$	1,823				$	5,809

The Senior Credit Agreement amendment costs are professional fees incurred by us in connection with the March 2010 agreements we negotiated with our lenders to amend the debt leverage covenants in our Securities Purchase Agreement and Credit Agreement. Employment claim settlements are related to employee terminations that occurred prior to 2008. Gores fees are related to professional services rendered by various members of Glendon to us in the areas of operational improvement, tax, finance, accounting, legal and insurance/risk management. Fees related to the Refinancing for the first quarter of 2009 include transaction fees and expenses related to negotiation of the definitive documentation, including the fees of various legal and financial advisors for the constituents involved in the Refinancing (e.g. Westwood One, the banks, noteholders and the lenders of the new Senior Credit Facility) and other professional fees. Fees related to the Refinancing for the first quarter of 2010 include tax consulting costs related to the finalization of the income tax treatment of the Refinancing. Corporate development costs include professional fees related to the evaluation of potential business development activity including acquisitions and dispositions. Regionalization costs are expenses related to reducing the number of our Metro Traffic operational hubs from 60 to 13 regional centers, including facility expenses.

NOTE 14 – Segment Information:

We manage and report our business in two operating segments: Metro Traffic and Network. Beginning with the first quarter of 2010, we changed how we evaluate segment performance and now use segment revenue and segment operating (loss) income before depreciation and amortization (“Segment OIBDA”) as the primary measure of profit and loss for our operating segments in accordance with FASB guidance for segment reporting. We have reflected this change in all periods presented in this report. We believe the presentation of Segment OIBDA is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by our management and enhances their ability to understand our operating performance. Administrative functions such as finance, human resources and information systems are centralized. However, where applicable, portions of the administrative function costs are allocated between the operating segments. The operating segments do not share programming or report distribution. In the event any materials and/or services are provided to one operating segment by the other, the transaction is valued at fair market value. Operating costs, capital expenditures and total assets are captured discretely within each segment.

We report certain administrative activities under corporate. We are domiciled in the United States with limited international operations comprising less than one percent of our revenue. No one customer represented more than 10% of our consolidated revenue.

Revenue for the quarters ended March 31, 2010 and 2009 is summarized below by segment:

		Successor Company					Predecessor Company
		For the Quarter Ended					For the Quarter Ended
		March 31, 2010					March 31, 2009
Revenue
Metro Traffic		$	37,267				$	34,683
Network			55,575					51,184
		$	92,842				$	85,867

Segment OIBDA for the quarters ended March 31, 2010 and 2009 is summarized below by segment:

		Successor Company					Predecessor Company
		For the Quarter Ended					For the Quarter Ended
		March 31, 2010					March 31, 2009
Segment OIBDA
Metro Traffic (1)		$	(1,566	)			$	(4,327	)
Network (1)			4,897					(1,884	)
Corporate			(2,849	)				(2,081	)
Restructuring and special charges			(2,566	)				(9,249	)
OIBDA			(2,084	)				(17,541	)
Depreciation and amortization			(4,496	)				(2,063	)
Operating loss			(6,580	)				(19,604	)
Interest expense			(5,376	)				(3,263	)
Other (expense) income			(1	)				300
Loss before income taxes			(11,957	)				(22,567	)
Income tax benefit			(5,234	)				(7,381	)
Net Loss		$	(6,723	)			$	(15,186	)

Segment depreciation, unusual items and capital expenditures for the quarters ended March 31, 2010 and 2009 is summarized below by segment:

		Successor Company					Predecessor Company
		For the Quarter Ended					For the Quarter Ended
		March 31, 2010					March 31, 2009
Depreciation and amortization:
Metro Traffic		$	3,100				$	1,185
Network			1,389					871
Corporate			7					7
		$	4,496				$	2,063

		Successor Company					Predecessor Company
		For the Quarter Ended					For the Quarter Ended
		March 31, 2010					March 31, 2009
Capital expenditures:
Metro Traffic		$	1,592				$	675
Network			583					494
Corporate			8					—
		$	2,183				$	1,169

Identifiable assets by segment at March 31, 2010 and December 31, 2009 are summarized below:

		March 31, 2010				December 31, 2009
Total assets
Metro Traffic		$	140,810			$	147,387
Network			125,827				131,632
Corporate			37,394				28,299
		$	304,031			$	307,318

NOTE 15 – Recent Accounting Pronouncements:

In February 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements (“ASU 2010-09”). ASU 2010-09 removes the requirement for an SEC registrant to disclose the date through which subsequent events were evaluated as this requirement would have potentially conflicted with SEC reporting requirements. Removal of the disclosure requirement is not expected to affect the nature or timing of subsequent events evaluations performed by the Company. This ASU became effective upon issuance. Our adoption of the new guidance did not have an impact on our consolidated financial position or results of operations.

In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 revises two disclosure requirements concerning fair value measurements and clarifies two others. It requires separate presentation of significant transfers into and out of Levels 1 and 2 of the fair value hierarchy and disclosure of the reasons for such transfers. It will also require the presentation of purchases, sales, issuances and settlements within Level 3 of the fair value hierarchy on a gross basis rather than a net basis. The amendments also clarify that disclosures should be disaggregated by class of asset or liability and that disclosures about inputs and valuation techniques should be provided for both recurring and non-recurring fair value measurements. Our disclosures about fair value measurements are presented in Note 8 – Fair Value Measurements. These new disclosure requirements will first apply to us in our financial statements for the period ending June 30, 2010, except for the requirement concerning gross presentation of Level 3 activity, which is effective for fiscal years beginning after December 15, 2010. We are evaluating the effects of this standard and do not expect its adoption to have a material impact on our consolidated financial position or results of operations.

In April 2009, the FASB issued new guidance intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities. New guidance related to determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly provides additional guidelines for estimating fair value in accordance with pre-existing guidance on fair value measurements. New guidance on recognition and presentation of other-than-temporary impairments provides additional guidance related to the disclosure of impairment losses on securities and the accounting for impairment losses on debt securities, but does not amend existing guidance related to other-than-temporary impairments of equity securities. Lastly, new guidance on interim disclosures about the fair value of financial instruments increases the frequency of fair value disclosures. The new guidance was effective for fiscal years and interim periods ended after June 15, 2009. As such, we adopted the new guidance in the second quarter ended June 30, 2009, and have included the additional required disclosures about the fair value of financial instruments and valuation techniques within Note 5 – Intangible Assets and Note 8 — Fair Value Measurements. Our adoption of the new guidance did not have a material impact on our consolidated financial position or results of operations.

In March 2009, the FASB issued new guidance intended to provide additional application guidance for the initial recognition and measurement, subsequent measurement, and disclosures of assets and liabilities arising from contingencies in a business combination and for pre-existing contingent consideration assumed as part of the business combination. It establishes principles and requirements for how an acquirer recognizes and measures the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. The new guidance also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. We adopted the new guidance on January 1, 2009. The adoption of the new guidance impacted the accounting for our Refinancing, as described above, and for the acquisition of Jaytu Technologies, LLC, doing business as SigAlert, in the fourth quarter of 2009.

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

EXECUTIVE OVERVIEW

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included elsewhere in this report and the annual audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009.

We produce and provide traffic, news, weather, sports, talk, music, special events and other programming content. Our content is distributed to radio and television stations and digital platforms and reaches over 190 million people. We are one of the largest domestic outsourced providers of traffic reporting services and one of the nation’s largest radio networks, delivering content to approximately 5,000 radio and 170 television stations in the U.S. We exchange our content with radio and television stations for commercial airtime, which we then sell to local, regional and national advertisers. By aggregating and packaging commercial airtime across radio and television stations nationwide, we are able to offer our advertising customers a cost effective way to reach a broad audience and target their audience on a demographic and geographic basis.

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

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

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

For the last several years through 2009, our network revenue was trending downward due principally to reductions in national audience levels and lower clearance and audience levels of our affiliated stations. Similarly, our local/regional revenue has been trending downward due principally to increased competition, reductions in our local/regional sales force and an increase in the amount of 10 second inventory being sold by radio stations. Our operating performance has also been affected by the weakness in the United States economy and advertiser demand for radio-related advertising products. However, as described below, in the first quarter ended March 31, 2010, radio advertising spending has begun to improve and we have been increasing our sales force. As a result, our radio revenue has begun to increase, particularly in the Network business. While we cannot predict if this upward trend will continue for a sustained period, we are cautiously optimistic that as the economy rebounds, our revenue will continue to increase.

The principal components of our operating expenses are programming, production and distribution costs (including affiliate compensation and broadcast rights fees), selling expenses including commissions, promotional expenses and bad debt expenses, depreciation and amortization, and corporate general and administrative expenses. Corporate general and administrative expenses are primarily comprised of costs associated with corporate accounting, legal, personnel costs, and other administrative expenses, including those associated with corporate governance matters. Special charges include one-time expenses associated with the 2009 and 2008 Gores investment, refinancing/recapitalization costs, compensation settlements related to employee terminations that occurred prior to 2008, and re-engineering expenses.

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

We engaged consultants for the most part to assist us in determining the most cost effective manner to gather and disseminate traffic information to our constituents. As a result, we announced the Metro Traffic re-engineering initiative that was implemented in the last half of 2008. The modifications to the Metro Traffic business are part of a series of re-engineering initiatives identified by us to improve our operating and financial performance in the near-term, while setting the foundation for profitable long-term growth. These changes resulted in a reduction of staff levels and the consolidation of operations centers into 13 regional hubs by the end of 2009.

The new arrangement with CBS Radio is particularly important to us, as in recent years, the radio broadcasting industry has experienced a significant amount of consolidation. As a result, certain major radio station groups, including Clear Channel Communications and CBS Radio, have emerged as powerful forces in the industry. While we provide programming to all major radio station groups, our extended affiliation agreements with most of CBS Radio’s owned and operated radio stations provide us with a significant portion of the audience that we sell to advertisers.

Prior to the new CBS arrangement which closed on March 3, 2008, many of our affiliation agreements with CBS Radio did not tie station compensation to audience levels or clearance levels. Such contributed to a significant decline in our national audience delivery to advertisers when CBS Radio stations delivered lower audience levels and broadcast fewer commercials than in earlier years. Our new arrangement with CBS mitigates both of these circumstances by adjusting affiliate compensation for changes in audience levels. In addition, the arrangement provides CBS Radio with financial incentives to broadcast substantially all our commercial inventory (referred to as “clearance”) in accordance with the terms of the contracts and significant penalties for not complying with the contractual terms of our arrangement. We believe that CBS Radio has taken and will continue to take the necessary steps to stabilize and increase the audience reached by its stations. It should be noted however, that as CBS takes steps to increase its compliance with our affiliation agreements, our operating costs will increase before we will be able to increase prices for the larger audience we will deliver, which was and may continue to be a contributing factor to the decline in our operating income. As part of our recent cost reduction actions to reduce station compensation expense, we and CBS Radio mutually agreed to enter into an arrangement, which became effective on February 15, 2010, to give back station inventory representing approximately 15% of the audience delivered by CBS Radio. This resulted in a commensurate reduction in cash compensation payable to them. To help deliver consistent RADAR audience levels over time, we have added incremental non-CBS inventory. We have added incremental non-CBS inventory. We actively manage our inventory, including by purchasing additional inventory for cash. We have also added Metro Traffic inventory from CBS Radio through various stand-alone agreements.

Results of Operations

We are organized into two business segments; Metro Traffic and Network.

Our Metro Traffic business produces and distributes traffic and other local information reports (such as news, sports and weather) to approximately 2,200 radio and 170 television stations, which include stations in over 80 of the top 100 Metropolitan Statistical Area (“MSA”) markets in the U.S. Our Metro Traffic business generates revenue from the sale of commercial advertising inventory to advertisers (typically 10 and 15 second radio spots embedded within our information reports and 30 second spots in television). We provide broadcasters a cost-effective alternative to gathering and delivering their own traffic and local information reports and offer advertisers a more efficient, broad reaching alternative to purchasing advertising directly from individual radio and television stations.

Our Network business nationally syndicates proprietary and licensed content to radio stations, enabling them to meet their programming needs on a cost-effective basis. The programming includes national news and sports content, such as CBS Radio News, CNN Radio News and NBC Radio News and major sporting events, including the National Football League (including the Super Bowl), NCAA football and basketball games (including the Men’s College Basketball Tournament known as “March Madness”) and the 2010 Winter Olympic Games. Our Network business features popular shows that we produce with personalities including Dennis Miller, Charles Osgood, Fred Thompson and Billy Bush. We also feature special events such as live concert broadcasts, countdown shows (including MTV and Country Music Television branded programs), music and interview programs. Our Network business generates revenue from the sale of 30 and 60 second commercial airtime, often embedded in our programming that we bundle and sell to national advertisers who want to reach a large audience across numerous radio stations.

Our consolidated financial statements and transactional records prior to the closing of the Refinancing reflect the historical accounting basis in our assets and liabilities and are labeled Predecessor Company, while such records subsequent to the Refinancing are labeled Successor Company and reflect the push down basis of accounting for the new fair values in our financial statements. This is presented in our consolidated financial statements by a vertical black line division which appears between the sections entitled Predecessor Company and Successor Company on the statements and relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the Refinancing are not comparable. For management purposes we continue to measure our performance against comparable prior periods.

Three Months Ended March 31, 2010 Compared With Three Months Ended March 31, 2009

Revenue

Revenue presented by operating segment for the three month periods ending March 31, 2010 and 2009 is as follows:

										Favorable / (Unfavorable)
		2010				2009				$ Amount				%
Metro Traffic		$	37,267			$	34,683			$	2,584				7.5	%
Network			55,575				51,184				4,391				8.6	%
Total (1)		$	92,842			$	85,867			$	6,975				8.1	%

For the three months ended March 31, 2010, revenue increased $6,975 or 8.1%, to $92,842 compared with $85,867 for the three months ended March 31, 2009. This increase in revenue for the first quarter was the first year-over-year quarterly increase since the second quarter of 2005. The increase is the result of higher revenue in both segments of our business.

Metro Traffic revenue for the three months ended March 31, 2010 increased $2,584 or 7.5% to $37,267 from $34,683 for the same period in 2009. The increase in Metro Traffic revenue was principally related to an increase in the revenue from television and radio advertising, primarily in the automotive and quick service restaurant sectors.

For the three months ended March 31, 2010, Network revenue was $55,575 compared to $51,184 for the comparable period in 2009, an increase of 8.6% or $4,391. The increase resulted from increased sports advertising revenue primarily related to the 2010 Winter Olympics, the NCAA Men’s College Basketball Tournament and NFL games, and new programming for The Weather Channel. These increases were partially offset by a decline in advertising revenue from our talk radio programs as a result of the cancellation of three programs, Air America Radio, The Radio Factor hosted by Bill O’Reilly and The Adam Carolla Show.

Operating Costs

Operating costs for the three months ended March 31, 2010 and 2009 are as follows:

										Favorable / (Unfavorable)
		2010				2009				$ Amount				%
Payroll and payroll related		$	20,961			$	21,122			$	161				0.8	%
Programming and production			24,790				27,482				2,692				9.8	%
Program and operating			7,903				4,570				(3,333	)			(72.9	)%
Station compensation			18,491				19,769				1,278				6.5	%
Other operating expenses			17,196				18,450				1,254				6.8	%
		$	89,341			$	91,393			$	2,052				2.2	%

Operating costs decreased $2,052, or 2.2%, to $89,341 in the first quarter of 2010 from $91,393 in the first quarter of 2009, primarily as a result of restructuring and cost saving programs we began in 2008 and continued in 2009. This was partially offset by an increase in program and operating costs of $3,333, predominantly as a result of increased cash buys for television and local radio inventory. The decrease in operating costs is primarily attributable to reductions in costs for: (i) programming and production of $2,692, related to talent and broadcast rights fees and aviation, (ii) station compensation costs of $1,278 primarily due to the renegotiation and cancellation of certain affiliate arrangements and (iii) other operating costs of $1,254, primarily from lower costs for legal, bad debt, news agreements and rent, partially offset by higher accounting and auditing fees, promotion and communication expense. Payroll and payroll related costs decreased $161 reflecting the benefit of our re-engineering and cost reduction programs which began in the last half of 2008, partially offset by costs related to additional sales hires in the first quarter of 2010 and variable compensation tied to revenue.

Depreciation and Amortization

Depreciation and amortization increased $2,433, or 118%, to $4,496 in the first quarter of 2010 from $2,063 in the first quarter of 2009. The increase is primarily attributable to the increase in the fair value of amortizable intangibles that were recorded as a result of the Refinancing and our application of “push down” acquisition accounting, and by increased depreciation and amortization from our additional investments in systems and infrastructure.

Corporate General and Administrative Expenses

Corporate, general and administrative expenses increased $253, or 9.1% to $3,019 for the three months ended March 31, 2010 compared to $2,766 for the three months ended March 31, 2009. The increase is principally due to higher accounting fees, partially offset by decreases in legal and consulting fees and equity-based compensation expense.

Restructuring Charges

During the three months ended March 31, 2010 and 2009, we recorded $743 and $3,440, respectively for restructuring charges. For the 2010 period, restructuring charges included Metro Traffic re-engineering costs of $352 for real estate expense, $249 resulting from revisions to estimated cash flows for our closed facilities and $142 for severance.

Special Charges

We incurred expenses aggregating $1,823 and $5,809 in the first quarter of 2010 and 2009, respectively. Special charges in the first quarter of 2010 included $579 for fees related to the agreements to amend the terms of our Senior Notes and Senior Credit Facility, $483 for employment claim settlements related to employee terminations that occurred prior to 2008, $320 for Gores fees, $114 for fees related to the finalization of the income tax treatment of the Refinancing, $201 for professional fees related to the evaluation of potential business development activity, including acquisitions and dispositions and $126 for fees primarily related to regionalization costs. Special charges in the first quarter of 2009 were incurred predominantly in connection with the Refinancing.

OIBDA

Beginning with the first quarter of 2010, we changed how we evaluate segment performance and now use segment revenue and segment operating (loss) income before depreciation and amortization (“Segment OIBDA”) as the primary measure of profit and loss for our operating segments in accordance with FASB guidance for segment reporting. We have reflected this change in all periods presented in this report. We believe the presentation of Segment OIBDA is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by our management and enhances their ability to understand our operating performance.

OIBDA for the three months ending March 31, 2010 and 2009 is as follows:

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