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iHeartMedia, Inc. - Annual Report: 2008 (Form 10-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, or
     
o   Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     .
Commission File Number
000-53354
CC MEDIA HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
     
Delaware
(State of Incorporation)
  26-0241222
(I.R.S. Employer Identification No.)
200 East Basse Road
San Antonio, Texas 78209
Telephone (210) 822-2828
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
     
Title of each class   Name of each exchange on which registered
n/a   n/a
Securities registered pursuant to Section 12(g) of the Act:
Title of class
Class A common stock, $.001 par value
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 Exchange Act. YES o NO þ
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 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. 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 oAccelerated filer o 
Non-accelerated filer þ
(Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by checkmark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). YES o NO þ
As of June 30, 2008, the Company’s common stock was not publicly traded.
On February 26, 2009, there were 23,602,149 outstanding shares of Class A Common Stock, excluding 81 shares held in treasury, 555,556 outstanding shares of Class B Common Stock and 58,967,502 outstanding shares of Class C Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
     Portions of our Definitive Proxy Statement for the 2009 Annual Meeting, expected to be filed within 120 days of our fiscal year end, are incorporated by reference into Part III.
 
 

 


 

CC MEDIA HOLDINGS, INC.
INDEX TO FORM 10-K
             
        Page
        Number
PART I.        
 
           
  Business     3  
 
           
  Risk Factors     20  
 
           
  Unresolved Staff Comments     27  
 
           
  Properties     27  
 
           
  Legal Proceedings     28  
 
           
  Submission of Matters to a Vote of Security Holders     29  
 
           
PART II.        
 
           
  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities     30  
 
           
  Selected Financial Data     31  
 
           
  Management’s Discussion and Analysis of Financial Condition and Results of Operations     33  
 
           
  Quantitative and Qualitative Disclosures about Market Risk     61  
 
           
  Financial Statements and Supplementary Data     62  
 
           
  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure     129  
 
           
  Controls and Procedures     130  
 
           
  Other Information     132  
 
           
PART III.        
 
           
  Directors, Executive Officers and Corporate Governance     133  
 
           
  Executive Compensation     134  
 
           
  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters     134  
 
           
  Certain Relationships and Related Transactions and Director Independence     134  
 
           
  Principal Accounting Fees and Services     134  
 
           
PART IV.        
 
           
  Exhibits and Financial Statement Schedules     135  
 EX-10.24
 EX-11
 EX-12
 EX-21
 EX-23
 EX-31.1
 EX-31.2
 EX-32.1
 EX-32.2

 


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PART I
ITEM 1. Business
The Company
     We were incorporated in May 2007 by private equity funds sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. (the “Sponsors”) for the purpose of acquiring the business of Clear Channel Communications, Inc., a Texas corporation (“Clear Channel”). The acquisition was completed on July 30, 2008 pursuant to the Agreement and Plan of Merger, dated November 16, 2006, as amended on April 18, 2007, May 17, 2007 and May 13, 2008 (the “Merger Agreement”). As a result of the merger, each issued and outstanding share of Clear Channel, other than shares held by certain of our principals that were rolled over and exchanged for our Class A common stock, were either exchanged for (i) $36.00 in cash consideration, without interest, or (ii) one share of our Class A common stock. Prior to the consummation of our acquisition of Clear Channel, we had not conducted any activities, other than activities incident to our formation and in connection with the acquisition, and did not have any assets or liabilities, other than those related to the acquisition.
     Subsequent to the consummation of our acquisition of Clear Channel, we became a diversified media company with three reportable business segments: Radio Broadcasting, Americas Outdoor Advertising (consisting primarily of operations in the United States, Canada and Latin America) and International Outdoor Advertising.
     The global economic slowdown has adversely affected advertising revenues across our businesses in recent months. In this regard, we performed an interim impairment test in the fourth quarter of 2008 and recorded a non-cash impairment of approximately $5.3 billion.
     On January 20, 2009 we announced that we commenced a restructuring program targeting a reduction of fixed costs by approximately $350 million on an annualized basis. As part of the program, we eliminated approximately 1,850 full-time positions representing approximately 9% of total workforce. The restructuring program will also include other actions, including elimination of overlapping functions and other cost savings initiatives. The program is expected to result in restructuring and other non-recurring charges of approximately $200 million, although additional costs may be incurred as the program evolves. The cost savings initiatives are expected to be fully implemented by the end of the first quarter of 2010. No assurance can be given that the restructuring program will be successful or will achieve the anticipated cost savings in the timeframe expected or at all. In addition, we may modify or terminate the restructuring program in response to economic conditions or otherwise.
     As of December 31, 2008 we had recognized approximately $95.9 million of expenses related to our restructuring program. These expenses primarily related to severance of approximately $83.3 million and $12.6 million related to professional fees.
     In November 2006, Clear Channel announced plans to sell all of its television stations and certain non-core radio stations. On March 14, 2008, Clear Channel completed the sale of its television business to Newport Television, LLC. Clear Channel also completed the planned divestiture of certain of its non-core radio stations in 2008. The total number of non-core radio stations divested under the plan was 262, with 102 of those stations divested in 2008.
     On November 11, 2005, Clear Channel completed the initial public offering, or IPO, of approximately 10% of the common stock of Clear Channel Outdoor Holdings, Inc., or CCO, comprised of the Americas and International outdoor segments. On December 21, 2005 Clear Channel completed the spin-off of its former live entertainment segment, which now operates under the name Live Nation.
     You can find more information about us at our Internet website located at www.ccmediaholdings.com. Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to those reports are available free of charge through our Internet website as soon as reasonably practicable after we electronically file such material with the SEC. The contents of our website are not deemed to be part of this Annual Report on Form 10-K or any of our other filings with the SEC.
     Our principal executive offices are located at 200 East Basse Road, San Antonio, Texas 78209 (telephone: 210-822-2828).
Our Business Segments
     We have three reportable business segments: Radio Broadcasting, or Radio; Americas Outdoor Advertising, or Americas; and International Outdoor Advertising, or International. Approximately half of our revenue is generated from

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our Radio Broadcasting segment. The remaining half is comprised of our Americas Outdoor Advertising business segment, our International Outdoor Advertising business segment, Katz Media, a full-service media representation firm, and other support services and initiatives. In addition to the information provided below, you can find more information about our segments in our consolidated financial statements located in Item 8 of this Form 10-K.
     We believe we offer advertisers a diverse platform of media assets across geographies, radio programming formats and outdoor products. We intend to continue to execute upon our long-standing radio broadcasting and outdoor advertising strategies, while closely managing expense growth and focusing on achieving operating efficiencies throughout our businesses. Within each of our operating segments, we share best practices across our markets in an attempt to replicate our successes throughout the markets in which we operate.
Radio Broadcasting
     As of December 31, 2008, we owned 894 domestic radio stations, with 272 stations operating in the 50 largest markets. For the year ended December 31, 2008, Radio Broadcasting represented 49% of our combined net revenue. Our portfolio of stations offers a broad assortment of programming formats, including adult contemporary, country, contemporary hit radio, rock, urban and oldies, among others, to a total weekly listening base of more than 90 million individuals based on Arbitron National Regional Database figures for the Spring 2008 ratings period. Our radio broadcasting business includes radio stations for which we are the licensee and for which we program and/or sell air time under local marketing agreements (“LMAs”) or joint sales agreements (“JSAs”).
     In addition to our radio broadcasting business, we operate our Premiere Radio Network, a national radio network that produces, distributes or represents approximately 90 syndicated radio programs and services for approximately 5,000 radio station affiliates. Some of our more popular syndicated radio personalities include Rush Limbaugh, Sean Hannity, Steve Harvey, Ryan Seacrest and Jeff Foxworthy. We also own various sports, news and agriculture networks.
Strategy
     Our radio broadcasting strategy centers on providing programming and services to the local communities in which we operate and being a contributing member of those communities. We believe that by serving the needs of local communities, we will be able to grow listenership and deliver target audiences to advertisers.
     Our radio broadcasting strategy also entails improving the ongoing operations of our stations through effective programming, promotion, marketing and sales and careful management of costs. In late 2004, we implemented price and yield optimization systems and invested in new information systems, which provide station level inventory yield and pricing information previously unavailable. We shifted our sales force compensation plan from a straight “volume-based” commission percentage system to a “value-based” system to reward success in optimizing price and inventory.
     We will continue to focus on enhancing the radio listener experience by offering a wide variety of compelling content. We believe our investments in radio programming over time have created a collection of leading on-air talent. The distribution platform provided by our Premiere Radio Network allows us to attract talent and more effectively utilize quality content across many stations.
     We are also continually expanding content choices for our listeners, including utilization of HD radio, Internet and other distribution channels with complementary formats. HD radio enables crystal clear reception, interactive features, data services and new applications. Further, HD radio allows for many more stations, providing greater variety of content which we believe will enable advertisers to target consumers more effectively. The interactive capabilities of HD radio will potentially permit us to participate in commercial download services. In addition, we provide streaming audio via the Internet, and accordingly, have increased listener reach and developed new listener applications as well as new advertising capabilities. Our websites hosted approximately 11.7 million unique visitors in December 2008 as measured by CommScore / Media Metrix, making the collection of these websites one of the top five trafficked music websites. Finally, we have pioneered mobile applications which allow subscribers to use their cell phones to interact directly with the station, including finding titles/artists, requesting songs and downloading station wallpapers.
     Sources of Revenue
     Our Radio Broadcasting segment generated 49%, 50% and 53% of our combined revenue in 2008, 2007 and 2006, respectively. The primary source of revenue in our Radio Broadcasting segment is the sale of commercial spots on our radio stations for local, regional and national advertising. Our local advertisers cover a wide range of categories, including consumer services, retailers, entertainment, health and beauty products, telecommunications, automotive and media. Our contracts with our advertisers generally provide for a term which extends for less than a one year period.

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     We also generate additional revenues from network compensation, the Internet, air traffic, events, barter and other miscellaneous transactions. These other sources of revenue supplement our traditional advertising revenue without increasing on-air-commercial time.
     Each radio station’s local sales staff solicits advertising directly from local advertisers or indirectly through advertising agencies. Our strategy of producing commercials that respond to the specific needs of our advertisers helps to build local direct advertising relationships. Regional advertising sales are also generally realized by our local sales staff. To generate national advertising sales, we engage firms specializing in soliciting radio advertising sales on a national level. National sales representatives obtain advertising principally from advertising agencies located outside the station’s market and receive commissions based on advertising sold.
     Advertising rates are principally based on the length of the spot and how many people in a targeted audience listen to our stations, as measured by independent ratings services. A station’s format can be important in determining the size and characteristics of its listening audience, and advertising rates are influenced by the station’s ability to attract and target audiences that advertisers aim to reach. The size of the market influences rates as well, with larger markets typically receiving higher rates than smaller markets. Rates are generally highest during morning and evening commuting periods.
     We seek to maximize revenue by closely managing on-air inventory of advertising time and adjusting prices to local market conditions. We implemented price and yield optimization systems and invested in new information systems, which provide detailed inventory information. These systems enable our station managers and sales directors to adjust commercial inventory and pricing based on local market demand, as well as to manage and monitor different commercial durations (60 second, 30 second, 15 second and five second) in order to provide more effective advertising for our customers at optimal prices.
Competition
     We compete in our respective markets for audiences, advertising revenue and programming with other radio stations owned by companies such as CBS, Citadel, Entercom and Cumulus. We also compete with other advertising media, including satellite radio, broadcast and cable television, print media, outdoor advertising, direct mail, the Internet and other forms of advertisement.
Radio Stations
     As of December 31, 2008, we owned 264 AM and 630 FM domestic radio stations, of which 148 stations were in the 25 largest U.S. markets. The following table sets forth certain selected information with regard to our radio broadcasting stations:

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            Number
    Market   of
Market   Rank*   Stations
New York, NY
    1       5  
Los Angeles, CA
    2       8  
Chicago, IL
    3       7  
San Francisco, CA
    4       7  
Dallas-Ft. Worth, TX
    5       6  
Houston-Galveston, TX
    6       8  
Atlanta, GA
    7       6  
Philadelphia, PA
    8       6  
Washington, DC
    9       5  
Boston, MA
    10       4  
Detroit, MI
    11       7  
Miami-Ft. Lauderdale-Hollywood, FL
    12       7  
Seattle-Tacoma, WA
    13       6  
Phoenix, AZ
    15       8  
Minneapolis-St. Paul, MN
    16       7  
San Diego, CA
    17       8  
Tampa-St. Petersburg-Clearwater, FL
    18       8  
Nassau-Suffolk (Long Island), NY
    19       2  
St. Louis, MO
    20       6  
Denver-Boulder, CO
    21       8  
Baltimore, MD
    22       3  
Portland, OR
    23       5  
Pittsburgh, PA
    24       6  
Charlotte-Gastonia-Rock Hill, NC-SC
    25       5  
Riverside-San Bernardino, CA
    26       6  
Sacramento, CA
    27       5  
Cincinnati, OH
    28       8  
Cleveland, OH
    29       6  
Salt Lake City-Ogden-Provo, UT
    30       6  
San Antonio, TX
    31       6  
Las Vegas, NV
    33       3  
Orlando, FL
    34       7  
San Jose, CA
    35       3  
Columbus, OH
    36       7  
Milwaukee-Racine, WI
    37       6  
Austin, TX
    39       6  
Indianapolis, IN
    40       3  
Providence-Warwick-Pawtucket, RI
    41       4  
Norfolk-Virginia Beach-Newport News, VA
    42       4  
Raleigh-Durham, NC
    43       4  
Nashville, TN
    44       5  
Greensboro-Winston Salem-High Point, NC
    45       5  
Jacksonville, FL
    46       7  
West Palm Beach-Boca Raton, FL
    47       6  
Oklahoma City, OK
    48       6  
Memphis, TN
    49       6  
Hartford-New Britain-Middletown, CT
    50       5  
                 
      Number
Market   Market
Rank*
  of
Stations
Louisville, KY
    53       8  
Richmond, VA
    54       6  
New Orleans, LA
    55       7  
Rochester, NY
    56       7  
Birmingham, AL
    57       5  
McAllen-Brownsville-Harlingen, TX
    58       5  
Greenville-Spartanburg, SC
    59       6  
Tucson, AZ
    60       7  
Ft. Myers-Naples-Marco Island, FL
    61       4  
Dayton, OH
    62       8  
Albany-Schenectady-Troy, NY
    63       7  
Honolulu, HI
    64       7  
Tulsa, OK
    65       6  
Fresno, CA
    66       8  
Grand Rapids, MI
    67       7  
Albuquerque, NM
    68       7  
Allentown-Bethlehem, PA
    69       4  
Omaha-Council Bluffs, NE-IA
    72       5  
Sarasota-Bradenton, FL
    73       6  
Bakersfield, CA
    74       5  
Akron, OH
    75       4  
El Paso, TX
    76       5  
Wilmington, DE
    77       5  
Baton Rouge, LA
    78       5  
Harrisburg-Lebanon-Carlisle, PA
    79       6  
Stockton, CA
    80       6  
Monterey-Salinas-Santa Cruz, CA
    82       5  
Syracuse, NY
    83       7  
Charleston, SC
    84       5  
Little Rock, AR
    85       5  
Springfield, MA
    88       5  
Columbia, SC
    89       6  
Des Moines, IA
    90       5  
Toledo, OH
    91       5  
Spokane, WA
    92       6  
Colorado Springs, CO
    94       3  
Ft. Pierce-Stuart-Vero Beach, FL
    95       6  
Mobile, AL
    96       4  
Melbourne-Titusville-Cocoa, FL
    97       4  
Madison, WI
    98       6  
Wichita, KS
    99       4  
Various U.S. Cities
    101-150       104  
Various U.S. Cities
    151-200       91  
Various U.S. Cities
    201-250       53  
Various U.S. Cities
    251+       67  
Various U.S. Cities
  unranked     75  
 
               
Total (a) (b)
            894  
 
               
 
*   Per Arbitron Rankings as of November 2008.

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(a)   Excluded from the 894 radio stations owned by us are 3 radio stations programmed pursuant to a local marketing agreement or shared services agreement (FCC licenses not owned by us) and one Mexican radio station that we provide programming to and sell airtime for under exclusive sales agency arrangements. Also excluded are radio stations in Australia, New Zealand and Mexico. We own a 50%, 50% and 20% equity interest in companies that have radio broadcasting operations in these markets, respectively. Effective January 30, 2009 we sold 57% of our remaining 20% interest in Grupo ACIR Comunicaciones, the owner of the radio stations in Mexico.
 
(b)   Included in the total are stations that were placed in a trust in order to bring the merger into compliance with the FCC’s media ownership rules. We will have to divest these stations.
Radio Networks
     In addition to radio stations, our Radio Broadcasting segment includes our Premiere Radio Network, a national radio network that produces, distributes or represents more than 90 syndicated radio programs and services for more than 5,000 radio station affiliates. Our broad distribution platform enables us to attract and retain top programming talent. Some of our more popular radio personalities include Rush Limbaugh, Sean Hannity, Steve Harvey, Ryan Seacrest and Jeff Foxworthy. We believe recruiting and retaining top talent is an important component of the success of our radio networks.
     We also own various sports, news and agriculture networks serving Alabama, California, Colorado, Florida, Georgia, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Pennsylvania, Tennessee and Virginia.
International Radio Investments
     We own equity interests in various international radio broadcasting companies located in Australia (50% ownership), Mexico (20% ownership) and New Zealand (50% ownership), which we account for under the equity method of accounting. Effective January 30, 2009 we sold 57% of our remaining 20% interest in Grupo ACIR Comunicaciones, the owner of the radio stations in Mexico.
Outdoor Advertising
     Our Americas Outdoor Advertising segment includes our operations in the United States, Canada and Latin America, with approximately 92% of our 2008 revenue in this segment derived from the United States. We own or operate approximately 237,000 displays in our Americas segment and have operations in 49 of the 50 largest markets in the United States, including all of the 20 largest markets. Our International Outdoor Advertising business segment includes our operations in Asia, Australia and Europe, with approximately 40% of our 2008 revenue in this segment derived from France and the United Kingdom. We own or operate approximately 670,000 displays in 36 countries.
     Our outdoor assets consist of billboards, street furniture and transit displays, airport displays, mall displays, and wallscapes and other spectaculars, which we own or operate under lease management agreements. Our outdoor advertising business is focused on urban markets with dense populations.
Strategy
     We have made and continue to make investments in research tools that enable our clients to better understand how our displays can successfully reach their target audiences and promote their advertising campaigns. We are working closely with clients, advertising agencies and other diversified media companies to develop more sophisticated systems that will provide improved demographic measurements of outdoor advertising. We believe that these measurement systems will further enhance the attractiveness of outdoor advertising for both existing clients and new advertisers.
     We intend to continue to work toward ensuring that our customers have a superior experience by leveraging our presence in each of our markets and by increasing our focus on customer satisfaction and improved measurement systems.
     Finally, we aim to capitalize on advances in electronic displays, including flat screens, LCDs and LEDs, as an alternative to traditional methods of outdoor advertising. These electronic displays may be linked through centralized computer systems to instantaneously and simultaneously change static advertisements on a large number of displays. Digital outdoor advertising provides advantages to advertisers, including the flexibility to change messaging over the course of a day, the ability to quickly change messaging and the ability to enhance targeting by reaching different demographics at different times of day. Digital outdoor displays provide us with advantages, as they are operationally efficient and eliminate safety issues from manual copy changes.

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Americas Outdoor Advertising
     Sources of Revenue
     Americas Outdoor Advertising generated 21%, 21% and 20% of our combined revenue in 2008, 2007 and 2006, respectively. Americas Outdoor Advertising revenue is derived from the sale of advertising copy placed on our display inventory. Our display inventory consists primarily of billboards, street furniture displays and transit displays. The margins on our billboard contracts tend to be higher than those on contracts for other displays, due to their greater size, impact and location along major roadways that are highly trafficked. Billboards comprise approximately two-thirds of our display revenues. The following table shows the approximate percentage of revenue derived from each category for our Americas Outdoor Advertising inventory:
                         
    Year Ended December 31,
    2008   2007   2006
Billboards
                       
Bulletins (1)
    51 %     52 %     52 %
Posters
    15 %     16 %     18 %
Street furniture displays
    5 %     4 %     4 %
Transit displays
    17 %     16 %     14 %
Other displays (2)
    12 %     12 %     12 %
 
                       
Total
    100 %     100 %     100 %
 
                       
 
(1)   Includes digital displays.
 
(2)   Includes spectaculars, mall displays and wallscapes.
     Our Americas Outdoor Advertising segment generates revenues from local, regional and national sales. Our advertising rates are based on a number of different factors including location, competition, size of display, illumination, market and gross ratings points. Gross ratings points are the total number of impressions delivered, expressed as a percentage of a market population, of a display or group of displays. The number of impressions delivered by a display is measured by the number of people passing the site during a defined period of time. For all of our billboards in the United States, we use independent, third-party auditing companies to verify the number of impressions delivered by a display. “Reach’’ is the percent of a target audience exposed to an advertising message at least once during a specified period of time, typically during a period of four weeks. “Frequency” is the average number of exposures an individual has to an advertising message during a specified period of time. Out-of-home frequency is typically measured over a four-week period.
     While location, price and availability of displays are important competitive factors, we believe that providing quality customer service and establishing strong client relationships are also critical components of sales. In addition, we have long-standing relationships with a diversified group of advertising brands and agencies that allow us to diversify client accounts and establish continuing revenue streams.
Billboards
     Our billboard inventory primarily includes bulletins and posters.
Bulletins. Bulletins vary in size, with the most common size being 14 feet high by 48 feet wide. Almost all of the advertising copy displayed on bulletins is computer printed on vinyl and transported to the bulletin where it is secured to the display surface. Because of their greater size and impact, we typically receive our highest rates for bulletins. Bulletins generally are located along major expressways, primary commuting routes and main intersections that are highly visible and heavily trafficked. Our clients may contract for individual bulletins or a network of bulletins, meaning the clients’ advertisements are rotated among bulletins to increase the reach of the campaign. Our client contracts for bulletins generally have terms ranging from one month to one year.
Posters. Posters are available in two sizes, 30-sheet and 8-sheet displays. The 30-sheet posters are approximately 11 feet high by 23 feet wide, and the 8-sheet posters are approximately 5 feet high by 11 feet wide. Advertising copy for posters is printed using silk-screen or lithographic processes to transfer the designs onto paper that is then transported and secured to the poster surfaces. Posters generally are located in commercial areas on primary and secondary routes near point-of-purchase locations, facilitating advertising campaigns with greater demographic targeting than those displayed on bulletins. Our poster rates typically are less than our bulletin rates, and our client contracts for posters generally have terms

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ranging from four weeks to one year. Two types of posters are premiere panels and squares. Premiere displays are innovative hybrids between bulletins and posters that we developed to provide our clients with an alternative for their targeted marketing campaigns. The premiere displays utilize one or more poster panels, but with vinyl advertising stretched over the panels similar to bulletins. Our intent is to combine the creative impact of bulletins with the additional reach and frequency of posters.
Street Furniture Displays
     Our street furniture displays, marketed under our global AdshelTM brand, are advertising surfaces on bus shelters, information kiosks, public toilets, freestanding units and other public structures, and are primarily located in major metropolitan cities and along major commuting routes. Generally, we own the street furniture structures and are responsible for their construction and maintenance. Contracts for the right to place our street furniture displays in the public domain and sell advertising space on them are awarded by municipal and transit authorities in competitive bidding processes governed by local law. Generally, these contracts have terms ranging from 10 to 20 years. As compensation for the right to sell advertising space on our street furniture structures, we pay the municipality or transit authority a fee or revenue share that is either a fixed amount or a percentage of the revenue derived from the street furniture displays. Typically, these revenue sharing arrangements include payments by us of minimum guaranteed amounts. Client contracts for street furniture displays typically have terms ranging from four weeks to one year, and, similar to billboards, may be for network packages.
Transit Displays
     Our transit displays are advertising surfaces on various types of vehicles or within transit systems, including on the interior and exterior sides of buses, trains, trams and taxis, and within the common areas of rail stations and airports. Similar to street furniture, contracts for the right to place our displays on such vehicles or within such transit systems and to sell advertising space on them generally are awarded by public transit authorities in competitive bidding processes or are negotiated with private transit operators. These contracts typically have terms of up to five years. Our client contracts for transit displays generally have terms ranging from four weeks to one year.
Other Inventory
     The balance of our display inventory consists of spectaculars, mall displays and wallscapes. Spectaculars are customized display structures that often incorporate video, multidimensional lettering and figures, mechanical devices and moving parts and other embellishments to create special effects. The majority of our spectaculars are located in Times Square in New York City, Dundas Square in Toronto, Fashion Show in Las Vegas, Sunset Strip in Los Angeles, Westgate City Center in Glendale, Arizona, the Boardwalk in Atlantic City and across from the Target Center in Minneapolis. Client contracts for spectaculars typically have terms of one year or longer. We also own displays located within the common areas of malls on which our clients run advertising campaigns for periods ranging from four weeks to one year. Contracts with mall operators grant us the exclusive right to place our displays within the common areas and sell advertising on those displays. Our contracts with mall operators generally have terms ranging from five to ten years. Client contracts for mall displays typically have terms ranging from six to eight weeks. A wallscape is a display that drapes over or is suspended from the sides of buildings or other structures. Generally, wallscapes are located in high-profile areas where other types of outdoor advertising displays are limited or unavailable. Clients typically contract for individual wallscapes for extended terms.
Competition
     The outdoor advertising industry in the Americas is fragmented, consisting of several larger companies involved in outdoor advertising, such as CBS and Lamar Advertising Company, as well as numerous smaller and local companies operating a limited number of display faces in a single or a few local markets. We also compete with other advertising media in our respective markets, including broadcast and cable television, radio, print media, the Internet and direct mail.

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Advertising Inventory and Markets
     As of December 31, 2008, we owned or operated approximately 237,000 displays in our Americas Outdoor Advertising segment. The following table sets forth certain selected information with regard to our Americas outdoor advertising inventory, with our markets listed in order of their designated market area (“DMA®”) region ranking (DMA® is a registered trademark of Nielsen Media Research, Inc.):
                                                         
DMA®                       Street            
Region       Billboards   Furniture   Transit   Other   Total
Rank   Markets   Bulletins   Posters   Displays   Displays   Displays(1)   Displays
       
United States
                                               
  1    
New York, NY
                                  17,047  
  2    
Los Angeles, CA
                                  10,689  
  3    
Chicago, IL
                                  15,532  
  4    
Philadelphia, PA
                                  6,214  
  5    
Dallas-Ft. Worth, TX
                                  16,688  
  6    
San Francisco-Oakland-San Jose, CA
                                  10,819  
  7    
Boston, MA (Manchester, NH)
                                  7,091  
  8    
Atlanta, GA
                                    2,950  
  9    
Washington, DC (Hagerstown, MD)
                                  3,914  
  10    
Houston, TX
                        (2)           3,259  
  11    
Detroit, MI
                                        315  
  12    
Phoenix, AZ
                                    9,918  
  13    
Tampa-St. Petersburg (Sarasota), FL
                                  2,439  
  14    
Seattle-Tacoma, WA
                                    12,863  
  15    
Minneapolis-St. Paul, MN
                                    1,978  
  16    
Miami-Ft. Lauderdale, FL
                                  6,411  
  17    
Cleveland-Akron (Canton), OH
                                    3,399  
  18    
Denver, CO
                                        976  
  19    
Orlando-Daytona Beach-Melbourne, FL
                                    4,228  
  20    
Sacramento-Stockton-Modesto, CA
                                  2,421  
  21    
St. Louis, MO
                                        284  
  22    
Portland, OR
                                    1,224  
  23    
Pittsburgh, PA
                                        104  
  24    
Charlotte, NC
                                          12  
  25    
Indianapolis, IN
                                    3,283  
  26    
Baltimore, MD
                                  2,572  
  27    
Raleigh-Durham (Fayetteville), NC
                                        1,994  
  28    
San Diego, CA
                                    809  
  29    
Nashville, TN
                                      648  
  30    
Hartford-New Haven, CT
                                        340  
  31    
Kansas City, KS/MO
                            (2)             1,169  
  32    
Columbus, OH
                                    1,487  
  33    
Salt Lake City, UT
                                        64  
  34    
Cincinnati, OH
                                        12  
  35    
Milwaukee, WI
                                  5,883  
  36    
Greenville-Spartanburg, SC- Asheville, NC-Anderson, SC
                                        85  
  37    
San Antonio, TX
                      (2)           7,481  
  38    
West Palm Beach-Ft. Pierce, FL
                                    808  
  39    
Grand Rapids-Kalamazoo-Battle Creek, MI
                                          300  

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DMA®                       Street            
Region       Billboards   Furniture   Transit   Other   Total
Rank   Markets   Bulletins   Posters   Displays   Displays   Displays(1)   Displays
  41    
Harrisburg-Lancaster-Lebanon-York, PA
                                          139  
  42    
Las Vegas, NV
                                    13,518  
  43    
Norfolk-Portsmouth-Newport News, VA
                                    457  
  44    
Albuquerque-Santa Fe, NM
                                    1,377  
  45    
Oklahoma City, OK
                                          3  
  46    
Greensboro-High Point-Winston Salem, NC
                                          1,051  
  47    
Jacksonville, FL
                                    987  
  48    
Memphis, TN
                                  2,239  
  49    
Austin, TX
                        (2)           46  
  50    
Louisville, KY
                                        178  
  51-100    
Various U.S. Cities
                      (2)           15,850  
  101-150    
Various U.S. Cities
                                    4,087  
  151+    
Various U.S. Cities
                                    2,186  
       
Non-U.S. Markets
                                               
  n/a    
Australia
                                          1,398  
  n/a    
Brazil
                                      7,237  
  n/a    
Canada
                                      4,392  
  n/a    
Chile
                                        1,124  
  n/a    
Mexico
                                      4,974  
  n/a    
New Zealand
                                          1,607  
  n/a    
Peru
                                  3,024  
  n/a    
Other (3)
                                          3,768  
       
 
                                               
       
Total Americas Displays
                                            237,352  
       
 
                                               
 
(1)   Includes wallscapes, spectaculars, mall and digital displays. Our inventory includes other small displays not in the table since their contribution to our revenue is not material.
 
(2)   We have access to additional displays through arrangements with local advertising and other companies.
 
(3)   Includes displays in Antigua, Aruba, Bahamas, Barbados, Belize, Costa Rica, Dominican Republic, Grenada, Guam, Jamaica, Netherlands Antilles, Saint Kitts and Nevis, Saint Lucia and Virgin Islands.
International Outdoor Advertising
     Sources of Revenue
     Our International Outdoor Advertising segment generated 27%, 25% and 23% of our combined revenue in 2008, 2007 and 2006, respectively. International outdoor advertising revenue is derived from the sale of advertising copy placed on our display inventory. Our international outdoor display inventory consists primarily of billboards, street furniture displays, transit displays and other out-of-home advertising displays, such as neon displays. The following table shows the approximate percentage of revenue derived from each inventory category of our International Outdoor Advertising segment:
                         
    Year Ended December 31,
    2008   2007   2006
Billboards (1)
    35 %     39 %     41 %
Street furniture displays
    38 %     37 %     37 %
Transit displays (2)
    9 %     8 %     9 %
Other displays (3)
    18 %     16 %     13 %
 
                       
Total
    100 %     100 %     100 %
 
                       
 
(1)   Includes revenue from spectaculars and neon displays.
 
(2)   Includes small displays.

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(3)   Includes advertising revenue from mall displays, other small displays, and non-advertising revenue from sales of street furniture equipment, cleaning and maintenance services and production revenue.
     Our International Outdoor Advertising segment generates revenues worldwide from local, regional and national sales. Similar to the Americas, advertising rates generally are based on the gross rating points of a display or group of displays. The number of impressions delivered by a display, in some countries, is weighted to account for such factors as illumination, proximity to other displays and the speed and viewing angle of approaching traffic.
     While location, price and availability of displays are important competitive factors, we believe that providing quality customer service and establishing strong client relationships are also critical components of sales. Our entrepreneurial culture allows local management to operate their markets as separate profit centers, encouraging customer cultivation and service.
Billboards
     The sizes of our international billboards are not standardized. The billboards vary in both format and size across our networks, with the majority of our international billboards being similar in size to our posters used in our Americas outdoor business (30-sheet and 8-sheet displays). Our international billboards are sold to clients as network packages with contract terms typically ranging from one to two weeks. Long-term client contracts are also available and typically have terms of up to one year. We lease the majority of our billboard sites from private landowners. Billboards include our spectacular and neon displays. DEFI, our international neon subsidiary, is a global provider of neon signs with approximately 400 displays in more than 15 countries worldwide. Client contracts for international neon displays typically have terms of approximately five years.
Street Furniture Displays
     Our international street furniture displays are substantially similar to their Americas street furniture counterparts, and include bus shelters, freestanding units, public toilets, various types of kiosks and benches. Internationally, contracts with municipal and transit authorities for the right to place our street furniture in the public domain and sell advertising on such street furniture typically provide for terms ranging from 10 to 15 years. The major difference between our international and Americas street furniture businesses is in the nature of the municipal contracts. In our international outdoor business, these contracts typically require us to provide the municipality with a broader range of urban amenities such as public wastebaskets and lampposts, as well as space for the municipality to display maps or other public information. In exchange for providing such urban amenities and display space, we are authorized to sell advertising space on certain sections of the structures we erect in the public domain. Our international street furniture is typically sold to clients as network packages, with contract terms ranging from one to two weeks. Long-term client contracts are also available and typically have terms of up to one year.
Transit Displays
     Our international transit display contracts are substantially similar to their Americas transit display counterparts, and typically require us to make only a minimal initial investment and few ongoing maintenance expenditures. Contracts with public transit authorities or private transit operators typically have terms ranging from three to seven years. Our client contracts for transit displays generally have terms ranging from one week to one year, or longer.
Other International Inventory and Services
     The balance of our revenue from our International Outdoor Advertising segment consists primarily of advertising revenue from mall displays, other small displays and non-advertising revenue from sales of street furniture equipment, cleaning and maintenance services and production revenue. Internationally, our contracts with mall operators generally have terms ranging from five to ten years and client contracts for mall displays generally have terms ranging from one to two weeks, but are available for up to six-month periods. Our international inventory includes other small displays that are counted as separate displays since they form a substantial part of our network and International Outdoor Advertising revenue. We also have a bike rental program which provides bicycles for rent to the general public in several municipalities. In exchange for providing the bike rental program, we generally derive revenue from advertising rights to the bikes, bike stations, or additional street furniture displays. Several of our international markets sell equipment or provide cleaning and maintenance services as part of a billboard or street furniture contract with a municipality. Production revenue relates to the production of advertising posters, usually for small customers.
Competition
     The international outdoor advertising industry is fragmented, consisting of several larger companies involved in outdoor advertising, such as CBS and JC Decaux, as well as numerous smaller and local companies operating a limited

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number of display faces in a single or a few local markets. We also compete with other advertising media in our respective markets, including broadcast and cable television, radio, print media, the Internet and direct mail.
Advertising Inventory and Markets
     As of December 31, 2008, we owned or operated approximately 670,000 displays in our International segment. The following table sets forth certain selected information with regard to our International advertising inventory, which are listed in descending order according to 2008 revenue contribution:
                                         
            Street            
            Furniture   Transit   Other   Total
International Markets   Billboards(1)   Displays   Displays(2)   Displays(3)   Displays
France
                            131,049  
United Kingdom
                            66,982  
Italy
                                58,774  
China
                            64,051  
Spain
                            33,814  
Australia/New Zealand
                                17,897  
Belgium
                            23,984  
Sweden
                            116,230  
Switzerland
                              17,962  
Norway
                            21,370  
Ireland
                                9,533  
Turkey
                            11,822  
Denmark
                            34,106  
Finland
                            24,700  
Poland
                              11,041  
Holland
                                4,630  
India
                              737  
Baltic States/Russia
                                16,250  
Romania
                                  150  
Greece
                                1,201  
Singapore
                                  3,857  
Hungary
                                  36  
Japan
                                  433  
Germany
                                  52  
Austria
                                  17  
Czech Republic
                                  10  
Indonesia
                                  1  
Portugal
                                  15  
United Arab Emirates
                                  1  
 
                                       
Total International Displays
                                    670,705  
 
                                       
 
(1)   Includes spectaculars and neon displays.
 
(2)   Includes small displays.
 
(3)   Includes mall displays and other small displays counted as separate displays in the table since they form a substantial part of our network and International revenue.

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Equity Investments
     In addition to the displays listed above, as of December 31, 2008, we had equity investments in various out-of-home advertising companies that operate in the following markets:
                                         
                            Street    
            Equity           Furniture   Transit
Market   Company   Investment   Billboards(1)   Displays   Displays
Outdoor Advertising Companies
                                       
Italy
  Alessi     34.3 %                  
Italy
  AD Moving SpA     17.5 %                    
Hong Kong
  Buspak     50.0 %                    
Spain
  Clear Channel Cemusa     50.0 %                      
Thailand
  Master & More     32.5 %                    
Belgium
  MTB     49.0 %                      
Belgium
  Streep     25.0 %                      
Other Media Companies
                                       
Norway
  CAPA     50.0 %                        
 
(1)   Includes spectaculars and neon displays.
Other
     The other category includes our media representation firm as well as other general support services and initiatives which are ancillary to our other businesses.
Media Representation
     We own Katz Media, a full-service media representation firm that sells national spot advertising time for clients in the radio and television industries throughout the United States. As of December 31, 2008, Katz Media represents approximately 3,900 radio stations, nearly one-fifth of which are owned by us and approximately 400 television stations.
     Katz Media generates revenue primarily through contractual commissions realized from the sale of national spot advertising airtime. National spot advertising is commercial airtime sold to advertisers on behalf of radio and television stations. Katz Media represents its media clients pursuant to media representation contracts, which typically have terms of up to ten years in length.
Management Team and Employees
     We have an experienced management team from our senior executives to our local market managers. Our executive officers and certain radio and outdoor senior managers possess an average of 21 years of industry experience, and have combined experience of over 250 years. The core of the executive management team includes Chief Executive Officer Mark Mays, who has been with Clear Channel for over 19 years, and President and Chief Financial Officer Randall Mays, who has been with the Clear Channel for over 15 years.
     As of February 27, 2009, we had approximately 16,800 domestic employees and 5,300 international employees of which approximately 21,300 were in operations and approximately 800 were in corporate related activities. Approximately 470 of our United States employees and approximately 230 of our non-United States employees are subject to collective bargaining agreements in their respective countries. We are a party to numerous collective bargaining agreements, none of which represent a significant number of employees. We believe that our relationship with our employees is good.
Regulation of Our Radio Broadcasting Business
Existing Regulation
     Radio broadcasting is subject to the jurisdiction of the Federal Communications Commission (“FCC”) under the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act prohibits the operation of a radio broadcast station except under a license issued by the FCC and empowers the FCC, among other things, to:
    issue, renew, revoke and modify broadcasting licenses;
 
    assign frequency bands;

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    determine stations’ frequencies, locations and power;
 
    regulate the equipment used by stations;
 
    adopt other regulations to carry out the provisions of the Communications Act;
 
    impose penalties for violation of such regulations; and
 
    impose fees for processing applications and other administrative functions.
     The Communications Act prohibits the assignment of an FCC license or the transfer of control of an FCC licensee without prior approval of the FCC.
     License Grant and Renewal
     The FCC grants radio broadcast licenses for a term of up to eight years. Generally, upon application, the FCC renews a broadcast license for an additional eight year term if it finds that:
    the station has served the public interest, convenience and necessity;
 
    there have been no serious violations of either the Communications Act or the FCC’s rules and regulations by the licensee; and
 
    there have been no other violations by the licensee which, taken together, constitute a pattern of abuse.
     After considering these factors and any petitions to deny a license renewal application (which may lead to a hearing), the FCC may grant the license renewal application with or without conditions, including renewal for a term less than the maximum otherwise permitted. In making its licensing determination, the FCC may consider petitions to deny and informal objections, and may order a hearing if sufficiently serious issues have been raised. The FCC may grant the license renewal application with or without conditions, including renewal for less than eight years. A station may continue to operate beyond the expiration date if a timely filed license renewal application is pending.
     Although in the vast majority of cases radio licenses are renewed by the FCC, even when petitions to deny or informal objections are filed, there can be no assurance that any of our stations’ licenses will be renewed for a full term and without sanctions or conditions at the expiration of their terms.
     Current Multiple Ownership Restrictions
     The Communications Act and FCC rules limit the ability of individuals and entities to own or have an “attributable interest” in broadcast stations and other specified mass media entities. All officers and directors of a licensee and any direct or indirect parent, general partners, limited partners and limited liability company members who are not properly “insulated” from management activities, and stockholders who own 5% or more of the outstanding voting stock of a licensee or its parent, either directly or indirectly, generally will be deemed to have an attributable interest in the licensee. Certain institutional investors who exert no control or influence over a licensee may own up to 20% of a licensee’s or its parent’s outstanding voting stock before attribution occurs. Under current FCC regulations, debt instruments, non-voting stock, minority voting stock interests in corporations having a single majority stockholder, and properly insulated limited partnership and limited liability company interests as to which the licensee certifies that the interest holders are not “materially involved” in the management and operation of the subject media property generally are not subject to attribution unless such interests implicate the FCC’s “equity/debt plus” (“EDP”) rule. Under the EDP rule, an aggregate debt and/or equity interest in excess of 33% of a licensee’s total asset value (equity plus debt) is attributable if the interest holder is either a major program supplier (providing over 15% of the licensee’s station’s total weekly broadcast programming hours) or a same-market media owner (including broadcasters, cable operators and newspapers). The FCC recently adopted revisions to the EDP rule to promote diversification of broadcast ownership. To the best of our knowledge at present, none of our officers, directors, or 5% or greater shareholders holds an interest in another television station, radio station, cable television system, or daily newspaper that is inconsistent with the FCC’s ownership rules and policies.
     Additionally, an entity that owns one or more radio stations in a market and programs more than 15% of the broadcast time on another radio station in the same market pursuant to an LMA is generally required to count the LMA station toward its media ownership limits even though it does not own the station. As a result, in a market where we own one or more radio stations, we generally cannot provide programming under an LMA to another radio station if we cannot acquire that station under the FCC’s ownership rules. The media ownership rules are subject to periodic review by the FCC. As the result of its third periodic review, in 2003 the FCC adopted new rules which, among other changes, modified broadcast ownership limits, changed the way a local radio market is defined, and made certain joint sales agreements (“JSAs”) “attributable” under the ownership limits. Numerous parties, including us, appealed the modified ownership rules. These appeals were consolidated before the United States Court of Appeals for the Third Circuit, which stayed their implementation. In June 2004, the court issued a decision that upheld the modified ownership rules in

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certain respects, including allowing the new local market definition to go into effect, and remanded them to the FCC for further justification in other respects.
     The maximum allowable number of radio stations that may be commonly owned in a market varies depending on the total number of radio stations in that market.
    In markets with 45 or more stations, one company may own, operate or control eight stations, with no more than five in any one service (AM or FM).
 
    In markets with 30-44 stations, one company may own seven stations, with no more than four in any one service.
 
    In markets with 15-29 stations, one entity may own six stations, with no more than four in any one service.
 
    In markets with 14 stations or less, one company may own up to five stations or 50% of all of the stations, whichever is less, with no more than three in any one service.
     The FCC’s June 2003 decision abandoned the existing local radio market definition based on station signal contours in favor of a definition based on “metro” markets as defined by Arbitron. Under the modified approach, commercial and non-commercial radio stations licensed to communities within an Arbitron metro market, as well as stations licensed to communities outside the metro market but considered “home” to that market, are counted as stations in the local radio market for the purposes of applying the ownership limits. For geographic areas outside defined Arbitron metro markets, the FCC adopted an interim market definition methodology based on a modified signal contour overlap approach and initiated a further rulemaking proceeding to determine a permanent market definition methodology for such areas. The further proceeding is still pending. The FCC grandfathered existing combinations of owned stations that would not comply with the modified rules. However, the FCC ruled that such noncompliant combinations could not be sold intact except to certain “eligible entities,” which the agency defined as entities qualifying as a small business consistent with Small Business Administration standards.
     The June 2003 rules also made JSAs involving more than 15% per week of a same-market radio station’s advertising time attributable under the ownership rules. Consequently, in a market where we own one or more radio stations, we generally cannot enter into a JSA with another radio station if we could not acquire that station under the FCC’s rules.
     Irrespective of FCC rules governing radio ownership, the Antitrust Division of the DOJ (the “Antitrust Division”) and the FTC have the authority to determine that a particular transaction presents antitrust concerns. Over the past decade, the Antitrust Division has become more aggressive in reviewing proposed radio station acquisitions, particularly where the proposed purchaser already owns one or more radio stations in a particular market and seeks to acquire additional radio stations in that market. The Antitrust Division has, in some cases, obtained consent decrees requiring radio station divestitures in a particular market based on allegations that acquisitions would lead to unacceptable concentration levels. The FCC generally delays action on radio acquisitions in situations where antitrust authorities have expressed concentration concerns, even if the acquisition complies with the FCC’s numerical station limits, until after action has been taken by the antitrust authorities.
     A number of cross-ownership rules pertain to licensees of a radio station, including limits on broadcast-newspaper and radio-television cross ownership. FCC rules generally prohibit an individual or entity from having an attributable interest in a radio or television station and a daily newspaper located in the same market, although in late 2007 the FCC adopted a revised rule that would allow a degree of same-market newspaper/broadcast cross-ownership based on certain presumptions, criteria and limitations.
     Regarding radio-television cross ownership, FCC rules permit the common ownership of one television and up to seven same-market radio stations, or up to two television and six same-market radio stations, if the market will have at least 20 separately owned broadcast, newspaper and cable “voices” after the combination. Common ownership of up to two television and four radio stations is permissible when at least 10 “voices” will remain, and common ownership of up to two television stations and one radio station is permissible in all markets regardless of voice count. The radio/television limits, moreover, are subject to the compliance of the television and radio components of the combination with the television duopoly rule and the local radio ownership limits, respectively. Waivers of the radio/television cross-ownership rule are available only where the station being acquired is “failed” (i.e., off the air for at least four months or involved in court-supervised involuntary bankruptcy or insolvency proceedings). A buyer seeking such a waiver must also demonstrate, in most cases, that it is the only buyer ready, willing and able to operate the station, and that sale to an out-of-market buyer would result in an artificially depressed price. In its 2003 ownership decision, the FCC adopted new cross-media limits to replace these newspaper-broadcast and radio-television cross-ownership rules. These provisions were remanded by the Third Circuit for further FCC consideration, and are currently subject to judicial stay.

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     Developments and Future Actions Regarding Multiple Ownership Rules
     Expansion of our broadcast operations in particular areas and nationwide will continue to be subject to the FCC’s ownership rules and any further changes the FCC or Congress may adopt. Recent actions by and pending proceedings before the FCC, Congress and the courts may significantly affect our business.
     In June 2006, the FCC commenced its proceeding on remand from the Third Circuit of the modified media ownership rules. At an open meeting on December 18, 2007, the FCC adopted a decision that revised the newspaper/broadcast cross-ownership rule to allow a degree of same-market newspaper/broadcast ownership based on certain presumptions, criteria and limitations. The FCC made no changes to the currently effective local radio ownership rules (as modified by the 2003 decision) or the radio/television cross-ownership rule (as modified in 1999). The FCC’s 2007 decision, including the determination not to relax the numerical radio ownership limits, is the subject of a request for reconsideration and various court appeals, including by us. Also at its December 18, 2007 meeting, the FCC adopted rules to promote diversification of broadcast ownership, including revisions to its EDP attribution rule and the “eligible entity” exception to the prohibition on the sale of grandfathered noncompliant radio station combinations.
     We cannot predict the impact of any of these developments on our business. In particular, we cannot predict the ultimate outcome of the FCC’s media ownership proceedings or their effects on our ability to acquire broadcast stations in the future, to complete acquisitions that we have agreed to make, to continue to own and freely transfer groups of stations that we have already acquired, or to continue our existing agreements to provide programming to or sell advertising on stations we do not own. Moreover, we cannot predict the impact of future reviews or any other agency or legislative initiatives upon the FCC’s broadcast rules.
     Alien Ownership Restrictions
     The Communications Act restricts the ability of foreign entities or individuals to own or hold certain interests in broadcast licenses. Foreign governments, representatives of foreign governments, non-United States citizens, representatives of non-United States citizens and corporations or partnerships organized under the laws of a foreign nation are barred from holding broadcast licenses. Non-United States citizens, collectively, may own or vote up to 20% of the capital stock of a corporate licensee. A broadcast license may not be granted to or held by any entity that is controlled, directly or indirectly, by a business entity more than one-fourth of whose capital stock is owned or voted by non-United States citizens or their representatives, by foreign governments or their representatives, or by non-United States business entities, if the FCC finds that the public interest will be served by the refusal or revocation of such license. The FCC has interpreted this provision of the Communications Act to require an affirmative public interest finding before a broadcast license may be granted to or held by any such entity, and the FCC has made such an affirmative finding only in limited circumstances. Since we serve as a holding company for subsidiaries that serve as licensees for our stations, we are effectively restricted from having more than one-fourth of our stock owned or voted directly or indirectly by non-United States citizens or their representatives, foreign governments, representatives of foreign governments, or foreign business entities.
     Other Regulations Affecting Broadcast Stations
     General. The FCC has significantly reduced its past regulation of broadcast stations, including elimination of formal ascertainment requirements and guidelines concerning amounts of certain types of programming and commercial matter that may be broadcast. There are, however, statutes and rules and policies of the FCC and other federal agencies that regulate matters such as political advertising practices, obscenity and indecency in broadcast programming, application procedures and other areas affecting the business or operations of broadcast stations. Moreover, recent and possible future actions by the FCC in the areas of localism and public interest obligations may impose additional regulatory requirements on us.
     Indecency. Provisions of federal law regulate the broadcast of obscene, indecent, or profane material. The FCC has substantially increased its monetary penalties for violations of these regulations. Legislation enacted in 2006 provides the FCC with authority to impose fines of up to $325,000 per violation for the broadcast of such material. We cannot predict whether Congress will consider or adopt further legislation in this area. Several judicial appeals of FCC indecency enforcement actions are currently pending, and their outcomes could affect future FCC policies in this area.
     Public Interest Programming. Broadcasters are required to air programming addressing the needs and interests of their communities of license, and to place “issues/programs lists” in their public inspection files to provide their communities with information on the level of “public interest” programming they air. In December 2007, the FCC adopted a report on broadcast localism and proposed new localism rules. The report tentatively concluded that broadcast

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licensees should be required to establish and hold regular meetings with a local advisory board to ascertain the needs and interests of the communities where they own stations. The report also proposed the adoption of specific renewal application processing guidelines that would require broadcasters to air a minimum amount of local programming. Finally, it sought comment on a variety of other issues concerning localism including potential changes to the main studio rule and sponsorship identification rules. The FCC has not yet issued a decision in this proceeding. We cannot predict whether the FCC will enact any of the initiatives discussed in the report.
     Equal Employment Opportunity. The FCC’s equal employment opportunity rules generally require broadcasters to engage in broad and inclusive recruitment efforts to fill job vacancies, keep a considerable amount of recruitment data and report much of this data to the FCC and to the public via stations’ public files and websites. Radio stations with more than 10 full-time employees must file certain annual Equal Employment Opportunity reports with the FCC midway through their license term. The FCC is still considering whether to apply these rules to part-time employment positions. Broadcasters are subject to random audits to ensure compliance with the Equal Employment Opportunity rules and could be sanctioned for noncompliance. Broadcasters are also obligated not to engage in employment discrimination based on race, color, religion, national origin or sex.
     Digital Radio. The FCC has approved a technical standard for the provision of “in band, on channel” terrestrial digital radio broadcasting by existing radio broadcasters (except for nighttime broadcasting by AM stations, which is undergoing further testing), and has allowed radio broadcasters to convert to a hybrid mode of digital/analog operation on their existing frequencies. We and other broadcasters have intensified efforts to roll out terrestrial digital radio service. In May 2007, the FCC established service, operational and technical rules for terrestrial digital audio broadcasting and sought public comment on what (if any) limitations should be placed on subscription services offered by digital audio broadcasters and whether any new public interest requirements should be applied to terrestrial digital audio broadcast service. We cannot predict the impact of terrestrial digital audio radio service on our business.
     Low Power FM Radio Service. In January 2000, the FCC created two new classes of noncommercial low power FM radio stations (“LPFM”). One class (“LP100”) is authorized to operate with a maximum power of 100 watts and a service radius of about 3.5 miles. The other class (“LP10”) is authorized to operate with a maximum power of 10 watts and a service radius of about one to two miles. In establishing the new LPFM service, the FCC said that its goal is to create a class of radio stations designed “to serve very localized communities or underrepresented groups within communities.” The FCC has authorized a number of LPFM stations. In December 2000, Congress passed the Radio Broadcasting Preservation Act of 2000. This legislation requires the FCC to maintain interference protection requirements between LPFM stations and full-power radio stations on third-adjacent channels. It also requires the FCC to conduct field tests to determine the impact of eliminating such requirements. The FCC has commissioned a preliminary report on such impact and on the basis of that report, has recommended to Congress that such requirements be eliminated. In addition, in November 2007, the FCC adopted rules that, among other things, enhance LPFM’s interference protection from subsequently authorized full-service stations. Concurrently, the FCC solicited public comment on technical rules for possible expansion of LPFM licensing opportunities and technical and financial assistance to LPFM broadcasters from full-service stations which propose to create interference to LPFM stations. We cannot predict the number of LPFM stations that eventually will be authorized to operate or the impact of such stations on our business.
     Other. Finally, Congress and the FCC from time to time consider, and may in the future adopt, new laws, regulations and policies regarding a wide variety of other matters that could affect, directly or indirectly, the operation and ownership of our broadcast properties. In addition to the changes and proposed changes noted above, such matters have included, for example, spectrum use fees, political advertising rates and potential restrictions on the advertising of certain products such as beer and wine. Other matters that could affect our broadcast properties include technological innovations and developments generally affecting competition in the mass communications industry, such as “streaming” of audio and video programming via the Internet, digital radio technologies and the establishment of a low power FM radio service.
     The foregoing is a brief summary of certain provisions of the Communications Act and specific regulations and policies of the FCC thereunder. This description does not purport to be comprehensive and reference should be made to the Communications Act, the FCC’s rules and the public notices and rulings of the FCC for further information concerning the nature and extent of federal regulation of broadcast stations. Proposals for additional or revised regulations and requirements are pending before and are being considered by Congress and federal regulatory agencies from time to time. Also, various of the foregoing matters are now, or may become, the subject of court litigation, and we cannot predict the outcome of any such litigation or its impact on our broadcasting business.

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Regulation of our Americas and International Outdoor Advertising Businesses
     The outdoor advertising industry in the United States is subject to governmental regulation at the federal, state and local levels. These regulations may include, among others, restrictions on the construction, repair, maintenance, lighting, upgrading, height, size, spacing and location of and, in some instances, content of advertising copy being displayed on outdoor advertising structures. In addition, the outdoor advertising industry outside of the United States is subject to certain foreign governmental regulation.
     Domestically, in recent years, outdoor advertising has become the subject of targeted state and municipal taxes and fees. These laws may affect prevailing competitive conditions in our markets in a variety of ways. Such laws may reduce our expansion opportunities, or may increase or reduce competitive pressure from other members of the outdoor advertising industry. No assurance can be given that existing or future laws or regulations, and the enforcement thereof, will not materially and adversely affect the outdoor advertising industry. However, we contest laws and regulations that we believe unlawfully restrict our constitutional or other legal rights and may adversely impact the growth of our outdoor advertising business.
     Federal law, principally the Highway Beautification Act of 1965, or HBA, regulates outdoor advertising on Federal-Aid Primary, Interstate and National Highway Systems roads within the United States (“controlled roads”). The HBA regulates the size and placement of billboards, requires the development of state standards, mandates a state’s compliance program, promotes the expeditious removal of illegal signs and requires just compensation for takings.
     To satisfy the HBA’s requirements, all states have passed billboard control statutes and regulations which regulate, among other things, construction, repair, maintenance, lighting, height, size, spacing and the placement of outdoor advertising structures. We are not aware of any state which has passed control statutes and regulations less restrictive than the prevailing federal requirements, including the requirement that an owner to remove any non-grandfathered non-compliant signs along the controlled roads, at the owner’s expense and without compensation, or requiring an owner to remove any non-grandfathered structures that do not comply with certain of the states’ requirements. Municipal and county governments generally also include billboard control as part of their zoning laws and building codes regulating those items described above and include similar provisions regarding the removal of non-grandfathered structures that do not comply with certain of the local requirements.
     As part of their billboard control laws, state and local governments regulate the construction of new signs. Some jurisdictions prohibit new construction, some jurisdictions allow new construction only to replace existing structures and some jurisdictions allow new construction subject to the various restrictions discussed above. In certain jurisdictions, restrictive regulations also limit our ability to relocate, rebuild, repair, maintain, upgrade, modify, or replace existing legal non-conforming billboards. While these regulations set certain limits on the construction of new outdoor advertising displays, they also benefit established companies, including us, by creating barriers to entry and by protecting the outdoor advertising industry against an oversupply of inventory.
     Federal law neither requires nor prohibits the removal of existing lawful billboards, but it does mandate the payment of compensation if a state or political subdivision compels the removal of a lawful billboard along the controlled roads. In the past, state governments have purchased and removed existing lawful billboards for beautification purposes using federal funding for transportation enhancement programs, and these jurisdictions may continue to do so in the future. From time to time, state and local government authorities use the power of eminent domain and amortization to remove billboards. Thus far, we have been able to obtain satisfactory compensation for our billboards purchased or removed as a result of these types of governmental action, although there is no assurance that this will continue to be the case in the future.
     Other important outdoor advertising regulations include the Intermodal Surface Transportation Efficiency Act of 1991, the Bonus Act/Bonus Program, the 1995 Scenic Byways Amendment and various increases or implementations of property taxes, billboard taxes and permit fees. From time to time, legislation has been introduced in both the United States and foreign jurisdictions attempting to impose taxes on revenue from outdoor advertising. Several state and local jurisdictions have already imposed such taxes as a percentage of our outdoor advertising revenue in that jurisdiction. While these taxes have not had a material impact on our business and financial results to date, we expect state and local governments to continue to try to impose such taxes as a way of increasing revenue.
     We have introduced and intend to expand the deployment of digital billboards that display static digital advertising copy from various advertisers that change up to several times per minute. We have encountered some existing regulations that restrict or prohibit these types of digital displays. However, since digital technology for changing static copy has only recently been developed and introduced into the market on a large scale, existing regulations that currently do not apply to digital technology by their terms could be revised to impose greater restrictions.

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These regulations may impose greater restrictions on digital billboards due to alleged concerns over aesthetics or driver safety.
     International regulation of the outdoor advertising industry varies by region and country, but generally limits the size, placement, nature and density of out-of-home displays. Other regulations may limit the subject matter and language of out-of-home displays.
Item 1A. Risk Factors
Risks Relating to Our Business
Deterioration in general economic conditions has caused and could cause additional decreases or delays in advertising spending by our advertisers and could harm our ability to generate advertising revenues and negatively affect our results of operations
     The risks associated with our businesses become more acute in periods of a slowing economy or recession, which may be accompanied by a decrease in advertising. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. The current global economic slowdown has resulted in a decline in advertising and marketing services among our customers, resulting in a decline in advertising revenues across our businesses. This reduction in advertising revenues has had an adverse effect on our revenue, profit margins, cash flow and liquidity, particularly during the second half of 2008. The continuation of the global economic slowdown may continue to adversely impact our revenue, profit margins, cash flow and liquidity.
     In this regard, our consolidated revenue decreased $232.5 million during 2008 compared to 2007. Revenue growth during the first nine months of 2008 was offset by a decline of $254.0 million in the fourth quarter. Revenue declined $264.7 million during 2008 compared to 2007 from our radio business associated with decreases in both local and national advertising. Our Americas outdoor revenue also declined approximately $54.8 million attributable to decreases in poster and bulletin revenues associated with cancellations and non-renewals from major national advertisers.
     In January 2009, in response to the deterioration in general economic conditions and the resulting negative impact on our business, we commenced a restructuring program targeting a reduction of fixed costs by approximately $350 million on an annualized basis. As part of the program, we eliminated approximately 1,850 full-time positions representing approximately 9% of total workforce. The program is expected to result in restructuring and other non-recurring charges of approximately $200 million, although additional costs may be incurred as the program evolves. The cost savings initiatives are expected to be fully implemented by the end of the first quarter of 2010. No assurance can be given that the restructuring program will be successful or will achieve the anticipated cost savings in the timeframe expected or at all.
If we need additional cash to fund our working capital, debt service, capital expenditures or other funding requirements, we may not be able to access the credit markets due to continuing adverse securities and credit market conditions
     Our primary source of liquidity is cash flow from operations, which has been adversely impacted by the decline in our advertising revenues resulting from the current global economic slowdown. Based on our current and anticipated levels of operations and conditions in our markets, we believe that cash flow from operations as well as cash on hand (including amounts drawn or available under our senior secured credit facilities) will enable us to meet our working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months. However, our ability to fund our working capital needs, debt service and other obligations, and to comply with the financial covenants under our financing agreements depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions and other factors, many of which are beyond our control. If our future operating performance does not meet our expectation or our plans materially change in an adverse manner or prove to be materially inaccurate, we may need additional financing. Continuing adverse securities and credit market conditions could significantly affect the availability of equity or credit financing. Consequently, there can be no assurance that such financing, if permitted under the terms of our financing agreements, will be available on terms acceptable to us or at all. The inability to obtain additional financing in such circumstances could have a material adverse effect on our financial condition and on our ability to meet our obligations.
Downgrades in our credit ratings and macroeconomic conditions may adversely affect our borrowing costs, limit our financing options, reduce our flexibility under future financings and adversely affect our liquidity

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     Our corporate credit and issue-level ratings were downgraded on February 20, 2009 by Standard & Poor’s Ratings Services. Our corporate credit rating was lowered to “B-”. These ratings remain on credit watch with negative implications. Additionally, Moody’s Investors Service has placed our credit ratings on review for possible downgrade from “B2.” These ratings are significantly below investment grade. These ratings and any additional reductions in our credit ratings could further increase our borrowing costs and reduce the availability of financing to us. In addition, deteriorating economic conditions, including market disruptions, tightened credit markets and significantly wider corporate borrowing spreads, may make it more difficult or costly for us to obtain financing in the future. A credit rating downgrade does not constitute a default under any of our debt obligations.
Our financial performance may be adversely affected by certain variables which are not in our control
     Certain variables that could adversely affect our financial performance by, among other things, leading to decreases in overall revenues, the numbers of advertising customers, advertising fees, or profit margins include:
    unfavorable economic conditions, both general and relative to the radio broadcasting, outdoor advertising and all related media industries, which may cause companies to reduce their expenditures on advertising;
 
    unfavorable shifts in population and other demographics which may cause us to lose advertising customers as people migrate to markets where we have a smaller presence, or which may cause advertisers to be willing to pay less in advertising fees if the general population shifts into a less desirable age or geographical demographic from an advertising perspective;
 
    an increased level of competition for advertising dollars, which may lead to lower advertising rates as we attempt to retain customers or which may cause us to lose customers to our competitors who offer lower rates that we are unable or unwilling to match;
 
    unfavorable fluctuations in operating costs which we may be unwilling or unable to pass through to our customers;
 
    technological changes and innovations that we are unable to adopt or are late in adopting that offer more attractive advertising or listening alternatives than what we currently offer, which may lead to a loss of advertising customers or to lower advertising rates;
 
    the impact of potential new royalties charged for terrestrial radio broadcasting which could materially increase our expenses;
 
    unfavorable changes in labor conditions which may require us to spend more to retain and attract key employees; and
 
    changes in governmental regulations and policies and actions of federal regulatory bodies which could restrict the advertising media which we employ or restrict some or all of our customers that operate in regulated areas from using certain advertising media, or from advertising at all.
We face intense competition in the broadcasting and outdoor advertising industries
     Our business segments are in highly competitive industries, and we may not be able to maintain or increase our current audience ratings and advertising and sales revenues. Our radio stations and outdoor advertising properties compete for audiences and advertising revenues with other radio stations and outdoor advertising companies, as well as with other media, such as newspapers, magazines, television, direct mail, satellite radio and Internet based media, within their respective markets. Audience ratings and market shares are subject to change, which could have the effect of reducing our revenues in that market. Our competitors may develop services or advertising media that are equal or superior to those we provide or that achieve greater market acceptance and brand recognition than we achieve. It is possible that new competitors may emerge and rapidly acquire significant market share in any of our business segments. An increased level of competition for advertising dollars may lead to lower advertising rates as we attempt to retain customers or may cause us to lose customers to our competitors who offer lower rates that we are unable or unwilling to match.
Our business is dependent upon the performance of on-air talent and program hosts, as well as our management team and other key employees
     We employ or independently contract with several on-air personalities and hosts of syndicated radio programs with significant loyal audiences in their respective markets. Although we have entered into long-term agreements with some of our key on-air talent and program hosts to protect our interests in those relationships, we can give no assurance that all or any of these persons will remain with us or will retain their audiences. Competition for these individuals is intense and many of these individuals are under no legal obligation to remain with us. Our competitors may choose to extend offers to any of these individuals on terms which we may be unwilling to meet. Furthermore, the popularity and audience loyalty of our key on-air talent and program hosts is highly sensitive to rapidly changing public tastes. A loss of such popularity or audience loyalty is beyond our control and could limit our ability to generate revenues.

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     Our business is also dependent upon the performance of our management team and other key employees. Although we have entered into long-term agreements with some of these individuals, we can give no assurance that all or any of our executive officers or key employees will remain with us. Competition for these individuals is intense and many of our key employees are at-will employees who are under no legal obligation to remain with us. In addition, any or all of our executive officers or key employees may decide to leave for a variety of personal or other reasons beyond our control. The loss of members of our management team or other key employees could have a negative impact on our business and results of operations.
Extensive government regulation, including laws dealing with indecency, may limit our broadcasting operations or adversely affect our business
     The federal government extensively regulates the domestic broadcasting industry, and any changes in the current regulatory scheme could significantly affect us.
     Provisions of federal law regulate the broadcast of obscene, indecent, or profane material. The FCC has substantially increased its monetary penalties for violations of these regulations. Congressional legislation enacted in 2006 provides the FCC with authority to impose fines of up to $325,000 per violation for the broadcast of such material. We therefore face increased costs in the form of fines for indecency violations, and cannot predict whether Congress will consider or adopt further legislation in this area.
Environmental, health, safety and land use laws and regulations may limit or restrict some of our operations
     As the owner or operator of various real properties and facilities, especially in our outdoor advertising operations, we must comply with various foreign, federal, state and local environmental, health, safety and land use laws and regulations. We and our properties are subject to such laws and regulations relating to the use, storage, disposal, emission and release of hazardous and non-hazardous substances and employee health and safety as well as zoning restrictions. Historically, we have not incurred significant expenditures to comply with these laws. However, additional laws which may be passed in the future, or a finding of a violation of or liability under existing laws, could require us to make significant expenditures and otherwise limit or restrict some of our operations.
Government regulation of outdoor advertising may restrict our outdoor advertising operations
     United States federal, state and local regulations have a significant impact on the outdoor advertising industry and our business. One of the seminal laws was the HBA, which regulates outdoor advertising on the 306,000 miles of Federal-Aid Primary, Interstate and National Highway Systems. The HBA regulates the size and location of billboards, mandates a state compliance program, requires the development of state standards, promotes the expeditious removal of illegal signs, and requires just compensation for takings. Construction, repair, lighting, height, size, spacing and the location of billboards and the use of new technologies for changing displays, such as digital displays, are regulated by federal, state and local governments. From time to time, states and municipalities have prohibited or significantly limited the construction of new outdoor advertising structures, and also permitted non-conforming structures to be rebuilt by third parties. Changes in laws and regulations affecting outdoor advertising at any level of government, including laws of the foreign jurisdictions in which we operate, could have a significant financial impact on us by requiring us to make significant expenditures or otherwise limiting or restricting some of our operations.
     From time to time, certain state and local governments and third parties have attempted to force the removal of our displays under various state and local laws, including condemnation and amortization. Amortization is the attempted forced removal of legal but non-conforming billboards (billboards which conformed with applicable zoning regulations when built, but which do not conform to current zoning regulations) or the commercial advertising placed on such billboards after a period of years. Pursuant to this concept, the governmental body asserts that just compensation is earned by continued operation of the billboard over time. Amortization is prohibited along all controlled roads and generally prohibited along non-controlled roads. Amortization has, however, been upheld along non-controlled roads in limited instances where provided by state and local law. Other regulations limit our ability to rebuild, replace, repair and upgrade non-conforming displays. In addition, from time to time third parties or local governments assert that we own or operate displays that either are not properly permitted or otherwise are not in strict compliance with applicable law. Although we believe that the number of our billboards that may be subject to removal based on alleged noncompliance is immaterial, from time to time we have been required to remove billboards for alleged noncompliance. Such regulations and allegations have not had a material impact on our results of operations to date, but if we are increasingly unable to resolve such allegations or obtain acceptable arrangements in circumstances in which our displays are subject to removal, modification, or amortization, or if there occurs an increase in such regulations or their enforcement, our operating results could suffer.

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     A number of state and local governments have implemented or initiated legislative billboard controls, including taxes, fees and registration requirements in an effort to decrease or restrict the number of outdoor signs and/or to raise revenue. While these controls have not had a material impact on our business and financial results to date, we expect states and local governments to continue these efforts. The increased imposition of these controls and our inability to pass on the cost of these items to our clients could negatively affect our operating income.
     International regulation of the outdoor advertising industry varies by region and country, but generally limits the size, placement, nature and density of out-of-home displays. Other regulations limit the subject matter and language of out-of-home displays. For instance, the United States and most European Union countries, among other nations, have banned outdoor advertisements for tobacco products. Our failure to comply with these or any future international regulations could have an adverse impact on the effectiveness of our displays or their attractiveness to clients as an advertising medium and may require us to make significant expenditures to ensure compliance. As a result, we may experience a significant impact on our operations, revenue, International client base and overall financial condition.
Additional restrictions on outdoor advertising of tobacco, alcohol and other products may further restrict the categories of clients that can advertise using our products
     Out-of-court settlements between the major United States tobacco companies and all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and four other United States territories include a ban on the outdoor advertising of tobacco products. Other products and services may be targeted in the future, including alcohol products. Legislation regulating tobacco and alcohol advertising has also been introduced in a number of European countries in which we conduct business and could have a similar impact. Any significant reduction in alcohol-related advertising due to content-related restrictions could cause a reduction in our direct revenues from such advertisements and an increase in the available space on the existing inventory of billboards in the outdoor advertising industry.
Doing business in foreign countries creates certain risks not found in doing business in the United States
     Doing business in foreign countries carries with it certain risks that are not found in doing business in the United States. The risks of doing business in foreign countries that could result in losses against which we are not insured include:
    exposure to local economic conditions;
 
    potential adverse changes in the diplomatic relations of foreign countries with the United States;
 
    hostility from local populations;
 
    the adverse effect of currency exchange controls;
 
    restrictions on the withdrawal of foreign investment and earnings;
 
    government policies against businesses owned by foreigners;
 
    investment restrictions or requirements;
 
    expropriations of property;
 
    the potential instability of foreign governments;
 
    the risk of insurrections;
 
    risks of renegotiation or modification of existing agreements with governmental authorities;
 
    foreign exchange restrictions;
 
    withholding and other taxes on remittances and other payments by subsidiaries; and
 
    changes in taxation structure.
     In addition, because we own assets in foreign countries and derive revenues from our international operations, we may incur currency translation losses due to changes in the values of foreign currencies and in the value of the United States dollar. We cannot predict the effect of exchange rate fluctuations upon future operating results.
Future acquisitions could pose risks
     We frequently evaluate strategic opportunities both within and outside our existing lines of business. We expect from time to time to pursue additional acquisitions and may decide to dispose of certain businesses. These acquisitions or dispositions could be material. Our acquisition strategy involves numerous risks, including:
    certain of our acquisitions may prove unprofitable and fail to generate anticipated cash flows;
 
    to successfully manage our large portfolio of broadcasting, outdoor advertising and other properties, we may need to:
    recruit additional senior management as we cannot be assured that senior management of acquired companies will continue to work for us and we cannot be certain that any of our recruiting efforts will succeed, and

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    expand corporate infrastructure to facilitate the integration of our operations with those of acquired properties, because failure to do so may cause us to lose the benefits of any expansion that we decide to undertake by leading to disruptions in our ongoing businesses or by distracting our management;
    entry into markets and geographic areas where we have limited or no experience;
 
    we may encounter difficulties in the integration of operations and systems;
 
    our management’s attention may be diverted from other business concerns; and
 
    we may lose key employees of acquired companies or stations.
     Additional acquisitions by us of radio and television stations and outdoor advertising properties may require antitrust review by federal antitrust agencies and may require review by foreign antitrust agencies under the antitrust laws of foreign jurisdictions. We can give no assurances that the United States Department of Justice (“DOJ”) or the Federal Trade Commission (“FTC”) or foreign antitrust agencies will not seek to bar us from acquiring additional radio or television stations or outdoor advertising properties in any market where we already have a significant position. The DOJ also actively reviews proposed acquisitions of outdoor advertising properties. In addition, the antitrust laws of foreign jurisdictions will apply if we acquire international broadcasting properties.
Capital requirements necessary to implement strategic initiatives could pose risks
     The purchase price of possible acquisitions and/or other strategic initiatives could require additional indebtedness or equity financing on our part. Since the terms and availability of this financing depend to a large degree upon general economic conditions and third parties over which we have no control, we can give no assurance that we will obtain the needed financing or that we will obtain such financing on attractive terms. In addition, our ability to obtain financing depends on a number of other factors, many of which are also beyond our control, such as interest rates and national and local business conditions. If the cost of obtaining needed financing is too high or the terms of such financing are otherwise unacceptable in relation to the strategic opportunity we are presented with, we may decide to forego that opportunity. Additional indebtedness could increase our leverage and make us more vulnerable to economic downturns and may limit our ability to withstand competitive pressures.
New technologies may affect our broadcasting operations
     Our broadcasting businesses face increasing competition from new broadcast technologies, such as broadband wireless and satellite radio, and new consumer products, such as portable digital audio players. These new technologies and alternative media platforms compete with our radio stations for audience share and advertising revenues. The FCC has also approved new technologies for use in the radio broadcasting industry, including the terrestrial delivery of digital audio broadcasting, which significantly enhances the sound quality of radio broadcasts. We have converted approximately 498 of our radio stations to digital broadcasting as of December 31, 2008. We are unable to predict the effect such technologies and related services and products will have on our broadcasting operations, but the capital expenditures necessary to implement such technologies could be substantial and other companies employing such technologies could compete with our businesses.
We may be adversely affected by the occurrence of extraordinary events, such as terrorist attacks
     The occurrence of extraordinary events, such as terrorist attacks, intentional or unintentional mass casualty incidents, or similar events may substantially decrease the use of and demand for advertising, which may decrease our revenues or expose us to substantial liability. The September 11, 2001 terrorist attacks, for example, caused a nationwide disruption of commercial activities. As a result of the expanded news coverage following the attacks and subsequent military actions, we experienced a loss in advertising revenues and increased incremental operating expenses. The occurrence of future terrorist attacks, military actions by the United States, contagious disease outbreaks, or similar events cannot be predicted, and their occurrence can be expected to further negatively affect the economies of the United States and other foreign countries where we do business generally, specifically the market for advertising.
Risks Relating to Ownership of Our Class A Common Stock
The market price and trading volume of our Class A common stock may be volatile
     The market price of our Class A common stock could fluctuate significantly for many reasons, including, without limitation:
    as a result of the risk factors listed in this annual report on Form 10-K;
 
    actual or anticipated fluctuations in our operating results;

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    reasons unrelated to operating performance, such as reports by industry analysts, investor perceptions, or negative announcements by our customers or competitors regarding their own performance;
 
    regulatory changes that could impact our business; and
 
    general economic and industry conditions.
     Shares of our Class A common stock are quoted on the Over-the-Counter Bulletin Board. The lack of an active market may impair the ability of holders of our Class A common stock to sell their shares of Class A common stock at the time they wish to sell them or at a price that they consider reasonable. The lack of an active market may also reduce the fair market value of the shares of our Class A common stock.
We have a large amount of indebtedness
     We currently use a portion of our operating income for debt service. Our leverage could make us vulnerable to an increase in interest rates or a downturn in the operating performance of our businesses due to various factors including a decline in general economic conditions. We may incur additional indebtedness to finance capital expenditures, acquisitions or to refinance indebtedness, as well as for other purposes. On February 6, 2009, we borrowed the approximately $1.6 billion of remaining availability under our $2.0 billion revolving credit facility. We made the borrowing to improve our liquidity position in light of continuing uncertainty in credit market and economic conditions. Our debt obligations could increase substantially because of acquisitions and other transactions that may be approved by our Board as well as the indebtedness of companies that we may acquire in the future.
     Such a large amount of indebtedness could have negative consequences for us, including, without limitation:
    dedicating a substantial portion of our cash flow to the payment of principal and interest on indebtedness, thereby reducing cash available for other purposes, including to fund operations and capital expenditures, invest in new technology and pursue other business opportunities;
 
    limiting our liquidity and operational flexibility and limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;
 
    limiting our ability to adjust to changing economic, business and competitive conditions;
 
    requiring us to defer planned capital expenditures, reduce discretionary spending, selling assets, restructure existing indebtedness or defer acquisitions or other strategic opportunities;
 
    limiting our ability to refinance any of our indebtedness or increasing the cost of any such financing in any downturn in our operating performance or decline in general economic conditions;
 
    making us more vulnerable to an increase in interest rates, a downturn in our operating performance or a decline in general economic conditions; and
 
    making us more susceptible to changes in credit ratings which could impact our ability to obtain financing in the future and increase the cost of such financing.
     If compliance with our debt obligations materially hinders our ability to operate our business and adapt to changing industry conditions, we may lose market share, our revenue may decline and our operating results may suffer. The terms of our credit facilities allow us, under certain conditions, to incur further indebtedness, which heightens the foregoing risks. If we are unable to generate sufficient cash flow from operations in the future, which together with cash on hand and availability under our senior secured credit facilities, is not sufficient to service our debt, we may have to refinance all or a portion of our indebtedness or to obtain additional financing. There can be no assurance that any refinancing of this kind would be possible or that any additional financing could be obtained.
The documents governing our indebtedness contain restrictions that limit our flexibility in operating our business
     Our financing agreements contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit our ability to, among other things, incur or guarantee additional indebtedness, incur or permit liens, merge or consolidate with or into, another company, sell assets, pay dividends and other payments in respect to our capital stock, including to redeem or repurchase our capital stock, make certain acquisitions and investments and enter into transactions with affiliates.
     The failure to comply with the covenants in the agreements governing the terms of our or our subsidiaries’ indebtedness could be an event of default and could accelerate the payment obligations and, in some cases, could affect other obligations with cross-default and cross-acceleration provisions.
Our failure to comply with the covenants in our financing agreements could be an event of default and could accelerate the payment obligations and, in some cases, could affect other obligations with cross-default and cross-acceleration provisions

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     In addition to covenants imposing restrictions on our business and operations, our senior secured credit facilities include covenants relating to financial ratios and tests. Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any covenants set forth in our financing agreements would result in a default thereunder. An event of default would permit the lenders under a defaulted financing agreement to declare all indebtedness thereunder to be due and payable prior to maturity. Moreover, the lenders under the revolving credit facility under our senior secured credit facilities would have the option to terminate their commitments to make further extensions of revolving credit thereunder. If we are unable to repay our obligations under any senior secured credit facilities or the receivables based credit facility, the lenders under such senior secured credit facilities or receivables based credit facility could proceed against any assets that were pledged to secure such senior secured credit facilities or receivables based credit facility. In addition, a default or acceleration under any of our financing agreements could cause a default under other of our obligations that are subject to cross-default and cross-acceleration provisions.
There is no assurance that holders of our Class A common stock will ever receive cash dividends
     There is no guarantee that we will ever pay cash dividends on our Class A common stock. The terms of our credit facilities restrict our ability to pay cash dividends on our Class A common stock. In addition to those restrictions, under Delaware law, we are permitted to pay cash dividends on our capital stock only out of our surplus, which in general terms means the excess of our net assets over the original aggregate par value of its stock. In the event we have no surplus, we are permitted to pay these cash dividends out of our net profits for the year in which the dividend is declared or in the immediately preceding year. Accordingly, there is no guarantee that, if we wish to pay cash dividends, we would be able to do so pursuant to Delaware law. Also, even if we are not prohibited from paying cash dividends by the terms of our debt or by law, other factors such as the need to reinvest cash back into our operations may prompt our board of directors to elect not to pay cash dividends.
We may terminate our Exchange Act reporting, if permitted by applicable law
     We voluntarily file periodic reports (including annual and quarterly reports) and we may cease filing periodic reports (if permitted by applicable law). If we were to cease to be a reporting company under the Exchange Act, and to the extent not required in connection with any other of our debt or equity securities registered or required to be registered under the Exchange Act, the information now available to our stockholders in the annual, quarterly and other reports required to be filed by us with the SEC would not be available to them as a matter of right.
Entities advised by or affiliated with Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC control us and may have conflicts of interest with us in the future
     Entities advised by or affiliated with Thomas H. Lee Partners, L.P. (“THL”) and Bain Capital Partners, LLC (“Bain”) currently indirectly control us through their ownership of all of our outstanding shares of Class B common stock, which represent approximately 72% of the voting power of all of our outstanding capital stock. As a result, THL and Bain have the power to elect all but two of our directors (and, in addition, the Company has agreed that each of Mark P. Mays and Randall T. Mays shall serve as directors of the Company pursuant to the terms of their respective amended and restated employment agreements), appoint new management and approve any action requiring the approval of the holders of our capital stock, including adopting any amendments to our third amended and restated certificate of incorporation, and approving mergers or sales of substantially all of our capital stock or its assets. The directors elected by THL and Bain will have significant authority to effect decisions affecting our capital structure, including the issuance of additional capital stock, incurrence of additional indebtedness, the implementation of stock repurchase programs and the decision of whether or not to declare dividends.
     Additionally, THL and Bain are in the business of making investments in companies and may acquire and hold interests in business that compete directly or indirectly with us. One or more of the entities advised by or affiliated with THL or Bain may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. So long as entities advised by or affiliated with THL and Bain directly or indirectly own a significant amount of the voting power of our capital stock, even if such amount is less than 50%, THL and Bain will continue to be able to strongly influence or effectively control our decisions.
Caution Concerning Forward-Looking Statements
     The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. Except for the historical information, this report contains various forward-looking statements which represent our expectations or beliefs concerning future events, including the future levels of cash flow from operations. Management believes that all statements that express expectations and projections with respect to

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future matters, including the planned sale of radio assets; our ability to negotiate contracts having more favorable terms; and the availability of capital resources are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. We caution that these forward-looking statements involve a number of risks and uncertainties and are subject to many variables which could impact our financial performance. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. We do not intend, nor do we undertake any duty, to update any forward-looking statements.
     A wide range of factors could materially affect future developments and performance, including:
    the impact of the substantial indebtedness incurred to finance the consummation of the merger;
 
    risks associated with the current global economic crisis and its impact on capital markets and liquidity;
 
    the need to allocate significant amounts of our cash flow to make payments on our indebtedness, which in turn could reduce our financial flexibility and ability to fund other activities;
 
    the impact of planned divestitures;
 
    the impact of the global economic slowdown, which has adversely affected advertising revenues across our businesses and other general economic and political conditions in the U.S. and in other countries in which we currently do business, including those resulting from recessions, political events and acts or threats of terrorism or military conflicts;
 
    our cost savings initiatives may not be entirely successful;
 
    the impact of the geopolitical environment;
 
    our ability to integrate the operations of recently acquired companies;
 
    shifts in population and other demographics;
 
    industry conditions, including competition;
 
    fluctuations in operating costs;
 
    technological changes and innovations;
 
    changes in labor conditions;
 
    fluctuations in exchange rates and currency values;
 
    capital expenditure requirements;
 
    the outcome of pending and future litigation settlements;
 
    legislative or regulatory requirements;
 
    changes in interest rates;
 
    the effect of leverage on our financial position and earnings;
 
    taxes;
 
    access to capital markets and borrowed indebtedness; and
 
    certain other factors set forth in our filings with the Securities and Exchange Commission.
     This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
ITEM 1B. Unresolved Staff Comments
Not Applicable
ITEM 2. Properties
Corporate
     Our corporate headquarters is in San Antonio, Texas, where we own an approximately 55,000 square foot executive office building and an approximately 123,000 square foot data and administrative service center.

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Radio Broadcasting
     Our radio executive operations are located in our corporate headquarters in San Antonio, Texas. The types of properties required to support each of our radio stations include offices, studios, transmitter sites and antenna sites. We either own or lease our transmitter and antenna sites. These leases generally have expiration dates that range from five to 15 years. A radio station’s studios are generally housed with its offices in downtown or business districts. A radio station’s transmitter sites and antenna sites are generally located in a manner that provides maximum market coverage.
Americas and International Outdoor Advertising
     The headquarters of our Americas Outdoor Advertising operations is in Phoenix, Arizona, and the headquarters of our International Outdoor Advertising operations is in London, England. The types of properties required to support each of our outdoor advertising branches include offices, production facilities and structure sites. An outdoor branch and production facility is generally located in an industrial or warehouse district.
     In both our Americas and International Outdoor Advertising segments, we own or have acquired permanent easements for relatively few parcels of real property that serve as the sites for our outdoor displays. Our remaining outdoor display sites are leased. Our leases generally range from month-to-month to year-to-year and can be for terms of 10 years or longer, and many provide for renewal options. There is no significant concentration of displays under any one lease or subject to negotiation with any one landlord. We believe that an important part of our management activity is to negotiate suitable lease renewals and extensions.
Consolidated
     The studios and offices of our radio stations and outdoor advertising branches are located in leased or owned facilities. These leases generally have expiration dates that range from one to 40 years. We do not anticipate any difficulties in renewing those leases that expire within the next several years or in leasing other space, if required. We own substantially all of the equipment used in our radio broadcasting and outdoor advertising businesses.
     As noted above, as of December 31, 2008, we owned 894 radio stations and owned or leased approximately 908,000 outdoor advertising display faces in various markets throughout the world. Therefore, no one property is material to our overall operations. We believe that our properties are in good condition and suitable for our operations.
ITEM 3. Legal Proceedings
     We are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, have accrued our estimate of the probable costs for the resolution of these claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.
     On September 9, 2003, the Assistant United States Attorney for the Eastern District of Missouri caused a Subpoena to Testify before Grand Jury to be issued to us. The subpoena requires us to produce certain information regarding commercial advertising run by us on behalf of offshore and/or online (Internet) gambling businesses, including sports bookmaking and casino-style gambling. On October 5, 2006, we received a subpoena from the Assistant United States Attorney for the Southern District of New York requiring us to produce certain information regarding substantially the same matters as covered in the subpoena from the Eastern District of Missouri. We are cooperating with such requirements. While we are unable to estimate the impact of any potential liabilities associated with these proceedings, the outcome of these proceedings is not expected to be material to the Company.
     We are a co-defendant with Live Nation (which was spun off as an independent company in December 2005) in 22 putative class actions filed by different named plaintiffs in various district courts throughout the country. These actions generally allege that the defendants monopolized or attempted to monopolize the market for “live rock concerts” in violation of Section 2 of the Sherman Act. Plaintiffs claim that they paid higher ticket prices for defendants’ “rock concerts” as a result of defendants’ conduct. They seek damages in an undetermined amount. On April 17, 2006, the Judicial Panel for Multidistrict Litigation centralized these class action proceedings in the District Court for the Central District of California. On March 2, 2007, plaintiffs filed motions for class certification in five “template” cases involving five regional markets, Los Angeles, Boston, New York, Chicago and Denver. Defendants opposed that motion and, on October 22, 2007, the District Court issued its decision certifying the class for each regional market. On November 4, 2007, defendants filed a petition for permission to appeal the class certification ruling with the Ninth

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Circuit Court of Appeals. On November 5, 2007 the District Court issued a stay on all proceedings pending the Ninth Circuit’s decision on our Petition to Appeal. On February 19, 2008, the Ninth Circuit denied our Petition to Appeal, and we filed a Motion for Reconsideration of the District Court’s ruling on class certification. The plaintiffs have filed a reply to our motion and we have replied to their filing. The District Court’s decision on our Motion for Reconsideration is still pending. On February 18, 2009, the District Court requested that the parties submit briefs concerning issuing an additional stay of the proceedings. These briefs are due March 2, 2009. In the Master Separation and Distribution Agreement between us and Live Nation that was entered into in connection with our spin-off of Live Nation in December 2005, Live Nation agreed, among other things, to assume responsibility for legal actions existing at the time of, or initiated after, the spin-off in which we are a defendant if such actions relate in any material respect to the business of Live Nation. Pursuant to the agreement, Live Nation also agreed to indemnify us with respect to all liabilities assumed by Live Nation, including those pertaining to the claims discussed above.
Merger-Related Litigation
     Eight putative class action lawsuits were filed in the District Court of Bexar County, Texas, in 2006 in connection with the merger. Of the eight, three have been voluntarily dismissed, one has been dismissed for lack of prosecution and four are still pending. The remaining putative class actions, Teitelbaum v. Clear Channel Communications, Inc., et al., No. 2006CI17492 (filed November 14, 2006), City of St. Clair Shores Police and Fire Retirement System v. Clear Channel Communications, Inc., et al., No. 2006CI17660 (filed November 16, 2006), Levy Investments, Ltd. v. Clear Channel Communications, Inc., et al., No. 2006CI17669 (filed November 16, 2006), DD Equity Partners LLC v. Clear Channel Communications, Inc., et al., No. 2006CI7914 (filed November 22, 2006), and Pioneer Investments Kapitalanlagegesellschaft MBH v. L. Lowry Mays, et al. (filed December 7, 2006), are consolidated into one proceeding and all raise substantially similar allegations on behalf of a purported class of our shareholders against the defendants for breaches of fiduciary duty in connection with the approval of the merger. The Pioneer Investments Kapitalanlagegesellschaft MBH v. L. Lowry Mays, et al. lawsuit has been dismissed by the court for lack of prosecution and we paid nothing in connection with the termination.
     Three other lawsuits were filed, two of which are still pending, in connection with the merger, Rauch v. Clear Channel Communications, Inc., et al., Case No. 2006-CI17436 (filed November 14, 2006), Pioneer Investments Kapitalanlagegesellschaft mbH v. Clear Channel Communications, Inc., et al., (filed January 30, 2007 in the United States District Court for the Western District of Texas) and Alaska Laborers Employees Retirement Fund v. Clear Channel Communications, Inc., et. al., Case No. SA-07-CA-0042 (filed January 11, 2007). These lawsuits raise substantially similar allegations to those found in the pleadings of the consolidated class actions. The Pioneer Investments Kapitalanlagegesellschaft mbH v. Clear Channel Communications, Inc., et al. lawsuit has been dismissed by consent of the parties and we paid nothing in connection with the dismissal.
     On July 24, 2008, approximately 20 months after the filing of the first merger-related lawsuit, Clear Channel’s shareholders approved the merger. We believe that the approval of the merger by the shareholders renders the claims in all the merger-related litigation moot. On November 5, 2008, counsel for plaintiffs in the various state court actions filed a petition in state court seeking the right to recover attorneys’ fees and expenses associated with their respective lawsuits. Clear Channel opposes the petition. The matter has not been resolved. Consequently, we may incur significant related expenses and costs that could have an adverse effect on our business and operations. Furthermore, the cases could involve a substantial diversion of the time of some members of management. At this time, we are unable to estimate the impact of any potential liabilities associated with the claims for fees and expenses.
     We continue to believe that the allegations contained in each of the pleadings in the above-referenced actions are without merit and we intend to contest the actions vigorously. We cannot assure you that we will successfully defend the allegations included in the complaints or that pending motions to dismiss the lawsuits will be granted. If we are unable to resolve the claims that are the basis for the lawsuits or to prevail in any related litigation we may be required to pay substantial monetary damages for which we may not be adequately insured, which could have an adverse effect on our business, financial position and results of operations. Regardless of the outcome of the lawsuits, we may incur significant related expenses and costs that could have an adverse effect on our business and operations. Furthermore, the cases could involve a substantial diversion of the time of some members of management. While we are unable to estimate the impact of any potential liabilities associated with these complaints, the amount of damages claimed in these pleadings is not expected to be material to the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
     There were no matters submitted to a vote of security holders in the fourth quarter of fiscal year 2008.

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PART II
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
     Our Class A common shares are quoted for trading on the OTC Bulletin Board under the symbol “CCMO”. There were 108 shareholders of record as of February 26, 2009. This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies. The following quotations obtained from the OTC Bulletin Board reflect the high and low bid prices for our Class A common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
                 
    Common Stock Market Price
    High   Low
2008
               
Third Quarter
  $ 18.95     $ 7.75  
Fourth Quarter
    13.25       1.15  
     There is no established public trading market for our Class B and Class C common stock. There were 555,556 Class B common shares and 58,967,502 Class C common shares outstanding on February 26, 2009. All of our outstanding shares of Class B common stock are held by Clear Channel Capital IV, LLC and all of our outstanding shares of Class C common stock are held by Clear Channel Capital V, L.P.
Dividend Policy
     The Company currently does not intend to pay regular quarterly cash dividends on the shares of its common stock. The Company has not declared any dividend on its common stock since its incorporation. Clear Channel’s debt financing arrangements include restrictions on its ability to pay dividends, which in turn affects the Company’s ability to pay dividends.
Equity Compensation Plan
     Please refer to Item 12 of this Annual Report.

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ITEM 6. Selected Financial Data
     The following tables set forth our summary historical consolidated financial and other data as of the dates and for the periods indicated. The summary historical financial data are derived from our audited consolidated financial statements. Historical results are not necessarily indicative of the results to be expected for future periods. Acquisitions and dispositions impact the comparability of the historical consolidated financial data reflected in this schedule of Selected Financial Data.
     The summary historical consolidated financial and other data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes thereto appearing elsewhere in this Form 10-K.
                                         
    For the Years ended December 31,  
    2008(1)     2007(2)     2006(3)     2005     2004  
(In thousands)   Combined     Pre-merger     Pre-merger     Pre-merger     Pre-merger  
Results of Operations Information:
                                       
Revenue
  $ 6,688,683     $ 6,921,202     $ 6,567,790     $ 6,126,553     $ 6,132,880  
Operating expenses:
                                       
Direct operating expenses (excludes depreciation and amortization)
    2,904,444       2,733,004       2,532,444       2,351,614       2,216,789  
Selling, general and administrative expenses (excludes depreciation and amortization)
    1,829,246       1,761,939       1,708,957       1,651,195       1,644,251  
Depreciation and amortization
    696,830       566,627       600,294       593,477       591,670  
Corporate expenses (excludes depreciation and amortization)
    227,945       181,504       196,319       167,088       163,263  
Merger expenses
    155,769       6,762       7,633              
Impairment charge (4)
    5,268,858                          
Other operating income — net
    28,032       14,113       71,571       49,656       43,040  
 
                             
Operating income (loss)
    (4,366,377 )     1,685,479       1,593,714       1,412,835       1,559,947  
Interest expense
    928,978       451,870       484,063       443,442       367,511  
Gain (loss) on marketable securities
    (82,290 )     6,742       2,306       (702 )     46,271  
Equity in earnings of nonconsolidated affiliates
    100,019       35,176       37,845       38,338       22,285  
Other income (expense) — net
    126,393       5,326       (8,593 )     11,016       (30,554 )
 
                             
Income (loss) before income taxes, minority interest, discontinued operations and cumulative effect of a change in accounting principle
    (5,151,233 )     1,280,853       1,141,209       1,018,045       1,230,438  
Income tax benefit (expense)
    524,040       (441,148 )     (470,443 )     (403,047 )     (471,504 )
Minority interest expense, net of tax
    16,671       47,031       31,927       17,847       7,602  
 
                             
Income (loss) before discontinued operations and cumulative effect of a change in accounting principle
    (4,643,864 )     792,674       638,839       597,151       751,332  
Income from discontinued operations, net (5)
    638,391       145,833       52,678       338,511       94,467  
 
                             
Income (loss) before cumulative effect of a change in accounting principle
    (4,005,473 )     938,507       691,517       935,662       845,799  
Cumulative effect of a change in accounting principle, net of tax of, $2,959,003 in 2004 (6)
                            (4,883,968 )
 
                             
Net income (loss)
  $ (4,005,473 )   $ 938,507     $ 691,517     $ 935,662     $ (4,038,169 )
 
                             

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    Post-merger       Pre-merger        
    For the five       For the seven        
    Months ended       Months ended     For the Pre-merger Years ended December 31,  
    December 31, 2008       July 30, 2008   2007(2)    2006(3)   2005     2004  
Net income (loss) per common share:
                                                 
Basic:
                                                 
Income (loss) before discontinued operations and cumulative effect of a change in accounting principle
  $ (62.04 )     $ .80     $ 1.60     $ 1.27     $ 1.09     $ 1.26  
Discontinued operations
    (.02 )       1.29       .30       .11       .62       .16  
 
                                     
Income (loss) before cumulative effect of a change in accounting principle
    (62.06 )       2.09       1.90       1.38       1.71       1.42  
Cumulative effect of a change in accounting principle
                                    (8.19 )
 
                                     
Net income (loss)
  $ (62.06 )     $ 2.09     $ 1.90     $ 1.38     $ 1.71     $ (6.77 )
 
                                     
Diluted:
                                                 
Income (loss) before discontinued operations and cumulative effect of a change in accounting principle
  $ (62.04 )     $ .80     $ 1.60     $ 1.27     $ 1.09     $ 1.26  
Discontinued operations
    (.02 )       1.29       .29       .11       .62       .15  
 
                                     
Income (loss) before cumulative effect of a change in accounting principle
    (62.06 )       2.09       1.89       1.38       1.71       1.41  
Cumulative effect of a change in accounting principle
                                    (8.16 )
 
                                     
Net income (loss)
  $ (62.06 )     $ 2.09     $ 1.89     $ 1.38     $ 1.71     $ (6.75 )
 
                                     
Dividends declared per share
  $       $     $ .75     $ .75     $ .69     $ .45  
 
                                     
                                         
    As of December 31,  
    2008     2007(2)     2006(3)     2005     2004  
(In thousands)   Post-merger     Pre-merger     Pre-merger     Pre-merger     Pre-merger  
Balance Sheet Data:
                                       
Current assets
  $ 2,066,554     $ 2,294,583     $ 2,205,730     $ 2,398,294     $ 2,269,922  
Property, plant and equipment — net, including discontinued operations (7)
    3,548,159       3,215,088       3,236,210       3,255,649       3,328,165  
Total assets
    21,125,463       18,805,528       18,886,455       18,718,571       19,959,618  
Current liabilities
    1,845,946       2,813,277       1,663,846       2,107,313       2,184,552  
Long-term debt, net of current maturities
    18,940,697       5,214,988       7,326,700       6,155,363       6,941,996  
Shareholders’ equity (deficit)
    (3,380,147 )     8,797,491       8,042,341       8,826,462       9,488,078  
 
(1)   The statement of operations for the year ended December 31, 2008 is comprised of two periods: post-merger and pre-merger. We applied preliminary purchase accounting adjustments to the opening balance sheet on July 31, 2008 as the merger occurred at the close of business on July 30, 2008. The merger resulted in a new basis of accounting beginning on July 31, 2008. Please refer to the consolidated financial statements located in Item 8 of this Form 10-K for details on the post-merger and pre-merger periods.
 
(2)   Effective January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, or FIN 48. In accordance with the provisions of FIN 48, the effects of adoption were accounted for as a cumulative-effect adjustment recorded to the balance of retained earnings on the date of adoption. The adoption of FIN 48 resulted in a decrease of $0.2 million to the January 1, 2007 balance of “Retained deficit”, an increase of $101.7 million in “Other long term-liabilities” for unrecognized tax benefits and a decrease of $123.0 million in “Deferred income taxes”.
 
(3)   Effective January 1, 2006, the Company adopted FASB Statement No. 123(R), Share-Based Payment. In accordance with the provisions of Statement 123(R), the Company elected to adopt the standard using the modified prospective method.
 
(4)   We recorded a non-cash impairment charge of $5.3 billion in 2008 as a result of the global economic slowdown which adversely affected advertising revenues across our businesses in recent months, as discussed more fully in Item 7.
 
(5)   Includes the results of operations of our live entertainment and sports representation businesses, which we spun-off on December 21, 2005, our television business which we sold on March 14, 2008 and certain of our non-core radio stations.

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(6)   We recorded a non-cash charge of $4.9 billion, net of deferred taxes of $3.0 billion, in 2004 as a cumulative effect of a change in accounting principle during the fourth quarter of 2004 as a result of the adoption of EITF Topic D-108, Use of the Residual Method to Value Acquired Assets other than Goodwill.
 
(7)   Excludes the property, plant and equipment — net of our live entertainment and sports representation businesses, which we spun-off on December 21, 2005.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consummation of Merger
     We were formed in May 2007 by private equity funds sponsored by Bain and THL for the purpose of acquiring the business of Clear Channel Communications, Inc., or Clear Channel. The acquisition was completed pursuant to the Agreement and Plan of Merger, dated November 16, 2006, as amended on April 18, 2007, May 17, 2007 and May 13, 2008. As a result of the merger, each issued and outstanding share of Clear Channel, other than shares held by certain of our principals that were rolled over and exchanged for shares of our Class A common stock, were either exchanged for (i) $36.00 in cash consideration, without interest, or (ii) one share of our Class A common stock.
     We accounted for our acquisition of Clear Channel as a purchase business combination in conformity with Statement of Financial Accounting Standards No. 141, Business Combinations, and Emerging Issues Task Force Issue 88-16, Basis in Leveraged Buyout Transactions. We have preliminarily allocated a portion of the consideration paid to the assets and liabilities acquired at their initial estimated respective fair values with the remaining portion recorded at the continuing shareholders’ basis. Excess consideration after this preliminary allocation was recorded as goodwill.
     We estimated the preliminary fair value of the acquired assets and liabilities as of the merger date utilizing information available at the time the financial statements were prepared. These estimates are subject to refinement until all pertinent information is obtained. We are currently in the process of obtaining third-party valuations of certain of the acquired assets and liabilities and will complete our purchase price allocation in 2009. The final allocation of the purchase price may be different than the initial allocation.
Impairment Charge
     The global economic slowdown has adversely affected advertising revenues across our businesses in recent months. As a result, we performed an impairment test in the fourth quarter of 2008 on our indefinite-lived FCC licenses, indefinite-lived permits and goodwill.
     Our FCC licenses and permits are valued using the direct valuation approach, with the key assumptions being market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average asset within a market.
     The estimated fair value of FCC licenses and permits was below their carrying values. As a result, we recognized a non-cash impairment charge of $1.7 billion on our FCC licenses and permits. The United States and global economies are undergoing a period of economic uncertainty, which has caused, among other things, a general tightening in the credit markets, limited access to the credit market, lower levels of liquidity and lower consumer and business spending. These disruptions in the credit and financial markets and the continuing impact of adverse economic, financial and industry conditions on the demand for advertising negatively impacted the key assumptions in the discounted cash flow models used to value our FCC licenses and permits.
     The goodwill impairment test requires us to measure the fair value of our reporting units and compare the estimated fair value to the carrying value, including goodwill. Each of our reporting units is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values were also estimated and discounted to their present value. Assessing the recoverability of goodwill requires us to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on our budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.
     The estimated fair value of our reporting units was below their carrying values, which required us to compare the implied fair value of each reporting units’ goodwill with its carrying value. As a result, we recognized a non-cash impairment charge of $3.6 billion to reduce our goodwill. The macroeconomic factors discussed above had an adverse effect on our estimated cash flows and discount rates used in the discounted cash flow model.
     While we believe we had made reasonable estimates and utilized reasonable assumptions to calculate the fair value of our FCC licenses, permits and reporting units, it is possible a material change could occur to the estimated fair value of these assets. If our actual results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations.

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Restructuring Program
     On January 20, 2009 we announced that we commenced a restructuring program targeting a reduction of fixed costs by approximately $350 million on an annualized basis. As part of the program, we eliminated approximately 1,850 full-time positions representing approximately 9% of total workforce. The restructuring program will also include other actions, including elimination of overlapping functions and other cost savings initiatives. The program is expected to result in restructuring and other non-recurring charges of approximately $200 million, although additional costs may be incurred as the program evolves. The cost savings initiatives are expected to be fully implemented by the end of the first quarter of 2010. No assurance can be given that the restructuring program will be successful or will achieve the anticipated cost savings in the timeframe expected or at all. In addition, we may modify or terminate the restructuring program in response to economic conditions or otherwise.
     As of December 31, 2008 we had recognized approximately $95.9 million of expenses related to our restructuring program. These expenses primarily related to severance of approximately $83.3 million and $12.6 million related to professional fees.
Sale of Non-core Radio Stations
     We determined that each radio station market in Clear Channel’s previously announced non-core radio station sales represents a disposal group consistent with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-lived Assets (“Statement 144”). Consistent with the provisions of Statement 144, we classified these assets that are subject to transfer under the definitive asset purchase agreements as discontinued operations for all periods presented. Accordingly, depreciation and amortization associated with these assets was discontinued. Additionally, we determined that these assets comprise operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company. We determined that the estimated fair value less costs to sell attributable to these assets was in excess of the carrying value of their related net assets held for sale.
Sale of the Television Business
     On March 14, 2008, Clear Channel completed the sale of its television business to Newport Television, LLC for $1.0 billion, adjusted for certain items including proration of expenses and adjustments for working capital. As a result, Clear Channel recorded a gain of $662.9 million as a component of “Income from discontinued operations, net” in our consolidated statement of operations during the quarter ended March 31, 2008. Additionally, net income and cash flows from the television business were classified as discontinued operations in the consolidated statements of operations and the consolidated statements of cash flows, respectively, in 2008 through the date of sale and for all of 2007 and 2006. The net assets related to the television business were classified as discontinued operations as of December 31, 2007.
Format of Presentation
     Our consolidated balance sheets, statements of operations, statements of cash flows and shareholders’ equity are presented for two periods: post-merger and pre-merger. Prior to the acquisition, we had not conducted any activities, other than activities incident to our formation and in connection with the acquisition, and did not have any assets or liabilities, other than as related to the acquisition. We applied preliminary purchase accounting to the opening balance sheet on July 31, 2008 as the merger occurred at the close of business on July 30, 2008 and the results of operations subsequent to this date reflect the impact of the new basis of accounting. The merger resulted in a new basis of accounting beginning on July 31, 2008 and the financial reporting periods are presented as follows:
    The period from July 31 through December 31, 2008 includes the post-merger period. Subsequent to the acquisition, Clear Channel became an indirect, wholly-owned subsidiary of ours and our business became that of Clear Channel and its subsidiaries.
 
    The period from January 1 through July 30, 2008 includes the pre-merger period of Clear Channel. Prior to the consummation of our acquisition of Clear Channel, we had not conducted any activities, other than activities incident to our formation and in connection with the acquisition, and did not have any assets or liabilities, other than as related to the acquisition.
 
    The 2007 and 2006 periods presented are pre-merger. The consolidated financial statements for all pre-merger periods were prepared using the historical basis of accounting for Clear Channel. As a result of the merger and the associated preliminary purchase accounting, the consolidated financial statements of the post-merger periods are not comparable to periods preceding the merger.
     The discussion in this MD&A is presented on a combined basis of the pre-merger and post-merger periods for 2008. The 2008 post-merger and pre-merger results are presented but are not discussed separately. We believe that the discussion on a combined basis is more meaningful as it allows the results of operations to be analyzed to 2007 and 2006.

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     Management’s discussion and analysis of our results of operations and financial condition should be read in conjunction with the consolidated financial statements and related footnotes. Our discussion is presented on both a consolidated and segment basis. Our reportable operating segments are Radio Broadcasting, or radio, which includes our national syndication business, Americas Outdoor Advertising, or Americas, and International Outdoor Advertising, or International. Included in the “other” segment are our media representation business, Katz Media, as well as other general support services and initiatives.
     We manage our operating segments primarily focusing on their operating income, while Corporate expenses, Merger expenses, Impairment charge, Other operating income — net, Interest expense, Gain (loss) on marketable securities, Equity in earnings of nonconsolidated affiliates, Other income (expense) — net, Income tax benefit (expense) and Minority interest benefit (expense) — net of tax are managed on a total company basis and are, therefore, included only in our discussion of consolidated results.
Radio Broadcasting
     Our radio business has been adversely impacted and may continue to be adversely impacted by the difficult economic conditions currently present in the United States. The weakening economy in the United States has, among other things, adversely affected our clients’ need for advertising and marketing services thereby reducing demand for our advertising spots. Continuing weakening demand for these services could materially affect our business, financial condition and results of operations.
     Our revenue is derived from selling advertising time, or spots, on our radio stations, with advertising contracts typically less than one year in duration. The programming formats of our radio stations are designed to reach audiences with targeted demographic characteristics that appeal to our advertisers. Management monitors average advertising rates, which are principally based on the length of the spot and how many people in a targeted audience listen to our stations, as measured by an independent ratings service. The size of the market influences rates as well, with larger markets typically receiving higher rates than smaller markets. Also, our advertising rates are influenced by the time of day the advertisement airs, with morning and evening drive-time hours typically the highest. Management monitors yield per available minute in addition to average rates because yield allows management to track revenue performance across our inventory. Yield is defined by management as revenue earned divided by commercial capacity available.
     Management monitors macro level indicators to assess our radio operations’ performance. Due to the geographic diversity and autonomy of our markets, we have a multitude of market specific advertising rates and audience demographics. Therefore, management reviews average unit rates across all of our stations.
     Management looks at our radio operations’ overall revenue as well as local advertising, which is sold predominately in a station’s local market, and national advertising, which is sold across multiple markets. Local advertising is sold by each radio station’s sales staffs while national advertising is sold, for the most part, through our national representation firm. Local advertising, which is our largest source of advertising revenue, and national advertising revenues are tracked separately, because these revenue streams have different sales forces and respond differently to changes in the economic environment.
     Management also looks at radio revenue by market size, as defined by Arbitron. Typically, larger markets can reach larger audiences with wider demographics than smaller markets. Additionally, management reviews our share of target demographics listening to the radio in an average quarter hour. This metric gauges how well our formats are attracting and retaining listeners.
     A portion of our radio segment’s expenses vary in connection with changes in revenue. These variable expenses primarily relate to costs in our sales department, such as salaries, commissions and bad debt. Our programming and general and administrative departments incur most of our fixed costs, such as talent costs, rights fees, utilities and office salaries. Lastly, our highly discretionary costs are in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience share.
Americas and International Outdoor Advertising
     Our outdoor advertising business has been, and may continue to be, adversely impacted by the difficult economic conditions currently present in the United States and other countries in which we operate. The continuing weakening economy has, among other things, adversely affected our clients’ need for advertising and marketing services, resulted in increased cancellations and non-renewals by our clients, thereby reducing our occupancy levels and could require us to lower our rates in order to remain competitive, thereby reducing our yield, or affect our client’s solvency. Any one or more of these effects could materially affect our business, financial condition and results of operations.
     Our revenue is derived from selling advertising space on the displays we own or operate in key markets worldwide consisting primarily of billboards, street furniture and transit displays. We own the majority of our advertising displays, which typically are located on sites that we either lease or own or for which we have acquired permanent easements. Our advertising contracts typically outline the number of displays reserved, the duration of the advertising campaign and the unit price per display.

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     Our advertising rates are based on a number of different factors including location, competition, size of display, illumination, market and gross ratings points. Gross ratings points are the total number of impressions delivered, expressed as a percentage of a market population, of a display or group of displays. The number of impressions delivered by a display is measured by the number of people passing the site during a defined period of time and, in some international markets, is weighted to account for such factors as illumination, proximity to other displays and the speed and viewing angle of approaching traffic. Management typically monitors our business by reviewing the average rates, average revenue per display, or yield, occupancy, and inventory levels of each of our display types by market. In addition, because a significant portion of our advertising operations are conducted in foreign markets, the largest being France and the United Kingdom, management reviews the operating results from our foreign operations on a constant dollar basis. A constant dollar basis allows for comparison of operations independent of foreign exchange movements.
     The significant expenses associated with our operations include (i) direct production, maintenance and installation expenses, (ii) site lease expenses for land under our displays and (iii) revenue-sharing or minimum guaranteed amounts payable under our billboard, street furniture and transit display contracts. Our direct production, maintenance and installation expenses include costs for printing, transporting and changing the advertising copy on our displays, the related labor costs, the vinyl and paper costs and the costs for cleaning and maintaining our displays. Vinyl and paper costs vary according to the complexity of the advertising copy and the quantity of displays. Our site lease expenses include lease payments for use of the land under our displays, as well as any revenue-sharing arrangements or minimum guaranteed amounts payable that we may have with the landlords. The terms of our site leases and revenue-sharing or minimum guaranteed contracts generally range from one to 20 years.
     In our International business, normal market practice is to sell billboards and street furniture as network packages with contract terms typically ranging from one to two weeks, compared to contract terms typically ranging from four weeks to one year in the U.S. In addition, competitive bidding for street furniture and transit contracts, which constitute a larger portion of our International business, and a different regulatory environment for billboards, result in higher site lease cost in our International business compared to our Americas business. As a result, our margins are typically less in our International business than in the Americas.
     Our street furniture and transit display contracts, the terms of which range from three to 20 years, generally require us to make upfront investments in property, plant and equipment. These contracts may also include upfront lease payments and/or minimum annual guaranteed lease payments. We can give no assurance that our cash flows from operations over the terms of these contracts will exceed the upfront and minimum required payments.
     Our 2008 and 2007 results of operations include the full year results of operations of Interspace Airport Advertising, or Interspace, and our results of operations for 2006 include a partial year of the results of operations of Interspace, which we acquired in July 2006.
FAS 123(R), Share-Based Payments
     As of December 31, 2008, there was $130.3 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements that will vest based on service conditions. This cost is expected to be recognized over four years. In addition, as of December 31, 2008, there was $80.2 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements that will vest based on market, performance and service conditions. This cost will be recognized when it becomes probable that the performance condition will be satisfied.
     Vesting of certain Clear Channel stock options and restricted stock awards was accelerated upon the closing of the merger. As a result, holders of stock options, other than certain executive officers and holders of certain options that could not, by their terms, be cancelled prior to their stated expiration date, received cash or, if elected, an amount of Company stock, in each case equal to the intrinsic value of the awards based on a market price of $36.00 per share while holders of restricted stock awards received, with respect to each share of restricted stock, $36.00 per share in cash, without interest or, if elected, a share of Company stock. Approximately $39.2 million of share-based compensation was recognized in the 2008 pre-merger period as a result of the accelerated vesting of stock options and restricted stock awards and is included in the table below.

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     The following table details compensation costs related to share-based payments for the years ended December 31, 2008, 2007 and 2006:
                         
    Year Ended December 31,  
(In millions)   2008     2007     2006  
Radio Broadcasting
                       
Direct Operating Expenses
  $ 17.2     $ 10.0     $ 11.1  
SG&A
    20.6       12.2       14.1  
Americas Outdoor Advertising
                       
Direct Operating Expenses
  $ 6.3     $ 5.7     $ 3.4  
SG&A
    2.1       2.2       1.3  
International Outdoor Advertising
                       
Direct Operating Expenses
  $ 1.7     $ 1.2     $ 0.9  
SG&A
    0.4       0.5       0.4  
Other
                       
Direct Operating Expenses
  $ 0.5     $     $ 0.7  
SG&A
    0.8             1.0  
Corporate
  $ 28.9     $ 12.2     $ 9.1  
THE COMPARISON OF YEAR ENDED DECEMBER 31, 2008 TO YEAR ENDED DECEMBER 31, 2007 IS AS FOLLOWS:
                           
    Post-merger       Pre-merger     Combined  
    Period from July 31       Period from January 1     Year ended  
    through December 31,       through July 30,     December 31,  
(In thousands)   2008       2008     2008  
Revenue
  $ 2,736,941       $ 3,951,742     $ 6,688,683  
Operating expenses:
                         
Direct operating expenses (excludes depreciation and amortization)
    1,198,345         1,706,099       2,904,444  
Selling, general and administrative expenses (excludes depreciation and amortization)
    806,787         1,022,459       1,829,246  
Depreciation and amortization
    348,041         348,789       696,830  
Corporate expenses (excludes depreciation and amortization)
    102,276         125,669       227,945  
Merger expenses
    68,085         87,684       155,769  
Impairment charge
    5,268,858               5,268,858  
Other operating income — net
    13,205         14,827       28,032  
 
                   
Operating income (loss)
    (5,042,246 )       675,869       (4,366,377 )
Interest expense
    715,768         213,210       928,978  
Gain (loss) on marketable securities
    (116,552 )       34,262       (82,290 )
Equity in earnings of nonconsolidated affiliates
    5,804         94,215       100,019  
Other income (expense) — net
    131,505         (5,112 )     126,393  
 
                   
Income (loss) before income taxes, minority interest and discontinued operations
    (5,737,257 )       586,024       (5,151,233 )
Income tax benefit (expense):
                         
Current
    76,729         (27,280 )     49,449  
Deferred
    619,894         (145,303 )     474,591  
 
                   
Income tax benefit (expense)
    696,623         (172,583 )     524,040  
Minority interest income (expense), net of tax
    481         (17,152 )     (16,671 )
 
                   
Income (loss) before discontinued operations
    (5,040,153 )       396,289       (4,643,864 )
Income (loss) from discontinued operations, net
    (1,845 )       640,236       638,391  
 
                   
Net income (loss)
  $ (5,041,998 )     $ 1,036,525     $ (4,005,473 )
 
                   

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    Year Ended December 31,        
    2008     2007     % Change  
(In thousands)   Combined     Pre-merger     2008 v. 2007  
Revenue
  $ 6,688,683     $ 6,921,202       (3 %)
Operating expenses:
                       
Direct operating expenses (excludes depreciation and amortization)
    2,904,444       2,733,004       6 %
Selling, general and administrative expenses (excludes depreciation and amortization)
    1,829,246       1,761,939       4 %
Depreciation and amortization
    696,830       566,627       23 %
Corporate expenses (excludes depreciation and amortization)
    227,945       181,504       26 %
Merger expenses
    155,769       6,762          
Impairment charge
    5,268,858                
Other operating income — net
    28,032       14,113          
 
                   
Operating income (loss)
    (4,366,377 )     1,685,479          
Interest expense
    928,978       451,870          
Gain (loss) on marketable securities
    (82,290 )     6,742          
Equity in earnings of nonconsolidated affiliates
    100,019       35,176          
Other income (expense) — net
    126,393       5,326          
 
                   
Income (loss) before income taxes, minority interest expense and discontinued operations
    (5,151,233 )     1,280,853          
Income tax benefit (expense):
                       
Current
    49,449       (252,910 )        
Deferred
    474,591       (188,238 )        
 
                   
Income tax expense
    524,040       (441,148 )        
Minority interest expense, net of tax
    16,671       47,031          
 
                   
Income (loss) before discontinued operations
    (4,643,864 )     792,674          
Income from discontinued operations, net
    638,391       145,833          
 
                   
Net income (loss)
  $ (4,005,473 )   $ 938,507          
 
                   
Consolidated Results of Operations
Revenue
     Our consolidated revenue decreased $232.5 million during 2008 compared to 2007. Revenue growth during the first nine months of 2008 was offset by a decline of $254.0 million in the fourth quarter. Revenue declined $264.7 million during 2008 compared to 2007 from our radio business associated with decreases in both local and national advertising. Our Americas outdoor revenue also declined approximately $54.8 million attributable to decreases in poster and bulletin revenues associated with cancellations and non-renewals from major national advertisers. The declines were partially offset by an increase from our international outdoor revenue of approximately $62.3 million, with roughly $60.4 million from movements in foreign exchange.
Direct Operating Expenses
     Our consolidated direct operating expenses increased approximately $171.4 million during 2008 compared to 2007. Our international outdoor business contributed $90.3 million to the increase primarily from an increase in site lease expenses and $39.5 million related to movements in foreign exchange. Our Americas outdoor business contributed $57.0 million to the increase primarily from new contracts. These increases were partially offset by a decline in direct operating expenses in our radio segment of approximately $3.6 million related to a decline in programming expenses.
Selling, General and Administrative Expenses (SG&A)
     Our SG&A increased approximately $67.3 million during 2008 compared to 2007. Approximately $48.3 million of this increase occurred during the fourth quarter primarily as a result of an increase in severance. Our international outdoor business contributed approximately $41.9 million to the increase primarily from movements in foreign exchange of $11.2 million and an increase in severance in 2008 associated with our restructuring plan of approximately $20.1 million. Our Americas outdoor business’ SG&A increased approximately $26.4 million largely from increased bad debt expense of $15.5 million and an increase in severance in 2008 associated with our restructuring

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plan of $4.5 million. SG&A expenses in our radio business decreased approximately $7.5 million primarily from reduced marketing and promotional expenses and a decline in commissions associated with the decline in revenues, partially offset by increase in severance in 2008 associated with our restructuring plan of approximately $32.6 million.
Depreciation and Amortization
     Depreciation and amortization expense increased $130.2 million in 2008 compared to 2007 primarily due to $86.0 million in additional depreciation and amortization associated with the preliminary purchase accounting adjustments to the acquired assets, $29.3 million of accelerated depreciation in our Americas and International outdoor segments from billboards that were removed and approximately $11.3 million related to impaired advertising display contracts in our international segment.
Corporate Expenses
     The increase in corporate expenses of $46.4 million in 2008 compared to 2007 primarily relates to a $16.7 million increase in non-cash compensation related to awards that vested at closing of the merger, a $6.3 million management fee to the Sponsors in connection with the management and advisory services provided following the merger, and $6.2 million related to outside professional services.
Merger Expenses
     Merger expenses for 2008 were $155.8 million and include accounting, investment banking, legal and other expenses.
Impairment Charge
     The global economic slowdown has adversely affected advertising revenues across our businesses in recent months. As discussed above, we performed an impairment test in the fourth quarter of 2008 and recognized a non-cash impairment charge to our indefinite-lived intangible assets and goodwill of $5.3 billion.
Other Operating Income — Net
     The $28.0 million income for 2008 consists of a gain of $3.3 million from the sale of sports broadcasting rights, a $7.0 million gain on the disposition of a representation contract, a $4.0 million gain on the sale of property, plant and equipment, a $1.7 million gain on the sale of international street furniture and $9.6 million from the favorable settlement of a lawsuit. The $14.1 million income in 2007 related primarily to $8.9 million gain from the sale of street furniture assets and land in our international outdoor segment as well as $3.4 million from the disposition of assets in our radio segment.
Interest Expense
     The increase in interest expense for 2008 over 2007 is the result of the increase in our average debt outstanding after the merger. Our outstanding debt was $19.5 billion and $6.6 billion at December 31, 2008 and 2007, respectively.
Gain (Loss) on Marketable Securities
     During the fourth quarter of 2008, we recorded a non-cash impairment charge to certain available-for-sale securities. The fair value of these available-for-sale securities was below their cost each month subsequent to the closing of the merger. As a result, we considered the guidance in SAB Topic 5M and reviewed the length of the time and the extent to which the market value was less than cost and the financial condition and near-term prospects of the issuer. After this assessment, we concluded that the impairment was other than temporary and recorded a $116.6 million impairment charge. This loss was partially offset by a net gain of $27.0 million recorded in the second quarter of 2008 on the unwinding of our secured forward exchange contracts and the sale of our American Tower Corporation, or AMT, shares.
     The $6.7 million gain on marketable securities for 2007 primarily related to changes in fair value of the shares of AMT held by Clear Channel and the related forward exchange contracts.
Other Income (Expense) — Net
     Other income of $126.4 million in 2008 relates to an aggregate gain of $124.5 million on the fourth quarter 2008 tender of certain of Clear Channel’s outstanding notes, a $29.3 million foreign exchange gain on translating short-term intercompany notes, an $8.0 million dividend received, partially offset by a $29.8 million loss on the third quarter 2008 tender of certain of Clear Channel’s outstanding notes and a $4.7 million impairment of our investment in a radio partnership and $0.9 million of various other items.

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     Other income of $5.3 million in 2007 primarily relates to a foreign exchange gain on translating short-term intercompany notes.
Equity in Earnings of Non-consolidated Affiliates
     Equity in earnings of nonconsolidated affiliates increased $64.8 million in 2008 compared to 2007 primarily from a $75.6 million gain recognized in the first quarter 2008 on the sale of Clear Channel’s 50% interest in Clear Channel Independent, a South African outdoor advertising company. We also recognized a gain of $9.2 million on the disposition of 20% of Grupo ACIR Comunicaciones. These gains were partially offset by a $9.0 million impairment charge to one of our international outdoor equity method investments and declines in equity in income from our investments in certain international radio broadcasting companies as well as the loss of equity in earnings from the disposition of Clear Channel Independent.
Income Taxes
     Current tax expense for 2008 decreased $302.4 million compared to 2007 primarily due to a decrease in “income (loss) before income taxes, minority interest and discontinued operations” of $1.2 billion which excludes the non-tax deductible impairment charge of $5.3 billion recorded in 2008. In addition, current tax benefits of approximately $74.6 million were recorded during 2008 related to the termination of Clear Channel’s cross currency swap. Also, we recognized additional tax depreciation deductions as a result of the bonus depreciation provisions enacted as part of the Economic Stimulus Act of 2008. These current tax benefits were partially offset by additional current tax expense recorded in 2008 related to currently non deductible transaction costs as a result of the merger.
     The effective tax rate for the year ended December 31, 2008 decreased to 10.2% as compared to 34.4% for the year ended December 31, 2007, primarily due to the impairment charge that resulted in a $5.3 billion decrease in “income (loss) before income taxes, minority interest and discontinued operations” and tax benefits of approximately $648.2 million. Partially offsetting this decrease to the effective rate were tax benefits recorded as a result of the release of valuation allowances on the capital loss carryforwards that were used to offset the taxable gain from the disposition of Clear Channel’s investment in AMT and Grupo ACIR Comunicaciones. Additionally, Clear Channel sold its 50% interest in Clear Channel Independent in 2008, which was structured as a tax free disposition. The sale resulted in a gain of $75.6 million with no current tax expense. Further, in 2008 valuation allowances were recorded on certain net operating losses generated during the period that were not able to be carried back to prior years. Due to the lack of earnings history as a merged company and limitations on net operating loss carryback claims allowed, the Company cannot rely on future earnings and carryback claims as a means to realize deferred tax assets which may arise as a result of future period net operating losses. Pursuant to the provision of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, deferred tax valuation allowances would be required on those deferred tax assets.
     For the year ended December 31, 2008, deferred tax expense decreased $662.8 million as compared to 2007 primarily due to the impairment charge recorded in 2008 related to the tax deductible intangibles. This decrease was partially offset by increases in deferred tax expense in 2008 related to recording of valuation allowances on certain net operating losses as well as the termination of the cross currency swap and the additional tax depreciation deductions as a result of the bonus depreciation provisions enacted as part of the Economic Stimulus Act of 2008 mentioned above.
Minority Interest, Net of Tax
     The decline in minority interest expense of $30.4 million in 2008 compared to 2007 relates to the decline for the same period in net income of our subsidiary, Clear Channel Outdoor Holdings, Inc.
Discontinued Operations
     Income from discontinued operations of $638.4 million recorded during 2008 primarily relates to a gain of $631.9 million, net of tax, related to the sale of our television business and radio stations.

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Radio Broadcasting Results of Operations
Our radio broadcasting operating results were as follows:
                         
    Years Ended December 31,        
    2008     2007     % Change  
(In thousands)   Combined     Pre-merger   2008 v. 2007  
Revenue
  $ 3,293,874     $ 3,558,534       (7 %)
Direct operating expenses
    979,324       982,966       (0 %)
Selling, general and administrative expense
    1,182,607       1,190,083       (1 %)
Depreciation and amortization
    152,822       107,466       42 %
 
                   
Operating income
  $ 979,121     $ 1,278,019       (23 %)
 
                   
     Our radio broadcasting revenue declined approximately $264.7 million during 2008 compared to 2007, with approximately 43% of the decline occurring during the fourth quarter. Our local revenues were down $205.6 million in 2008 compared to 2007. National revenues declined as well. Both local and national revenues were down as a result of overall weakness in advertising. Our radio revenue experienced declines across advertising categories including automotive, retail and entertainment advertising categories. For the year ended December 31, 2008, our total minutes sold and average minute rate declined compared to 2007.
     Direct operating expenses declined approximately $3.6 million. Decreases in programming expenses of approximately $21.2 million from our radio markets were partially offset by an increase in programming expenses of approximately $16.3 million in our national syndication business. The increase in programming expenses in our national syndication business was mostly related to contract talent payments. SG&A expenses decreased approximately $7.5 million primarily from reduced marketing and promotional expenses and a decline in commission expenses associated with the revenue decline. Partially offsetting the decline in SG&A was an increase in severance in 2008 associated with our restructuring plan of approximately $32.6 million and an increase in bad debt expense of approximately $17.3 million.
     Depreciation and amortization increased approximately $45.4 million mostly as a result of additional amortization associated with the preliminary purchase accounting adjustments to the acquired intangible assets.
Americas Outdoor Advertising Results of Operations
Our Americas outdoor advertising operating results were as follows:
                         
    Years Ended December 31,        
    2008     2007     % Change  
(In thousands)   Combined     Pre-merger   2008 v. 2007  
Revenue
  $ 1,430,258     $ 1,485,058       (4 %)
Direct operating expenses
    647,526       590,563       10 %
Selling, general and administrative expense
    252,889       226,448       12 %
Depreciation and amortization
    207,633       189,853       9 %
 
                   
Operating income
  $ 322,210     $ 478,194       (33 %)
 
                   
     Revenue decreased approximately $54.8 million during 2008 compared to 2007, with the entire decline occurring in the fourth quarter. Driving the decline was approximately $87.4 million attributable to poster and bulletin revenues associated with cancellations and non-renewals from major national advertisers, partially offset by an increase of $46.2 million in airport revenues, digital display revenues and street furniture revenues. Also impacting the decline in bulletin revenue was decreased occupancy while the decline in poster revenue was affected by a decrease in both occupancy and rate. The increase in airport and street furniture revenues was primarily driven by new contracts while digital display revenue growth was primarily the result of an increase in the number of digital displays. Other miscellaneous revenues also declined approximately $13.6 million.
     Our Americas direct operating expenses increased $57.0 million primarily from higher site lease expenses of $45.2 million primarily attributable to new taxi, airport and street furniture contracts and an increase of $2.4 million in severance. Our SG&A expenses increased $26.4 million largely from increased bad debt expense of $15.5 million and an increase of $4.5 million in severance in 2008 associated with our restructuring plan.
     Depreciation and amortization increased approximately $17.8 million mostly as a result of $6.6 million related to additional depreciation and amortization associated with preliminary purchase accounting adjustments to the acquired assets and $11.3 million of accelerated depreciation from billboards that were removed.

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International Outdoor Results of Operations
Our international operating results were as follows:
                         
    Years Ended December 31,        
    2008     2007     % Change  
(In thousands)   Combined     Pre-merger     2008 v. 2007  
Revenue
  $ 1,859,029     $ 1,796,778       3 %
Direct operating expenses
    1,234,610       1,144,282       8 %
Selling, general and administrative expense
    353,481       311,546       13 %
Depreciation and amortization
    264,717       209,630       26 %
 
                   
Operating income
  $ 6,221     $ 131,320       (95 %)
 
                   
     Revenue increased approximately $62.3 million, with roughly $60.4 million from movements in foreign exchange. The remaining revenue growth was primarily attributable to growth in China, Turkey and Romania, partially offset by revenue declines in France and the United Kingdom. China and Turkey benefited from strong advertising environments. We acquired operations in Romania at the end of the second quarter of 2007, which also contributed to revenue growth in 2008. The decline in France was primarily driven by the loss of a contract to advertise on railways and the decline in the United Kingdom was primarily driven by weak advertising demand.
     During the fourth quarter of 2008, revenue declined approximately $88.6 million compared to the fourth quarter of 2007, of which approximately $51.8 million was attributable to movements in foreign exchange and the remainder primarily the result of a decline in advertising demand.
     Direct operating expenses increased $90.3 million. Included in the increase is approximately $39.5 million related to movements in foreign exchange. The remaining increase in direct operating expenses was driven by an increase in site lease expenses. SG&A expenses increased $41.9 million in 2008 over 2007 with approximately $11.2 million related to movements in foreign exchange and $20.1 million related to severance in 2008 associated with our restructuring plan.
     Depreciation and amortization expenses increased $55.1 million with $18.8 million related to additional depreciation and amortization associated with the preliminary purchase accounting adjustments to the acquired assets, approximately $18.0 million related to an increase in accelerated depreciation from billboards to be removed, approximately $11.3 million related to impaired advertising display contracts and $4.9 million related to an increase from movements in foreign exchange.
Reconciliation of Segment Operating Income (Loss)
                 
    Years Ended December 31,  
(In thousands)   2008     2007  
Radio Broadcasting
  $ 979,121     $ 1,278,019  
Americas Outdoor Advertising
    322,210       478,194  
International Outdoor Advertising
    6,221       131,320  
Other
    (31,419 )     (11,659 )
Impairment charge
    (5,268,858 )      
Other operating income — net
    28,032       14,113  
Merger expenses
    (155,769 )     (6,762 )
Corporate
    (245,915 )     (197,746 )
 
           
Consolidated operating income
  $ (4,366,377 )   $ 1,685,479  
 
           

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THE COMPARISON OF YEAR ENDED DECEMBER 31, 2007 TO YEAR ENDED DECEMBER 31, 2006 IS AS FOLLOWS:
                         
    Years Ended December 31,     % Change  
(In thousands)   2007     2006     2007 v. 2006  
Revenue
  $ 6,921,202     $ 6,567,790       5 %
Operating expenses:
                       
Direct operating expenses (excludes depreciation and amortization)
    2,733,004       2,532,444       8 %
Selling, general and administrative expenses (excludes depreciation and amortization)
    1,761,939       1,708,957       3 %
Depreciation and amortization
    566,627       600,294       (6 %)
Corporate expenses (excludes depreciation and amortization)
    181,504       196,319       (8 %)
Merger expenses
    6,762       7,633          
Other operating income — net
    14,113       71,571          
 
                   
Operating income
    1,685,479       1,593,714       6 %
Interest expense
    451,870       484,063          
Gain (loss) on marketable securities
    6,742       2,306          
Equity in earnings of nonconsolidated affiliates
    35,176       37,845          
Other income (expense) — net
    5,326       (8,593 )        
 
                   
Income before income taxes, minority interest expense and discontinued operations
    1,280,853       1,141,209          
Income tax expense:
                       
Current
    252,910       278,663          
Deferred
    188,238       191,780          
 
                   
Income tax expense
    441,148       470,443          
Minority interest expense, net of tax
    47,031       31,927          
 
                   
Income before discontinued operations
    792,674       638,839          
Income from discontinued operations, net
    145,833       52,678          
 
                   
Net income
  $ 938,507     $ 691,517          
 
                   
Consolidated Results of Operations
Revenue
     Our consolidated revenue increased $353.4 million during 2007 compared to 2006. Our International revenue increased $240.4 million, including approximately $133.3 million related to movements in foreign exchange and the remainder associated with growth across inventory categories. Our Americas revenue increased $143.7 million driven by increases in bulletin, street furniture, airports and taxi display revenues as well as $32.1 million from Interspace. Our radio revenue was essentially flat. Declines in local and national advertising revenue were partially offset by an increase in our syndicated radio programming, traffic and on-line businesses. These increases were also partially offset by declines from operations classified in our “other” segment.
Direct Operating Expenses
     Our direct operating expenses increased $200.6 million in 2007 compared to 2006. International direct operating expenses increased $163.8 million principally from $88.0 million related to movements in foreign exchange. Americas direct operating expenses increased $56.2 million primarily attributable to increased site lease expenses associated with new contracts and the increase in transit revenue as well as approximately $14.9 million from Interspace. Partially offsetting these increases was a decline in our radio direct operating expenses of approximately $11.7 million primarily from a decline in programming and expenses associated with non-traditional revenue.

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Selling, General and Administrative Expenses (SG&A)
     Our SG&A increased $53.0 million in 2007 compared to 2006. International SG&A expenses increased $31.9 million primarily related to movements in foreign exchange. Americas SG&A expenses increased $19.1 million mostly attributable to sales expenses associated with the increase in revenue and $6.7 million from Interspace. Our radio SG&A expenses increased $4.3 million for the comparative periods primarily from an increase in our marketing and promotions department which was partially offset by a decline in bonus and commission expenses.
Depreciation and Amortization
     Depreciation and amortization expense decreased approximately $33.7 million primarily from a decrease in the radio segments fixed assets and a reduction in amortization from international outdoor contracts.
Corporate Expenses
     Corporate expenses decreased $14.8 million during 2007 compared to 2006 primarily related to a decline in radio bonus expenses.
Merger Expenses
     We entered into the Merger Agreement, as amended, in the fourth quarter of 2006. Expenses associated with the merger were $6.8 million and $7.6 million for the years ended December 31, 2007 and 2006, respectively, and include accounting, investment banking, legal and other expenses.
Other Operating Income — Net
     Other operating income — net of $14.1 million for the year ended December 31, 2007 related primarily to $8.9 million gain from the sale of street furniture assets and land in our international outdoor segment as well as $3.4 million from the disposition of assets in our radio segment.
     Other operating income — net of $71.6 million for the year ended December 31, 2006 mostly related to $34.6 million in our radio segment primarily from the sale of stations and programming rights and $13.2 million in our Americas outdoor segment from the exchange of assets in one of our markets for the assets of a third party located in a different market.
Interest Expense
     Interest expense declined $32.2 million for the year ended December 31, 2007 compared to the same period of 2006. The decline was primarily associated with the reduction in our average outstanding debt during 2007.
Gain (Loss) on Marketable Securities
     The $6.7 million gain on marketable securities for 2007 primarily related to changes in fair value of our American Tower Corporation, or AMT, shares and the related forward exchange contracts. The gain of $2.3 million for the year ended December 31, 2006 related to a $3.8 million gain from terminating our secured forward exchange contract associated with our investment in XM Satellite Radio Holdings, Inc. partially offset by a loss of $1.5 million from the change in fair value of AMT securities that are classified as trading and the related secured forward exchange contracts associated with those securities.
Other Income (Expense) — Net
     Other income of $5.3 million recorded in 2007 primarily relates to foreign exchange gains while other expense of $8.6 million recorded in 2006 primarily relates to foreign exchange losses.
Income Taxes
     Current tax expense decreased $25.8 million for the year ended December 31, 2007 as compared to the year ended December 31, 2006 primarily due to current tax benefits of approximately $45.7 million recorded in 2007 related to the settlement of several tax positions with the Internal Revenue Service for the 1999 through 2004 tax years. In addition, we recorded current tax benefits of approximately $14.6 million in 2007 related to the utilization of capital loss carryforwards. The 2007 current tax benefits were partially offset by additional current tax expense due to an increase in Income before income taxes of $139.6 million.
     Deferred tax expense decreased $3.5 million for the year ended December 31, 2007 as compared to the year

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ended December 31, 2006 primarily due to additional deferred tax benefits of approximately $8.3 million recorded in 2007 related to accrued interest and state tax expense on uncertain tax positions. In addition, we recorded deferred tax expense of approximately $16.7 million in 2006 related to the uncertainty of our ability to utilize certain tax losses in the future for certain international operations. The changes noted above were partially offset by additional deferred tax expense recorded in 2007 as a result of tax depreciation expense related to capital expenditures in certain foreign jurisdictions.
Minority Interest, Net of Tax
     Minority interest expense increased $15.1 million in 2007 compared to 2006 primarily from an increase in net income attributable to our subsidiary Clear Channel Outdoor Holdings, Inc.
Discontinued Operations
     We closed on the sale of 160 stations in 2007 and 5 stations in 2006. The gain on sale of assets recorded in discontinued operations for these sales was $144.6 million and $0.3 million in 2007 and 2006, respectively. The remaining $1.2 million and $52.4 million are associated with the net income from radio stations and our television business that are recorded as income from discontinued operations for 2007 and 2006, respectively.
Radio Broadcasting Results of Operations
     Our radio broadcasting operating results were as follows:
                         
    Years Ended December 31,     % Change  
(In thousands)   2007     2006     2007 v. 2006  
Revenue
  $ 3,558,534     $ 3,567,413       0 %
Direct operating expenses
    982,966       994,686       (1 %)
Selling, general and administrative expense
    1,190,083       1,185,770       0 %
Depreciation and amortization
    107,466       125,631       (14 %)
 
                   
Operating income
  $ 1,278,019     $ 1,261,326       1 %
 
                   
     Our radio revenue was essentially flat. Declines in local and national revenues were partially offset by increases in network, traffic, syndicated radio and on-line revenues. Local and national revenues were down partially as a result of overall weakness in advertising as well as declines in automotive, retail and political advertising categories. During 2007, our average minute rate declined compared to 2006.
     Our radio broadcasting direct operating expenses declined approximately $11.7 million in 2007 compared to 2006. The decline was primarily from a $14.8 million decline in programming expenses partially related to salaries, a $16.5 million decline in non-traditional expenses primarily related to fewer concert events sponsored by us in the current year and $5.1 million in other direct operating expenses. Partially offsetting these declines were increases of $5.7 million in traffic expenses and $19.1 million in internet expenses associated with the increased revenues in these businesses. SG&A expenses increased $4.3 million during 2007 as compared to 2006 primarily from an increase of $16.2 million in our marketing and promotions department partially offset by a decline of $9.5 million in bonus and commission expenses.
Americas Outdoor Advertising Results of Operations
Our Americas outdoor advertising operating results were as follows:
                         
    Years Ended December 31,     % Change  
(In thousands)   2007     2006     2007 v. 2006  
Revenue
  $ 1,485,058     $ 1,341,356       11 %
Direct operating expenses
    590,563       534,365       11 %
Selling, general and administrative expenses
    226,448       207,326       9 %
Depreciation and amortization
    189,853       178,970       6 %
 
                   
Operating income
  $ 478,194     $ 420,695       14 %
 
                   
     Americas revenue increased $143.7 million, or 11%, during 2007 as compared to 2006 with Interspace contributing approximately $32.1 million to the increase. The growth occurred across our inventory, including bulletins, street furniture, airports and taxi displays. The revenue growth was primarily driven by bulletin revenue attributable to increased rates and airport revenue which had both increased rates and occupancy. Leading advertising categories during the year were telecommunications, retail, automotive, financial services and amusements. Revenue growth occurred across our markets, led by Los Angeles, New York, Washington/Baltimore, Atlanta, Boston, Seattle and

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Minneapolis.
     Our Americas direct operating expenses increased $56.2 million primarily from an increase of $46.6 million in site lease expenses associated with new contracts and the increase in airport, street furniture and taxi revenues. Interspace contributed $14.9 million to the increase. Our SG&A expenses increased $19.1 million primarily from bonus and commission expenses associated with the increase in revenue and from Interspace, which contributed approximately $6.7 million to the increase.
     Depreciation and amortization increased $10.9 million during 2007 compared to 2006 primarily associated with $5.9 million from Interspace.
International Outdoor Results of Operations
Our international operating results were as follows:
                         
    Years Ended December 31,     % Change  
(In thousands)   2007     2006   2007 v. 2006  
Revenue
  $ 1,796,778     $ 1,556,365       15 %
Direct operating expenses
    1,144,282       980,477       17 %
Selling, general and administrative expenses
    311,546       279,668       11 %
Depreciation and amortization
    209,630       228,760       (8 %)
 
                   
Operating income
  $ 131,320     $ 67,460       95 %
 
                   
     International revenue increased $240.4 million, or 15%, in 2007 as compared to 2006. Included in the increase was approximately $133.3 million related to movements in foreign exchange. Revenue growth occurred across inventory categories including billboards, street furniture and transit, driven by both increased rates and occupancy. Growth was led by increased revenues in France, Italy, Australia, Spain and China.
     Our international direct operating expenses increased approximately $163.8 million in 2007 compared to 2006. Included in the increase was approximately $88.0 million related to movements in foreign exchange. The remaining increase in direct operating expenses was primarily attributable to an increase in site lease expenses associated with the increase in revenue. SG&A expenses increased $31.9 million in 2007 over 2006 from approximately $23.4 million related to movements in foreign exchange and an increase in selling expenses associated with the increase in revenue. Additionally, we recorded a $9.8 million reduction to SG&A in 2006 as a result of the favorable settlement of a legal proceeding.
     Depreciation and amortization declined $19.1 million during 2007 compared to 2006 primarily from contracts which were recorded at fair value in purchase accounting in prior years and became fully amortized at December 31, 2006.
Reconciliation of Segment Operating Income (Loss)
                 
    Years Ended December 31,  
(In thousands)   2007     2006  
Radio Broadcasting
  $ 1,278,019     $ 1,261,326  
Americas Outdoor Advertising
    478,194       420,695  
International Outdoor Advertising
    131,320       67,460  
Other
    (11,659 )     (4,225 )
Other operating income — net
    14,113       71,571  
Merger expenses
    (6,762 )     (7,633 )
Corporate
    (197,746 )     (215,480 )
 
           
Consolidated operating income
  $ 1,685,479     $ 1,593,714  
 
           

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LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
                                         
            Period from July 31     Period from January        
            through December 31,     1 to July 30,     Years ended December 31,  
    2008     2008     2008     2007     2006  
(In thousands)   Combined     Post-merger     Pre-merger     Pre-merger     Pre-merger  
Cash provided by (used in):
                                       
Operating activities
  $ 1,281,284     $ 246,026     $ 1,035,258     $ 1,576,428     $ 1,748,057  
Investing activities
  $ (18,127,954 )   $ (17,711,703 )   $ (416,251 )   $ (482,677 )   $ (607,011 )
Financing activities
  $ 15,907,798     $ 17,554,739     $ (1,646,941 )   $ (1,431,014 )   $ (1,178,610 )
Discontinued operations
  $ 1,033,570     $ 2,429     $ 1,031,141     $ 366,411     $ 69,227  
Operating Activities
     2008
     Net cash flow from operating activities for 2008 primarily reflects a loss before discontinued operations of $4.6 billion plus a non-cash impairment charge of $5.3 billion, depreciation and amortization of $696.8 million, the amortization of deferred financing charges of approximately $106.4 million, and share-based compensation of $78.6 million, partially offset by a deferred tax benefit of $474.6 million.
     2007
     Net cash flow from operating activities during 2007 primarily reflected income before discontinued operations of $792.7 million plus depreciation and amortization of $566.6 million and deferred taxes of $188.2 million.
     2006
     Net cash flow from operating activities of $1.7 billion for the year ended December 31, 2006 principally reflects net income from continuing operations of $638.8 million and depreciation and amortization of $600.3 million. Net cash flows from operating activities also reflects an increase of $190.2 million in accounts receivable as a result of the increase in revenue and a $390.4 million federal income tax refund related to restructuring our international businesses consistent with our strategic realignment and the utilization of a portion of the capital loss generated on the spin-off of Live Nation, Inc.
Investing Activities
     2008
     Net cash used in investing activities during 2008 principally reflects cash used in the acquisition of Clear Channel of $17.5 billion and the purchase of property, plant and equipment of $430.5 million.
     2007
     Net cash used in investing activities of $482.7 million for the year ended December 31, 2007 principally reflects the purchase of property, plant and equipment of $363.3 million.
     2006
     Net cash used in investing activities of $607.0 million for the year ended December 31, 2006 principally reflects capital expenditures of $336.7 million related to purchases of property, plant and equipment and $341.2 million primarily related to acquisitions of operating assets, partially offset by proceeds from the sale of other assets of $99.7 million.
Financing Activities
     2008
     Net cash used in financing activities for 2008 principally reflected $15.4 billion in debt proceeds used to finance the acquisition of Clear Channel, an equity contribution of $2.1 billion used to finance the acquisition of Clear Channel, $1.9 billion primarily for the redemptions of certain of our subsidiaries’ notes and $93.4 million in dividends paid.

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     2007
     Net cash used in financing activities for the year ended December 31, 2007 principally reflects $372.4 million in dividend payments, decrease in debt of $1.1 billion, partially offset by the proceeds from the exercise of stock options of $80.0 million.
     2006
     Net cash used in financing activities for the year ended December 31, 2006 principally reflects $1.4 billion for shares repurchased, $382.8 million in dividend payments, partially offset by the net increase in debt of $601.3 million and proceeds from the exercise of stock options of $57.4 million.
Discontinued Operations
     During 2008, we completed the sale of our television business to Newport Television, LLC for $1.0 billion and completed the sales of certain radio stations for $110.5 million. The cash received from these sales was recorded as a component of cash flows from discontinued operations during 2008.
     The proceeds from the sale of five stations in 2006 and 160 stations in 2007 are classified as cash flows from discontinued operations in 2006 and 2007 respectively. Additionally, the cash flows from these stations are classified as discontinued operations for all periods presented.
Anticipated Cash Requirements
     Our primary source of liquidity is cash flow from operations, which has been adversely affected by the global economic slowdown. The risks associated with our businesses become more acute in periods of a slowing economy or recession, which may be accompanied by a decrease in advertising. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. The current global economic slowdown has resulted in a decline in advertising and marketing services among our customers, resulting in a decline in advertising revenues across our businesses. This reduction in advertising revenues has had an adverse effect on our revenue, profit margins, cash flow and liquidity, particularly during the second half of 2008. The continuation of the global economic slowdown may continue to adversely impact our revenue, profit margins, cash flow and liquidity.
     In January 2009, in response to the deterioration in general economic conditions and the resulting negative impact on our business, we commenced a restructuring program targeting a reduction of fixed costs by approximately $350 million on an annualized basis. As part of the program, we eliminated approximately 1,850 full-time positions representing approximately 9% of total workforce. The program is expected to result in restructuring and other non-recurring charges of approximately $200 million, although additional costs may be incurred as the program evolves. The cost savings initiatives are expected to be fully implemented by the end of the first quarter of 2010. No assurance can be given that the restructuring program will be successful or will achieve the anticipated cost savings in the timeframe expected or at all.
     Based on our current and anticipated levels of operations and conditions in our markets, we believe that cash flow from operations as well as cash on hand (including amounts drawn or available under our senior secured credit facilities) will enable us to meet our working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.
     Continuing adverse securities and credit market conditions could significantly affect the availability of equity or credit financing. While there is no assurance in the current economic environment, we believe the lenders participating in our credit agreements will be willing and able to provide financing in accordance with the terms of their agreements. In this regard, on February 6, 2009 we borrowed the approximately $1.6 billion of remaining availability under our $2.0 billion revolving credit facility to improve our liquidity position in light of continuing uncertainty in credit market and economic conditions. We expect to refinance our $500.0 million 4.25% notes due May 15, 2009 with a draw under the $500.0 million delayed draw term loan facility that is specifically designated for this purpose. The remaining $69.5 million of indebtedness maturing in 2009 will either be refinanced or repaid with cash flow from operations or on hand.
     We expect to be in compliance with the covenants under our senior secured credit facilities in 2009. However, our anticipated results are subject to significant uncertainty and there can be no assurance that actual results will be in compliance with the covenants. In addition, our ability to comply with the covenants in our financing agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any covenants set forth in our financing agreements would result in a default thereunder. An event of default would permit the lenders under a defaulted financing agreement to declare all indebtedness thereunder to be due and payable prior to maturity. Moreover, the lenders under the revolving credit facility under our senior secured credit facilities

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would have the option to terminate their commitments to make further extensions of revolving credit thereunder. If we are unable to repay our obligations under any senior secured credit facilities or the receivables based credit facility, the lenders under such senior secured credit facilities or receivables based credit facility could proceed against any assets that were pledged to secure such senior secured credit facilities or receivables based credit facility. In addition, a default or acceleration under any of our financing agreements could cause a default under other of our obligations that are subject to cross-default and cross-acceleration provisions.
     Our corporate credit and issue-level ratings were downgraded on February 20, 2009 by Standard & Poor’s Ratings Services. Our corporate credit rating was lowered to “B-”. These ratings remain on credit watch with negative implications. Additionally, Moody’s Investors Service has placed our credit ratings on review for possible downgrade from “B2.” These ratings are significantly below investment grade. These ratings and any additional reductions in our credit ratings could further increase our borrowing costs and reduce the availability of financing to us. In addition, deteriorating economic conditions, including market disruptions, tightened credit markets and significantly wider corporate borrowing spreads, may make it more difficult or costly for us to obtain financing in the future. A credit rating downgrade does not constitute a default under any of our debt obligations.
     Our ability to fund our working capital needs, debt service and other obligations, and to comply with the financial covenants under our financing agreements depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions and other factors, many of which are beyond our control. If our future operating performance does not meet our expectation or our plans materially change in an adverse manner or prove to be materially inaccurate, we may need additional financing. Continuing adverse securities and credit market conditions could significantly affect the availability of equity or credit financing. Consequently, there can be no assurance that such financing, if permitted under the terms of our financing agreements, will be available on terms acceptable to us or at all. The inability to obtain additional financing in such circumstances could have a material adverse effect on our financial condition and on our ability to meet our obligations.
Sources of Capital
     As of December 31, 2008 and 2007, we had the following indebtedness outstanding:
                 
    Post-merger     Pre-merger  
    December 31,     December 31,  
(In millions)   2008     2007  
Term Loan A
  $ 1,331.5        
Term Loan B
    10,700.0        
Term Loan C
    695.9        
Delayed Draw Facility
    532.5        
Receivables Based Facility
    445.6        
Revolving Credit Facility (a)
    220.0        
Secured Subsidiary Debt
    6.6       8.3  
 
           
Total Secured Debt
    13,932.1       8.3  
Senior Cash Pay Notes
    980.0        
Senior Toggle Notes
    1,330.0        
Clear Channel $1.75 billion credit facility
          174.6  
Clear Channel Senior Notes (b)
    3,192.3       5,646.4  
Clear Channel Subsidiary Debt (c)
    69.3       745.9  
 
           
Total Debt
    19,503.7       6,575.2  
Less: Cash and cash equivalents
    239.8       145.1  
 
           
 
  $ 19,263.9     $ 6,430.1  
 
           
 
(a)   Subsequent to December 31, 2008, we borrowed the approximately $1.6 billion of remaining availability under this facility.
 
(b)   Includes $1.1 billion at December 31, 2008 in unamortized fair value purchase accounting discounts related to our merger with Clear Channel. Includes $11.4 million increase related to fair value adjustments for interest rate swap agreements and $15.0 million decrease related to original issue discounts at December 31, 2007.
 
(c)   Includes $3.2 million at December 31, 2007 in unamortized fair value purchase accounting adjustment premiums related to Clear Channel’s merger with AMFM.
     We may utilize available funds for general working capital purposes including funding capital expenditures and acquisitions. We may also from time to time seek to retire or purchase our outstanding debt or equity securities or

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obligations through cash purchases, prepayments and/or exchanges for debt or equity securities or obligations, in open market purchases, privately negotiated transactions or otherwise. Such uses, repurchases, prepayments or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Indebtedness Incurred in Connection with the Merger
     The following is a summary of the terms of our indebtedness incurred in connection with the merger:
    a $1.33 billion term loan A facility, with a maturity in July 2014;
 
    a $10.7 billion term loan B facility with a maturity in January 2016;
 
    a $695.9 million term loan C — asset sale facility, with a maturity in January 2016;
 
    a $750.0 million delayed draw term loan facility with a maturity in January 2016 which may be drawn to purchase or redeem Clear Channel’s outstanding 7.65% senior notes due 2010, of which $532.5 million was drawn as of December 31, 2008;
 
    a $500.0 million delayed draw term loan facility with a maturity in January 2016 may be drawn to purchase or redeem Clear Channel’s outstanding 4.25% senior notes due 2009, of which none was drawn as of December 31, 2008;
 
    a $2.0 billion revolving credit facility with a maturity in July 2014, including a letter of credit sub-facility and a swingline loan sub-facility. As of February 27, 2009, the outstanding balance on this facility was $1.8 billion and, taking into account letters of credit of $171.9 million, $18.1 million was available to be drawn;
 
    a $783.5 million receivables based credit facility with a maturity in July 2014 providing revolving credit commitments in an amount equal to the initial borrowing of $533.5 million on the merger closing date plus $250 million, subject to a borrowing base, of which $445.6 million was drawn as of December 31, 2008, which was the maximum available under the borrowing base. As of February 27, 2009, the outstanding balance on this facility had declined to $365.5 million which was the maximum available under the borrowing base; and
 
    $980.0 million aggregate principal amount of 10.75% senior cash pay notes due 2016 and $1.33 billion aggregate principal amount of 11.00%/11.75% senior toggle notes due 2016.
     Each of the proceeding obligations are between Clear Channel, our wholly owned subsidiary, and each lender from time to time party to the credit agreements or senior cash pay and senior toggle notes. The following references to “our”, us” or “we” in the discussion of the credit agreements, senior cash pay notes and senior toggle notes are in respect to Clear Channel’s obligations under the credit agreements, senior cash pay and senior toggle notes.
Senior Secured Credit Facilities
     Borrowings under the senior secured credit facilities bear interest at a rate equal to an applicable margin plus, at our option, either (i) a base rate determined by reference to the higher of (A) the prime lending rate publicly announced by the administrative agent and (B) the federal funds effective rate from time to time plus 0.50%, or (ii) a Eurocurrency rate determined by reference to the costs of funds for deposits for the interest period relevant to such borrowing adjusted for certain additional costs.
     The margin percentages applicable to the term loan facilities and revolving credit facility are the following percentages per annum:
    with respect to loans under the term loan A facility and the revolving credit facility, (i) 2.40% in the case of base rate loans and (ii) 3.40% in the case of Eurocurrency rate loans subject to downward adjustments if our leverage ratio of total debt to EBITDA decreases below 7 to 1; and
 
    with respect to loans under the term loan B facility, term loan C — asset sale facility and delayed draw term loan facilities, (i) 2.65%, in the case of base rate loans and (ii) 3.65%, in the case of Eurocurrency rate loans subject to downward adjustments if our leverage ratio of total debt to EBITDA decreases below 7 to 1.
     We are required to pay each revolving credit lender a commitment fee in respect of any unused commitments under the revolving credit facility, which is 0.50% per annum. We are required to pay each delayed draw term facility lender a commitment fee in respect of any undrawn commitments under the delayed draw term facilities, which initially is 1.825% per annum until the delayed draw term facilities are fully drawn or commitments thereunder terminated.

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     The senior secured credit facilities require us to prepay outstanding term loans, subject to certain exceptions, with:
    50% (which percentage will be reduced to 25% and to 0% based upon our leverage ratio) of our annual excess cash flow (as calculated in accordance with the senior secured credit facilities), less any voluntary prepayments of term loans and revolving credit loans (to the extent accompanied by a permanent reduction of the commitment) and subject to customary credits;
 
    100% (which percentage will be reduced to 75% and 50% based upon our leverage ratio) of the net cash proceeds of sales or other dispositions by us or our wholly-owned restricted subsidiaries (including casualty and condemnation events) of assets other than specified assets subject to reinvestment rights and certain other exceptions; and
 
    100% of the net cash proceeds of any incurrence of certain debt, other than debt permitted under the senior secured credit facilities.
     The foregoing prepayments with the net cash proceeds of certain incurrences of debt and annual excess cash flow will be applied (i) first to the term loans other than the term loan C — asset sale facility loans (on a pro rata basis) and (ii) second to the term loan C — asset sale facility loans, in each case to the remaining installments thereof in direct order of maturity. The foregoing prepayments with the net cash proceeds of the sale of assets (including casualty and condemnation events) will be applied (i) first to the term loan C — asset sale facility loans and (ii) second to the other term loans (on a pro rata basis), in each case to the remaining installments thereof in direct order of maturity.
     We may voluntarily repay outstanding loans under our senior secured credit facilities at any time without premium or penalty, other than customary “breakage” costs with respect to Eurocurrency rate loans.
     We are required to repay the loans under our term loan facilities as follows:
    the term loan A facility will amortize in quarterly installments commencing on the first interest payment date after the second anniversary of the closing date of the merger in annual amounts equal to 5% of the original funded principal amount of such facility in years three and four, 10% thereafter, with the balance being payable on the final maturity date of such term loans; and
 
    the term loan B facility, term loan C — asset sale facility and delayed draw term loan facilities will amortize in quarterly installments on the first interest payment date after the third anniversary of the closing date of the merger, in annual amounts equal to 2.5% of the original funded principal amount of such facilities in years four and five and 1% thereafter, with the balance being payable on the final maturity date of such term loans.
     The senior secured credit facilities are guaranteed by each of our existing and future material wholly-owned domestic restricted subsidiaries, subject to certain exceptions.
     All obligations under the senior secured credit facilities, and the guarantees of those obligations, are secured, subject to permitted liens and other exceptions, by:
    a first-priority lien on the capital stock of Clear Channel;
 
    100% of the capital stock of any future material wholly-owned domestic license subsidiary that is not a “Restricted Subsidiary” under the indenture governing the Clear Channel senior notes;
 
    certain assets that do not constitute “principal property” (as defined in the indenture governing the Clear Channel senior notes);
 
    certain assets that constitute “principal property” (as defined in the indenture governing the Clear Channel senior notes) securing obligations under the senior secured credit facilities up to the maximum amount permitted to be secured by such assets without requiring equal and ratable security under the indenture governing the Clear Channel senior notes; and
 
    a second-priority lien on the accounts receivable and related assets securing our receivables based credit facility.
     The obligations of any foreign subsidiaries that are borrowers under the revolving credit facility will also be guaranteed by certain of their material wholly-owned restricted subsidiaries, and secured by substantially all assets of all such borrowers and guarantors, subject to permitted liens and other exceptions.
     The senior secured credit facilities require us to comply on a quarterly basis with a maximum consolidated senior secured net debt to adjusted EBITDA (as calculated in accordance with the senior secured credit facilities) ratio. This financial covenant becomes effective on March 31, 2009 (maximum of 9.5:1) and will become more restrictive over time beginning in the second quarter of 2013. Secured leverage, defined as secured debt, net of cash, divided by the trailing 12-month consolidated EBITDA was 6.4:1 at December 31, 2008. Our consolidated EBITDA is calculated as the trailing twelve months operating income before depreciation, amortization, impairment charge, non-cash

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compensation, other operating income — net and merger expenses of $1.8 billion adjusted for certain items, including: (i) an increase for expected cost savings (limited to $100.0 million in any twelve month period) of $100.0 million; (ii) an increase of $43.1 million for cash received from nonconsolidated affiliates; (iii) an increase of $17.0 million for non-cash items; (iv) an increase of $95.9 million related to expenses incurred associated with our restructuring program; and (v) an increase of $82.4 million of various other items.
     In addition, the senior secured credit facilities include negative covenants that, subject to significant exceptions, limit our ability and the ability of our restricted subsidiaries to, among other things:
    incur additional indebtedness;
 
    create liens on assets;
 
    engage in mergers, consolidations, liquidations and dissolutions;
 
    sell assets;
 
    pay dividends and distributions or repurchase its capital stock;
 
    make investments, loans, or advances;
 
    prepay certain junior indebtedness;
 
    engage in certain transactions with affiliates;
 
    amend material agreements governing certain junior indebtedness; and
 
    change our lines of business.
     The senior secured credit facilities include certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, the invalidity of material provisions of the senior secured credit facilities documentation, the failure of collateral under the security documents for the senior secured credit facilities, the failure of the senior secured credit facilities to be senior debt under the subordination provisions of certain of our subordinated debt and a change of control. If an event of default occurs, the lenders under the senior secured credit facilities will be entitled to take various actions, including the acceleration of all amounts due under the senior secured credit facilities and all actions permitted to be taken by a secured creditor.
Receivables Based Credit Facility
     The receivables based credit facility of $783.5 million provides revolving credit commitments in an amount equal to the initial borrowing of $533.5 million on the closing date plus $250 million, subject to a borrowing base. The borrowing base at any time equals 85% of our and certain of our subsidiaries’ eligible accounts receivable. The receivables based credit facility includes a letter of credit sub-facility and a swingline loan sub-facility.
     All borrowings under the receivables based credit facility are subject to the absence of any default, the accuracy of representations and warranties and compliance with the borrowing base. If at any time, borrowings, excluding the initial borrowing, under the receivables based credit facility following the closing date will be subject to compliance with a minimum fixed charge coverage ratio of 1.0:1.0 if excess availability under the receivables based credit facility is less than $50 million, or if aggregate excess availability under the receivables based credit facility and revolving credit facility is less than 10% of the borrowing base.
     Borrowings under the receivables based credit facility bear interest at a rate equal to an applicable margin plus, at our option, either (i) a base rate determined by reference to the higher of (A) the prime lending rate publicly announced by the administrative agent and (B) the federal funds effective rate from time to time plus 0.50%, or (ii) a Eurocurrency rate determined by reference to the costs of funds for deposits for the interest period relevant to such borrowing adjusted for certain additional costs.
     The margin percentage applicable to the receivables based credit facility which is (i) 1.40%, in the case of base rate loans and (ii) 2.40% in the case of Eurocurrency rate loans subject to downward adjustments if our leverage ratio of total debt to EBITDA decreases below 7 to 1.
     We are required to pay each lender a commitment fee in respect of any unused commitments under the receivables based credit facility, which is 0.375% per annum subject to downward adjustments if our leverage ratio of total debt to EBITDA decreases below 6 to 1.
     If at any time the sum of the outstanding amounts under the receivables based credit facility (including the letter of credit outstanding amounts and swingline loans thereunder) exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitments under the receivables based credit facility, we will be required to repay outstanding loans and cash collateralize letters of credit in an aggregate amount equal to such excess.

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     We may voluntarily repay outstanding loans under the receivables based credit facility at any time without premium or penalty, other than customary “breakage” costs with respect to Eurocurrency rate loans.
     The receivables based credit facility is guaranteed by, subject to certain exceptions, the guarantors of the senior secured credit facilities. All obligations under the receivables based credit facility, and the guarantees of those obligations, are secured by a perfected first priority security interest in all of our and all of the guarantors’ accounts receivable and related assets and proceeds thereof, subject to permitted liens and certain exceptions.
     The receivables based credit facility includes negative covenants, representations, warranties, events of default, conditions precedent and termination provisions substantially similar to those governing our senior secured credit facilities.
Senior Notes
     We have outstanding $980.0 million aggregate principal amount of 10.75% senior cash pay notes due 2016 (the “senior cash pay notes”) and $1.3 billion aggregate principal amount of 11.00%/11.75% senior toggle notes due 2016 (the “senior toggle notes” and, together with the senior cash pay notes, the “notes”).
     The senior toggle notes mature on August 1, 2016 and may require a special redemption on August 1, 2015. We may elect on each interest election date to pay all or 50% of such interest on the senior toggle notes in cash or by increasing the principal amount of the senior toggle notes or by issuing new senior toggle notes (such increase or issuance, “PIK Interest”). Interest on the senior toggle notes payable in cash will accrue at a rate of 11.00% per annum and PIK Interest will accrue at a rate of 11.75% per annum.
     On January 15, 2009, we made a permitted election under the indenture governing the senior toggle notes to pay interest under the senior toggle notes for the semi-annual interest period commencing February 1, 2009 entirely in kind (“PIK Interest”). For subsequent interest periods, no later than 10 business days prior to the beginning of such interest period, we must make an election regarding whether the applicable interest payment on the senior toggle notes will be made entirely in cash, entirely through PIK Interest or 50% in cash and 50% in PIK Interest. In the absence of such an election for any interest period, interest on the senior toggle notes will be payable according to the election for the immediately preceding interest period. As a result, the PIK Interest election is now the default election for future interest periods unless and until we elect otherwise.
     We may redeem some or all of the notes at any time prior to August 1, 2012 at a price equal to 100% of the principal amount of such notes plus accrued and unpaid interest thereon to the redemption date and a “make-whole premium,” as described in the notes. We may redeem some or all of the notes at any time on or after August 1, 2012 at the redemption prices set forth in notes. In addition, we may redeem up to 40% of any series of the outstanding notes at any time on or prior to August 1, 2011 with the net cash proceeds raised in one or more equity offerings. If we undergo a change of control, sells certain of our assets, or issue certain debt offerings, we may be required to offer to purchase notes from holders.
     The notes are senior unsecured debt and rank equal in right of payment with all of our existing and future senior debt. Guarantors of obligations under the senior secured credit facilities and the receivables based credit facility guarantee the notes with unconditional guarantees that are unsecured and equal in right of payment to all existing and future senior debt of such guarantors, except that the guarantees are subordinated in right of payment only to the guarantees of obligations under the senior secured credit facilities and the receivables based credit facility. In addition, the notes and the guarantees are structurally senior to Clear Channel’s senior notes and existing and future debt to the extent that such debt is not guaranteed by the guarantors of the notes. The notes and the guarantees are effectively subordinated to the existing and future secured debt and that of the guarantors to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all obligations of subsidiaries that do not guarantee the notes.
Clear Channel Credit Facility
     Clear Channel had a multi-currency revolving credit facility in the amount of $1.75 billion. This facility was terminated in connection with the closing of the merger.

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Dispositions and Other
     Clear Channel received proceeds of $110.5 million related to the sale of radio stations recorded as investing cash flows from discontinued operations and recorded a gain of $28.8 million as a component of “income from discontinued operations, net” during 2008. Clear Channel received proceeds of $1.0 billion related to the sale of its television business recorded as investing cash flows from discontinued operations and recorded a gain of $662.9 million as a component of “income from discontinued operations, net” during 2008.
     In addition, Clear Channel sold its 50% interest in Clear Channel Independent and recognized a gain of $75.6 million in “Equity in earnings of nonconsolidated affiliates” based on the fair value of the equity securities received in the pre-merger period.
     Clear Channel sold a portion of its investment in Grupo ACIR Comunicaciones for approximately $47.0 million on July 1, 2008 and recorded a gain of $9.2 million in equity in earnings of nonconsolidated affiliates. Effective January 20, 2009 we sold 57% of our remaining 20% interest in Grupo ACIR Comunicaciones for approximately $23.5 million and recorded a loss of approximately $2.2 million.
Uses of Capital
Dividends
     Clear Channel declared a $93.4 million dividend on December 3, 2007 payable to shareholders of record on December 31, 2007 and paid on January 15, 2008.
     We currently do not intend to pay regular quarterly cash dividends on the shares of our common stock. Clear Channel’s debt financing arrangements include restrictions on its ability to pay dividends, which in turn affects our ability to pay dividends.
Tender Offers
     On August 7, 2008, Clear Channel announced that it commenced a cash tender offer and consent solicitation for the outstanding $750.0 million principal amount of 7.65% senior notes due 2010. The tender offer and consent payment expired on September 9, 2008. The aggregate principal amount of 7.65% senior notes validly tendered and accepted for payment was $363.9 million.
     On November 24, 2008, Clear Channel announced that it commenced another cash tender offer to purchase its outstanding 7.65% Senior Notes due 2010. The tender offer and consent payment expired on December 23, 2008. The aggregate principal amount of 7.65% senior notes validly tendered and accepted for payment was $252.4 million.
     Clear Channel also announced on November 24, 2008 that its indirect wholly-owned subsidiary, CC Finco, LLC, commenced cash tender offers for Clear Channel’s outstanding 6.25% Senior Notes due 2011 (“6.25 Notes”), Clear Channel’s outstanding 4.40% Senior Notes due 2011 (“4.40% Notes”), Clear Channel’s outstanding 5.00% Senior Notes due 2012 (“5.00% Notes”) and Clear Channel’s outstanding 5.75% Senior Notes due 2013 (“5.75% Notes”). The tender offers and consent payments expired on December 23, 2008. The aggregate principal amounts of the 6.25% Notes, 4.40% Notes, 5.00% Notes and 5.75% Notes validly tendered and accepted for payment pursuant to the tender offers was $27.1 million, $26.7 million, $24.2 million and $24.3 million, respectively, and CC Finco, LLC purchased and currently holds such tendered notes.
Debt Maturities and Other
     On January 15, 2008, Clear Channel redeemed its 4.625% senior notes at their maturity for $500.0 million plus accrued interest with proceeds from its bank credit facility.
     On June 15, 2008, Clear Channel redeemed its 6.625% senior notes at their maturity for $125.0 million with available cash on hand.
     Clear Channel terminated its cross currency swaps on July 30, 2008 by paying the counterparty $196.2 million from available cash on hand.
     Clear Channel repurchased $639.2 million aggregate principal amount of the AMFM Operating Inc. 8% senior notes pursuant to a tender offer and consent solicitation in connection with the merger. The remaining 8% senior notes were redeemed at maturity on November 1, 2008.

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Capital Expenditures
     Capital expenditures, on a combined basis for the year ended December 31, 2008 was $430.5 million. Capital expenditures were $363.3 million in the year ended December 31, 2007.
                                         
    Combined Year Ended December 31, 2008 Capital Expenditures  
            Americas     International              
            Outdoor     Outdoor     Corporate and        
(In millions)   Radio     Advertising     Advertising     Other     Total  
 
Non-revenue producing
  $ 61.5     $ 40.5     $ 44.9     $ 10.7     $ 157.6  
Revenue producing
          135.3       137.6             272.9  
 
                             
 
  $ 61.5     $ 175.8     $ 182.5     $ 10.7     $ 430.5  
 
                             
Acquisitions
     We acquired FCC licenses in our radio segment for $11.7 million in cash during 2008. We acquired outdoor display faces and additional equity interests in international outdoor companies for $96.5 million in cash during 2008. Our national representation business acquired representation contracts for $68.9 million in cash during 2008.
Certain Relationships with the Sponsors
     In connection with the merger, we paid certain affiliates of the Sponsors $87.5 million in fees and expenses for financial and structural advice and analysis, assistance with due diligence investigations and debt financing negotiations and $15.9 million for reimbursement of escrow and other out-of-pocket expenses. This amount was preliminarily allocated between merger expenses, debt issuance costs or included in the overall purchase price of the merger.
     We have agreements with certain affiliates of the Sponsors pursuant to which such affiliates of the Sponsors will provide management and financial advisory services to us until 2018. The agreements require us to pay management fees to such affiliates of the Sponsors for such services at a rate not greater than $15.0 million per year, with any additional fees subject to approval by our board of directors. For the post-merger period of 2008, we recognized Sponsors’ management fees of $6.3 million.
Commitments, Contingencies and Guarantees
     There are various lawsuits and claims pending against us. Based on current assumptions, we have accrued an estimate of the probable costs for the resolution of these claims. Future results of operations could be materially affected by changes in these assumptions.
     Certain agreements relating to acquisitions provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired companies generally over a one to five year period. We will continue to accrue additional amounts related to such contingent payments if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if performance targets are met, would not significantly impact our financial position or results of operations.
     In addition to our scheduled maturities on our debt, we have future cash obligations under various types of contracts. We lease office space, certain broadcast facilities, equipment and the majority of the land occupied by our outdoor advertising structures under long-term operating leases. Some of our lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for our payment of utilities and maintenance.
     We have minimum franchise payments associated with non-cancelable contracts that enable us to display advertising on such media as buses, taxis, trains, bus shelters and terminals. The majority of these contracts contain rent provisions that are calculated as the greater of a percentage of the relevant advertising revenue or a specified guaranteed minimum annual payment. Also, we have non-cancelable contracts in our radio broadcasting operations related to program rights and music license fees.
     In the normal course of business, our broadcasting operations have minimum future payments associated with employee and talent contracts. These contracts typically contain cancellation provisions that allow us to cancel the contract with good cause.

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     The scheduled maturities of our senior secured credit facilities, receivables based facility, senior cash pay and senior toggle notes, other long-term debt outstanding, future minimum rental commitments under non-cancelable lease agreements, minimum payments under other non-cancelable contracts, payments under employment/talent contracts, capital expenditure commitments, and other long-term obligations as of December 31, 2008 are as follows:
(In thousands)
                                         
    Payments due by Period  
Contractual Obligations   Total     2009     2010 -2011     2012-2013     Thereafter  
Long-term Debt
                                       
Senior Secured Debt
  $ 13,932,092       677       249,748       745,115       12,936,552  
Senior Cash Pay and Senior Toggle Notes (1)
    2,310,000                         2,310,000  
Clear Channel Senior Notes
    4,306,440       500,000       1,329,901       751,539       1,725,000  
Other Long-term Debt
    69,260       68,850       410              
Interest payments on long-term debt (2)
    9,136,049       1,151,824       2,077,657       1,899,257       4,007,311  
Non-Cancelable Operating Leases
    2,745,110       383,568       627,884       468,084       1,265,574  
Non-Cancelable Contracts
    2,648,262       673,900       859,061       471,766       643,535  
Employment/Talent Contracts
    599,363       196,391       220,040       112,214       70,718  
Capital Expenditures
    151,663       76,760       62,426       9,336       3,141  
Other long-term obligations (3)
    159,805             26,489       9,233       124,083  
 
                             
Total (4)
  $ 36,058,044     $ 3,051,970     $ 5,453,616     $ 4,466,544     $ 23,085,914  
 
                             
 
(1)   On January 15, 2009, we made a permitted election under the indenture governing the senior toggle notes to pay PIK Interest. For subsequent interest periods, we must make an election regarding whether the applicable interest payment on the senior toggle notes will be made entirely in cash, entirely through PIK Interest or 50% in cash and 50% in PIK Interest. In the absence of such an election for any interest period, interest on the senior toggle notes will be payable according to the election for the immediately preceding interest period. As a result, the PIK Interest election is now the default election for future interest periods unless and until we elect otherwise. Therefore, the interest payments on the senior toggle notes assume that the PIK Interest election remains the default election over the term of the notes.
 
(2)   Interest payments on the senior secured credit facilities, other than the revolving credit facility, assume the obligations are repaid in accordance with the amortization schedule included in the credit agreement and the interest rate is held constant over the remaining term based on the weighted average interest rate at December 31, 2008 on the senior secured credit facilities.
 
    Interest payments related to the revolving credit facility assume the balance and interest rate as of December 31, 2008 is held constant over the remaining term. On February 6, 2009, we borrowed the approximately $1.6 billion of remaining availability under our $2.0 billion revolving credit facility. Assuming the balance on the facility after the draw on February 6, 2009 and weighted average interest rate are held constant over the remaining term, interest payments would have increased by approximately $60.2 million per year.
 
    Interest payments on $6.0 billion of the Term Loan B facility are effectively fixed at interest rates between 2.6% and 4.4%, plus applicable margins, per annum, as a result of an aggregate of $6.0 billion notional amount of interest rate swap agreements.
 
(3)   Other long-term obligations consist of $55.6 million related to asset retirement obligations recorded pursuant to Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations, which assumes the underlying assets will be removed at some period over the next 50 years. Also included are $50.8 million of contract payments in our syndicated radio and media representation businesses and $53.4 million of various other long-term obligations.
 
(4)   Excluded from the table is $423.1 million related to various obligations with no specific contractual commitment or maturity, $267.8 million of which relates to unrecognized tax benefits recorded pursuant to Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes. Approximately $1.0 million of the benefits are recorded as current liabilities.
Market Risk
Interest Rate Risk
     After the merger a significant amount of our long-term debt bears interest at variable rates. Accordingly, our earnings will be affected by changes in interest rates. At December 31, 2008 we had interest rate swap agreements with a $6.0 billion notional amount that effectively fixes interest at rates between 2.6% and 4.4%, plus applicable margins, per annum. The fair value of these agreements at December 31, 2008 was a liability of $118.8 million. At

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December 31, 2008, approximately 39% of our aggregate principal amount of long-term debt, including taking into consideration debt on which we have entered into pay-fixed rate receive floating rate swap agreements, bears interest at floating rates.
     Assuming the current level of borrowings and interest rate swap contracts and assuming a 200 basis point change in LIBOR, it is estimated that our interest expense for the post-merger period ended December 31, 2008 would have changed by approximately $66.0 million.
     In the event of an adverse change in interest rates, management may take actions to further mitigate its exposure. However, due to the uncertainty of the actions that would be taken and their possible effects, this interest rate analysis assumes no such actions. Further, the analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment.
Equity Price Risk
     The carrying value of our available-for-sale equity securities is affected by changes in their quoted market prices. It is estimated that a 20% change in the market prices of these securities would change their carrying value at December 31, 2008 by $5.4 million and would change comprehensive income by $3.2 million. At December 31, 2008, we also held $6.4 million of investments that do not have a quoted market price, but are subject to fluctuations in their value.
Foreign Currency
     We have operations in countries throughout the world. Foreign operations are measured in their local currencies except in hyper-inflationary countries in which we operate. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. We believe we mitigate a small portion of our exposure to foreign currency fluctuations with a natural hedge through borrowings in currencies other than the U.S. dollar. Our foreign operations reported a net loss of approximately $135.2 million for the year ended December 31, 2008. We estimate a 10% change in the value of the U.S. dollar relative to foreign currencies would have changed our net income for the year ended December 31, 2008 by approximately $13.5 million.
     Our earnings are also affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies as a result of our equity method investments in various countries. It is estimated that the result of a 10% fluctuation in the value of the dollar relative to these foreign currencies at December 31, 2008 would change our equity in earnings of nonconsolidated affiliates by $10.0 million and would change our net income by approximately $5.9 million for the year ended December 31, 2008.
     This analysis does not consider the implications that such fluctuations could have on the overall economic activity that could exist in such an environment in the U.S. or the foreign countries or on the results of operations of these foreign entities.
Recent Accounting Pronouncements
     Statement of Financial Accounting Standards No. 141(R), Business Combinations (“Statement 141(R)”), was issued in December 2007. Statement 141(R) requires that upon initially obtaining control, an acquirer will recognize 100% of the fair values of acquired assets, including goodwill, and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100% of its target. Additionally, contingent consideration arrangements will be fair valued at the acquisition date and included on that basis in the purchase price consideration and transaction costs will be expensed as incurred. Statement 141(R) also modifies the recognition for preacquisition contingencies, such as environmental or legal issues, restructuring plans and acquired research and development value in purchase accounting. Statement 141(R) amends Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. Statement 141(R) is effective for fiscal years beginning after December 15, 2008. Adoption is prospective and early adoption is not permitted. We adopted Statement 141(R) on January 1, 2009. Statement 141(R)’s impact on accounting for business combinations is dependent upon the nature of future acquisitions.
     Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“Statement 160”), was issued in December 2007. Statement 160 clarifies the classification of noncontrolling interests in consolidated statements of financial position and the accounting for and

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reporting of transactions between the reporting entity and holders of such noncontrolling interests. Under Statement 160 noncontrolling interests are considered equity and should be reported as an element of consolidated equity, net income will encompass the total income of all consolidated subsidiaries and there will be separate disclosure on the face of the income statement of the attribution of that income between the controlling and noncontrolling interests, and increases and decreases in the noncontrolling ownership interest amount will be accounted for as equity transactions. Statement 160 is effective for the first annual reporting period beginning on or after December 15, 2008, and earlier application is prohibited. Statement 160 is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parent’s shareholders’ equity, in the consolidated statement of financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to be adopted retrospectively. We adopted Statement 160 on January 1, 2009 which resulted in a reclassification of approximately $463.9 million of noncontrolling interests to shareholders’ equity.
     On March 19, 2008, the Financial Accounting Standards Board (“FASB”) issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (“Statement 161”). Statement 161 requires additional disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items effect an entity’s financial position, results of operations and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We will adopt the disclosure requirements beginning January 1, 2009.
     In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under FASB Statement No. 142, Goodwill and Other Intangible Assets (“Statement 142”). FSP FAS 142-3 removes an entity’s requirement under paragraph 11 of Statement 142 to consider whether an intangible asset can be renewed without substantial cost or material modifications to the existing terms and conditions. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008, and early adoption is prohibited. We adopted FSP FAS 142-3 on January 1, 2009. FSP FAS 142-3’s impact is dependent upon future acquisitions.
     In June 2008, the FASB issued FASB Staff Position Emerging Issues Task Force 03-6-1 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarifies that unvested share-based payment awards with a right to receive nonforfeitable dividends are participating securities. Guidance is also provided on how to allocate earnings to participating securities and compute basic earnings per share using the two-class method. This FSP is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008, and early adoption is prohibited. We adopted FSP EITF 03-6-1 on January 1, 2009. We are evaluating the impact FSP EITF 03-6-1 will have on our earnings per share.
Critical Accounting Estimates
     The preparation of our financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material. Our significant accounting policies are discussed in the notes to our consolidated financial statements, included in Item 8 of this Annual Report on Form 10-K. Management believes that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. The following narrative describes these critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions.
Allowance for Doubtful Accounts
     We evaluate the collectability of our accounts receivable based on a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, we record a specific reserve to reduce the amounts recorded to what we believe will be collected. For all other customers, we recognize reserves for bad debt based on historical experience of bad debts as a percent of revenue for each business unit, adjusted for relative improvements or deteriorations in the agings and changes in current economic conditions.

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     If our allowance were to change 10%, it is estimated that our 2008 bad debt expense would have changed by $9.7 million and our 2008 net income would have changed by $6.0 million.
Long-Lived Assets
     Long-lived assets, such as property, plant and equipment and definite-lived intangibles are reviewed for impairment when events and circumstances indicate that depreciable and amortizable long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current fair market value.
     We use various assumptions in determining the current fair market value of these assets, including future expected cash flows, industry growth rates and discount rates, as well as future salvage values. Our impairment loss calculations require management to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.
     Using the impairment review described, we recorded an impairment charge of approximately $33.4 million for the year ended December 31, 2008. If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results of operations.
Indefinite-lived Assets
     Indefinite-lived assets are reviewed annually for possible impairment using the direct valuation method as prescribed in SEC Staff Announcement No. D-108, Use of the Residual Method to Value Acquired Assets Other Than Goodwill. Under the direct valuation method, it is assumed that rather than acquiring indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flows model which results in value that is directly attributable to the indefinite-lived intangible assets.
     Our key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information representing an average asset within a market.
     In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, or Statement 142, we performed an interim impairment test as of December 31, 2008. The estimated fair value of our FCC licenses and permits was below their carrying values. As a result, we recognized a non-cash impairment charge of $1.7 billion in 2008 on our indefinite-lived FCC licenses and permits as a result of the impairment test. The United States and global economies are undergoing a period of economic uncertainty, which has caused, among other things, a general tightening in the credit markets, limited access to the credit markets, lower levels of liquidity and lower consumer and business spending. These disruptions in the credit and financial markets and the continuing impact of adverse economic, financial and industry conditions on the demand for advertising negatively impacted the key assumptions in the discounted cash flow models used to value our FCC licenses and permits.
     While we believe we had made reasonable estimates and utilized reasonable assumptions to calculate the fair value of our FCC license and permits, it is possible a material change could occur. If our future results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. The following table shows the impact on the fair value of our FCC licenses and billboard permits of a 100 basis point decline in our long-term revenue growth rate, profit margin, and discount rate assumptions, respectively:
(In thousands)
                         
Indefinite-lived intangible   Revenue growth rate   Profit margin   Discount rates
FCC licenses
  $ (285,900 )   $ (121,670 )   $ 524,900  
Billboard permits
  $ (508,300 )   $ (84,000 )   $ 770,200  
Goodwill
     Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. We review goodwill for potential impairment annually using a discounted cash flow model to

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determine the fair value of our reporting units. The fair value of our reporting units is used to apply value to the net assets of each reporting unit. To the extent that the carrying amount of net assets would exceed the fair value, an impairment charge may be required to be recorded.
     The discounted cash flow approach we use for valuing goodwill involves estimating future cash flows expected to be generated from the related assets, discounted to their present value using a risk-adjusted discount rate. Terminal values were also estimated and discounted to their present value. In accordance with Statement 142, we performed an interim impairment test as of December 31, 2008 on goodwill.
     The estimated fair value of our reporting units was below their carrying values, which required us to compare the implied fair value of each reporting units’ goodwill with its carrying value. As a result, we recognized a non-cash impairment charge of $3.6 billion to reduce our goodwill. The macroeconomic factors discussed above had an adverse effect on our estimated cash flows and discount rates used in the discounted cash flow model.
     While we believe we had made reasonable estimates and utilized reasonable assumptions to calculate the fair value of our reporting units, it is possible a material change could occur. If future results are not consistent with our assumptions and estimates, we may be exposed to impairment charges in the future. The following table shows the impact on the fair value of each of our reportable segments of a 100 basis point decline in our long-term revenue growth rate, profit margin, and discount rate assumptions, respectively:
                         
(In thousands)            
 
Reportable segment   Revenue growth rate   Profit margin   Discount rates
Radio Broadcasting
  $ (960,000 )   $ (240,000 )   $ 1,090,000  
Americas Outdoor
  $ (380,000 )   $ (90,000 )   $ 420,000  
International Outdoor
  $ (190,000 )   $ (160,000 )   $ 90,000  
Tax Accruals
     The IRS and other taxing authorities routinely examine our tax returns. From time to time, the IRS challenges certain of our tax positions. We believe our tax positions comply with applicable tax law and we would vigorously defend these positions if challenged. The final disposition of any positions challenged by the IRS could require us to make additional tax payments. We believe that we have adequately accrued for any foreseeable payments resulting from tax examinations and consequently do not anticipate any material impact upon their ultimate resolution.
     Our estimates of income taxes and the significant items giving rise to the deferred assets and liabilities are shown in the notes to our consolidated financial statements and reflect our assessment of actual future taxes to be paid on items reflected in the financial statements, giving consideration to both timing and probability of these estimates. Actual income taxes could vary from these estimates due to future changes in income tax law or results from the final review of our tax returns by federal, state or foreign tax authorities.
     We have considered these potential changes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes and Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes, which requires us to record reserves for estimates of probable settlements of federal and state tax audits.
Litigation Accruals
     We are currently involved in certain legal proceedings and, as required, have accrued our estimate of the probable costs for the resolution of these claims.
     Management’s estimates used have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies.
     It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.
Insurance Accruals
     We are currently self-insured beyond certain retention amounts for various insurance coverages, including general liability and property and casualty. Accruals are recorded based on estimates of actual claims filed, historical payouts, existing insurance coverage and projections of future development of costs related to existing claims.
     Our self-insured liabilities contain uncertainties because management must make assumptions and apply judgment to estimate the ultimate cost to settle reported claims and claims incurred but not reported as of December 31, 2008.

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     If actual results are not consistent with our assumptions and judgments, we may be exposed to gains or losses that could be material. A 10% change in our self-insurance liabilities at December 31, 2008, would have affected net income by approximately $3.2 million for the year ended December 31, 2008.
Shared-based Payments
     Under the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, stock based compensation cost is measured at the grant date based on the value of the award. For awards that vest based on service conditions, this cost is recognized as expense on a straight-line basis over the vesting period. For awards that will vest based on market, performance and service conditions, this cost will be recognized when it becomes probable that the performance conditions will be satisfied. Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility and forfeiture rates, among other factors. If actual results differ significantly from these estimates, our results of operations could be materially impacted.
Inflation
     Inflation has affected our performance in terms of higher costs for wages, salaries and equipment. Although the exact impact of inflation is indeterminable, we believe we have offset these higher costs by increasing the effective advertising rates of most of our broadcasting stations and outdoor display faces.
Ratio of Earnings to Fixed Charges
                                         
Period from   Period from            
July 31 through   January 1 through            
December 31,   July 30,   Years Ended December 31,
Post-merger   Pre-merger   Pre-merger   Pre-merger   Pre-merger   Pre-merger
2008   2008   2007   2006   2005   2004
N/A
    2.06       2.38       2.27       2.24       2.76  
     The ratio of earnings to fixed charges was computed on a total enterprise basis. Earnings represent income from continuing operations before income taxes less equity in undistributed net income (loss) of unconsolidated affiliates plus fixed charges. Fixed charges represent interest, amortization of debt discount and expense, and the estimated interest portion of rental charges. We had no preferred stock outstanding for any period presented. Earnings, as adjusted, were not sufficient to cover fixed charges by approximately $5.7 billion for the post merger period from July 31 through December 31, 2008.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
Required information is within Item 7.

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ITEM 8. Financial Statements and Supplementary Data
MANAGEMENT’S REPORT ON FINANCIAL STATEMENTS
The consolidated financial statements and notes related thereto were prepared by and are the responsibility of management. The financial statements and related notes were prepared in conformity with U.S. generally accepted accounting principles and include amounts based upon management’s best estimates and judgments.
It is management’s objective to ensure the integrity and objectivity of its financial data through systems of internal controls designed to provide reasonable assurance that all transactions are properly recorded in our books and records, that assets are safeguarded from unauthorized use and that financial records are reliable to serve as a basis for preparation of financial statements.
The financial statements have been audited by our independent registered public accounting firm, Ernst & Young LLP, to the extent required by auditing standards of the Public Company Accounting Oversight Board (United States) and, accordingly, they have expressed their professional opinion on the financial statements in their report included herein.
The Board of Directors meets with the independent registered public accounting firm and management periodically to satisfy itself that they are properly discharging their responsibilities. The independent registered public accounting firm has unrestricted access to the Board, without management present, to discuss the results of their audit and the quality of financial reporting and internal accounting controls.
         
     
/s/ Mark P. Mays      
Chief Executive Officer     
     
 
     
/s/ Randall T. Mays      
President and Chief Financial Officer     
     
 
     
/s/ Herbert W. Hill, Jr.      
Senior Vice President/Chief Accounting Officer     
     

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Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
CC Media Holdings, Inc.
We have audited the accompanying consolidated balance sheet of CC Media Holdings, Inc. (Holdings) as of December 31, 2008, the accompanying consolidated balance sheet of Clear Channel Communications, Inc. (Clear Channel) as of December 31, 2007, the related consolidated statements of operations, shareholders’ equity(deficit), and cash flows of Holdings for the period from July 31, 2008 through December 31, 2008, and the related consolidated statements of operations, shareholders’ equity, and cash flows of Clear Channel for the period from January 1, 2008 through July 30, 2008, and each of the two years in the period ended December 31, 2007. Our audits also included the financial statement schedule listed in the index as Item 15(a)2. These financial statements and schedule are the responsibility of Holdings’ management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Holdings at December 31, 2008, the consolidated financial position of Clear Channel at December 31, 2007, the consolidated results of Holdings’ operations and cash flows for the period from July 31, 2008 through December 31, 2008, and the consolidated results of Clear Channel’s operations and cash flows for the period from January 1, 2008 through July 30, 2008, and each of the two years in the period ended December 31, 2007, 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 financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
As discussed in Note L to the consolidated financial statements, in 2007 Clear Channel changed its method of accounting for income taxes, and as discussed in Note A to the consolidated financial statements, in 2006 Clear Channel changed its method of accounting for share-based compensation.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Holdings’ internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2009 expressed an unqualified opinion thereon.
         
     
  /s/ Ernst & Young LLP    
San Antonio, Texas
March 2, 2009

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CONSOLIDATED BALANCE SHEETS
ASSETS
                 
    Post-merger     Pre-merger  
    December 31,     December 31,  
(In thousands)   2008     2007  
CURRENT ASSETS
               
Cash and cash equivalents
  $ 239,846     $ 145,148  
Accounts receivable, net of allowance of $97,364 in 2008 and $59,169 in 2007
    1,431,304       1,693,218  
Prepaid expenses
    133,217       116,902  
Other current assets
    262,188       243,248  
Current assets from discontinued operations
          96,067  
 
           
Total Current Assets
    2,066,555       2,294,583  
 
               
PROPERTY, PLANT AND EQUIPMENT
               
Land, buildings and improvements
    614,811       840,832  
Structures
    2,355,776       3,901,941  
Towers, transmitters and studio equipment
    353,108       600,315  
Furniture and other equipment
    242,287       527,714  
Construction in progress
    128,739       119,260  
 
           
 
    3,694,721       5,990,062  
Less accumulated depreciation
    146,562       2,939,698  
 
           
 
    3,548,159       3,050,364  
Property, plant and equipment from discontinued operations, net
    ¯       164,724  
 
               
INTANGIBLE ASSETS
               
Definite-lived intangibles, net
    2,881,720       485,870  
Indefinite-lived intangibles — licenses
    3,019,803       4,201,617  
Indefinite-lived intangibles — permits
    1,529,068       251,988  
Goodwill
    7,090,621       7,210,116  
Intangible assets from discontinued operations, net
    ¯       219,722  
 
               
OTHER ASSETS
               
Notes receivable
    11,633       12,388  
Investments in, and advances to, nonconsolidated affiliates
    384,137       346,387  
Other assets
    560,260       303,791  
Other investments
    33,507       237,598  
Other assets from discontinued operations
    ¯       26,380  
 
           
Total Assets
  $ 21,125,463     $ 18,805,528  
 
           
See Notes to Consolidated Financial Statements

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LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
                 
    Post-merger     Pre-merger  
    December 31,     December 31,  
(In thousands, except share data)   2008     2007  
CURRENT LIABILITIES
               
Accounts payable
  $ 155,240     $ 165,533  
Accrued expenses
    793,366       912,665  
Accrued interest
    181,264       98,601  
Accrued income taxes
          79,973  
Current portion of long-term debt
    562,923       1,360,199  
Deferred income
    153,153       158,893  
Current liabilities from discontinued operations
          37,413  
 
           
Total Current Liabilities
    1,845,946       2,813,277  
 
               
Long-term debt
    18,940,697       5,214,988  
Other long-term obligations
          127,384  
Deferred income taxes
    2,679,312       793,850  
Other long-term liabilities
    575,739       567,848  
Long-term liabilities from discontinued operations
          54,330  
 
               
Minority interest
    463,916       436,360  
Commitments and contingent liabilities (Note J)
               
 
               
SHAREHOLDERS’ EQUITY (DEFICIT)
               
Class A Common Stock, par value $.001 per share, authorized 400,000,000 shares, issued 23,605,923 shares in 2008
    23        
Class B Common Stock, par value $.001 per share, authorized 150,000,000 shares, issued 555,556 shares in 2008
    1        
Class C Common Stock, par value $.001 per share, authorized 100,000,000 shares, issued 58,967,502 shares in 2008
    58        
Common Stock, par value $.10 per share, authorized 1,500,000,000 shares, issued 498,075,417 shares in 2007
          49,808  
Additional paid-in capital
    2,100,995       26,858,079  
Retained deficit
    (5,041,998 )     (18,489,143 )
Accumulated other comprehensive income (loss)
    (439,225 )     383,698  
Cost of shares (81 in 2008 and 157,744 in 2007) held in treasury
    (1 )     (4,951 )
 
           
Total Shareholders’ Equity (Deficit)
    (3,380,147 )     8,797,491  
 
           
Total Liabilities and Shareholders’ Equity (Deficit)
  $ 21,125,463     $ 18,805,528  
 
           
See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF OPERATIONS
                                   
    Period from                
    July 31                
    through       Period from January 1        
    December 31,       through July 30,     Year Ended December 31,  
    2008       2008     2007     2006  
(In thousands, except per share data)   Post-merger       Pre-merger     Pre-merger     Pre-merger  
Revenue
  $ 2,736,941       $ 3,951,742     $ 6,921,202     $ 6,567,790  
Operating expenses:
                                 
Direct operating expenses (excludes depreciation and amortization)
    1,198,345         1,706,099       2,733,004       2,532,444  
Selling, general and administrative expenses (excludes depreciation and amortization)
    806,787         1,022,459       1,761,939       1,708,957  
Depreciation and amortization
    348,041         348,789       566,627       600,294  
Corporate expenses (excludes depreciation and amortization)
    102,276         125,669       181,504       196,319  
Merger expenses
    68,085         87,684       6,762       7,633  
Impairment charge
    5,268,858                      
Other operating income — net
    13,205         14,827       14,113       71,571  
 
                         
Operating income (loss)
    (5,042,246 )       675,869       1,685,479       1,593,714  
Interest expense
    715,768         213,210       451,870       484,063  
Gain (loss) on marketable securities
    (116,552 )       34,262       6,742       2,306  
Equity in earnings of nonconsolidated affiliates
    5,804         94,215       35,176       37,845  
Other income (expense) — net
    131,505         (5,112 )     5,326       (8,593 )
 
                         
Income (loss) before income taxes, minority interest and discontinued operations
    (5,737,257 )       586,024       1,280,853       1,141,209  
Income tax benefit (expense) expense:
                                 
Current
    76,729         (27,280 )     (252,910 )     (278,663 )
Deferred
    619,894         (145,303 )     (188,238 )     (191,780 )
 
                         
Income tax benefit (expense)
    696,623         (172,583 )     (441,148 )     (470,443 )
Minority interest income (expense), net of tax
    481         (17,152 )     (47,031 )     (31,927 )
 
                         
Income (loss) before discontinued operations
    (5,040,153 )       396,289       792,674       638,839  
Income (loss) from discontinued operations, net
    (1,845 )       640,236       145,833       52,678  
 
                         
Net income (loss)
  $ (5,041,998 )     $ 1,036,525     $ 938,507     $ 691,517  
 
                         
Other comprehensive income (loss), net of tax:
                                 
Foreign currency translation adjustments
    (364,164 )       28,866       88,823       92,810  
Unrealized holding gain (loss) on marketable securities
    (95,669 )       (52,460 )     (8,412 )     (60,516 )
Unrealized holding gain (loss) on cash flow derivatives
    (75,079 )             (1,688 )     76,132  
Reclassification adjustments for realized (gain) loss on securities and derivatives included in net income
    95,687         (25,997 )            
 
                         
Comprehensive income (loss)
  $ (5,481,223 )     $ 986,934     $ 1,017,230     $ 799,943  
 
                         
Net income (loss) per common share:
                                 
Income (loss) before discontinued operations— Basic
  $ (62.04 )     $ .80     $ 1.60     $ 1.27  
Discontinued operations — Basic
    (.02 )       1.29       .30       .11  
 
                         
Net income (loss) — Basic
  $ (62.06 )     $ 2.09     $ 1.90     $ 1.38  
 
                                 
 
                         
Weighted average common shares — basic
    81,242         495,044       494,347       500,786  
 
                                 
Income (loss) before discontinued operations — Diluted
  $ (62.04 )     $ .80     $ 1.60     $ 1.27  
Discontinued operations — Diluted
    (.02 )       1.29       .29       .11  
 
                         
Net income (loss) — Diluted
  $ (62.06 )     $ 2.09     $ 1.89     $ 1.38  
 
                                 
 
                         
Weighted average common shares — diluted
    81,242         496,519       495,784       501,639  
 
                                 
Dividends declared per share
  $       $     $ .75     $ .75  
See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
                                                                           
                                                      Accumulated              
                                      Additional             Other              
                    Common Shares       Common     Paid-in     Retained     Comprehensive     Treasury        
(In thousands, except share data)                   Issued       Stock     Capital     (Deficit)     Income (Loss)     Stock     Total  
Pre-merger Balances at December 31, 2005
                    538,287,763       $ 53,829     $ 27,945,725     $ (19,371,411 )   $ 201,928     $ (3,609 )   $ 8,826,462  
Net income
                                              691,517                       691,517  
Dividends declared
                                              (374,471 )                     (374,471 )
Subsidiary common stock issued for a business acquisition
                                      67,873                               67,873  
Purchase of common shares
                                                              (1,371,462 )     (1,371,462 )
Treasury shares retired and cancelled
                    (46,729,900 )       (4,673 )     (1,367,032 )                     1,371,705        
Exercise of stock options and other
                    2,424,988         243       60,139                       11       60,393  
Amortization and adjustment of deferred compensation
                                      38,982                               38,982  
Currency translation adjustment
                                                      87,431               87,431  
Unrealized gains on cash flow derivatives
                                                      76,132               76,132  
Unrealized (losses) on investments
                                                      (60,516 )             (60,516 )
 
                                                       
Pre-merger Balances at December 31, 2006
                    493,982,851         49,399       26,745,687       (19,054,365 )     304,975       (3,355 )     8,042,341  
Cumulative effect of FIN 48 adoption
                                              (152 )                     (152 )
Net income
                                              938,507                       938,507  
Dividends declared
                                              (373,133 )                     (373,133 )
Exercise of stock options and other
                    4,092,566         409       74,827                       (1,596 )     73,640  
Amortization and adjustment of deferred compensation
                                      37,565                               37,565  
Currency translation adjustment
                                                      88,823               88,823  
Unrealized (losses) on cash flow derivatives
                                                      (1,688 )             (1,688 )
Unrealized (losses) on investments
                                                      (8,412 )             (8,412 )
 
                                                       
Pre-merger Balances at December 31, 2007
                    498,075,417         49,808       26,858,079       (18,489,143 )     383,698       (4,951 )     8,797,491  
Net income
                                              1,036,525                       1,036,525  
Exercise of stock options and other
                    82,645         30       4,963                       (2,024 )     2,969  
Amortization and adjustment of deferred compensation
                                      57,855                               57,855  
Currency translation adjustment
                                                      28,866               28,866  
Unrealized (losses) on investments
                                                      (52,460 )             (52,460 )
Realized (losses) on investments
                                                      (25,997 )             (25,997 )
 
                                                       
Pre-merger Balances at July 30, 2008
                    498,158,062         49,838       26,920,897       (17,452,618 )     334,107       (6,975 )     9,845,249  
 
                                                           
Elimination of pre-merger equity
                    (498,158,062 )       (49,838 )     (26,920,897 )     17,452,618       (334,107 )     6,975       (9,845,249 )
 
  Class C   Class B   Class A                                                  
 
  Shares   Shares   Shares                                                  
Post-merger Balances at July 31, 2008
    58,967,502       555,556       21,718,569         81       2,089,266                         2,089,347  
Net (loss)
                                              (5,041,998 )                     (5,041,998 )
Issuance of restricted stock awards and other
                    1,887,354         1                               (1 )      
Amortization and adjustment of deferred compensation
                                      11,729                               11,729  
Currency translation adjustment
                                                      (364,164 )             (364,164 )
Unrealized (losses) on cash flow
                                                      (75,079 )             (75,079 )
derivatives Unrealized (losses) on investments
                                                      (95,669 )             (95,669 )
Reclassification adjustment for
                                                      95,687               95,687  
realized loss included in net income
                                                                         
 
                                                       
Post-merger Balances at December 31, 2008
    58,967,502       555,556       23,605,923       $ 82     $ 2,100,995     $ (5,041,998 )   $ (439,225 )   $ (1 )   $ (3,380,147 )
 
                                                       
See Notes to Consolidated Financial Statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   
    Period from                
    July 31       Period from        
    through       January 1        
    December 31,       through July 30,     Year Ended December 31,  
    2008       2008     2007     2006  
(In thousands)   Post-merger       Pre-merger     Pre-merger     Pre-merger  
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
                                 
Net income (loss)
  $ (5,041,998 )     $ 1,036,525     $ 938,507     $ 691,517  
Less: Income (loss) from discontinued operations, net
    (1,845 )       640,236       145,833       52,678  
 
                         
Net income (loss) from continuing operations
    (5,040,153 )       396,289       792,674       638,839  
 
                                 
Reconciling Items:
                                 
Depreciation
    197,702         290,454       461,598       449,624  
Amortization of intangibles
    150,339         58,335       105,029       150,670  
Impairment charge
    5,268,858                      
Deferred taxes
    (619,894 )       145,303       188,238       191,780  
Provision for doubtful accounts
    54,603         23,216       38,615       34,627  
Amortization of deferred financing charges, bond premiums and accretion of note discounts, net
    102,859         3,530       7,739       3,462  
Share-based compensation
    15,911         62,723       44,051       42,030  
(Gain) on sale of operating and fixed assets
    (13,205 )       (14,827 )     (14,113 )     (71,571 )
Loss on forward exchange contract
            2,496       3,953       18,161  
(Gain) loss on securities
    116,552         (36,758 )     (10,696 )     (20,467 )
Equity in earnings of nonconsolidated affiliates
    (5,804 )       (94,215 )     (35,176 )     (37,845 )
Minority interest, net of tax
    (481 )       17,152       47,031       31,927  
Gain (loss) on extinguishment of debt
    (116,677 )       13,484              
Increase (decrease) other, net
    12,089         9,133       (91 )     9,027  
 
                                 
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
                                 
Decrease (increase) in accounts receivable
    158,142         24,529       (111,152 )     (190,191 )
Decrease (increase) in prepaid expenses
    6,538         (21,459 )     5,098       (23,797 )
Decrease (increase) in other current assets
    156,869         (29,329 )     694       (2,238 )
Increase (decrease) in accounts payable, accrued expenses and other liabilities
    (130,172 )       190,834       27,027       86,887  
Federal income tax refund
                        390,438  
Increase (decrease) in accrued interest
    98,909         (16,572 )     (13,429 )     14,567  
Increase (decrease) in deferred income
    (54,938 )       51,200       26,013       6,486  
Increase (decrease) in accrued income taxes
    (112,021 )       (40,260 )     13,325       25,641  
 
                         
 
                                 
Net cash provided by operating activities
    246,026         1,035,258       1,576,428       1,748,057  
See Notes to Consolidated Financial Statements

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    Period from                
    July 31       Period from        
    through       January 1        
    December 31,       through July 30,     Years Ended December 31,  
    2008       2008     2007     2006  
    Post-merger       Pre-merger     Pre-merger     Pre-merger  
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
                                 
Decrease (increase) in notes receivable, net
    741         336       (6,069 )     1,163  
Decrease in investments in, and advances to nonconsolidated affiliates — net
    3,909         25,098       20,868       20,445  
Cross currency settlement of interest
            (198,615 )     (1,214 )     1,607  
Purchase of other investments
    (26 )       (98 )     (726 )     (520 )
Proceeds from sale of other investments
            173,467       2,409        
Purchases of property, plant and equipment
    (190,253 )       (240,202 )     (363,309 )     (336,739 )
Proceeds from disposal of assets
    16,955         72,806       26,177       99,682  
Acquisition of operating assets
    (23,228 )       (153,836 )     (122,110 )     (341,206 )
(Increase) in other — net
    (47,342 )       (95,207 )     (38,703 )     (51,443 )
Cash used to purchase equity
    (17,472,459 )                    
 
                         
Net cash used in investing activities
    (17,711,703 )       (416,251 )     (482,677 )     (607,011 )
 
                                 
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
                                 
Draws on credit facilities
    180,000         692,614       886,910       3,383,667  
Payments on credit facilities
    (128,551 )       (872,901 )     (1,705,014 )     (2,700,004 )
Proceeds from long-term debt
    557,520         5,476       22,483       783,997  
Payments on long-term debt
    (579,089 )       (1,282,348 )     (343,041 )     (866,352 )
Debt used to finance the merger
    15,382,076                      
Equity contribution used to finance the merger
    2,142,830                      
Payment to terminate forward exchange contract
            (110,410 )           (83,132 )
Proceeds from exercise of stock options, stock purchase plan and common stock warrants
            17,776       80,017       57,452  
Dividends paid
            (93,367 )     (372,369 )     (382,776 )
Payments for purchase of common shares
    (47 )       (3,781 )           (1,371,462 )
 
                         
Net cash provided by (used in) financing activities
    17,554,739         (1,646,941 )     (1,431,014 )     (1,178,610 )
 
                                 
CASH FLOWS PROVIDED BY (USED IN) DISCONTINUED OPERATIONS:
                                 
Net cash provided by (used in) operating activities
    2,429         (67,751 )     33,832       99,265  
Net cash provided by (used in) investing activities
            1,098,892       332,579       (30,038 )
Net cash provided by financing activities
                         
 
                         
Net cash provided by discontinued operations
    2,429         1,031,141       366,411       69,227  
Net increase in cash and cash equivalents
    91,491         3,207       29,148       31,663  
Cash and cash equivalents at beginning of period
    148,355         145,148       116,000       84,337  
 
                         
Cash and cash equivalents at end of period
  $ 239,846       $ 148,355     $ 145,148     $ 116,000  
 
                         
 
                                 
SUPPLEMENTAL DISCLOSURE:
                                 
Cash paid during the year for:
                                 
Interest
  $ 527,083       $ 231,163     $ 462,181     $ 461,398  
Income taxes
    37,029         138,187       299,415        
See Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A — SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
CC Media Holdings, Inc. (the “Company”) was formed in May 2007 by private equity funds sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. (the “Sponsors”) for the purpose of acquiring the business of Clear Channel Communications, Inc., a Texas company (“Clear Channel”). The acquisition was completed on July 30, 2008 pursuant to the Agreement and Plan of Merger, dated November 16, 2006, as amended on April 18, 2007, May 17, 2007 and May 13, 2008 (the “Merger Agreement”).
As a result of the merger, each issued and outstanding share of Clear Channel, other than shares held by certain principals of the Company that were rolled over and exchanged for Class A common stock of the Company, were either exchanged for (i) $36.00 in cash consideration, without interest, or (ii) one share of Class A common stock of the Company.
The purchase price was approximately $23 billion including $94 million in capitalized transaction costs. The merger was funded primarily through a $3 billion equity contribution, including the rollover of Clear Channel shares, and $20.8 billion in debt financing, including the assumption of $5.1 billion aggregate principal amount of Clear Channel debt.
The transaction was accounted for as a purchase in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations (“Statement 141”), and Emerging Issues Task Force Issue 88-16, Basis in Leveraged Buyout Transactions (“EITF 88-16”). The Company preliminarily allocated a portion of the consideration paid to the assets and liabilities acquired at their respective initially estimated fair values with the remaining portion recorded at the continuing shareholders basis. Excess consideration after this preliminary allocation was recorded as goodwill.
The Company has initially estimated the fair value of the acquired assets and liabilities as of the merger date utilizing information available at the time the Company’s financial statements were prepared. These estimates are subject to refinement until all pertinent information is obtained. The Company is currently in the process of obtaining third-party valuations of certain of the acquired assets and liabilities and will finalize its purchase price allocation in 2009. The final allocation of the purchase price may be different than the initial allocation.
The merger is more fully discussed in Note B.
Liquidity and Asset Impairments
The Company’s primary source of liquidity is cash flow from operations, which has been adversely affected by the global economic slowdown. The risks associated with the Company’s businesses become more acute in periods of a slowing economy or recession, which may be accompanied by a decrease in advertising. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. The current global economic slowdown has resulted in a decline in advertising and marketing services among the Company’s customers, resulting in a decline in advertising revenues across its businesses. This reduction in advertising revenues has had an adverse effect on the Company’s revenue, profit margins, cash flow and liquidity, particularly during the second half of 2008. The continuation of the global economic slowdown may continue to adversely impact the Company’s revenue, profit margins, cash flow and liquidity.
In January 2009, in response to the deterioration in general economic conditions and the resulting negative impact on the Company’s business, it commenced a restructuring program targeting a reduction of fixed costs by approximately $350 million on an annualized basis. As part of the program, the Company eliminated approximately 1,850 full-time positions representing approximately 9% of total workforce. The program is expected to result in restructuring and other non-recurring charges of approximately $200 million, although additional costs may be incurred as the program evolves. The cost savings initiatives are expected to be fully implemented by the end of the

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first quarter of 2010. No assurance can be given that the restructuring program will be successful or will achieve the anticipated cost savings in the timeframe expected or at all.
Based on the Company’s current and anticipated levels of operations and conditions in its markets, it believes that cash flow from operations as well as cash on hand (including amounts drawn or available under the senior secured credit facilities) will enable the Company to meet its working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.
Continuing adverse securities and credit market conditions could significantly affect the availability of equity or credit financing. While there is no assurance in the current economic environment, the Company believes the lenders participating in its credit agreements will be willing and able to provide financing in accordance with the terms of their agreements. In this regard, on February 6, 2009 the Company borrowed the approximately $1.6 billon of remaining availability under its $2.0 billion revolving credit facility to improve its liquidity position in light of continuing uncertainty in credit market and economic conditions. The Company expects to refinance its $500.0 million 4.25% notes due May 15, 2009 with a draw under the $500.0 million delayed draw term loan facility that is specifically designated for this purpose. The remaining $69.5 million of indebtedness maturing in 2009 will either be refinanced or repaid with cash flow from operations or on hand.
The Company expects to be in compliance with the covenants under its senior secured credit facilities in 2009. However, the Company’s anticipated results are subject to significant uncertainty and there can be no assurance that actual results will be in compliance with the covenants. In addition, the Company’s ability to comply with the covenants in its financing agreements may be affected by events beyond its control, including prevailing economic, financial and industry conditions. The breach of any covenants set forth in the financing agreements would result in a default thereunder. An event of default would permit the lenders under a defaulted financing agreement to declare all indebtedness thereunder to be due and payable prior to maturity. Moreover, the lenders under the revolving credit facility under the senior secured credit facilities would have the option to terminate their commitments to make further extensions of revolving credit thereunder. If the Company is unable to repay its obligations under any senior secured credit facilities or the receivables based credit facility, the lenders under such senior secured credit facilities or receivables based credit facility could proceed against any assets that were pledged to secure such senior secured credit facilities or receivables based credit facility. In addition, a default or acceleration under any of the Company’s financing agreements could cause a default under other of its obligations that are subject to cross-default and cross-acceleration provisions.
The Company performed an interim impairment test on its indefinite-lived intangible assets as of December 31, 2008 as a result of the current global economic slowdown and its negative impact on the Company’s business. The estimated fair value of the Company’s FCC licenses and permits was below their carrying values, which resulted in a non-cash impairment charge of $1.7 billion. As discussed, the United States and global economies are undergoing a period of economic uncertainty, which has caused, among other things, a general tightening in the credit markets, limited access to the credit market, lower levels of liquidity and lower consumer and business spending. These disruptions in the credit and financial markets and the continuing impact of adverse economic, financial and industry conditions on the demand for advertising negatively impacted the key assumptions in the discounted cash flow models used to value FCC licenses and permits.
The Company also performed an interim goodwill impairment test as of December 31, 2008. The estimated fair value of the reporting units was below their carrying values, which required the Company to compare the implied fair value of each reporting units’ goodwill with its carrying value. As a result, the Company recognized a non-cash impairment charge of $3.6 billion to reduce goodwill. The macroeconomic factors discussed above had an adverse effect on the estimated cash flows and discount rates used in the discounted cash flow model.
Format of Presentation
The accompanying consolidated balance sheets, statements of operations, statements of cash flows and shareholders’ equity are presented for two periods: post-merger and pre-merger. The Company applied preliminary purchase accounting pursuant to the aforementioned standards to the opening balance sheet on July 31, 2008 as the merger occurred at the close of business on July 30, 2008. The merger resulted in a new basis of accounting beginning on July 31, 2008 and the financial reporting periods are presented as follows:

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    The period from July 31 through December 31, 2008 includes the post-merger period of the Company, reflecting the merger of the Company and Clear Channel. Subsequent to the acquisition, Clear Channel became an indirect, wholly-owned subsidiary of the Company and the business of the Company became that of Clear Channel and its subsidiaries.
 
    The period from January 1 through July 30, 2008 includes the pre-merger period of Clear Channel. Prior to the consummation of its acquisition of Clear Channel, the Company had not conducted any activities, other than activities incident to its formation and in connection with the acquisition, and did not have any assets or liabilities, other than as related to the acquisition.
 
    The 2007 and 2006 periods presented are pre-merger. The consolidated financial statements for all pre-merger periods were prepared using the historical basis of accounting for Clear Channel. As a result of the merger and the associated preliminary purchase accounting, the consolidated financial statements of the post-merger periods are not comparable to periods preceding the merger.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts have been eliminated in consolidation. Investments in nonconsolidated affiliates are accounted for using the equity method of accounting.
The Company owns stations that were placed in a trust in order to bring the merger into compliance with the FCC’s media ownership rules. The Company will have to divest these stations. The trust is terminated if at any time the stations may be owned by the Company under the then current FCC media ownership rules. The trust agreement stipulates that the Company must fund any operating shortfalls of the trust activities and any excess cash flow generated by the trust is distributed to the Company. The Company is also the beneficiary of proceeds from the sale of stations held in the trust. The Company consolidates the trust in accordance with Financial Accounting Standards Board Interpretation No. 46(R), Consolidation of Variable Interest Entities (“FIN 46R”), as the trust was determined to be a variable interest entity and the Company is its primary beneficiary.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.
Allowance for Doubtful Accounts
The Company evaluates the collectibility of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, it records a specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it recognizes reserves for bad debt based on historical experience of bad debts as a percent of revenue for each business unit, adjusted for relative improvements or deteriorations in the agings and changes in current economic conditions. The Company believes its concentration of credit risk is limited due to the large number and the geographic diversification of its customers.
Land Leases and Other Structure Licenses
Most of the Company’s outdoor advertising structures are located on leased land. Americas outdoor land rents are typically paid in advance for periods ranging from one to twelve months. International outdoor land rents are paid both in advance and in arrears, for periods ranging from one to twelve months. Most international street furniture display faces are operated through contracts with the municipalities for up to 20 years. The street furniture contracts often include a percent of revenue to be paid along with a base rent payment. Prepaid land leases are recorded as an asset and expensed ratably over the related rental term and license and rent payments in arrears are recorded as an accrued liability.

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Purchase Accounting
The Company accounts for its business acquisitions under the purchase method of accounting. The total cost of acquisitions is allocated to the underlying identifiable net assets, based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. Various acquisition agreements may include contingent purchase consideration based on performance requirements of the investee. The Company accrues these payments under the guidance in Emerging Issues Task Force issue 95-8: Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination, after the contingencies have been resolved.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method at rates that, in the opinion of management, are adequate to allocate the cost of such assets over their estimated useful lives, which are as follows:
Buildings and improvements — 10 to 39 years
Structures — 5 to 40 years
Towers, transmitters and studio equipment — 7 to 20 years
Furniture and other equipment — 3 to 20 years
Leasehold improvements — shorter of economic life or lease term assuming renewal periods, if appropriate
For assets associated with a lease or contract, the assets are depreciated at the shorter of the economic life or the lease or contract term, assuming renewal periods, if appropriate. Expenditures for maintenance and repairs are charged to operations as incurred, whereas expenditures for renewal and betterments are capitalized.
The Company tests for possible impairment of property, plant, and equipment whenever events or changes in circumstances, such as a reduction in operating cash flow or a dramatic change in the manner for which the asset is intended to be used indicate that the carrying amount of the asset may not be recoverable. If indicators exist, the Company compares the estimated undiscounted future cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded in depreciation and amortization expense in the statement of operations for amounts necessary to reduce the carrying value of the asset to fair value. The impairment loss calculations require management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in future cash flows.
Intangible Assets
The Company classifies intangible assets as definite-lived, indefinite-lived or goodwill. Definite-lived intangibles include primarily transit and street furniture contracts, talent and representation contracts, customer and advertiser relationships, and site-leases, all of which are amortized over the respective lives of the agreements, or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived assets. These assets are stated at cost. The Company’s indefinite-lived intangibles include broadcast FCC licenses in its radio broadcasting segment and billboard permits in its Americas outdoor advertising segment. The excess cost over fair value of net assets acquired is classified as goodwill. The indefinite-lived intangibles and goodwill are not subject to amortization, but are tested for impairment at least annually. The Company tests for possible impairment of definite-lived intangible assets whenever events or changes in circumstances, such as a reduction in operating cash flow or a dramatic change in the manner for which the asset is intended to be used indicate that the carrying amount of the asset may not be recoverable. If indicators exist, the Company compares the undiscounted cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the undiscounted cash flow amount, an impairment charge is recorded in amortization expense in the statement of operations for amounts necessary to reduce the carrying value of the asset to fair value.
The Company performs its annual impairment test for its FCC licenses and permits using a direct valuation technique as prescribed by the Emerging Issues Task Force (“EITF”) Topic D-108, Use of the Residual Method to

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Value Acquired Assets Other Than Goodwill (“D-108”). Certain assumptions are used under the Company’s direct valuation technique, including market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up cost and losses incurred during the build-up period, the risk adjusted discount rate and terminal values. The Company utilizes Mesirow Financial Consulting LLC, a third party valuation firm, to assist the Company in the development of these assumptions and the Company’s determination of the fair value of its FCC licenses and permits.
As previously discussed, the Company performed an interim impairment test as of December 31, 2008 which resulted in a non-cash impairment charge of $1.7 billion on its indefinite-lived FCC licenses and permits.
At least annually, the Company performs its impairment test for each reporting unit’s goodwill using a discounted cash flow model to determine if the carrying value of the reporting unit, including goodwill, is less than the fair value of the reporting unit. The Company identified its reporting units under the guidance in Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“Statement 142”) and EITF D-101, Clarification of Reporting Unit Guidance in Paragraph 30 of FASB Statement No. 142. The Company’s reporting units for radio broadcasting and Americas outdoor advertising are the reportable segments. The Company determined that each country in its International outdoor segment constitutes a reporting unit.
Each of the Company’s reporting units is valued using a discounted cash flow model which requires estimating future cash flows expected to be generated from the reporting unit, discounted to their present value using a risk-adjusted discount rate. Terminal values were also estimated and discounted to their present value. Assessing the recoverability of goodwill requires the Company to make estimates and assumptions about sales, operating margins, growth rates and discount rates based on its budgets, business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors. The Company utilizes Mesirow Financial Consulting LLC, a third party valuation firm, to assist the Company in the development of these assumptions and the Company’s determination of the fair value of its reporting units.
As previously discussed, the Company performed an interim impairment test as of December 31, 2008 and recognized a non-cash impairment charge of $3.6 billion to reduce its goodwill.
Other Investments
Other investments are composed primarily of equity securities. These securities are classified as available-for-sale or trading and are carried at fair value based on quoted market prices. Securities are carried at historical value when quoted market prices are unavailable. The net unrealized gains or losses on the available-for-sale securities, net of tax, are reported as a separate component of shareholders’ equity. The net unrealized gains or losses on the trading securities are reported in the statement of operations. In addition, the Company holds investments that do not have quoted market prices. The Company periodically reviews the value of available-for-sale, trading and non-marketable securities and records impairment charges in the statement of operations for any decline in value that is determined to be other-than-temporary. The average cost method is used to compute the realized gains and losses on sales of equity securities.
The Company assessed the value of its available-for-sale securities at December 31, 2008. After this assessment, the Company concluded that an other-than-temporary impairment existed and recorded a $116.6 million impairment charge on the statement of operations in “Gain (loss) on marketable securities”.
Nonconsolidated Affiliates
In general, investments in which the Company owns 20 percent to 50 percent of the common stock or otherwise exercises significant influence over the investee are accounted for under the equity method. The Company does not recognize gains or losses upon the issuance of securities by any of its equity method investees. The Company reviews the value of equity method investments and records impairment charges in the statement of operations for any decline in value that is determined to be other-than-temporary.

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Financial Instruments
Due to their short maturity, the carrying amounts of accounts and notes receivable, accounts payable, accrued liabilities, and short-term borrowings approximated their fair values at December 31, 2008 and 2007.
Income Taxes
The Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. Deferred tax assets are reduced by valuation allowances if the Company believes it is more likely than not that some portion or all of the asset will not be realized. As all earnings from the Company’s foreign operations are permanently reinvested and not distributed, the Company’s income tax provision does not include additional U.S. taxes on foreign operations. It is not practical to determine the amount of federal income taxes, if any, that might become due in the event that the earnings were distributed.
Revenue Recognition
Radio broadcasting revenue is recognized as advertisements or programs are broadcast and is generally billed monthly. Outdoor advertising contracts typically cover periods of up to three years and are generally billed monthly. Revenue for outdoor advertising space rental is recognized ratably over the term of the contract. Advertising revenue is reported net of agency commissions. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for the Company’s broadcasting and outdoor operations. Payments received in advance of being earned are recorded as deferred income.
Barter transactions represent the exchange of airtime or display space for merchandise or services. These transactions are generally recorded at the fair market value of the airtime or display space or the fair value of the merchandise or services received. Revenue is recognized on barter and trade transactions when the advertisements are broadcasted or displayed. Expenses are recorded ratably over a period that estimates when the merchandise or service received is utilized or the event occurs. Barter and trade revenues and expenses from continuing operations are included in consolidated revenue and selling, general and administrative expenses, respectively. Barter and trade revenues and expenses from continuing operations were:
                                   
    Post-merger period     Pre-merger period    
    ended December 31,     ended July 30,   Years ended December 31,
    2008     2008   2007   2006
(In millions)   Post-merger     Pre-merger   Pre-merger   Pre-merger
 
                                 
Barter and trade revenues
  $ 33.7       $ 40.2     $ 70.7     $ 77.8  
Barter and trade expenses
    35.0         38.9       70.4       75.6  
Share-Based Payments
The Company adopted Financial Accounting Standard No. 123 (R), Share-Based Payment (“Statement 123(R)”), on January 1, 2006 using the modified-prospective-transition method. Under the fair value recognition provisions of this statement, stock based compensation cost is measured at the grant date based on the fair value of the award. For awards that vest based on service conditions, this cost is recognized as expense on a straight-line basis over the vesting period. For awards that will vest based on market, performance and service conditions, this cost will be recognized when it becomes probable that the performance conditions will be satisfied. Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility and forfeiture rates, among other factors. If actual results differ significantly from these estimates, the Company’s results of operations could be materially impacted.
Derivative Instruments and Hedging Activities
Financial Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging Activities, (“Statement 133”), requires the Company to recognize all of its derivative instruments as either assets or liabilities in the

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consolidated balance sheet at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship. For derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking various hedge transactions. The Company formally assesses, both at inception and at least quarterly thereafter, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in either the fair value or cash flows of the hedged item. If a derivative ceases to be a highly effective hedge, the Company discontinues hedge accounting. The Company accounts for its derivative instruments that are not designated as hedges at fair value, with changes in fair value recorded in earnings. The Company does not enter into derivative instruments for speculation or trading purposes.
Foreign Currency
Results of operations for foreign subsidiaries and foreign equity investees are translated into U.S. dollars using the average exchange rates during the year. The assets and liabilities of those subsidiaries and investees, other than those of operations in highly inflationary countries, are translated into U.S. dollars using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a separate component of shareholders’ equity, “Accumulated other comprehensive income”. Foreign currency transaction gains and losses, as well as gains and losses from translation of financial statements of subsidiaries and investees in highly inflationary countries, are included in operations.
Advertising Expense
The Company records advertising expense as it is incurred. Advertising expenses from continuing operations was:
                                   
    Post-merger period     Pre-merger period    
    ended December 31,     ended July 30,   Years ended December 31,
    2008     2008   2007   2006
(In millions)   Post-merger     Pre-merger   Pre-merger   Pre-merger
 
                                 
Advertising expenses
  $ 51.8       $ 56.1     $ 138.5     $ 130.4  
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes including, but not limited to, legal, tax and insurance accruals. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.
Certain Reclassifications
The historical financial statements and footnote disclosures have been revised to reflect the reclassification of amounts related to the Company’s television business and certain radio stations from continuing operations to discontinued operations.
New Accounting Pronouncements
Statement of Financial Accounting Standards No. 141(R), Business Combinations (“Statement 141(R)”), was issued in December 2007. Statement 141(R) requires that upon initially obtaining control, an acquirer will recognize 100% of the fair values of acquired assets, including goodwill, and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100% of its target. Additionally, contingent consideration arrangements will be fair valued at the acquisition date and included on that basis in the purchase price consideration and transaction costs will be expensed as incurred. Statement 141(R) also modifies the recognition for preacquisition contingencies, such as environmental or legal issues, restructuring plans and acquired research and development value in purchase accounting. Statement 141(R) amends Statement of Financial Accounting Standards No. 109, Accounting for

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Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. Statement 141(R) is effective for fiscal years beginning after December 15, 2008. Adoption is prospective and early adoption is not permitted. The Company will adopt Statement 141 (R) on January 1, 2009. Statement 141R’s impact on accounting for business combinations is dependent upon the nature of future acquisitions.
Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“Statement 160”), was issued in December 2007. Statement 160 clarifies the classification of noncontrolling interests in consolidated statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such noncontrolling interests. Under Statement 160 noncontrolling interests are considered equity and should be reported as an element of consolidated equity, net income will encompass the total income of all consolidated subsidiaries and there will be separate disclosure on the face of the income statement of the attribution of that income between the controlling and noncontrolling interests, and increases and decreases in the noncontrolling ownership interest amount will be accounted for as equity transactions. Statement 160 is effective for the first annual reporting period beginning on or after December 15, 2008, and earlier application is prohibited. Statement 160 is required to be adopted prospectively, except for reclassifying noncontrolling interests to equity, separate from the parent’s shareholders’ equity, in the consolidated statement of financial position and recasting consolidated net income (loss) to include net income (loss) attributable to both the controlling and noncontrolling interests, both of which are required to be adopted retrospectively. The Company will adopt Statement 160 on January 1, 2009 which will result in a reclassification of approximately $463.9 million of noncontrolling interests to shareholders’ equity.
On March 19, 2008, the Financial Accounting Standards Board issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (“Statement 161”). Statement 161 requires additional disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items effect an entity’s financial position, results of operations and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company will adopt the disclosure requirements beginning January 1, 2009.
In April 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under FASB Statement No. 142, Goodwill and Other Intangible Assets (“Statement 142”). FSP FAS 142-3 removes an entity’s requirement under paragraph 11 of Statement 142 to consider whether an intangible asset can be renewed without substantial cost or material modifications to the existing terms and conditions. It is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008, and early adoption is prohibited. The Company will adopt FSP FAS 142-3 on January 1, 2009. FSP FAS 142-3’s impact is dependent upon future acquisitions.
The Company adopted Financial Accounting Standards Board Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“Statement 159”), which permits entities to measure many financial instruments and certain other items at fair value at specified election dates that are not currently required to be measured at fair value. Unrealized gains and losses on items for which the fair value option has been elected should be reported in earnings at each subsequent reporting date. The provisions of Statement 159 were effective as of January 1, 2008. The Company did not elect the fair value option under this standard upon adoption.
In June 2008, the FASB issued FASB Staff Position Emerging Issues Task Force 03-6-1 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarifies that unvested share-based payment awards with a right to receive nonforfeitable dividends are participating securities. Guidance is also provided on how to allocate earnings to participating securities and compute basic earnings per share using the two-class method. This FSP is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008, and early adoption is prohibited. The Company will adopt FSP EITF 03-6-1 on January 1, 2009. The Company is evaluating the impact FSP EITF 03-6-1 will have on its earnings per share.

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NOTE B — BUSINESS ACQUISITIONS
2008 Acquisitions
The Company completed its acquisition of Clear Channel on July 30, 2008. The transaction was accounted for as a purchase in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations (“Statement 141”), and Emerging Issues Task Force Issue 88-16, Basis in Leveraged Buyout Transactions (“EITF 88-16”). The Company preliminarily allocated a portion of the consideration paid to the assets and liabilities acquired at their respective initially estimated fair values with the remaining portion recorded at the continuing shareholders basis. Excess consideration after this preliminary allocation was recorded as goodwill.
The Company has initially estimated the fair value of the acquired assets and liabilities as of the merger date utilizing information available at the time the Company’s financial statements were prepared. These estimates are subject to refinement until all pertinent information is obtained. The Company is currently in the process of obtaining third-party valuations of certain of the acquired assets and liabilities and will finalize its purchase price allocation in 2009. The final allocation of the purchase price may be different than the initial allocation.
The opening balance sheet presented as of July 31, 2008 reflected the preliminary allocation of purchase price, based on available information and certain assumptions management believed reasonable. Following is a summary of the preliminary purchase price allocations, adjusted for additional information management has obtained:
                         
    Preliminary             Adjusted  
(In thousands)   July 31, 2008     Adjustments     July 31, 2008  
Consideration paid
  $ 18,082,938             $ 18,082,938  
Debt assumed
    5,136,929               5,136,929  
Historical carryover basis
    (825,647 )             (825,647 )
 
                   
 
  $ 22,394,220             $ 22,394,220  
 
                   
 
                       
Total current assets
    2,311,777       5,041       2,316,818  
PP&E — net
    3,745,422       125,357       3,870,779  
Intangible assets — net
    20,634,499       (764,472 )     19,870,027  
Long-term assets
    1,079,704       44,787       1,124,491  
Current liabilities
    (1,219,033 )     (13,204 )     (1,232,237 )
Long-term liabilities
    (4,158,149 )     602,491       (3,555,658 )
 
                 
 
  $ 22,394,220     $     $ 22,394,220  
 
                 
The adjustments to PP&E — net primarily relate to fair value appraisals received for land and buildings. The adjustments to intangible assets — net primarily relate to an aggregate $3.6 billion adjustment to lower the estimated fair value of the Company’s FCC licenses and permits based on appraised values, partially offset by a $1.5 billion fair value adjustment to recognize advertiser relationships and trade names in the Company’s radio segment based on appraised values, a $240.6 million fair value adjustment to advertising contracts in the Company’s Americas and International outdoor segments based on appraised values and an increase of $1.0 billion to goodwill. The adjustment to long-term liabilities primarily relates to the deferred tax effects of the fair value adjustments.
The adjustments related to the Company’s FCC licenses, permits and goodwill were recorded prior to the Company’s interim impairment test.
The following unaudited supplemental pro forma information reflects the consolidated results of operations of the Company as if the merger had occurred on January 1, 2007. The historical financial information was adjusted to give effect to items that are (i) directly attributed to the merger, (ii) factually supportable, and (iii) expected to have a continuing impact on the consolidated results. Such items include depreciation and amortization expense associated with preliminary valuations of property, plant and equipment and definite-lived intangible assets, corporate expenses associated with new equity based awards granted to certain members of management, expenses associated with the accelerated vesting of employee share based awards upon closing of the merger, interest expense related to debt issued in conjunction with the merger and the fair value adjustment to Clear Channel’s existing debt

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and the related tax effects of these items. This unaudited pro forma information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the merger had actually occurred on that date, nor of the results that may be obtained in the future.
                         
    Pre-merger   Pre-merger   Pre-merger
    Period from January 1   Year ended   Year ended
    through July 30,   December 31,   December 31,
(In thousands)   2008   2007   2006
Revenue
  $ 3,951,742     $ 6,921,202     $ 6,567,790  
Income (loss) before discontinued operations
  $ (18,466 )   $ 4,179     $ (127,620 )
Net income (loss)
  $ 621,790     $ 150,012     $ (74,942 )
Earnings (loss) per share — basic
  $ 7.65     $ 1.85     $ (.92 )
Earnings (loss) per share — diluted
  $ 7.65     $ 1.85     $ (.92 )
The Company also acquired assets in its operating segments in addition to the merger described above. The Company acquired FCC licenses in its radio segment for $11.7 million in cash during 2008. The Company acquired outdoor display faces and additional equity interests in international outdoor companies for $96.5 million in cash during 2008. The Company’s national representation business acquired representation contracts for $68.9 million in cash during 2008.
2007 Acquisitions
Clear Channel acquired domestic outdoor display faces and additional equity interests in international outdoor companies for $69.1 million in cash during 2007. Clear Channel’s national representation business acquired representation contracts for $53.0 million in cash during 2007.
2006 Acquisitions
Clear Channel acquired radio stations for $16.4 million and a music scheduling company for $44.3 million in cash plus $10.0 million of deferred purchase consideration during 2006. Clear Channel also acquired Interspace Airport Advertising, Americas and international outdoor display faces and additional equity interests in international outdoor companies for $242.4 million in cash. Clear Channel exchanged assets in one of its Americas outdoor markets for assets located in a different market and recognized a gain of $13.2 million in “Other operating income — net”. In addition, Clear Channel’s national representation firm acquired representation contracts for $38.1 million in cash.

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Acquisition Summary
The following is a summary of the assets and liabilities acquired and the consideration given for acquisitions made during 2007 and 2006:
                 
(In thousands)   2007     2006  
Property, plant and equipment
  $ 28,002     $ 49,641  
Accounts receivable
          18,636  
Definite lived intangibles
    55,017       177,554  
Indefinite-lived intangible assets
    15,023       32,862  
Goodwill
    41,696       253,411  
Other assets
    3,453       6,006  
 
           
 
    143,191       538,110  
Other liabilities
    (13,081 )     (64,303 )
Minority interests
          (15,293 )
Deferred tax
          (21,361 )
Subsidiary common stock issued, net of minority interests
          (67,873 )
 
           
 
    (13,081 )     (168,830 )
 
           
Less: fair value of net assets exchanged in swap
    (8,000 )     (28,074 )
 
           
Cash paid for acquisitions
  $ 122,110     $ 341,206  
 
           
The Company has entered into certain agreements relating to acquisitions that provide for purchase price adjustments and other future contingent payments based on the financial performance of the acquired company. The Company will continue to accrue additional amounts related to such contingent payments if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if performance targets were met, would not significantly impact the Company’s financial position or results of operations.
NOTE C — DISCONTINUED OPERATIONS
Sale of non-core radio stations
The Company determined that each radio station market in Clear Channel’s previously announced non-core radio station sales represents a disposal group consistent with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-lived Assets (“Statement 144”). Consistent with the provisions of Statement 144, the Company classified these assets that are subject to transfer under the definitive asset purchase agreements as discontinued operations for all periods presented. Accordingly, depreciation and amortization associated with these assets was discontinued. Additionally, the Company determined that these assets comprise operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company.
Sale of the television business
On March 14, 2008, Clear Channel completed the sale of its television business to Newport Television, LLC for $1.0 billion, adjusted for certain items including proration of expenses and adjustments for working capital. As a result, Clear Channel recorded a gain of $662.9 million as a component of “Income from discontinued operations, net” in its consolidated statement of operations during the first quarter of 2008. Additionally, net income and cash flows from the television business were classified as discontinued operations in the consolidated statements of operations and the consolidated statements of cash flows, respectively, in 2008 through the date of sale and for the years ended December 31, 2007 and 2006. The net assets related to the television business were classified as discontinued operations as of December 31, 2007.
Summarized Financial Information of Discontinued Operations
Summarized operating results for the years ended December 31, 2008, 2007 and 2006 from these businesses are as follows:

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    Five months ended     Seven months ended    
    December 31,     July 30,   Years ended December 31,
    2008     2008   2007   2006
(In thousands)   Post-merger     Pre-merger   Pre-merger   Post-merger
Revenue
  $ 1,364       $ 74,783     $ 442,263     $ 531,621  
Income (loss) before income taxes
    (3,160 )     $ 702,698     $ 209,882     $ 84,969  
Included in income from discontinued operations, net is an income tax benefit of $1.3 million for the period July 31 through December 31, 2008. Included for the period from January 1 through July 30, 2008 is income tax expense of $62.4 million and a gain of $695.8 million related to the sale of Clear Channel’s television business and certain radio stations. The Company estimates utilization of approximately $585.3 million of capital loss carryforwards to offset a portion of the taxes associated with these gains. The Company had approximately $699.6 million, before valuation allowance, in capital loss carryforwards remaining as of December 31, 2008.
Included in income from discontinued operations, net are income tax expenses of $64.0 million and $32.3 million for the years ended December 31, 2007 and 2006, respectively. Also included in income from discontinued operations for the years ended December 31, 2007 and 2006 are gains on the sale of certain radio stations of $144.6 million and $0.3 million, respectively.
The following table summarizes the carrying amount at December 31, 2007 of the major classes of assets and liabilities of the businesses classified as discontinued operations.
         
    Pre-merger  
(In thousands)   December 31,  
Assets   2007  
 
       
Accounts receivable, net
  $ 76,426  
Other current assets
    19,641  
 
     
Total current assets
  $ 96,067  
 
     
 
       
Land, buildings and improvements
  $ 73,138  
Transmitter and studio equipment
    207,230  
Other property, plant and equipment
    22,781  
Less accumulated depreciation
    138,425  
 
     
Property, plant and equipment, net
  $ 164,724  
 
     
 
       
Definite-lived intangibles, net
  $ 283  
Licenses
    107,910  
Goodwill
    111,529  
 
     
Total intangible assets
  $ 219,722  
 
     
 
       
Film rights
  $ 18,042  
Other long-term assets
    8,338  
 
     
Total other assets
  $ 26,380  
 
     
         
    Pre-merger  
    December 31,  
Liabilities   2007  
Accounts payable and accrued expenses
  $ 10,565  
Film liability
    18,027  
Other current liabilities
    8,821  
 
     
Total current liabilities
  $ 37,413  
 
     
 
       
Film liability
  $ 19,902  
Other long-term liabilities
    34,428  
 
     
Total long-term liabilities
  $ 54,330  
 
     
NOTE D — INTANGIBLE ASSETS AND GOODWILL
Definite-lived intangible assets
The Company has transit and street furniture contracts, site-leases and other contractual rights in its Americas and International outdoor segments (with an estimated 6 year weighted average useful life at the date of the Company’s acquisition of Clear Channel), talent and program right contracts in its radio segment (with an estimated 8 year weighted average useful life at the date of the Company’s acquisition of Clear Channel), advertiser and customer

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relationships in its radio segment (with an estimated 10 year weighted average useful life at the date of the Company’s acquisition of Clear Channel) and contracts for non-affiliated radio and television stations in the Company’s media representation operations (with an estimated 6 year weighted average useful life at the date of the Company’s acquisition of Clear Channel). These definite-lived intangible assets are amortized over the shorter of either the respective lives of the agreements or over the period of time the assets are expected to contribute directly or indirectly to the Company’s future cash flows.
The following table presents the gross carrying amount and accumulated amortization for each major class of definite-lived intangible assets at December 31, 2008 and 2007:
                                 
    Post-merger     Pre-merger  
    December 31, 2008     December 31, 2007  
    Gross Carrying     Accumulated     Gross Carrying     Accumulated  
(In thousands)   Amount     Amortization     Amount     Amortization  
Transit, street furniture, and other outdoor contractual rights
  $ 883,130     $ 49,818     $ 867,283     $ 613,897  
Customer / advertiser relationships
    1,210,205       49,970              
Talent contracts
    161,644       7,479              
Representation contracts
    216,955       21,537       400,316       212,403  
Other
    548,180       9,590       84,004       39,433  
 
                       
Total
  $ 3,020,114     $ 138,394     $ 1,351,603     $ 865,733  
 
                       
Total amortization expense from continuing operations related to definite-lived intangible assets was:
                                   
    Five months ended     Seven months ended    
    December 31,     July 30,   Years ended December 31,
    2008     2008   2007   2006
(In millions)   Post-merger     Pre-merger   Pre-merger   Pre-merger
 
                                 
Amortization expense
  $ 150.3       $ 58.3     $ 105.0     $ 150.7  
     As acquisitions and dispositions occur in the future and as purchase price allocations are finalized, amortization expense may vary. The following table presents the Company’s estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets:
         
(In thousands)        
2009
  $ 339,443  
2010
    316,413  
2011
    301,721  
2012
    287,174  
2013
    267,096  
Indefinite-lived Intangibles
The Company’s indefinite-lived intangible assets consist of Federal Communications Commission (“FCC”) broadcast licenses and billboard permits. FCC broadcast licenses are granted to both radio and television stations for up to eight years under the Telecommunications Act of 1996. The Act requires the FCC to renew a broadcast license if: it finds that the station has served the public interest, convenience and necessity; there have been no serious violations of either the Communications Act of 1934 or the FCC’s rules and regulations by the licensee; and there have been no other serious violations which taken together constitute a pattern of abuse. The licenses may be renewed indefinitely at little or no cost. The Company does not believe that the technology of wireless broadcasting will be replaced in the foreseeable future. The Company’s billboard permits are issued in perpetuity by state and local governments and are transferable or renewable at little or no cost. Permits typically include the location which allows the Company the right to operate an advertising structure. The Company’s permits are located on either owned or leased land. In cases where the Company’s permits are located on leased land, the leases are typically from 10 to 20 years and renew indefinitely, with rental payments generally escalating at an inflation based index. If

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the Company loses its lease, the Company will typically obtain permission to relocate the permit or bank it with the municipality for future use.
The Company does not amortize its FCC broadcast licenses or billboard permits. The Company tests these indefinite-lived intangible assets for impairment at least annually using a direct valuation method. This direct valuation method assumes that rather than acquiring indefinite-lived intangible assets as a part of a going concern business, the buyer hypothetically obtains indefinite-lived intangible assets and builds a new operation with similar attributes from scratch. Thus, the buyer incurs start-up costs during the build-up phase which are normally associated with going concern value. Initial capital costs are deducted from the discounted cash flows model which results in value that is directly attributable to the indefinite-lived intangible assets.
Under the direct valuation method, the Company aggregates its indefinite-lived intangible assets at the market level for purposes of impairment testing. The Company’s key assumptions using the direct valuation method are market revenue growth rates, market share, profit margin, duration and profile of the build-up period, estimated start-up capital costs and losses incurred during the build-up period, the risk-adjusted discount rate and terminal values. This data is populated using industry normalized information.
The Company performed an impairment test as of December 31, 2008. As a result, the Company recognized a non-cash impairment charge of $1.7 billion on its indefinite-lived FCC licenses and permits. The United States and global economies are undergoing a period of economic uncertainty, which has caused, among other things, a general tightening in the credit markets, limited access to the credit markets, lower levels of liquidity and lower consumer and business spending. These disruptions in the credit and financial markets and the continuing impact of adverse economic, financial and industry conditions on the demand for advertising negatively impacted the key assumptions in the discounted cash flow models used to value our FCC licenses and permits.
Goodwill
The Company tests goodwill for impairment using a two-step process. The first step, used to screen for potential impairment, compares the fair value of the reporting unit with its carrying amount, including goodwill. The second step, used to measure the amount of the impairment loss, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The Company’s reporting units for radio broadcasting and Americas outdoor advertising are the reportable segments. The Company determined that each country in its International outdoor segment constitutes a reporting unit. Goodwill of approximately $10.8 billion resulted from the merger, $896.5 million of which is expected to be deductible for tax purposes.
                                         
            Americas     International              
(In thousands)   Radio     Outdoor     Outdoor     Other     Total  
Pre-merger
                                       
Balance as of December 31, 2006
    6,140,613       667,986       425,630       6       7,234,235  
Acquisitions
    5,608       20,361       13,733       1,994       41,696  
Dispositions
    (3,974 )                       (3,974 )
Foreign currency
          78       35,430             35,508  
Adjustments
    (96,720 )     (89 )     (540 )           (97,349 )
 
                             
Balance as of December 31, 2007
  $ 6,045,527     $ 688,336     $ 474,253     $ 2,000     $ 7,210,116  
 
                                       
Acquisitions
    7,051             12,341             19,392  
Dispositions
    (20,931 )                       (20,931 )
Foreign currency
          (293 )     28,596             28,303  
Adjustments
    (423 )     (970 )                 (1,393 )
 
                             
Balance as of July 30, 2008
  $ 6,031,224     $ 687,073     $ 515,190     $ 2,000     $ 7,235,487  

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In 2007, the Company recorded a $97.3 million adjustment to its balance of goodwill related to tax positions established as part of various radio station acquisitions for which the IRS audit periods have now closed.
                                         
            Americas     International              
(In thousands)   Radio     Outdoor     Outdoor     Other     Total  
Post-merger
                                       
Balances at July 31, 2008
  $     $     $     $     $  
Preliminary purchase price allocation
    6,335,220       2,805,780       603,712       60,115       9,804,827  
Purchase price adjustments — net
    356,040       438,025       (76,116 )     271,175       989,124  
Impairment
    (1,115,033 )     (2,321,602 )     (173,435 )           (3,610,070 )
Acquisitions
    3,486                         3,486  
Foreign exchange
          (29,605 )     (63,519 )           (93,124 )
Other
    (523 )           (3,099 )           (3,622 )
 
                             
Balance as of December 31, 2008
  $ 5,579,190     $ 892,598     $ 287,543     $ 331,290     $ 7,090,621  
 
                             
The Company performed an interim impairment test as of December 31, 2008. The estimated fair value of the Company’s reporting units was below their carrying values, which required it to compare the implied fair value of each reporting units’ goodwill with its carrying value. As a result, the Company recognized a non-cash impairment charge of $3.6 billion to reduce its goodwill. The macroeconomic factors discussed above had an adverse effect on the estimated cash flows and discount rates used in the discounted cash flow model.
NOTE E — INVESTMENTS
The Company’s most significant investments in nonconsolidated affiliates are listed below:
Australian Radio Network
The Company owns a fifty-percent (50%) interest in Australian Radio Network (“ARN”), an Australian company that owns and operates radio stations in Australia and New Zealand.
Grupo ACIR Comunicaciones
Clear Channel sold a portion of its investment in Grupo ACIR Comunicaciones (“ACIR”) for approximately $47.0 million on July 1, 2008 and recorded a gain of $9.2 million in “equity in earnings of nonconsolidated affiliates” during the pre-merger period ended July 30, 2008. As a result, the Company now owns a twenty-percent (20%) interest in ACIR. ACIR owns and operates radio stations throughout Mexico.
All Others
Included within the “All Others” category in the table below at December 31, 2007 was Clear Channel’s 50% interest in Clear Channel Independent, a South African outdoor advertising company. Clear Channel sold its 50% interest in Clear Channel Independent in the pre-merger period ended July 30, 2008. The sale resulted in a gain of $75.6 million recorded in “Equity in earnings of nonconsolidated affiliates” based on the fair value of the equity securities received. The equity securities received are classified as available-for-sale and recorded as a component of “Other investments” on the Company’s consolidated balance sheets at December 31, 2008.

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Summarized Financial Information
The following table summarizes the Company’s investments in nonconsolidated affiliates:
                                 
                    All        
(In thousands)   ARN     ACIR     Others     Total  
At December 31, 2007
  $ 165,474     $ 72,905     $ 108,008     $ 346,387  
Acquisition (disposition) of investments, net
          (47,559 )     (117,577 )     (165,136 )
Cash advances (repayments)
    (16,164 )     28       (8,962 )     (25,098 )
Equity in net earnings (loss)
    12,108       11,264       70,843       94,215  
Foreign currency transaction adjustment
    (1,454 )                 (1,454 )
Foreign currency translation adjustment
    3,519       2,481       (4,392 )     1,608  
 
                       
At July 30, 2008
  $ 163,483     $ 39,119     $ 47,920     $ 250,522  
 
                       
 
                               
Fair value adjustments
    167,683       7,085       3,797       178,565  
 
                               
Balances at July 31, 2008
    331,166       46,204       51,717       429,087  
Acquisition (disposition) of investments, net
                500       500  
Cash advances (repayments)
    (11,188 )     27       6,752       (4,409 )
Equity in net earnings (loss)
    7,397       517       (2,110 )     5,804  
Foreign currency transaction adjustment
    11,179                   11,179  
Foreign currency translation adjustment
    (47,746 )     (5,230 )     (5,048 )     (58,024 )
 
                       
At December 31, 2008
  $ 290,808     $ 41,518     $ 51,811     $ 384,137  
 
                       
The investments in the table above are not consolidated, but are accounted for under the equity method of accounting, whereby the Company records its investments in these entities in the balance sheet as “Investments in, and advances to, nonconsolidated affiliates.” The Company’s interests in their operations are recorded in the statement of operations as “Equity in earnings of nonconsolidated affiliates”. Accumulated undistributed earnings included in retained deficit for these investments were $3.6 million, $133.6 million and $112.8 million for December 31, 2008, 2007 and 2006, respectively.
The fair value adjustments to the Company’s investment in ARN primarily relate to the Company’s proportionate share of indefinite-lived intangible assets and equity method goodwill.

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Other Investments
Other investments of $33.5 million and $237.6 million at December 31, 2008 and 2007, respectively, include marketable equity securities and other investments classified as follows:
                 
(In thousands)   Fair        
Investments   Value     Cost  
2008
               
Available-for sale
  $ 27,110     $ 27,110  
Other cost investments
    6,397       6,397  
 
           
Total
  $ 33,507     $ 33,507  
 
           
                                 
    Fair     Unrealized     Realized        
    Value     Gains     (Losses)     Cost  
2007
                               
Available-for sale
  $ 140,731     $ 104,996     $     $ 35,735  
Trading
    85,649       78,391             7,258  
Other cost investments
    11,218                   11,218  
 
                       
Total
  $ 237,598     $ 183,387     $     $ 54,211  
 
                       
The accumulated net unrealized gain on available-for-sale securities, net of tax, of $69.4 million was recorded in shareholders’ equity in “Accumulated other comprehensive income” at December 31, 2007. The Company sold its American Tower Corporation securities in the second quarter of 2008 and recorded a gain of $30.4 million on the statement of operations in “Gain (loss) on marketable securities”. The net unrealized gain (loss) on trading securities of $10.7 million and $20.5 million for the years ended December 31, 2007 and 2006, respectively, is recorded on the statement of operations in “Gain (loss) on marketable securities”. Other cost investments include various investments in companies for which there is no readily determinable market value.
The fair value of certain of the Company’s available-for-sale securities were below their cost each month subsequent to the closing of the merger. As a result, the Company considered the guidance in SAB Topic 5M and reviewed the length of the time and the extent to which the market value was less than cost and the financial condition and near-term prospects of the issuer. After this assessment, the Company concluded that the impairment was other than temporary and recorded a $116.6 million impairment charge on the statement of operations in “Gain (loss) on marketable securities”.
NOTE F — ASSET RETIREMENT OBLIGATION
The Company’s asset retirement obligation is reported in “Other long-term liabilities” and relates to its obligation to dismantle and remove outdoor advertising displays from leased land and to reclaim the site to its original condition upon the termination or non-renewal of a lease. The liability is capitalized as part of the related long-lived assets’ carrying value. Due to the high rate of lease renewals over a long period of time, the calculation assumes that all related assets will be removed at some period over the next 50 years. An estimate of third-party cost information is used with respect to the dismantling of the structures and the reclamation of the site. The interest rate used to calculate the present value of such costs over the retirement period is based on an estimated risk adjusted credit rate for the same period.

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The following table presents the activity related to the Company’s asset retirement obligation:
                         
    Post-merger     Pre-merger        
    Period from     Period from     Pre-merger  
    July 31 to     January 1 to     December 31,  
(In thousands)   December 31, 2008     July 30, 2008     2007  
Beginning balance
  $ 59,278     $ 70,497     $ 59,280  
Adjustment due to change in estimate of related costs
    (3,123 )     1,853       8,958  
Accretion of liability
    2,233       3,084       4,236  
Liabilities settled
    (2,796 )     (2,558 )     (1,977 )
 
                 
Ending balance
  $ 55,592     $ 72,876     $ 70,497  
 
                 
The Company decreased the liability by $13.6 million as a result of a change in the discount rate used to fair value the liability in purchase accounting.

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NOTE G — LONG-TERM DEBT
Long-term debt at December 31, 2008 and 2007 consisted of the following:
                 
    Post-merger     Pre-merger  
    December 31,     December 31,  
(In thousands)   2008     2007  
Senior Secured Credit Facilities:
               
Term loan A
  $ 1,331,500     $  
Term loan B
    10,700,000        
Term loan C
    695,879        
Revolving Credit Facility
    220,000        
Delayed Draw Facility
    532,500        
Receivables Based Facility
    445,609        
Other Secured Long-term Debt
    6,604       8,297  
 
           
Total Consolidated Secured Debt
    13,932,092       8,297  
 
               
Senior Cash Pay Notes
    980,000        
Senior Toggle Notes
    1,330,000        
Clear Channel Senior Notes:
               
4.625% Senior Notes Due 2008
          500,000  
6.625% Senior Notes Due 2008
          125,000  
4.25% Senior Notes Due 2009
    500,000       500,000  
7.65% Senior Notes Due 2010
    133,681       750,000  
4.5% Senior Notes Due 2010
    250,000       250,000  
6.25% Senior Notes Due 2011
    722,941       750,000  
4.4% Senior Notes Due 2011
    223,279       250,000  
5.0% Senior Notes Due 2012
    275,800       300,000  
5.75% Senior Notes Due 2013
    475,739       500,000  
5.5% Senior Notes Due 2014
    750,000       750,000  
4.9% Senior Notes Due 2015
    250,000       250,000  
5.5% Senior Notes Due 2016
    250,000       250,000  
6.875% Senior Debentures Due 2018
    175,000       175,000  
7.25% Senior Debentures Due 2027
    300,000       300,000  
Subsidiary level notes
          644,860  
Other long-term debt
    69,260       97,822  
$1.75 billion multi-currency revolving credit facility
          174,619  
Purchase accounting adjustments and original issue (discount) premium
    (1,114,172 )     (11,849 )
Fair value adjustments related to interest rate swaps
          11,438  
 
           
 
    19,503,620       6,575,187  
Less: current portion
    562,923       1,360,199  
 
           
Total long-term debt
  $ 18,940,697     $ 5,214,988  
 
           
The Company’s weighted average interest rate at December 31, 2008 was 6.0%. The aggregate market value of the Company’s debt based on quoted market prices for which quotes were available was approximately $17.2 billion and $5.9 billion at December 31, 2008 and 2007, respectively.

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The following is a summary of the terms of the Company’s debt incurred in connection with the merger:
    a $1.33 billion term loan A facility, with a maturity in July 2014;
 
    a $10.7 billion term loan B facility with a maturity in January 2016;
 
    a $695.9 million term loan C — asset sale facility, with a maturity in January 2016;
 
    a $750.0 million delayed draw term loan facility with a maturity in January 2016 which may be drawn to purchase or redeem Clear Channel’s outstanding 7.65% senior notes due 2010, of which $532.5 million was drawn as of December 31, 2008;
 
    a $500.0 million delayed draw term loan facility with a maturity in January 2016 may be drawn to purchase or redeem Clear Channel’s outstanding 4.25% senior notes due 2009, of which none was drawn as of December 31, 2008;
 
    a $2.0 billion revolving credit facility with a maturity in July 2014, including a letter of credit sub-facility and a swingline loan sub-facility. At December 31, 2008, the outstanding balance on this facility was $220.0 million and, taking into account letters of credit of $304.1 million, $1.5 billion was available for future borrowings. Interest rates on this facility varied from 3.9% to 4.6%;
 
    a $783.5 million receivables based credit facility with a maturity in July 2014 providing revolving credit commitments in an amount equal to the initial borrowing of $533.5 million on the merger closing date plus $250.0 million, subject to a borrowing base. At December 31, 2008 the outstanding balance on this facility was $445.6 million, which was the maximum available under the borrowing base; and
 
    $980.0 million aggregate principal amount of 10.75% senior cash pay notes due 2016 and $1.33 billion aggregate principal amount of 11.00%/11.75% senior toggle notes due 2016.
Each of the proceeding obligations are among Clear Channel Communications, Inc., a wholly owned subsidiary of the Company, and each lender from time to time party to the credit agreements or senior cash pay and senior toggle notes. The following references to the Company in the discussion of the credit agreements, senior cash pay notes and senior toggle notes are in respect to Clear Channel Communications, Inc.’s obligations under the credit agreements, senior cash pay and senior toggle notes.
Senior Secured Credit Facilities
Borrowings under the senior secured credit facilities bear interest at a rate equal to an applicable margin plus, at the Company’s option, either (i) a base rate determined by reference to the higher of (A) the prime lending rate publicly announced by the administrative agent and (B) the federal funds effective rate from time to time plus 0.50%, or (ii) a Eurocurrency rate determined by reference to the costs of funds for deposits for the interest period relevant to such borrowing adjusted for certain additional costs.
The margin percentages applicable to the term loan facilities and revolving credit facility are the following percentages per annum:
    with respect to loans under the term loan A facility and the revolving credit facility, (i) 2.40% in the case of base rate loans and (ii) 3.40% in the case of Eurocurrency rate loans, subject to downward adjustments if the Company’s leverage ratio of total debt to EBITDA decreases below 7 to 1; and
 
    with respect to loans under the term loan B facility, term loan C — asset sale facility and delayed draw term loan facilities, (i) 2.65% in the case of base rate loans and (ii) 3.65% in the case of Eurocurrency rate loans subject to downward adjustments if the Company’s leverage ratio of total debt to EBITDA decreases below 7 to 1.
The Company is required to pay each revolving credit lender a commitment fee in respect of any unused commitments under the revolving credit facility, which is 0.50% per annum. The Company is required to pay each delayed draw term facility lender a commitment fee in respect of any undrawn commitments under the delayed draw term facilities, which initially is 1.825% per annum until the delayed draw term facilities are fully drawn or commitments thereunder terminated.
The senior secured credit facilities require the Company to prepay outstanding term loans, subject to certain exceptions, with:

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    50% (which percentage will be reduced to 25% and to 0% based upon the Company’s leverage ratio) of the Company’s annual excess cash flow (as calculated in accordance with the senior secured credit facilities), less any voluntary prepayments of term loans and revolving credit loans (to the extent accompanied by a permanent reduction of the commitment) and subject to customary credits;
 
    100% (which percentage will be reduced to 75% and 50% based upon the Company’s leverage ratio) of the net cash proceeds of sales or other dispositions by the Company or its wholly-owned restricted subsidiaries (including casualty and condemnation events) of assets subject to reinvestment rights and certain other exceptions; and
 
    100% of the net cash proceeds of any incurrence of certain debt, other than debt permitted under the senior secured credit facilities.
The foregoing prepayments with the net cash proceeds of certain incurrences of debt and annual excess cash flow will be applied (i) first to the term loans other than the term loan C — asset sale facility loans (on a pro rata basis) and (ii) second to the term loan C — asset sale facility loans, in each case to the remaining installments thereof in direct order of maturity. The foregoing prepayments with the net cash proceeds of the sale of assets (including casualty and condemnation events) will be applied (i) first to the term loan C — asset sale facility loans and (ii) second to the other term loans (on a pro rata basis), in each case to the remaining installments thereof in direct order of maturity.
The Company may voluntarily repay outstanding loans under its senior secured credit facilities at any time without premium or penalty, other than customary “breakage” costs with respect to Eurocurrency rate loans.
The Company is required to repay the loans under its term loan facilities as follows:
    the term loan A facility will amortize in quarterly installments commencing on the first interest payment date after the second anniversary of the closing date of the merger in annual amounts equal to 5% of the original funded principal amount of such facility in years three and four, 10% thereafter, with the balance being payable on the final maturity date of such term loans; and
 
    the term loan B facility, term loan C — asset sale facility and delayed draw term loan facilities will amortize in quarterly installments on the first interest payment date after the third anniversary of the closing date of the merger, in annual amounts equal to 2.5% of the original funded principal amount of such facilities in years four and five and 1% thereafter, with the balance being payable on the final maturity date of such term loans.
The senior secured credit facilities are guaranteed by each of the Company’s existing and future material wholly-owned domestic restricted subsidiaries, subject to certain exceptions.
All obligations under the senior secured credit facilities, and the guarantees of those obligations, are secured, subject to permitted liens and other exceptions, by:
    a first-priority lien on the capital stock of Clear Channel;
 
    100% of the capital stock of any future material wholly-owned domestic license subsidiary that is not a “Restricted Subsidiary” under the indenture governing the Clear Channel senior notes;
 
    certain assets that do not constitute “principal property” (as defined in the indenture governing the Clear Channel senior notes);
 
    certain assets that constitute “principal property” (as defined in the indenture governing the Clear Channel senior notes) securing obligations under the senior secured credit facilities up to the maximum amount permitted to be secured by such assets without requiring equal and ratable security under the indenture governing the Clear Channel senior notes; and
 
    a second-priority lien on the accounts receivable and related assets securing our receivables based credit facility.
The obligations of any foreign subsidiaries that are borrowers under the revolving credit facility will also be guaranteed by certain of their material wholly-owned restricted subsidiaries, and secured by substantially all assets of all such borrowers and guarantors, subject to permitted liens and other exceptions.

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The senior secured credit facilities require the Company to comply on a quarterly basis with a maximum consolidated senior secured net debt to adjusted EBITDA (as calculated in accordance with the senior secured credit facilities) ratio. This financial covenant becomes effective on March 31, 2009 (maximum of 9.5:1) and will become more restrictive over time. The Company’s senior secured debt consists of the senior secured facilities, the receivables based facility and certain other secured subsidiary debt. Secured leverage, defined as secured debt, net of cash, divided by the trailing 12-month consolidated EBITDA was 6.4:1 at December 31, 2008. The Company’s consolidated EBITDA is calculated as its trailing twelve months operating income before depreciation, amortization, impairment charge, non-cash compensation, other operating income — net and merger expenses of $1.8 billion adjusted for certain items, including: (i) an increase for expected cost savings (limited to $100.0 million in any twelve month period) of $100.0 million; (ii) an increase of $43.1 million for cash received from nonconsolidated affiliates; (iii) an increase of $17.0 million for non-cash items; (iv) an increase of $95.9 million related to expenses incurred associated with our restructuring program; and (v) an increase of $82.4 million for various other items.
In addition, the senior secured credit facilities include negative covenants that, subject to significant exceptions, limit the Company’s ability and the ability of its restricted subsidiaries to, among other things:
    incur additional indebtedness;
 
    create liens on assets;
 
    engage in mergers, consolidations, liquidations and dissolutions;
 
    sell assets;
 
    pay dividends and distributions or repurchase its capital stock;
 
    make investments, loans, or advances;
 
    prepay certain junior indebtedness;
 
    engage in certain transactions with affiliates;
 
    amend material agreements governing certain junior indebtedness; and
 
    change its lines of business.
The senior secured credit facilities include certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, the invalidity of material provisions of the senior secured credit facilities documentation, the failure of collateral under the security documents for the senior secured credit facilities, the failure of the senior secured credit facilities to be senior debt under the subordination provisions of certain of the Company’s subordinated debt and a change of control. If an event of default occurs, the lenders under the senior secured credit facilities will be entitled to take various actions, including the acceleration of all amounts due under the senior secured credit facilities and all actions permitted to be taken by a secured creditor.
Receivables Based Credit Facility
The receivables based credit facility of $783.5 million provides revolving credit commitments in an amount equal to the initial borrowing of $533.5 million on the closing date plus $250 million, subject to a borrowing base. The borrowing base at any time equals 85% of the eligible accounts receivable for certain subsidiaries of the Company. The receivables based credit facility includes a letter of credit sub-facility and a swingline loan sub-facility.
All borrowings under the receivables based credit facility are subject to the absence of any default, the accuracy of representations and warranties and compliance with the borrowing base. If at any time, borrowings, excluding the initial borrowing, under the receivables based credit facility following the closing date will be subject to compliance with a minimum fixed charge coverage ratio of 1.0:1.0 if excess availability under the receivables based credit facility is less than $50 million, or if aggregate excess availability under the receivables based credit facility and revolving credit facility is less than 10% of the borrowing base.
Borrowings under the receivables based credit facility bear interest at a rate equal to an applicable margin plus, at the Company’s option, either (i) a base rate determined by reference to the higher of (A) the prime lending rate publicly announced by the administrative agent and (B) the federal funds effective rate from time to time plus 0.50%, or (ii) a Eurocurrency rate determined by reference to the costs of funds for deposits for the interest period relevant to such borrowing adjusted for certain additional costs.

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The margin percentage applicable to the receivables based credit facility which is (i) 1.40% in the case of base rate loans and (ii) 2.40% in the case of Eurocurrency rate loans subject to downward adjustments if the Company’s leverage ratio of total debt to EBITDA decreases below 7 to 1.
The Company is required to pay each lender a commitment fee in respect of any unused commitments under the receivables based credit facility, which is 0.375% per annum subject to downward adjustments if the Company’s leverage ratio of total debt to EBITDA decreases below 6 to 1.
If at any time the sum of the outstanding amounts under the receivables based credit facility (including the letter of credit outstanding amounts and swingline loans thereunder) exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitments under the receivables based credit facility, the Company will be required to repay outstanding loans and cash collateralize letters of credit in an aggregate amount equal to such excess.
The Company may voluntarily repay outstanding loans under the receivables based credit facility at any time without premium or penalty, other than customary “breakage” costs with respect to Eurocurrency rate loans.
The receivables based credit facility is guaranteed by, subject to certain exceptions, the guarantors of the senior secured credit facilities. All obligations under the receivables based credit facility, and the guarantees of those obligations, are secured by a perfected first priority security interest in all of the Company’s and all of the guarantors’ accounts receivable and related assets and proceeds thereof, subject to permitted liens and certain exceptions.
The receivables based credit facility includes negative covenants, representations, warranties, events of default, conditions precedent and termination provisions substantially similar to those governing our senior secured credit facilities.
Senior Notes
The Company has outstanding $980.0 million aggregate principal amount of 10.75% senior cash pay notes due 2016 (the “senior cash pay notes”) and $1.3 billion aggregate principal amount of 11.00%/11.75% senior toggle notes due 2016 (the “senior toggle notes” and, together with the senior cash pay notes, the “notes”).
The senior toggle notes mature on August 1, 2016 and may require a special redemption on August 1, 2015. The Company may elect on each interest election date to pay all or 50% of such interest on the senior toggle notes in cash or by increasing the principal amount of the senior toggle notes or by issuing new senior toggle notes (such increase or issuance, “PIK Interest”). Interest on the senior toggle notes payable in cash will accrue at a rate of 11.00% per annum and PIK Interest will accrue at a rate of 11.75% per annum.
The Company may redeem some or all of the notes at any time prior to August 1, 2012, at a price equal to 100% of the principal amount of such notes plus accrued and unpaid interest thereon to the redemption date and a “make-whole premium,” as described in the notes. The Company may redeem some or all of the notes at any time on or after August 1, 2012 at the redemption prices set forth in notes. In addition, the Company may redeem up to 40% of any series of the outstanding notes at any time on or prior to August 1, 2011 with the net cash proceeds raised in one or more equity offerings. If the Company undergoes a change of control, sells certain of its assets, or issues certain debt offerings, it may be required to offer to purchase notes from holders.
The notes are senior unsecured debt and rank equal in right of payment with all of the Company’s existing and future senior debt. Guarantors of obligations under the senior secured credit facilities and the receivables based credit facility guarantee the notes with unconditional guarantees that are unsecured and equal in right of payment to all existing and future senior debt of such guarantors, except that the guarantees are subordinated in right of payment only to the guarantees of obligations under the senior secured credit facilities and the receivables based credit facility. In addition, the notes and the guarantees are structurally senior to Clear Channel’s senior notes and existing and future debt to the extent that such debt is not guaranteed by the guarantors of the notes. The notes and the guarantees are effectively subordinated to the existing and future secured debt and that of the guarantors to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all obligations of subsidiaries that do not guarantee the notes.

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Subsidiary Level Notes
AMFM Operating Inc. (“AMFM”), a wholly-owned subsidiary of the Company, had outstanding 8% senior notes due 2008. An aggregate principal amount of $639.2 million of the 8% senior notes was repurchased pursuant to a tender offer and consent solicitation in connection with the merger and a loss of $8.0 million was recorded in “Other income (expense) — net” in the pre-merger consolidated income statement. The remaining 8% senior notes were redeemed at maturity on November 1, 2008.
Debt Maturities
On January 15, 2008, Clear Channel redeemed its 4.625% senior notes at their maturity for $500.0 million plus accrued interest with proceeds from its bank credit facility.
On June 15, 2008, Clear Channel redeemed its 6.625% Senior Notes at their maturity for $125.0 million with available cash on hand.
Clear Channel’s $1.75 billion multi-currency revolving credit facility was terminated in connection with the closing of the merger. There was no outstanding balance on the facility on the date it was terminated.
Tender Offers
On August 7, 2008, Clear Channel announced that it commenced a cash tender offer and consent solicitation for its outstanding $750.0 million principal amount of 7.65% senior notes due 2010. The tender offer and consent payment expired on September 9, 2008. The aggregate principal amount of 7.65% senior notes validly tendered and accepted for payment was $363.9 million. Clear Channel recorded a loss of $21.8 million in “Other income (expense) — Net” during the pre-merger period as a result of the tender.
On November 24, 2008, Clear Channel announced that it commenced another cash tender offer to purchase its outstanding 7.65% Senior Notes due 2010. The tender offer and consent payment expired on December 23, 2008. The aggregate principal amount of 7.65% senior notes validly tendered and accepted for payment was $252.4 million. The Company recorded a gain of $74.7 million in “Other income (expense) — Net” during the post-merger period as a result of the tender.
Clear Channel also announced on November 24, 2008 that its indirect wholly-owned subsidiary, CC Finco, LLC, commenced a cash tender offers for Clear Channel’s outstanding 6.25% Senior Notes due 2011 (“6.25 Notes”), Clear Channel’s outstanding 4.40% Senior Notes due 2011 (“4.40% Notes”), Clear Channel’s outstanding 5.00% Senior Notes due 2012 (“5.00% Notes”) and Clear Channel’s outstanding 5.75% Senior Notes due 2013 (“5.75% Notes”). The tender offers and consent payments expired on December 23, 2008. The aggregate principal amounts of the 6.25% Notes, 4.40% Notes, 5.00% Notes and 5.75% Notes validly tendered and accepted for payment pursuant to the tender offers was $27.1 million, $26.7 million, $24.2 million and $24.3 million, respectively, and CC Finco, LLC purchased and currently holds such tendered notes. The Company recorded an aggregate gain of $49.7 million in “Other income (expense) — Net” during the post-merger period as a result of the tenders.
Other
All purchase accounting fair value adjustments to debt, fees and initial offering discounts are being amortized as interest expense over the life of the respective notes.

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Future maturities of long-term debt at December 31, 2008 are as follows:
         
(In thousands)        
2009
  $ 569,527  
2010
    417,779  
2011
    1,162,280  
2012
    674,282  
2013
    822,372  
Thereafter
    16,971,552  
 
     
Total (1)
  $ 20,617,792  
 
     
 
(1)   Excludes a negative purchase accounting fair value adjustment of $1.1 billion, which is amortized through interest expense over the life of the underlying debt obligations.
NOTE H — FINANCIAL INSTRUMENTS
The Company has entered into $6.0 billion aggregate notional amount of interest rate swaps. The Company continually monitors its positions with, and credit quality of, the financial institutions which are counterparties to its interest rate swaps. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the interest rate swaps. However, the Company considers this risk to be low.
Interest Rate Swaps
The Company’s aggregate $6.0 billion notional amount interest rate swap agreements are designated as a cash flow hedge and the effective portion of the gain or loss on the swap is reported as a component of other comprehensive income. The Company entered into the swaps to effectively convert a portion of its floating-rate debt to a fixed basis, thus reducing the impact of interest-rate changes on future interest expense. The aggregate fair value of these interest rate swaps of $118.8 million was recorded on the balance sheet as “Other long-term liabilities” at December 31, 2008. Accumulated other comprehensive income is adjusted to reflect the change in the fair value of the swaps. The balance in other comprehensive income was $75.1 million at December 31, 2008. No ineffectiveness was recorded in earnings related to these interest rate swaps.
Clear Channel had $1.1 billion of interest rate swaps at December 31, 2007 that were designated as fair value hedges of the underlying fixed-rate debt obligations. On December 31, 2007, the fair value of the interest rate swap agreements was recorded on the balance sheet as “Other long-term assets” with the offset recorded in “Long-term debt” of approximately $11.4 million. Clear Channel terminated these interest rate swaps effective July 10, 2008 and received proceeds of approximately $15.4 million. These interest rate swaps were recorded on the balance sheet at fair value, which was equivalent to the proceeds received.
Secured Forward Exchange Contracts
In 2001, Clear Channel Investments, Inc., a wholly owned subsidiary of Clear Channel, entered into two ten-year secured forward exchange contracts that monetized 2.9 million shares of its investment in American Tower Corporation (“AMT”). The AMT contracts had a value of $17.0 million recorded in “Other long term liabilities” at December 31, 2007. These contracts were not designated as a hedge of the Clear Channel’s cash flow exposure of the forecasted sale of the AMT shares. During the years ended December 31, 2007 and 2006, Clear Channel recognized losses of $6.7 million and $22.0 million, respectively, in “Gain (loss) on marketable securities” related to the change in the fair value of these contracts. To offset the change in the fair value of these contracts, Clear Channel recorded AMT shares as trading securities. During the years ended December 31, 2007 and 2006, Clear Channel recognized income of $10.7 million and $20.5 million, respectively, in “Gain (loss) on marketable securities” related to the change in the fair value of the shares. Clear Channel terminated the contracts effective June 13, 2008, receiving net proceeds of $15.2 million. A net gain of $27.0 million was recorded in the pre-merger period in “Gain on marketable securities” related to terminating the contracts and selling the underlying AMT shares.

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Foreign Currency Rate Management
Clear Channel held two United States dollar — Euro cross currency swaps with an aggregate Euro notional amount of 706.0 million and a corresponding aggregate U.S. dollar notional amount of $877.7 million. These cross currency swaps had a value of $127.4 million at December 31, 2007 and were recorded in “Other long-term obligations”. Clear Channel designated the cross currency swaps as a hedge of its net investment in Euro denominated assets. Clear Channel recorded all changes in the fair value of the cross currency swaps and the semiannual cash payments as a cumulative translation adjustment in other comprehensive income (loss). As of December 31, 2007, a $73.5 million loss, net of tax, was recorded as a cumulative translation adjustment to “Other comprehensive income (loss)” related to the cross currency swaps. Clear Channel terminated its cross currency swap contracts on July 30, 2008 by paying the counterparty $196.2 million from available cash on hand. The contracts were recorded on the balance sheet at fair value, which was equivalent to the cash paid to terminate them. The related fair value adjustments in other comprehensive income were deleted when the merger took place.
NOTE I — FAIR VALUE MEASUREMENTS
The Company adopted Financial Accounting Standards Board Statement No. 157, Fair Value Measurements (“Statement 157”) on January 1, 2008 and began to apply its recognition and disclosure provisions to its financial assets and financial liabilities that are remeasured at fair value at least annually. Statement 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The Company’s marketable equity securities and interest rate swaps are measured at fair value on each reporting date.
The marketable equity securities are measured at fair value using quoted prices in active markets. Due to the fact that the inputs used to measure the marketable equity securities at fair value are observable, the Company has categorized the fair value measurements of the securities as Level 1. The fair value of these securities at December 31, 2008 was $27.1 million.
The Company’s aggregate $6.0 billion notional amount of interest rate swap agreements are designated as a cash flow hedge and the effective portion of the gain or loss on the swap is reported as a component of other comprehensive income. The Company entered into the swaps to effectively convert a portion of its floating-rate debt to a fixed basis, thus reducing the impact of interest-rate changes on future interest expense. Due to the fact that the inputs to the model used to estimate fair value are either directly or indirectly observable, the Company classified the fair value measurements of these agreements as Level 2. The aggregate fair value of the interest rate swaps at December 31, 2008 was a liability of $118.8 million.
NOTE J — COMMITMENTS AND CONTINGENCIES
The Company accounts for its rentals that include renewal options, annual rent escalation clauses, minimum franchise payments and maintenance related to displays under the guidance in EITF 01-8, Determining Whether an Arrangement Contains a Lease (“EITF 01-8”), Financial Accounting Standards No. 13, Accounting for Leases, Financial Accounting Standards No. 29, Determining Contingent Rentals an amendment of FASB Statement No. 13 (“Statement 29”) and FASB Technical Bulletin 85-3, Accounting for Operating Leases with Scheduled Rent Increases (“FTB 85-3”).
The Company considers its non-cancelable contracts that enable it to display advertising on buses, taxis, trains, bus shelters, etc. to be leases in accordance with the guidance in EITF 01-8. These contracts may contain minimum annual franchise payments which generally escalate each year. The Company accounts for these minimum franchise payments on a straight-line basis in accordance with FTB 85-3. If the rental increases are not scheduled in the lease, for example an increase based on the CPI, those rents are considered contingent rentals and are recorded as expense when accruable. Other contracts may contain a variable rent component based on revenue. The Company accounts

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for these variable components as contingent rentals under Statement 29, and records these payments as expense when accruable.
The Company accounts for annual rent escalation clauses included in the lease term on a straight-line basis under the guidance in FTB 85-3. The Company considers renewal periods in determining its lease terms if at inception of the lease there is reasonable assurance the lease will be renewed. Expenditures for maintenance are charged to operations as incurred, whereas expenditures for renewal and betterments are capitalized.
The Company leases office space, certain broadcasting facilities, equipment and the majority of the land occupied by its outdoor advertising structures under long-term operating leases. The Company accounts for these leases in accordance with the policies described above.
The Company’s contracts with municipal bodies or private companies relating to street furniture, billboard, transit and malls generally require the Company to build bus stops, kiosks and other public amenities or advertising structures during the term of the contract. The Company owns these structures and is generally allowed to advertise on them for the remaining term of the contract. Once the Company has built the structure, the cost is capitalized and expensed over the shorter of the economic life of the asset or the remaining life of the contract.
Certain of the Company’s contracts contain penalties for not fulfilling its commitments related to its obligations to build bus stops, kiosks and other public amenities or advertising structures. Historically, any such penalties have not materially impacted the Company’s financial position or results of operations.
As of December 31, 2008, the Company’s future minimum rental commitments under non-cancelable operating lease agreements with terms in excess of one year, minimum payments under non-cancelable contracts in excess of one year, and capital expenditure commitments consist of the following:
                         
    Non-Cancelable     Non-Cancelable     Capital  
(In thousands)   Operating Leases     Contracts     Expenditures  
2009
  $ 383,568     $ 673,900     $ 76,760  
2010
    337,654       454,402       44,776  
2011
    290,230       404,659       17,650  
2012
    247,364       265,011       4,666  
2013
    220,720       206,755       4,670  
Thereafter
    1,265,574       643,535       3,141  
 
                 
Total
  $ 2,745,110     $ 2,648,262     $ 151,663  
 
                 
Rent expense charged to continuing operations for the post-merger period ended December 31, 2008 was $526.6 million. Rent expense charged to continuing operations for the pre-merger period ended July 30, 2008 was $755.4 million. Rent expense charged to continuing operations for the pre-merger periods 2007 and 2006 was $1.2 billion and $1.1 billion, respectively.
In November 2006 Plaintiff Grantley Patent Holdings, Ltd. sued Clear Channel and nine of its subsidiaries for patent infringement in the United States District Court for the Eastern District of Texas, as described in more detail in the Company’s Quarterly Report on Form 10-Q filed November 10, 2008 for the quarter ended September 30, 2008. On December 29, 2008, the parties entered into a settlement agreement. The settlement is on terms that are not material to us and does not constitute an admission of wrongdoing or liability by us.
The Company is currently involved in certain legal proceedings and, as required, has accrued its estimate of the probable costs for the resolution of these claims. These estimates have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in the Company’s assumptions or the effectiveness of its strategies related to these proceedings.
In various areas in which the Company operates, outdoor advertising is the object of restrictive and, in some cases, prohibitive zoning and other regulatory provisions, either enacted or proposed. The impact to the Company of loss of displays due to governmental action has been somewhat mitigated by federal and state laws mandating compensation for such loss and constitutional restraints.

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Certain acquisition agreements include deferred consideration payments based on performance requirements by the seller typically involving the completion of a development or obtaining appropriate permits that enable the Company to construct additional advertising displays. At December 31, 2008, the Company believes its maximum aggregate contingency, which is subject to performance requirements by the seller, is approximately $35.0 million. As the contingencies have not been met or resolved as of December 31, 2008, these amounts are not recorded. If future payments are made, amounts will be recorded as additional purchase price.
The Company is a party to various put agreements that may require additional investments to be made by the Company in the future. The put values are contingent upon the financial performance of the investee and are typically based on the investee meeting certain EBITDA targets, as defined in the agreement. The Company will continue to accrue additional amounts related to such contingent payments if and when it is determinable that the applicable financial performance targets will be met. The aggregate of these contingent payments, if performance targets are met, would not significantly impact the financial position or results of operations of the Company.
NOTE K — GUARANTEES
At December 31, 2008, the Company guaranteed $39.8 million of credit lines provided to certain of its international subsidiaries by a major international bank. Most of these credit lines related to intraday overdraft facilities covering participants in the Company’s European cash management pool. As of December 31, 2008, no amounts were outstanding under these agreements.
As of December 31, 2008, the Company had outstanding commercial standby letters of credit and surety bonds of $367.6 million and $211.4 million, respectively. Letters of credit in the amount of $154.8 million are collateral in support of surety bonds and these amounts would only be drawn under the letters of credit in the event the associated surety bonds were funded and the Company did not honor its reimbursement obligation to the issuers.
These letters of credit and surety bonds relate to various operational matters including insurance, bid, and performance bonds as well as other items.
NOTE L — INCOME TAXES
Significant components of the provision for income tax expense (benefit) are as follows:
                                   
    Post-merger       Pre-merger              
    period ended       period ended              
    December 31,       July 30,     Pre-merger     Pre-merger  
(In thousands)   2008       2008     2007     2006  
Current — federal
  $ (100,578 )     $ (6,535 )   $ 187,700     $ 211,444  
Current — foreign
    15,755         24,870       43,776       40,454  
Current — state
    8,094         8,945       21,434       26,765  
 
                         
Total current (benefit) expense
    (76,729 )       27,280       252,910       278,663  
Deferred — federal
    (555,679 )       145,149       175,524       185,053  
Deferred — foreign
    (17,762 )       (12,662 )     (1,400 )     (9,134 )
Deferred — state
    (46,453 )       12,816       14,114       15,861  
 
                         
Total deferred (benefit) expense
    (619,894 )       145,303       188,238       191,780  
 
                         
Income tax (benefit) expense
  $ (696,623 )     $ 172,583     $ 441,148     $ 470,443  
 
                         

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Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2008 and 2007 are as follows:
                 
(In thousands)   2008     2007  
Deferred tax liabilities:
               
Intangibles and fixed assets
  $ 2,332,924     $ 921,497  
Long-term debt
    352,057        
Unrealized gain in marketable securities
          20,715  
Foreign
    87,654       7,799  
Equity in earnings
    27,872       44,579  
Investments
    15,268       17,585  
Deferred Income
          4,940  
Other
    25,836       11,814  
 
           
Total deferred tax liabilities
    2,841,611       1,028,929  
 
               
Deferred tax assets:
               
Accrued expenses
    129,684       91,080  
Long-term debt
          56,026  
Unrealized gain in marketable securities
    29,438        
Net operating loss/Capital loss carryforwards
    319,530       521,187  
Bad debt reserves
    28,248       14,051  
Deferred Income
    976        
Other
    17,857       90,511  
 
           
Total gross deferred tax assets
    525,733       772,855  
Valuation allowance
    319,530       516,922  
 
           
Total deferred tax assets
    206,203       255,933  
 
           
Net deferred tax liabilities
  $ 2,635,408     $ 772,996  
 
           
For the year ended December 31, 2008, the Company recorded approximately $2.5 billion in additional deferred tax liabilities associated with the applied purchase accounting adjustments resulting from the acquisition of Clear Channel. The additional deferred tax liabilities primarily relate to differences between the purchase accounting adjusted book basis and the historical tax basis of the Company’s intangible assets. During the post-merger period ended December 31, 2008, the Company recorded an impairment charge to its FCC licenses, permits and tax deductible goodwill resulting in a decrease of approximately $648.2 million in recorded deferred tax liabilities. Included in the Company’s net deferred tax liabilities are $43.9 million and $20.9 million of current net deferred tax assets for 2008 and 2007, respectively. The Company presents these assets in “Other current assets” on its consolidated balance sheets. The remaining $2.7 billion and $793.9 million of net deferred tax liabilities for 2008 and 2007, respectively, are presented in “Deferred tax liabilities” on the consolidated balance sheets.
At December 31, 2008, net deferred tax liabilities include a deferred tax asset of $16.1 million relating to stock-based compensation expense under Statement 123(R). Full realization of this deferred tax asset requires stock options to be exercised at a price equaling or exceeding the sum of the grant price plus the fair value of the option at the grant date and restricted stock to vest at a price equaling or exceeding the fair market value at the grant date. Accordingly, there can be no assurance that the stock price of the Company’s common stock will rise to levels sufficient to realize the entire tax benefit currently reflected in its balance sheet.
The deferred tax liability related to intangibles and fixed assets primarily relates to the difference in book and tax basis of acquired FCC licenses, permits and tax deductible goodwill created from the Company’s various stock acquisitions. In accordance with Statement 142, the Company no longer amortizes FCC licenses and permits. As a result, this deferred tax liability will not reverse over time unless the Company recognizes future impairment charges related to its FCC licenses, permits and tax deductible goodwill or sells its FCC licenses or permits. As the Company continues to amortize its tax basis in its FCC licenses, permits and tax deductible goodwill, the deferred tax liability will increase over time.

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During 2005, Clear Channel recognized a capital loss of approximately $2.4 billion as a result of the spin-off of Live Nation. Of the $2.4 billion capital loss, approximately $734.5 million was used to offset capital gains recognized in 2002, 2003 and 2004 and Clear Channel received the related $257.0 million tax refund on October 12, 2006. During 2008, Clear Channel used $585.3 million of the capital loss to offset the gain on sale of its television business and certain radio stations. As of December 31, 2008, the remaining capital loss carryforward is approximately $699.6 million and it can be used to offset future capital gains through 2009. The Company has recorded an after tax valuation allowance of $257.4 million related to the capital loss carryforward due to the uncertainty of the ability to utilize the carryforward prior to its expiration. If the Company is able to utilize the capital loss carryforward in future years, the valuation allowance will be released and be recorded as a current tax benefit in the year the losses are utilized.
The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense (benefit) is:
                                                                   
    Post-merger period ended       Pre-merger period ended              
    December 31, 2008       July 30, 2008     2007     2006  
(In thousands)   Amount     Percent       Amount     Percent     Amount     Percent     Amount     Percent  
Income tax expense (benefit) at statutory rates
  $ (2,008,040 )     35 %     $ 205,108       35 %   $ 448,298       35 %   $ 399,423       35 %
State income taxes, net of federal tax benefit
    (38,359 )     1 %       21,760       4 %     35,548       3 %     42,626       4 %
Foreign taxes
    95,478       (2 %)       (29,606 )     (5 %)     (8,857 )     (1 %)     6,391       1 %
Nondeductible items
    1,591       (0 %)       2,464       0 %     6,228       0 %     2,607       0 %
Changes in valuation allowance and other estimates
    53,877       (1 %)       (32,256 )     (6 %)     (34,005 )     (3 %)     16,482       1 %
Impairment charge
    1,194,182       (21 %)                                      
Other, net
    4,648       (0 %)       5,113       1 %     (6,064 )     (0 %)     2,914       0 %
 
                                                         
 
  $ (696,623 )     12 %     $ 172,583       29 %   $ 441,148       34 %   $ 470,443       41 %
 
                                                         
A tax benefit was recorded for the post-merger period ended December 31, 2008 of 12% and reflects the Company’s ability to recover a limited amount of the Company’s prior period tax liabilities through certain net operating loss carrybacks. Due to the lack of earnings history as a merged company and limitations on net operating loss carryback claims allowed; the Company cannot rely on future earnings and carryback claims as a means to realize deferred tax assets which may arise as a result of future period net operating losses. Pursuant to the provision of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, deferred tax valuation allowances would be required on those deferred tax assets. The effective tax rate for the post-merger period was primarily impacted due to the impairment charge. In addition, the Company recorded a valuation allowance on certain net operating losses generated during the post-merger period that are not able to be carried back to prior years. The effective tax rate for the pre-merger period was primarily impacted by the tax effect of the disposition of certain radio broadcasting assets and investments.
During 2007, Clear Channel utilized approximately $2.2 million of net operating loss carryforwards, the majority of which were generated by certain acquired companies prior to their acquisition by Clear Channel. The utilization of the net operating loss carryforwards reduced current taxes payable and current tax expense for the year ended December 31, 2007. Clear Channel’s effective income tax rate for 2007 was 34.4% as compared to 41.2% for 2006. For 2007, the effective tax rate was primarily affected by the recording of current tax benefits of approximately $45.7 million related to the settlement of several tax positions with the Internal Revenue Service (“IRS”) for the 1999 through 2004 tax years and deferred tax benefits of approximately $14.6 million related to the release of valuation allowances for the use of certain capital loss carryforwards. These tax benefits were partially offset by additional current tax expense being recorded in 2007 due to an increase in Income before income taxes of $139.6 million.
During 2006, Clear Channel utilized approximately $70.3 million of net operating loss carryforwards, the majority of which were generated during 2005. The utilization of the net operating loss carryforwards reduced current taxes payable and current tax expense for the year ended December 31, 2006. In addition, current tax expense was reduced by approximately $22.1 million related to the disposition of certain operating assets and the filing of an

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amended tax return during 2006. As discussed above, the Company recorded a capital loss on the spin-off of Live Nation. During 2006 the amount of capital loss carryforward and the related valuation allowance was adjusted to the final amount reported on our 2005 filed tax return.
The remaining federal net operating loss carryforwards of $168.8 million expires in various amounts from 2009 to 2028.
The Company adopted Financial Accounting Standard Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements. FIN 48 prescribes a recognition threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken within an income tax return. The adoption of FIN 48 resulted in a decrease of $0.2 million to the January 1, 2007 balance of “Retained deficit”, an increase of $101.7 million in “Other long term-liabilities” for unrecognized tax benefits and a decrease of $123.0 million in “Deferred income taxes”. The total amount of unrecognized tax benefits at January 1, 2007 was $416.1 million, inclusive of $89.6 million for interest.
The Company continues to record interest and penalties related to unrecognized tax benefits in current income tax expense. The total amount of interest accrued at December 31, 2008 and 2007 was $53.5 million and $43.0 million, respectively. The total amount of unrecognized tax benefits and accrued interest and penalties at December 31, 2008 and 2007 was $267.8 million and $237.1 million, respectively, and is recorded in “Other long-term liabilities” on the Company’s consolidated balance sheets. Of this total, $250.0 million at December 31, 2008 represents the amount of unrecognized tax benefits and accrued interest and penalties that, if recognized, would favorably affect the effective income tax rate in future periods.
                           
    Post-merger period       Pre-merger period        
    ended December 31,       ended July 30,     Pre-merger  
Unrecognized Tax Benefits (In thousands)   2008       2008     2007  
Balance at beginning of period
  $ 207,884       $ 194,060     $ 326,478  
Increases for tax position taken in the current year
    35,942         8,845       18,873  
Increases for tax positions taken in previous years
    3,316         7,019       45,404  
Decreases for tax position taken in previous years
    (20,564 )       (1,764 )     (175,036 )
Decreases due to settlements with tax authorities
    (9,975 )       (276 )     (21,200 )
Decreases due to lapse of statute of limitations
    (2,294 )             (459 )
 
                   
Balance at end of period
  $ 214,309       $ 207,884     $ 194,060  
 
                   
The Company and its subsidiaries file income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. As stated above, the Company settled several federal tax positions with the Internal Revenue Service (“IRS”) during the year ended December 31, 2007. As a result of the settlement the Company reduced its balance of unrecognized tax benefits by $246.2 million. During 2008, the Company favorably settled certain issues in foreign jurisdictions that resulted in the decrease in unrecognized tax benefits. In addition, as a result of the currency fluctuations during 2008, the balance of unrecognized tax benefits decreased approximately $12.0 million. The IRS is currently auditing the Company’s 2005 and 2006 tax years. The Company does not expect to resolve any material federal tax positions within the next twelve months. Substantially all material state, local, and foreign income tax matters have been concluded for years through 2000.
NOTE M — SHAREHOLDERS’ EQUITY
In connection with the merger, the Company issued approximately 23.6 million shares of Class A common stock, approximately 0.6 million shares of Class B common stock and approximately 59.0 million shares of Class C common stock. Every holder of shares of Class A common stock is entitled to one vote for each share of Class A common stock. Every holder of shares of Class B common stock is entitled to a number of votes per share equal to the number obtained by dividing (a) the sum of the total number of shares of Class B common stock outstanding as of the record date for such vote and the number of shares of Class C common stock outstanding as of the record date for such vote by (b) the number of shares of Class B common stock outstanding as of the record date for such vote.Except as otherwise required by law, the holders of outstanding shares of Class C common stock are not entitled to any votes upon any matters presented to our stockholders.

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Except with respect to voting as described above, and as otherwise required by law, all shares of Class A common stock, Class B common stock and Class C common stock have the same powers, privileges, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, and will be identical to each other in all respects.
Vesting of certain Clear Channel stock options and restricted stock awards was accelerated upon closing of the merger. As a result, except for certain executive officers and holders of certain options that could not, by their terms, be cancelled prior to their stated expiration date, holders of stock options received cash or, if elected, an amount of Company stock, in each case equal to the intrinsic value of the awards based on a market price of $36.00 per share. Holders of restricted stock awards received $36.00 per share in cash, without interest, if elected, or a share of Company stock per share of Clear Channel restricted stock. Approximately $39.2 million of share-based compensation was recognized in the pre-merger period as a result of the accelerated vesting of the stock options and restricted stock awards.
Dividends
Clear Channel’s Board of Directors declared quarterly cash dividends as follows.
(In millions, except per share data)
                         
    Amount per            
Declaration   Common            
Date   Share   Record Date   Payment Date   Total Payment
2007:
                       
February 21, 2007
    0.1875     March 31, 2007   April 15, 2007   $ 93.0  
April 19, 2007
    0.1875     June 30, 2007   July 15, 2007     93.4  
July 27, 2007
    0.1875     September 30, 2007   October 15, 2007     93.4  
December 3, 2007
    0.1875     December 31, 2007   January 15, 2008     93.4  
Clear Channel did not declare dividends in 2008. The Company currently does not intend to pay regular quarterly cash dividends on the shares of its Class A common stock. Clear Channel’s debt financing arrangements include restrictions on its ability to pay dividends thereby limiting the Company’s ability to pay dividends.
Share-Based Payments
Stock Options
Prior to the merger, Clear Channel granted options to purchase its common stock to its employees and directors and its affiliates under its various equity incentive plans typically at no less than the fair value of the underlying stock on the date of grant. These options were granted for a term not exceeding ten years and were forfeited, except in certain circumstances, in the event the employee or director terminated his or her employment or relationship with Clear Channel or one of its affiliates. Prior to acceleration, if any, in connection with the merger, these options vested over a period of up to five years. All equity incentive plans contained anti-dilutive provisions that permitted an adjustment of the number of shares of Clear Channel’s common stock represented by each option for any change in capitalization.
At July 30, 2008, immediately prior to the effectiveness of the merger, there were 23,433,092 outstanding Clear Channel stock options held by Clear Channel’s employees and directors under Clear Channel’s equity incentive plans. Of these Clear Channel stock options, 7,407,103 had an exercise price below $36.00, and were considered “in the money.” Each Clear Channel stock option that was outstanding and unexercised as of the date of the merger, other than certain stock options described below, whether vested or unvested, automatically became fully vested and converted into the right to receive a cash payment or equity in the Company equal to the value of the product of the excess, if any, of the $36.00 over the exercise price per share of the Clear Channel stock option. Following the merger, Clear Channel stock options automatically ceased to exist and are no longer outstanding and, following the receipt of the cash payment or equity, if any, described in the preceding sentence, the holders thereof ceased to have any rights with respect to Clear Channel stock options.

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Some of the outstanding “in the money” Clear Channel stock options held by certain executive officers were not converted into the right to receive a cash payment or equity in the Company based on their intrinsic value on the date of the merger, but rather were converted into options to purchase shares of the Company following the merger. Such conversions were based on the fair market value of Company stock on the merger date and also preserved the aggregate spread value of the converted options. An aggregate of 1,749,075 shares of Clear Channel stock options held by these executive officers with a weighted average exercise price of $32.63 per share were converted into vested stock options to purchase 235,393 shares of the Company’s Class A common stock with a weighted average exercise price of $10.99 per share. Additionally, vested options to acquire 170,329 shares of Clear Channel common stock at a weighted average exercise price of $57.28 on the date of the merger could not, by their terms, be cancelled prior to their stated expiration date. These stock options were converted, on a one-for-one basis, into stock options to acquire shares of the Company’s Class A common stock.
The following table presents a summary of Clear Channel’s stock options outstanding at and stock option activity during the pre-merger period from January 1 through July 30, 2008 (“Price” reflects the weighted average exercise price per share):
                 
(In thousands, except per share data)   Options   Price
Outstanding, January 1, 2008
    30,643     $ 43.56  
Granted
          n/a  
Exercised (a)
    (438 )     30.85  
Forfeited
    (298 )     31.47  
Expired
    (22,330 )     47.61  
Settled at merger (b)
    (5,658 )     32.16  
Converted into options in the Company
    (1,919 )     34.82  
 
               
Outstanding, July 30, 2008
    0       n/a  
 
               
 
(a)   Cash received from option exercises during the pre-merger period from January 1 through July 30, 2008 was $13.5 million, and Clear Channel received an income tax benefit of $0.9 million relating to the options exercised during the pre-merger period from January 1 through July 30, 2008. The cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) is to be classified as financing cash flows. The excess tax benefit that is required to be classified as a financing cash inflow is not material. The total intrinsic value of options exercised during the pre-merger period from January 1 through July 30, 2008 was $1.7 million.
 
(b)   Clear Channel received an income tax benefit of $8.1 million relating to the options settled upon the closing of the merger.
A summary of Clear Channel’s unvested options at December 31, 2007, and changes during the pre-merger period from January 1 through July 30, 2008, is presented below:
                 
            Weighted Average
            Grant Date
(In thousands, except per share data)   Options   Fair Value
Unvested, January 1, 2008
    6,817     $ 10.80  
Granted
          n/a  
Vested (a)
    (6,519 )     10.81  
Forfeited
    (298 )     8.33  
 
               
Unvested, July 30, 2008
    0       n/a  
 
               
 
(a)   The total fair value of options vested during the pre-merger period from January 1 through July 30, 2008 was $71.2 million. Upon closing of the merger, 4.1 million Clear Channel unvested stock options became vested. As a result, Clear Channel recorded $12.9 million in non-cash compensation expense on July 30, 2008.

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In connection with, and prior to, the merger, the Company adopted a new equity incentive plan (“2008 Incentive Plan”), under which it grants options to purchase its Class A common stock to its employees and directors and its affiliates at no less than the fair value of the underlying stock on the date of grant. These options are granted for a term not exceeding ten years and are forfeited, except in certain circumstances, in the event the employee or director terminates his or her employment or relationship with the Company or one of its affiliates. The 2008 Incentive Plan contains antidilutive provisions that permit an adjustment of the number of shares of the Company’s common stock represented by each option for any change in capitalization.
On July 30, 2008, the Company granted 7,417,307 options to purchase Class A common stock to certain key executives at $36.00 per share under the 2008 Incentive Plan. Of these options, 3,166,830 will vest based solely on continued service over a period of up to five years with the remainder becoming eligible to vest over five years if certain predetermined performance targets are met. All options were granted for a term of ten years and will be forfeited, except in certain circumstances, in the event the employee terminates his or her employment or relationship with the Company. The fair value of the portion of options that vest based on continued service was estimated on the grant date using a Black-Scholes option-pricing model and the fair value of the remaining options which contain vesting provisions subject to service, market and performance conditions was estimated on the grant date using a Monte Carlo model. Expected volatilities were based on implied volatilities from traded options on peer companies, historical volatility on peer companies’ stock, and other factors. The expected life of the options granted represents the period of time that the options granted are expected to be outstanding. The Company used historical data to estimate option exercises and employee terminations within the valuation model. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods equal to the expected life of the option. The following assumptions were used to calculate the fair value of these options:
         
Expected volatility
    58%
Expected life in years
    5.5 — 7.5
Risk-free interest rate
    3.46% — 3.83%
Dividend yield
    0%
The following table presents a summary of the Company’s stock options outstanding at and stock option activity during the post-merger period from July 31 through December 31, 2008 (“Price” reflects the weighted average exercise price per share):
                                 
                    Weighted Average   Aggregate
                    Remaining   Intrinsic
(In thousands, except per share data)   Options   Price   Contractual Term   Value
Clear Channel options converted
    406     $ 30.42                  
Granted (a)
    7,417       36.00                  
Exercised
          n/a                  
Forfeited
    (64 )     36.00                  
Expired
    (8 )     46.32                  
 
                               
Outstanding, December 31, 2008
    7,751       35.70     9.28 years   $ 0  
 
                               
Exercisable
    397       30.05     3.73 years   $ 0  
Expect to Vest
    3,004       36.00     9.58 years   $ 0  
 
(a)   The weighted average grant date fair value of options granted on July 30, 2008 was $21.20. Non-cash compensation expense has not been recorded with respect to 4.3 million shares of this grant as the vesting of these options is subject to performance conditions that have not yet been determined probable to meet.

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A summary of the Company’s unvested options and changes during the post-merger period from July 31 through December 31, 2008, is presented below:
                 
            Weighted Average
            Grant Date
(In thousands, except per share data)   Options   Fair Value
Granted
    7,417     $ 21.20  
Vested
          n/a  
Forfeited
    (63 )     20.73  
 
               
Unvested, December 31, 2008
    7,354       21.20  
 
               
Restricted Stock Awards
Prior to the merger, Clear Channel granted restricted stock awards to its employees and directors and its affiliates under its various equity incentive plans. These common shares held a legend which restricted their transferability for a term of up to five years and were forfeited, except in certain circumstances, in the event the employee or director terminated his or her employment or relationship with Clear Channel prior to the lapse of the restriction. Recipients of the restricted stock awards were entitled to all cash dividends as of the date the award was granted.
At July 30, 2008, there were 2,692,904 outstanding Clear Channel restricted stock awards held by Clear Channel’s employees and directors under Clear Channel’s equity incentive plans. Pursuant to the Merger Agreement, 1,876,315 of the Clear Channel restricted stock awards became fully vested and converted into the right to receive, with respect to each share of such restricted stock, a cash payment or equity in the Company equal to the value of $36.00 per share. The remaining 816,589 shares of Clear Channel restricted stock were converted on a one-for-one basis into restricted stock of the Company. These converted shares continue to vest in accordance with their original terms. Following the merger, Clear Channel restricted stock automatically ceased to exist and is no longer outstanding, and, following the receipt of the cash payment or equity, if any, described above, the holders thereof no longer have any rights with respect to Clear Channel restricted stock.
The following table presents a summary of Clear Channel’s restricted stock outstanding at and restricted stock activity during the pre-merger period from January 1 through July 30, 2008 (“Price” reflects the weighted average share price at the date of grant):
                 
(In thousands, except per share data)   Awards   Price
Outstanding, January 1, 2008
    3,301     $ 34.52  
Granted
          n/a  
Vested (restriction lapsed) (a)
    (470 )     36.58  
Forfeited
    (138 )     33.60  
Settled at merger (b)
    (1,876 )     32.53  
Converted into restricted stock of the Company
    (817 )     38.06  
 
               
Outstanding, July 30, 2008
    0       n/a  
 
               
 
(a)   Clear Channel received an income tax benefit of $6.5 million relating to restricted shares that vested during the pre-merger period from January 1 through July 30, 2008.
 
(b)   Upon closing of the merger, 1.9 million shares of Clear Channel restricted stock became vested. As a result, Clear Channel recorded $26.3 million in non-cash compensation on July 30, 2008. Clear Channel received an income tax benefit of $25.4 million relating to the restricted shares settled upon closing of the merger, $23.2 million was recorded as a tax benefit on the consolidated statements of operations and $2.2 million was recorded to additional paid in capital.
On July 30, 2008, the Company granted 555,556 shares of restricted stock to each its Chief Executive Officer and Chief Financial Officer under its 2008 Incentive Plan. The aggregate fair value of these awards was $40.0 million, based on the market value of a share of the Company’s Class A common stock on the grant date, or $36.00 per share. These Class A common shares are subject to restrictions on their transferability, which lapse ratably over a

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term of five years and will be forfeited, except in certain circumstances, in the event the employee terminates his employment or relationship with the Company prior to the lapse of the restriction. The following table presents a summary of the Company’s restricted stock outstanding at and restricted stock activity during the post-merger period from July 31 through December 31, 2008 (“Price” reflects the weighted average share price at the date of grant):
                 
(In thousands, except per share data)   Awards   Price
Clear Channel restricted stock converted
    817     $ 36.00  
Granted
    1,111       36.00  
Vested (restriction lapsed)
    (1 )     36.00  
Forfeited
    (40 )     36.00  
 
               
Outstanding, December 31, 2008
    1,887       36.00  
 
               
Subsidiary Share-Based Awards
The Company’s subsidiary, Clear Channel Outdoor Holdings, Inc. (“CCO”), grants options to purchase shares of its Class A common stock to its employees and directors and its affiliates under its equity incentive plan typically at no less than the fair market value of the underlying stock on the date of grant. These options are granted for a term not exceeding ten years and are forfeited, except in certain circumstances, in the event the employee or director terminates his or her employment or relationship with CCO or one of its affiliates. These options vest over a period of up to five years. The incentive stock plan contains anti-dilutive provisions that permit an adjustment of the number of shares of CCO’s common stock represented by each option for any change in capitalization.
Prior to CCO’s IPO, CCO did not have any compensation plans under which it granted stock awards to employees. However, Clear Channel had granted certain of CCO’s officers and other key employees, stock options to purchase shares of Clear Channel’s common stock under its own equity incentive plans. Concurrent with the closing of CCO’s IPO, all such outstanding options to purchase shares of Clear Channel’s common stock held by CCO employees were converted using an intrinsic value method into options to purchase shares of CCO Class A common stock.
The fair value of each option awarded on CCO common stock is estimated on the date of grant using a Black-Scholes option-pricing model. Expected volatilities are based on implied volatilities from traded options on CCO’s stock, historical volatility on CCO’s stock, and other factors. The expected life of options granted represents the period of time that options granted are expected to be outstanding. CCO uses historical data to estimate option exercises and employee terminations within the valuation model. CCO includes estimated forfeitures in its compensation cost and updates the estimated forfeiture rate through the final vesting date of awards. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods equal to the expected life of the option. The following assumptions were used to calculate the fair value of CCO’s options on the date of grant:
                                 
    Post-Merger   Pre-Merger
    Period from   Period from        
    July 31   January 1        
    through   through   Year Ended   Year Ended
    December 31,   July 30,   December 31,   December 31,
    2008   2008   2007   2006
Expected volatility
    n/a     27%   27%   27%
Expected life in years
    n/a     5.5 — 7.0   5.0 — 7.0   5.0 — 7.5
Risk-free interest rate
    n/a     3.24% — 3.38%   4.76% — 4.89%   4.58% — 5.08%
Dividend yield
    n/a     0%   0%   0%

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The following table presents a summary of CCO’s stock options outstanding at and stock option activity during the year ended December 31, 2008 (“Price” reflects the weighted average exercise price per share):
                                 
                    Weighted    
                    Average   Aggregate
                    Remaining   Intrinsic
(In thousands, except per share data)   Options   Price   Contractual Term   Value
Pre-Merger
                               
Outstanding, January 1, 2008
    7,536     $ 23.08                  
Granted (a)
    1,881       20.64                  
Exercised (b)
    (233 )     18.28                  
Forfeited
    (346 )     19.95                  
Expired
    (548 )     30.62                  
 
                               
Outstanding, July 30, 2008
    8,290       22.30                  
 
                               
Post-Merger
                               
 
                               
Granted
          n/a                  
Exercised
          n/a                  
Forfeited
    (49 )     19.87                  
Expired
    (528 )     26.41                  
 
                               
Outstanding, December 31, 2008
    7,713       22.03     5.2 years   $  
 
                               
Exercisable
    2,979       24.28     2.4 years      
Expect to vest
    4,734       20.62     6.9 years      
 
(a)   The weighted average grant date fair value of CCO options granted during the pre-merger prior from January 1, 2008 through July 30, 2008 was $7.10. The weighted average grant date fair value of CCO options granted during the pre-merger years ended December 31, 2007 and 2006 was $11.05 and $6.76, respectively.
 
(b)   Cash received from CCO option exercises during the pre-merger period from January 1, 2008 through July 30, 2008, was $4.3 million. Cash received from CCO option exercises during the pre-merger year ended December 31, 2007, was $10.8 million. The total intrinsic value of CCO options exercised during the pre-merger period from January 1, 2008 through July 30, 2008, was $0.7 million. The total intrinsic value of CCO options exercised during the pre-merger years ended December 31, 2007 and 2006, was $2.0 million and $0.3 million, respectively.

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A summary of CCO’s nonvested options at and changes during the year ended December 31, 2008, is presented below:
                 
            Weighted
            Average
            Grant Date
(In thousands, except per share data)   Options   Fair Value
Pre-Merger
               
Nonvested, January 1, 2008
    4,622     $ 7.01  
Granted
    1,881       7.10  
Vested (a)
    (978 )     5.81  
Forfeited
    (346 )     7.01  
 
               
Nonvested, July 31, 2008
    5,179       7.28  
 
               
Post-Merger
               
 
               
Granted
          n/a  
Vested (a)
    (396 )     5.81  
Forfeited
    (49 )     7.17  
 
               
Nonvested, December 31, 2008
    4,734       7.40  
 
               
 
(a)   The total fair value of CCO options vested during the pre-merger period from January 1, 2008 through July 30, 2008 was $5.7 million. The total fair value of CCO options vested during the post-merger period from July 31 through December 31, 2008 was $2.3 million. The total fair value of CCO options vested during the pre-merger years ended December 31, 2007 and 2006, was $2.0 million and $1.6 million, respectively.
Restricted Stock Awards
CCO also grants restricted stock awards to employees and directors of CCO and its affiliates. These common shares hold a legend which restricts their transferability for a term of up to five years and are forfeited, except in certain circumstances, in the event the employee terminates his or her employment or relationship with CCO prior to the lapse of the restriction. Restricted stock awards are granted under the CCO equity incentive plan.
The following table presents a summary of CCO’s restricted stock outstanding at and restricted stock activity during the year ended December 31, 2008 (“Price” reflects the weighted average share price at the date of grant):
                 
(In thousands, except per share data)   Awards   Price
Pre-Merger
               
Outstanding, January 1, 2008
    491     $ 24.57  
Granted
          n/a  
Vested (restriction lapsed)
    (72 )     29.03  
Forfeited
    (15 )     25.77  
 
               
Outstanding, July 30, 2008
    404       23.76  
 
               
Post-Merger
               
 
               
Granted
          n/a  
Vested (restriction lapsed)
    (46 )     18.00  
Forfeited
    (7 )     21.34  
 
               
Outstanding, December 31, 2008
    351       24.54  
 
               
Share-based compensation cost
The share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the vesting period. The following table presents the amount of

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share-based compensation recorded during the five months ended December 31, 2008, the seven months ended July 30, 2008 and the years ended December 31, 2007 and 2006:
                                   
    Post-Merger       Pre-Merger  
    July 31       January 1     Year Ended     Year Ended  
    December 31,       July 30,     December 31,     December 31,  
(In thousands)   2008       2008     2007     2006  
Direct Expense
  $ 4,631       $ 21,162     $ 16,975     $ 16,142  
Selling, General & Administrative Expense
    2,687         21,213       14,884       16,762  
Corporate Expense
    8,593         20,348       12,192       9,126  
 
                         
Total Share Based Compensation Expense
  $ 15,911       $ 62,723     $ 44,051     $ 42,030  
 
                         
As of December 31, 2008, there was $130.3 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements that will vest based on service conditions. This cost is expected to be recognized over four years. In addition, as of December 31, 2008, there was $80.2 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested share-based compensation arrangements that will vest based on market, performance and service conditions. This cost will be recognized when it becomes probable that the performance condition will be satisfied.
Reconciliation of Earnings (Loss) per Share
                                   
    Post-merger       Pre-merger              
    period ended       period ended              
    December 31,       July 30,     Pre-merger     Pre-merger  
(In thousands, except per share data)   2008       2008     2007     2006  
NUMERATOR:
                                 
Income (loss) before discontinued operations
  $ (5,040,153 )     $ 396,289     $ 792,674     $ 638,839  
Income (loss) from discontinued operations, net
    (1,845 )       640,236       145,833       52,678  
 
                         
Net income (loss) — basic and diluted
    (5,041,998 )       1,036,525       938,507       691,517  
 
                                 
DENOMINATOR:
                                 
Weighted average common shares — basic
    81,242         495,044       494,347       500,786  
 
                                 
Effect of dilutive securities:
                                 
Stock options and common stock warrants (a)
            1,475       1,437       853  
 
                         
Denominator for net income (loss) per common share — diluted
    81,242         496,519       495,784       501,639  
 
                         
 
                                 
Net income (loss) per common share:
                                 
Income (loss) before discontinued operations — Basic
  $ (62.04 )     $ .80     $ 1.60     $ 1.27  
Discontinued operations — Basic
    (.02 )       1.29       .30       .11  
 
                         
Net income (loss) — Basic
  $ (62.06 )     $ 2.09     $ 1.90     $ 1.38  
 
                         
Income (loss) before discontinued operations — Diluted
  $ (62.04 )     $ .80     $ 1.60     $ 1.27  
Discontinued operations — Diluted
    (.02 )       1.29       .29       .11  
 
                         
Net income (loss) — Diluted
  $ (62.06 )     $ 2.09     $ 1.89     $ 1.38  
 
                         
 
(a)   7.6 million, 7.8 million, 22.2 million and 24.2 million stock options were outstanding at July 30, 2008, December 31, 2008, December 31, 2007 and December 31, 2006 that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive as the respective options’ strike price was greater than the current market price of the shares.

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NOTE N — EMPLOYEE STOCK AND SAVINGS PLANS
The Company has various 401(k) savings and other plans for the purpose of providing retirement benefits for substantially all employees. Under these plans, an employee can make pre-tax contributions and the Company will match a portion of such an employee’s contribution. Employees vest in these Company matching contributions based upon their years of service to the Company. Contributions from continuing operations to these plans of $12.4 million for the post-merger period ended December 31, 2008 and $17.9 million for the pre-merger period ended July 30, 2008 were charged to expense. Contributions from continuing operations to these plans of $39.1 million and $36.2 million were charged to expense for 2007 and 2006, respectively.
Clear Channel sponsored a non-qualified employee stock purchase plan for all eligible employees. Under the plan, employees were provided with the opportunity to purchase shares of the Clear Channel’s common stock at 95% of the market value on the day of purchase. During each calendar year, employees were able to purchase shares having a value not exceeding 10% of their annual gross compensation or $25,000, whichever was lower. During 2006, employees purchased 144,444 shares at weighted average share price of $28.56. The Company stopped accepting contributions to this plan, effective January 1, 2007, as a condition of its Merger Agreement. Clear Channel terminated this plan upon the closing of the merger and each share held under the plan was converted into the right to receive a cash payment equal to the value of $36.00 per share.
Clear Channel offered a non-qualified deferred compensation plan for its highly compensated executives, under which such executives were able to make an annual election to defer up to 50% of their annual salary and up to 80% of their bonus before taxes. Clear Channel accounted for the plan in accordance with the provisions of EITF No. 97-14, Accounting for Deferred Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested. The asset and liability under the nonqualified deferred compensation plan at December 31, 2007 were approximately $39.5 million recorded in “Other assets” and $40.9 million recorded in “Other long-term liabilities”, respectively. Clear Channel terminated this plan upon the closing of the merger and the related asset and liability of approximately $38.4 million were settled.
The Company offers a non-qualified deferred compensation plan for its highly compensated executives, under which such executives are able to make an annual election to defer up to 50% of their annual salary and up to 80% of their bonus before taxes. The Company accounts for the plan in accordance with the provisions of EITF No. 97-14, Accounting for Deferred Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested. Matching credits on amounts deferred may be made in the Company’s sole discretion and the Company retains ownership of all assets until distributed. Participants in the plan have the opportunity to allocate their deferrals and any Company matching credits among different investment options, the performance of which is used to determine the amounts to be paid to participants under the plan. In accordance with the provisions of EITF No. 97-14, the assets and liabilities of the non-qualified deferred compensation plan are presented in “Other assets” and “Other long-term liabilities” in the accompanying consolidated balance sheets, respectively. The asset and liability under the deferred compensation plan at December 31, 2008 were approximately $2.5 million recorded in “Other assets” and $2.5 million recorded in Other long-term liabilities”, respectively.

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NOTE O — OTHER INFORMATION
                                 
    Post-merger     Pre-merger        
    period ended     period ended     For the year ended  
    December 31,     July 30,     December 31,  
(In thousands)   2008     2008     2007     2006  
The following details the components of “Other income (expense) — net”:
                               
Foreign exchange gain (loss)
  $ 21,323     $ 7,960     $ 6,743     $ (8,130 )
Gain (loss) on early redemption of debt
    108,174       (13,484 )            
Other
    2,008       412       (1,417 )     (463 )
 
                       
Total other income (expense) — net
  $ 131,505     $ (5,112 )   $ 5,326     $ (8,593 )
 
                       
 
                               
The following details the income tax expense (benefit) on items of other comprehensive income (loss):
                               
Foreign currency translation adjustments
  $ (20,946 )   $ (24,894 )   $ (16,233 )   $ (22,012 )
Unrealized gain (loss) on securities and derivatives:
                               
Unrealized holding gain (loss)
  $     $ (27,047 )   $ (5,155 )   $ (37,091 )
Unrealized gain (loss) on cash flow derivatives
  $ (43,706 )   $     $ (1,035 )   $ 46,662  
                 
    As of December 31,  
(In thousands)   2008     2007  
The following details the components of “Other current assets”:
  Post-merger     Pre-merger  
Inventory
  $ 28,012     $ 27,900  
Deferred tax asset
    43,903       20,854  
Deposits
    7,162       27,696  
Other prepayments
    53,280       90,631  
Income taxes receivable
    46,615        
Other
    83,216       76,167  
 
           
Total other current assets
  $ 262,188     $ 243,248  
 
           
                 
    As of December 31,  
(In thousands)   2008     2007  
The following details the components of “Other assets”:
  Post-merger     Pre-merger  
Prepaid expenses
  $ 125,768     $ 18,709  
Deferred loan costs
    295,143       11,678  
Deposits
    27,943       14,507  
Prepaid rent
    92,171       74,077  
Other prepayments
    16,685       70,265  
Prepaid income taxes
          75,096  
Non-qualified plan assets
    2,550       39,459  
 
           
Total other assets
  $ 560,260     $ 303,791  
 
           

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    As of December 31,  
    2008     2007  
(In thousands)   Post-merger     Pre-merger  
The following details the components of “Other long-term liabilities”:
               
FIN 48 unrecognized tax benefits
  $ 266,852     $ 237,085  
Asset retirement obligation
    55,592       70,497  
Non-qualified plan liabilities
    2,550       40,932  
SAILS obligation
          103,849  
Interest rate swap
    118,785        
Other
    131,960       115,485  
 
           
Total other long-term liabilities
  $ 575,739     $ 567,848  
 
           
                 
    2008     2007  
    Post-merger     Pre-merger  
The following details the components of “Accumulated other comprehensive income (loss)”:
               
Cumulative currency translation adjustment
  $ (364,164 )   $ 314,282  
Cumulative unrealized gain (losses) on securities
    (95,669 )     67,693  
Reclassification adjustments
    95,687        
Cumulative unrealized gain (losses) on cash flow derivatives
    (75,079 )     1,723  
 
           
Total accumulated other comprehensive income (loss)
  $ (439,225 )   $ 383,698  
 
           
NOTE P — SEGMENT DATA
The Company’s reportable operating segments, which it believes best reflects how the Company is currently managed, are radio broadcasting, Americas outdoor advertising and international outdoor advertising. Revenue and expenses earned and charged between segments are recorded at fair value and eliminated in consolidation. The radio broadcasting segment also operates various radio networks. The Americas outdoor advertising segment consists of our operations primarily in the United States, Canada and Latin America, with approximately 92% of its 2008 revenue in this segment derived from the United States. The international outdoor segment includes operations in Europe, Asia and Australia. The Americas and international display inventory consists primarily of billboards, street furniture displays and transit displays. The other category includes our media representation firm as well as other general support services and initiatives which are ancillary to our other businesses. Share-based payments are recorded by each segment in direct operating and selling, general and administrative expenses.

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            Americas     International                            
    Radio     Outdoor     Outdoor             Corporate and other              
(In thousands)   Broadcasting     Advertising     Advertising     Other     reconciling items     Eliminations     Consolidated  
Post-Merger Period from July 31, 2008 through December 31, 2008
                                                       
Revenue
  $ 1,355,894     $ 587,427     $ 739,797     $ 97,975     $     $ (44,152 )   $ 2,736,941  
Direct operating expenses
    409,090       276,602       486,102       46,193             (19,642 )     1,198,345  
Selling, general and administrative expenses
    530,445       114,260       147,264       39,328             (24,510 )     806,787  
Depreciation and amortization
    90,166       90,624       134,089       24,722       8,440             348,041  
Corporate expenses
                            102,276             102,276  
Merger expenses
                            68,085             68,085  
Impairment charge
                            5,268,858             5,268,858  
Other operating income - net
                            13,205             13,205  
 
                                         
Operating income (loss)
  $ 326,193     $ 105,941     $ (27,658 )   $ (12,268 )   $ (5,434,454 )   $     $ (5,042,246 )
 
                                         
 
                                                       
Intersegment revenues
  $ 15,926     $ 3,985     $     $ 24,241     $     $     $ 44,152  
Identifiable assets
  $ 11,905,689     $ 5,187,838     $ 2,409,652     $ 1,016,073     $ 606,211     $     $ 21,125,463  
Capital expenditures
  $ 24,462     $ 93,146     $ 66,067     $ 2,567     $ 4,011     $     $ 190,253  
Share-based payments
  $ 3,399     $ 3,012     $ 797     $ 110     $ 8,593     $     $ 15,911  
 
                                                       
Pre-Merger Period from January 1, 2008 through July 30, 2008
                                                       
Revenue
  $ 1,937,980     $ 842,831     $ 1,119,232     $ 111,990     $     $ (60,291 )   $ 3,951,742  
Direct operating expenses
    570,234       370,924       748,508       46,490             (30,057 )     1,706,099  
Selling, general and administrative expenses
    652,162       138,629       206,217       55,685             (30,234 )     1,022,459  
Depreciation and amortization
    62,656       117,009       130,628       28,966       9,530             348,789  
Corporate expenses
                            125,669             125,669  
Merger expenses
                            87,684             87,684  
Other operating income — net
                            14,827             14,827  
 
                                         
Operating income (loss)
  $ 652,928     $ 216,269     $ 33,879     $ (19,151 )   $ (208,056 )   $     $ 675,869  
 
                                         
 
                                                       
Intersegment revenues
  $ 23,551     $ 4,561     $     $ 32,179     $     $     $ 60,291  
Identifiable assets
  $ 11,667,570     $ 2,876,051     $ 2,704,889     $ 558,638     $ 656,616     $     $ 18,463,764  
Capital expenditures
  $ 37,004     $ 82,672     $ 116,450     $ 1,609     $ 2,467     $     $ 240,202  
Share-based payments
  $ 34,386     $ 5,453     $ 1,370     $ 1,166     $ 20,348     $     $ 62,723  

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            Americas     International                            
    Radio     Outdoor     Outdoor             Corporate and other              
(In thousands)   Broadcasting     Advertising     Advertising     Other     reconciling items     Eliminations     Consolidated  
Pre-merger 2007
                                                       
Revenue
  $ 3,558,534     $ 1,485,058     $ 1,796,778     $ 207,704     $     $ (126,872 )   $ 6,921,202  
Direct operating expenses
    982,966       590,563       1,144,282       78,513             (63,320 )     2,733,004  
Selling, general and administrative expenses
    1,190,083       226,448       311,546       97,414             (63,552 )     1,761,939  
Depreciation and amortization
    107,466       189,853       209,630       43,436       16,242             566,627  
Corporate expenses
                            181,504             181,504  
Merger expenses
                            6,762             6,762  
Other operating income - net
                            14,113             14,113  
 
                                         
Operating income (loss)
  $ 1,278,019     $ 478,194     $ 131,320     $ (11,659 )   $ (190,395 )   $     $ 1,685,479  
 
                                         
 
                                                       
Intersegment revenues
  $ 44,666     $ 13,733     $     $ 68,473     $     $     $ 126,872  
Identifiable assets
  $ 11,732,311     $ 2,878,753     $ 2,606,130     $ 736,037     $ 345,404     $     $ 18,298,635  
Capital expenditures
  $ 78,523     $ 142,826     $ 132,864     $ 2,418     $ 6,678     $     $ 363,309  
Share-based payments
  $ 22,226     $ 7,932     $ 1,701     $     $ 12,192     $     $ 44,051  
 
                                                       
Pre-merger 2006
                                                       
Revenue
  $ 3,567,413     $ 1,341,356     $ 1,556,365     $ 223,929     $     $ (121,273 )   $ 6,567,790  
Direct operating expenses
    994,686       534,365       980,477       82,372             (59,456 )     2,532,444  
Selling, general and administrative expenses
    1,185,770       207,326       279,668       98,010             (61,817 )     1,708,957  
Depreciation and amortization
    125,631       178,970       228,760       47,772       19,161             600,294  
Corporate expenses
                            196,319             196,319  
Merger expenses
                            7,633             7,633  
Other operating income — net
                            71,571             71,571  
 
                                         
Operating income (loss)
  $ 1,261,326     $ 420,695     $ 67,460     $ (4,225 )   $ (151,542 )   $     $ 1,593,714  
 
                                         
 
                                                       
Intersegment revenues
  $ 40,119     $ 10,536     $     $ 70,618     $     $     $ 121,273  
Identifiable assets
  $ 11,873,784     $ 2,820,737     $ 2,401,924     $ 701,239     $ 360,440     $     $ 18,158,124  
Capital expenditures
  $ 93,264     $ 90,495     $ 143,387     $ 2,603     $ 6,990     $     $ 336,739  
Share-based payments
  $ 25,237     $ 4,699     $ 1,312     $ 1,656     $ 9,126     $     $ 42,030  
Revenue of $799.8 million and identifiable assets of $2.6 billion derived from foreign operations are included in the data above for the post-merger period from July 31, 2008 through December 31, 2008. Revenue of $1.2 billion and identifiable assets of $2.9 billion derived from foreign operations are included in the data above for the pre-merger period from January 1, 2008 through July 30, 2008. Revenue of $1.9 billion and $1.7 billion derived from the Company’s foreign operations are included in the data above for the years ended December 31, 2007 and 2006. Identifiable assets of $2.9 billion and $2.7 billion derived from the Company’s foreign operations are included in the data above for the years ended December 31, 2007 and 2006, respectively.

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NOTE Q — QUARTERLY RESULTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
                                                                 
    March 31,     June 30,     September 30,     December 31,  
    2008     2007     2008     2007     2008     2007     2008     2007  
    Pre-merger     Pre-merger     Pre-merger     Pre-merger     Combined(1)     Pre-merger     Post-merger     Pre-merger  
Revenue
  $ 1,564,207     $ 1,505,077     $ 1,831,078     $ 1,802,192     $ 1,684,593     $ 1,751,165     $ 1,608,805     $ 1,862,768  
Operating expenses:
                                                               
Direct operating expenses
    705,947       627,879       743,485       676,255       730,405       689,681       724,607       739,189  
Selling, general and administrative expenses
    426,381       416,319       445,734       447,190       441,813       431,366       515,318       467,064  
Depreciation and amortization
    152,278       139,685       142,188       141,309       162,463       139,650       239,901       145,983  
Corporate expenses
    46,303       48,150       47,974       43,044       64,787       47,040       68,881       43,270  
Merger expenses
    389       1,686       7,456       2,684       79,839       2,002       68,085       390  
Impairment charge
                                        5,268,858        
Other operating income — net
    2,097       6,947       17,354       3,996       (3,782 )     678       12,363       2,492  
 
                                               
Operating income (loss)
    235,006       278,305       461,595       495,706       201,504       442,104       (5,264,482 )     469,364  
Interest expense
    100,003       118,077       82,175       116,422       312,511       113,026       434,289       104,345  
Gain (loss) on marketable securities
    6,526       395       27,736       (410 )           676       (116,552 )     6,081  
Equity in earnings of nonconsolidated affiliates
    83,045       5,264       8,990       11,435       4,277       7,133       3,707       11,344  
Other income (expense) — net
    11,787       (12 )     (6,086 )     340       (21,727 )     (1,403 )     142,419       6,401  
 
                                               
Income (loss) before income taxes, minority interest and discontinued operations
    236,361       165,875       410,060       390,649       (128,457 )     335,484       (5,669,197 )     388,845  
Income tax (expense) benefit
    (66,581 )     (70,466 )     (125,137 )     (159,786 )     52,344       (70,125 )     663,414       (140,771 )
Minority interest income (expense) — net
    (8,389 )     (276 )     (7,628 )     (14,970 )     (10,003 )     (11,961 )     9,349       (19,824 )
 
                                               
Income (loss) before discontinued operations
    161,391       95,133       277,295       215,893       (86,116 )     253,398       (4,996,434 )     228,250  
Discontinued operations
    638,262       7,089       5,032       20,097       (4,071 )     26,338       (832 )     92,309  
 
                                               
Net income (loss)
  $ 799,653     $ 102,222     $ 282,327     $ 235,990     $ (90,187 )   $ 279,736     $ (4,997,266 )   $ 320,559  
 
                                               
Net income per common share:
                                                               
Basic:
                                                               
Income (loss) before discontinued operations
  $ .33     $ .19     $ .56     $ .44       N.A.     $ .51     $ (61.50 )   $ .46  
Discontinued operations
    1.29       .02       .01       .04       N.A.       .06       (.01 )     .19  
 
                                                 
Net income (loss)
  $ 1.62     $ .21     $ .57     $ .48       N.A.     $ .57     $ (61.51 )   $ .65  
 
                                                 
Diluted:
                                                               
Income (loss) before discontinued operations
  $ .32     $ .19     $ .56     $ .44       N.A.     $ .51     $ (61.50 )   $ .46  
Discontinued operations
    1.29       .02       .01       .04       N.A.       .05       (.01 )     .19  
 
                                                 
Net income (loss)
  $ 1.61     $ .21     $ .57     $ .48       N.A.     $ .56     $ (61.51 )   $ .65  
 
                                                 
Dividends declared per share
  $     $ .1875     $     $ .1875     $     $ .1875     $     $ .1875  
The Company’s Class A common shares are quoted for trading on the OTC Bulletin Board under the symbol CCMO.

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(1)   The third quarter results of operations contain two months of post-merger and one month of pre-merger results, which relate to the period succeeding the merger and the periods preceding the merger, respectively. The Company believes that the presentation on a combined basis is more meaningful as it allows the results of operations to be analyzed to comparable periods in 2007. The following table separates the combined results into the post-merger and pre-merger periods:
                         
    Post-merger              
    Period from July 31     Pre-merger     Combined  
    through     Period From July 1     Three Months ended  
    September 30,     through July 30,     September 30,  
(In thousands)   2008     2008     2008  
Revenue
  $ 1,128,136     $ 556,457     $ 1,684,593  
Operating expenses:
                       
Direct operating expenses (excludes depreciation and amortization)
    473,738       256,667       730,405  
Selling, general and administrative expenses (excludes depreciation and amortization)
    291,469       150,344       441,813  
Depreciation and amortization
    108,140       54,323       162,463  
Corporate expenses (excludes depreciation and amortization)
    33,395       31,392       64,787  
Merger expenses
          79,839       79,839  
Gain (loss) on disposition of assets — net
    842       (4,624 )     (3,782 )
 
                 
Operating income (loss)
    222,236       (20,732 )     201,504  
Interest expense
    281,479       31,032       312,511  
Equity in earnings of nonconsolidated affiliates
    2,097       2,180       4,277  
Other income (expense) — net
    (10,914 )     (10,813 )     (21,727 )
 
                 
Income (loss) before income taxes, minority interest and discontinued operations
    (68,060 )     (60,397 )     (128,457 )
Income tax benefit
    33,209       19,135       52,344  
Minority interest expense, net of tax
    8,868       1,135       10,003  
 
                 
Income (loss) before discontinued operations
    (43,719 )     (42,397 )     (86,116 )
Income (loss) from discontinued operations, net
    (1,013 )     (3,058 )     (4,071 )
 
                 
Net income (loss)
  $ (44,732 )   $ (45,455 )   $ (90,187 )
 
                 
 
                       
Net income (loss) per common share:
                       
Income (loss) before discontinued operations — Basic
  $ (.54 )   $ (.09 )        
Discontinued operations — Basic
    (.01 )              
 
                   
Net income (loss) — Basic
  $ (.55 )   $ (.09 )        
 
                   
 
                       
Weighted average common shares — basic
    81,242       495,465          
Income (loss) before discontinued operations — Diluted
  $ (.54 )   $ (.09 )        
Discontinued operations — Diluted
    (.01 )              
 
                   
Net income (loss) — Diluted
  $ (.55 )   $ (.09 )        
 
                   
 
                       
Weighted average common shares — diluted
    81,242       495,465          
 
                       
Dividends declared per share
  $     $          
NOTE R — CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In connection with the merger, the Company paid certain affiliates of the Sponsors $87.5 million in fees and expenses for financial and structural advice and analysis, assistance with due diligence investigations and debt financing negotiations and $15.9 million for reimbursement of escrow and other out-of-pocket expenses. This amount was preliminarily allocated between merger expenses, debt issuance costs or included in the overall purchase price of the merger.

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The Company has agreements with certain affiliates of the Sponsors pursuant to which such affiliates of the Sponsors will provide management and financial advisory services to the Company until 2018. The agreements require the Company to pay management fees to such affiliates of the Sponsors for such services at a rate not greater than $15.0 million per year, with any additional fees subject to approval by the Company’s board of directors. For the post-merger period ended December 31, 2008, the Company recognized Sponsors’ management fees of $6.3 million.

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NOTE S — GUARANTOR SUBSIDIARIES
Certain of the Company’s domestic, wholly-owned subsidiaries (the “Guarantors”) have fully and unconditionally guaranteed on a joint and several basis certain of Clear Channel’s outstanding debt obligations. The following consolidating schedules present condensed financial information on a combined basis:
Post-merger
                                 
    December 31, 2008  
    Company, Clear                    
    Channel and                    
    Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash and cash equivalents
  $ 139,433     $ 100,413             $ 239,846  
Accounts receivable, net of allowance
    622,255       809,049               1,431,304  
Intercompany receivables
    15,061       431,641       (446,702 )      
Prepaid expenses
    62,752       70,465               133,217  
Other current assets
    109,347       154,474       (1,633 )     262,188  
 
                       
Total Current Assets
    948,848       1,566,042       (448,335 )     2,066,555  
Property, plant and equipment, net
    959,555       2,588,604               3,548,159  
Definite-lived intangibles, net
    1,869,528       1,012,192               2,881,720  
Indefinite-lived intangibles — licenses
    3,019,803                     3,019,803  
Indefinite-lived intangibles — permits
          1,529,068               1,529,068  
Goodwill
    5,809,000       1,281,621               7,090,621  
Notes receivable
    8,493       3,140               11,633  
Intercompany notes receivable (a)
    2,500,000             (2,500,000 )      
Investments in, and advances to, nonconsolidated affiliates
          384,137               384,137  
Investment in subsidiaries
    3,765,342             (3,765,342 )      
Other assets
    438,909       145,805       (24,454 )     560,260  
Other investments
    10,089       23,418               33,507  
 
                       
Total Assets
  $ 19,329,567     $ 8,534,027     $ (6,738,131 )   $ 21,125,463  
 
                       
 
                               
Accounts payable
  $ 36,732     $ 118,508     $       $ 155,240  
Accrued expenses
    295,402       497,964               793,366  
Accrued interest
    182,605       292       (1,633 )     181,264  
Intercompany payable
    432,422       14,280       (446,702 )      
Current portion of long-term debt (b)
    493,401       69,522               562,923  
Deferred income
    40,268       112,885               153,153  
 
                       
Total Current Liabilities
    1,480,830       813,451       (448,335 )     1,845,946  
Long-term debt (b)
    18,986,269       32,332       (77,904 )     18,940,697  
Intercompany long-term debt
          2,500,000       (2,500,000 )      
Deferred income taxes
    1,647,282       1,032,030               2,679,312  
Other long-term liabilities
    396,680       179,059               575,739  
Minority interest
    252,103       211,813               463,916  
Total shareholders’ equity
    (3,433,597 )     3,765,342       (3,711,892 )     (3,380,147 )
 
                       
Total Liabilities and Shareholders’ Equity
  $ 19,329,567     $ 8,534,027     $ (6,738,131 )   $ 21,125,463  
 
                       
 
(a)   Clear Channel has a note receivable in the original principal amount of $2.5 billion from Clear Channel Outdoor, Inc. which matures on August 2, 2010 and may be prepaid in whole at any time, or in part from time to time. The note accrues interest at a variable per annum rate equal to the weighted average cost of debt for Clear Channel, calculated on a monthly basis. This note is mandatorily payable upon a change of control of Clear Channel Outdoor, Inc. (as defined in the note) and, subject to certain exceptions, all net proceeds from debt or equity raised by Clear Channel Outdoor, Inc. must be used to prepay such note. At December 31, 2008, the interest rate on the $2.5 billion note was 6.0%.

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(b)   Clear Channel is the issuer of substantially all of the Company’s indebtedness.
Pre-merger
                                 
    December 31, 2007  
    Company, Clear                    
    Channel and                    
    Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
 
                               
Cash and cash equivalents
  $ 4,975     $ 140,173             $ 145,148  
Accounts receivable, net of allowance
    762,932       930,286               1,693,218  
Intercompany receivables
          264,365       (264,365 )      
Prepaid expenses
    30,869       86,033               116,902  
Other current assets
    52,987       190,261               243,248  
Current assets from discontinued operations
    93,257       2,810               96,067  
 
                       
Total Current Assets
    945,020       1,613,928       (264,365 )     2,294,583  
Property, plant and equipment, net
    804,670       2,245,694               3,050,364  
Property, plant and equipment from discontinued operations, net
    164,672       52               164,724  
Definite-lived intangibles, net
    228,552       257,318               485,870  
Indefinite-lived intangibles — licenses
    4,201,617                     4,201,617  
Indefinite-lived intangibles — permits
          251,988               251,988  
Goodwill
    6,047,037       1,163,079               7,210,116  
Intangible assets from discontinued operations, net
    218,062       1,660               219,722  
Notes receivable
    8,962       3,426               12,388  
Intercompany notes receivable (a)
    2,500,000             (2,500,000 )      
Investments in, and advances to, nonconsolidated affiliates
          346,387               346,387  
Investment in subsidiaries
    2,263,205             (2,263,205 )      
Other assets
    186,105       117,686               303,791  
Other investments
    236,606       992               237,598  
Other assets from discontinued operations
    26,380                     26,380  
 
                       
Total Assets
  $ 17,830,888     $ 6,002,210     $ (5,027,570 )   $ 18,805,528  
 
                       
 
                               
Accounts payable
  $ 25,692     $ 139,841             $ 165,533  
Accrued expenses
    373,429       539,236               912,665  
Accrued interest
    97,527       1,074               98,601  
Accrued income taxes
    79,973                     79,973  
Intercompany payables
    264,365             (264,365 )      
Current portion of long-term debt (b)
    1,273,100       87,099               1,360,199  
Deferred income
    34,391       124,502               158,893  
Current liabilities from discontinued operations
    37,211       202               37,413  
 
                       
Total Current Liabilities
    2,185,688       891,954       (264,365 )     2,813,277  
Long-term debt (b)
    5,120,066       94,922               5,214,988  
Intercompany long-term debt
          2,500,000       (2,500,000 )      
Other long-term obligations
    127,384                     127,384  
Deferred income taxes
    979,124       (185,274 )             793,850  
Other long-term liabilities
    346,811       221,037               567,848  
Long-term liabilities from discontinued operations
    53,828       502               54,330  
Minority interest
    220,496       215,864               436,360  
Total shareholders’ equity
    8,797,491       2,263,205       (2,263,205 )     8,797,491  
 
                       
Total Liabilities and Shareholders’ Equity
  $ 17,830,888     $ 6,002,210     $ (5,027,570 )   $ 18,805,528  
 
                       
 
(a)   Clear Channel has a note receivable in the original principal amount of $2.5 billion from Clear Channel Outdoor, Inc. which matures on August 2, 2010 and may be prepaid in whole at any time, or in part from time to time. The

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    note accrues interest at a variable per annum rate equal to the weighted average cost of debt for Clear Channel, calculated on a monthly basis. This note is mandatorily payable upon a change of control of Clear Channel Outdoor, Inc. (as defined in the note) and, subject to certain exceptions, all net proceeds from debt or equity raised by Clear Channel Outdoor, Inc. must be used to prepay such note. At December 31, 2008, the interest rate on the $2.5 billion note was 6.0%.
 
(b)   Clear Channel is the issuer of substantially all of the Company’s indebtedness.
Post-merger
                                 
    Period from July 31 through December 31, 2008  
    Company, Clear                    
    Channel and                    
    Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Revenue
  $ 1,398,926     $ 1,338,015             $ 2,736,941  
Operating expenses:
                               
Direct operating expenses
    438,170       760,175               1,198,345  
Selling, general and administrative expenses
    532,455       274,332               806,787  
Depreciation and amortization
    122,807       225,234               348,041  
Impairment charge
    2,051,209       3,217,649               5,268,858  
Corporate expenses
    70,595       31,681               102,276  
Merger expenses
    68,085                     68,085  
Other operating income — net
    8,335       4,870               13,205  
 
                       
Operating income (loss)
    (1,876,060 )     (3,166,186 )             (5,042,246 )
Interest expense
    643,001       72,767               715,768  
Gain (loss) on marketable securities
    (56,709 )     (59,843 )             (116,552 )
Equity in earnings of nonconsolidated affiliates
    (2,999,344 )     5,804       2,999,344       5,804  
Other income (expense) — net
    55,736       22,320       53,449       131,505  
 
                       
Income before income taxes, minority interest and discontinued operations
    (5,519,378 )     (3,270,672 )     3,052,793       (5,737,257 )
Income tax benefit (expense)
    423,640       272,983               696,623  
Minority interest income (expense), net of tax
    2,136       (1,655 )             481  
 
                       
Income (loss) before discontinued operations
    (5,093,602 )     (2,999,344 )     3,052,793       (5,040,153 )
Income (loss) from discontinued operations, net
    (1,845 )                   (1,845 )
 
                       
Net income (loss)
  $ (5,095,447 )   $ (2,999,344 )   $ 3,052,793     $ (5,041,998 )
 
                       

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Pre-merger
                                 
    Period from January 1 through July 30, 2008  
    Company, Clear                    
    Channel and                    
    Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
 
                               
Revenue
  $ 1,973,478     $ 1,978,264             $ 3,951,742  
Operating expenses:
                               
Direct operating expenses
    579,094       1,127,005               1,706,099  
Selling, general and administrative expenses
    670,772       351,687               1,022,459  
Depreciation and amortization
    100,675       248,114               348,789  
Corporate expenses
    86,305       39,364               125,669  
Merger expenses
    87,684                     87,684  
Other operating income — net
    3,849       10,978               14,827  
 
                       
Operating income (loss)
    452,797       223,072               675,869  
Interest (income) expense
    124,557       88,653               213,210  
Gain (loss) on marketable securities
    34,262                     34,262  
Equity in earnings of nonconsolidated affiliates
    194,072       94,215       (194,072 )     94,215  
Other income (expense) — net
    (17,603 )     12,491               (5,112 )
 
                       
Income before income taxes, minority interest and discontinued operations
    538,971       241,125       (194,072 )     586,024  
Income tax benefit (expense)
    (120,464 )     (52,119 )             (172,583 )
Minority interest income (expense), net of tax
    (19,100 )     1,948               (17,152 )
 
                       
Income (loss) before discontinued operations
    399,407       190,954       (194,072 )     396,289  
Income (loss) from discontinued operations, net
    637,118       3,118               640,236  
 
                       
Net income (loss)
  $ 1,036,525     $ 194,072     $ (194,072 )   $ 1,036,525  
 
                       

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Pre-merger
                                 
    Year ended December 31, 2007  
    Company, Clear                    
    Channel and                    
    Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
 
                               
Revenue
  $ 3,614,097     $ 3,307,105             $ 6,921,202  
Operating expenses:
                               
Direct operating expenses
    993,464       1,739,540               2,733,004  
Selling, general and administrative expenses
    1,206,220       555,719               1,761,939  
Depreciation and amortization
    166,328       400,299               566,627  
Corporate expenses
    115,424       66,080               181,504  
Merger expenses
    6,762                     6,762  
Other operating income — net
    2,289       11,824               14,113  
 
                       
Operating income (loss)
    1,128,188       557,291               1,685,479  
Interest expense
    294,170       157,700               451,870  
Gain on marketable securities
    6,742                     6,742  
Equity in earnings of nonconsolidated affiliates
    277,420       35,176       (277,420 )     35,176  
Other income (expense) — net
    (3,222 )     8,548               5,326  
 
                       
Income before income taxes, minority interest and discontinued operations
    1,114,958       443,315       (277,420 )     1,280,853  
Income tax benefit (expense)
    (293,715 )     (147,433 )             (441,148 )
Minority interest income (expense), net of tax
    (27,770 )     (19,261 )             (47,031 )
 
                       
Income (loss) before discontinued operations
    793,473       276,621       (277,420 )     792,674  
Income (loss) from discontinued operations, net
    145,034       799               145,833  
 
                       
Net income (loss)
  $ 938,507     $ 277,420     $ (277,420 )   $ 938,507  
 
                       
Pre-merger
                                 
    Year ended December 31, 2006  
    Company, Clear                    
    Channel and                    
    Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Revenue
  $ 3,652,044     $ 2,915,746           $ 6,567,790  
Operating expenses:
                               
Direct operating expenses
    1,013,267       1,519,177               2,532,444  
Selling, general and administrative expenses
    1,209,928       499,029               1,708,957  
Depreciation and amortization
    191,945       408,349               600,294  
Corporate expenses
    130,777       65,542               196,319  
Merger expenses
    7,633                     7,633  
Other operating income — net
    48,752       22,819               71,571  
 
                       
Operating income (loss)
    1,147,246       446,468               1,593,714  
Interest expense
    321,686       162,377               484,063  
Gain (loss) on marketable securities
    2,306                     2,306  
Equity in earnings of nonconsolidated affiliates
    184,449       37,845       (184,449 )     37,845  
Other income (expense) — net
    (9,016 )     423               (8,593 )
 
                       
Income before income taxes, minority interest and discontinued operations
    1,003,299       322,359       (184,449 )     1,141,209  
Income tax benefit (expense)
    (347,965 )     (122,478 )             (470,443 )
Minority interest income (expense), net of tax
    (16,412 )     (15,515 )             (31,927 )
 
                       
Income (loss) before discontinued operations
    638,922       184,366       (184,449 )     638,839  
Income (loss) from discontinued operations, net
    52,595       83               52,678  
 
                       
Net income (loss)
  $ 691,517     $ 184,449     $ (184,449 )   $ 691,517  
 
                       

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Post-merger
                                 
    Period from July 31 through December 31, 2008  
    Company, Clear                    
    Channel and                    
    Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash flows from operating activities:
                               
Net income (loss)
  $ (5,095,447 )   $ (2,999,344 )   $ 3,052,793     $ (5,041,998 )
Less: Income (loss) from discontinued operations, net
    (1,845 )                 (1,845 )
 
                       
 
    (5,093,602 )     (2,999,344 )     3,052,793       (5,040,153 )
 
                               
Reconciling items:
                               
Depreciation and amortization
    122,807       225,234               348,041  
Impairment charge
    2,051,209       3,217,649               5,268,858  
Deferred taxes
    (349,560 )     (270,334 )             (619,894 )
Provision for doubtful accounts
    30,363       24,240               54,603  
Amortization of deferred financing charges, bond premiums, and accretion of note discounts
    102,859                     102,859  
Share-based compensation
    11,728       4,183               15,911  
(Gain) loss on sale of operating assets
    (8,335 )     (4,870 )             (13,205 )
(Gain) loss on forward exchange contract
                               
(Gain) loss on securities
    56,709       59,843               116,552  
Equity in earnings of nonconsolidated affiliates
    2,999,344       (5,804 )     (2,999,344 )     (5,804 )
Minority interest, net of tax
    (2,136 )     1,655               (481 )
(Gain) loss on debt extinguishment
    (63,228 )           (53,449 )     (116,677 )
Other reconciling items — net
    1,590       10,499               12,089  
Changes in operating assets and liabilities:
                               
Changes in other operating assets and liabilities, net of effects of acquisitions and dispositions
    106,141       17,186               123,327  
 
                       
Net cash provided by operating activities
    (34,111 )     280,137               246,026  
Cash flows from investing activities:
                               
Decrease (increase) in notes receivable — net
    572       169               741  
Decrease (increase) in investments in and advances to nonconsolidated affiliates — net
          3,909               3,909  
Purchase of other investments
    27,410       (27,436 )             (26 )
Proceeds from sales of other investments
    (788 )     788                
Purchases of property, plant and equipment
    (30,536 )     (159,717 )             (190,253 )
Proceeds from disposal of assets
    14,038       2,917               16,955  
Acquisition of operating assets
    (11,551 )     (11,677 )             (23,228 )
Decrease (increase) in other — net
    (33,353 )     (13,989 )             (47,342 )
Cash used to purchase equity
    (17,468,683 )     (3,776 )             (17,472,459 )
 
                       
Net cash used in investing activities
    (17,502,891 )     (208,812 )             (17,711,703 )

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Post-merger
                                 
    Period from July 31 through December 31, 2008  
    Company, Clear Channel                    
    and Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash flows from financing activities:
                               
Draws on credit facilities
    150,000       30,000               180,000  
Payments on credit facilities
    (127,891 )     (660 )             (128,551 )
Proceeds from long-term debt
    527,024       30,496               557,520  
Payments on long-term debt
    (562,510 )     (42,621 )     26,042       (579,089 )
Intercompany funding
    91,891       (91,891 )              
Debt proceeds used to finance the merger
    15,382,076                     15,382,076  
Equity proceeds used to finance the merger
    2,142,830       26,042       (26,042 )     2,142,830  
Payments for purchase of common shares
    (2 )     (45 )             (47 )
 
                       
Net cash used in financing activities
    17,603,418       (48,679 )             17,554,739  
Cash flows from discontinued operations:
                               
Net cash (used in) provided by operating activities
    2,429                     2,429  
Net cash provided by investing activities
                         
Net cash provided by (used in) financing activities
                         
 
                       
Net cash provided by discontinued operations
    2,429                     2,429  
 
                               
Net (decrease) increase in cash and cash equivalents
    68,845       22,646               91,491  
 
                               
Cash and cash equivalents at beginning of period
    70,590       77,765               148,355  
 
                       
Cash and cash equivalents at end of period
  $ 139,435     $ 100,411             $ 239,846  
 
                       

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Pre-merger
                                 
    Period from January 1 through July 30, 2008  
    Company,                    
    Clear Channel                    
    and Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash flows from operating activities:
                               
Net income
  $ 1,036,525     $ 194,072     $ (194,072 )   $ 1,036,525  
Less: Income (loss) from discontinued operations, net
    637,118       3,118             640,236  
 
                       
 
    399,407       190,954       (194,072 )     396,289  
Reconciling items:
                               
Depreciation and amortization
    100,675       248,114               348,789  
Deferred taxes
    123,898       21,405               145,303  
Provision for doubtful accounts
    14,601       8,615               23,216  
Amortization of deferred financing charges, bond premiums, and accretion of note discounts
    3,530                     3,530  
Share-based compensation
    56,218       6,505               62,723  
(Gain) loss on disposal of assets
    (3,849 )     (10,978 )             (14,827 )
(Gain) loss forward exchange contract
    2,496                     2,496  
(Gain) loss on trading securities
    (36,758 )                   (36,758 )
Equity in earnings of nonconsolidated affiliates
    (194,072 )     (94,215 )     194,072       (94,215 )
Minority interest, net of tax
    19,100       (1,948 )             17,152  
(Gain) loss on debt extinguishment
    13,484                     13,484  
Other reconciling items — net
    4,697       4,436               9,133  
Changes in operating assets and liabilities:
                               
Changes in other operating assets and liabilities, net of effects of acquisitions and dispositions
    194,605       (35,662 )             158,943  
 
                       
Net cash provided by operating activities
    698,032       337,226               1,035,258  
Cash flows from investing activities:
                               
Decrease (increase) in notes receivable — net
    97       239               336  
Decrease (increase) in investments in and advances to nonconsolidated affiliates — net
          25,098               25,098  
Cross currency settlement of interest
    (198,615 )                   (198,615 )
Purchase of other investments
    (48,347 )     48,249               (98 )
Proceeds from sales of other investments
    173,467                     173,467  
Purchases of property, plant and equipment
    (40,642 )     (199,560 )             (240,202 )
Proceeds from disposal of assets
    34,176       38,630               72,806  
Acquisition of operating assets
    (69,015 )     (84,821 )             (153,836 )
Decrease (increase) in other — net
    (93,891 )     (1,316 )             (95,207 )
Cash used to purchase equity
    (3,776 )     3,776                
 
                       
Net cash used in investing activities
    (246,546 )     (169,705 )             (416,251 )

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Pre-merger
                                 
    Period from January 1 through July 30, 2008  
    Company,                    
    Clear Channel                    
    and Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash flows from financing activities:
                               
Draws on credit facilities
    620,464       72,150             692,614  
Payments on credit facilities
    (715,127 )     (157,774 )             (872,901 )
Proceeds from long term debt
    5,476                     5,476  
Payments on long-term debt
    (1,283,162 )     814               (1,282,348 )
Intercompany funding
    153,135       (153,135 )              
Payments on forward exchange contract
    (110,410 )                   (110,410 )
Proceeds from exercise of stock options and other
    13,515       4,261               17,776  
Dividends paid
    (93,367 )                   (93,367 )
Payments for purchase of common shares
    (3,517 )     (264 )             (3,781 )
 
                       
Net cash used in financing activities
    (1,412,993 )     (233,948 )             (1,646,941 )
Cash flows from discontinued operations:
                               
Net cash (used in) provided by operating activities
    (68,770 )     1,019               (67,751 )
Net cash provided by investing activities
    1,095,892       3,000               1,098,892  
Net cash provided by (used in) financing activities
                         
 
                       
Net cash provided by discontinued operations
    1,027,122       4,019               1,031,141  
 
                               
Net (decrease) increase in cash and cash equivalents
    65,615       (62,408 )             3,207  
 
                               
Cash and cash equivalents at beginning of period
    4,975       140,173               145,148  
 
                       
Cash and cash equivalents at end of period
  $ 70,590     $ 77,765             $ 148,355  
 
                       

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Pre-merger
                                 
    Year ended December 31, 2007  
    Company, Clear                    
    Channel and                    
    Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash flows from operating activities:
                               
Net income
  $ 938,507     $ 277,420     $ (277,420 )   $ 938,507  
Less: Income (loss) from discontinued operations, net
    145,034       799             145,833  
 
                       
 
    793,473       276,621       (277,420 )     792,674  
 
                               
Reconciling items:
                               
Depreciation and amortization
    166,328       400,299               566,627  
Deferred taxes
    153,323       34,915               188,238  
Provision for doubtful accounts
    28,017       10,598               38,615  
Amortization of deferred financing charges, bond premiums, and accretion of note discounts
    7,739                     7,739  
Share-based compensation
    34,681       9,370               44,051  
(Gain) loss on disposal of assets
    (2,289 )     (11,824 )             (14,113 )
(Gain) loss forward exchange contract
    3,953                     3,953  
(Gain) loss on trading securities
    (10,696 )                   (10,696 )
Equity in earnings of nonconsolidated affiliates
    (277,420 )     (35,176 )     277,420       (35,176 )
Minority interest, net of tax
    27,770       19,261               47,031  
Other reconciling items — net
    404       (495 )             (91 )
Changes in operating assets and liabilities:
                               
Changes in other operating assets and liabilities, net of effects of acquisitions and dispositions
    (45,702 )     (6,722 )             (52,424 )
 
                       
Net cash provided by operating activities
    879,581       696,847               1,576,428  
Cash flows from investing activities:
                               
Decrease (increase) in notes receivable — net
    (5,835 )     (234 )             (6,069 )
Decrease (increase) in investments in and advances to nonconsolidated affiliates — net
    (2,353 )     23,221               20,868  
Cross currency settlement of interest
    (1,214)        —               (1,214 )
Purchase of other investments
    (67 )     (659 )             (726 )
Proceeds from sales of other investments
    2,409        —               2,409  
Purchases of property, plant and equipment
    (86,683 )     (276,626 )             (363,309 )
Proceeds from disposal of assets
    8,856       17,321               26,177  
Acquisition of operating assets
    (53,051 )     (69,059 )             (122,110 )
Decrease (increase) in other — net
    (9,772 )     (28,931 )             (38,703 )
 
                       
Net cash used in investing activities
    (147,710 )     (334,967 )             (482,677 )

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Pre-merger
                                 
    Year ended December 31, 2007  
    Company, Clear Channel                    
    and Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash flows from financing activities:
                               
Draws on credit facilities
    780,138       106,772               886,910  
Payments on credit facilities
    (1,628,400 )     (76,614 )             (1,705,014 )
Proceeds from long-term debt
          22,483               22,483  
Payments on long-term debt
    (276,751 )     (66,290 )             (343,041 )
Intercompany funding
    335,508       (335,508 )              
Proceeds from exercise of stock options and other
    69,237       10,780               80,017  
Dividends paid
    (372,369 )                   (372,369 )
 
                       
Net cash used in financing activities
    (1,092,637 )     (338,377 )             (1,431,014 )
Cash flows from discontinued operations:
                               
Net cash (used in) provided by operating activities
    33,332       500               33,832  
Net cash provided by investing activities
    332,579                     332,579  
Net cash provided by (used in) financing activities
                         
 
                       
Net cash provided by discontinued operations
    365,911       500               366,411  
Net (decrease) increase in cash and cash equivalents
    5,145       24,003               29,148  
Cash and cash equivalents at beginning of period
    (170 )     116,170               116,000  
 
                       
Cash and cash equivalents at end of period
  $ 4,975     $ 140,173             $ 145,148  
 
                       

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Pre-merger
                                 
    Year ended December 31, 2006  
    Company, Clear Channel                    
    and Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash flows from operating activities:
                               
Net income
  $ 691,517     $ 184,449     $ (184,449 )   $ 691,517  
Less: Income (loss) from discontinued operations, net
    52,595       83             52,678  
 
                       
 
    638,922       184,366       (184,449 )     638,839  
Reconciling items:
                               
Depreciation and amortization
    191,945       408,349               600,294  
Deferred taxes
    152,253       39,527               191,780  
Provision for doubtful accounts
    25,706       8,921               34,627  
Amortization of deferred financing charges, bond premiums, and accretion of note discounts
    3,462                     3,462  
Share-based compensation
    36,734       5,296               42,030  
(Gain) loss on disposal of assets
    (48,725 )     (22,846 )             (71,571 )
(Gain) loss forward exchange contract
    18,161                     18,161  
(Gain) loss on trading securities
    (20,467 )                   (20,467 )
Equity in earnings of nonconsolidated affiliates
    (184,449 )     (37,845 )     184,449       (37,845 )
Minority interest, net of tax
    16,412       15,515               31,927  
Other reconciling items — net
    14,782       (5,755 )             9,027  
Changes in operating assets and liabilities:
                               
Changes in other operating assets and liabilities, net of effects of acquisitions and dispositions
    359,585       (51,792 )             307,793  
 
                       
Net cash provided by operating activities
    1,204,321       543,736               1,748,057  
Cash flows from investing activities:
                               
Decrease (increase) in notes receivable — net
    (1,203 )     2,366               1,163  
Decrease (increase) in investments in and advances to nonconsolidated affiliates — net
    (1,725 )     22,170               20,445  
Cross currency settlement of interest
    1,607                     1,607  
Purchase of other investments
    (520 )                   (520 )
Proceeds from sales of other investments
                         
Purchases of property, plant and equipment
    (102,527 )     (234,212 )             (336,739 )
Proceeds from disposal of assets
    84,231       15,451               99,682  
Acquisition of operating assets, net of cash acquired
    (96,225 )     (244,981 )             (341,206 )
Decrease (increase) in other — net
    (13,548 )     (37,895 )             (51,443 )
 
                       
Net cash used in investing activities
    (129,910 )     (477,101 )             (607,011 )

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Pre-merger
                                 
    Year ended December 31, 2006  
    Company, Clear Channel                    
    and Guarantor     Non-Guarantor              
(In thousands)   Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Cash flows from financing activities:
                               
Draws on credit facilities
    3,264,800       118,867               3,383,667  
Payments on credit facilities
    (2,599,928 )     (100,076 )             (2,700,004 )
Proceeds from long-term debt
    746,762       37,235               783,997  
Payments on long-term debt
    (750,658 )     (115,694 )             (866,352 )
Intercompany funding
    15,287       (15,287 )              
Payments on forward exchange contract
    (83,132 )                   (83,132 )
Proceeds from exercise of stock options and other
    55,276       2,176               57,452  
Dividends paid
    (382,776 )                   (382,776 )
Payments for purchase of common shares
    (1,371,462 )                   (1,371,462 )
 
                       
Net cash used in financing activities
    (1,105,831 )     (72,779 )             (1,178,610 )
Cash flows from discontinued operations:
                               
Net cash (used in) provided by operating activities
    99,806       (541 )             99,265  
Net cash provided by investing activities
    (30,038 )                   (30,038 )
Net cash provided by (used in) financing activities
                         
 
                       
Net cash provided by discontinued operations
    69,768       (541 )             69,227  
 
                               
Net (decrease) increase in cash and cash equivalents
    38,348       (6,685 )             31,663  
 
                               
Cash and cash equivalents at beginning of period
    (38,518 )     122,855               84,337  
 
                       
Cash and cash equivalents at end of period
  $ (170 )   $ 116,170             $ 116,000  
 
                       
NOTE T — SUBSEQUENT EVENTS
On January 15, 2009, the Company made a permitted election under the indenture governing the senior toggle notes to pay PIK Interest. For subsequent interest periods, the Company must make an election regarding whether the applicable interest payment on the senior toggle notes will be made entirely in cash, entirely through PIK Interest or 50% in cash and 50% in PIK Interest. In the absence of such an election for any interest period, interest on the senior toggle notes will be payable according to the election for the immediately preceding interest period. As a result, the PIK Interest election is now the default election for future interest periods unless and until the Company elects otherwise.
Effective January 30, 2009 the Company sold 57% of its remaining interest in Grupo ACIR Comunicaciones for approximately $23.5 million and recorded a loss of approximately $2.2 million. As a result of the sale, the Company will no longer account for the investment under Accounting Principles Board No. 18, The Equity Method of Accounting for Investments in Common Stock.
On February 6, 2009, the Company borrowed the approximately $1.6 billion of remaining availability under the $2.0 billion revolving credit facility. The Company made the borrowing to improve its liquidity position in light of continuing uncertainty in credit market and economic conditions.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable

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ITEM 9A(T). Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures to ensure that material information relating to CC Media Holdings, Inc. (the “Company”), including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors.
Based on their evaluation as of December 31, 2008, the Chief Executive Officer and Chief Financial Officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Management’s Report on Internal Control Over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and preparation of the Company’s financial statements for external purposes in accordance with generally accepted accounting principles.
As of December 31, 2008, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2008, based on those criteria.
Ernst & Young LLP, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008, is included in this Item under the heading “Report of Independent Registered Public Accounting Firm.”
There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
CC Media Holdings, Inc.
We have audited CC Media Holdings, Inc.’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). CC Media Holdings, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, CC Media Holdings, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of CC Media Holdings, Inc. (Holdings) as of December 31, 2008, the consolidated balance sheet of Clear Channel Communications, Inc. (Clear Channel) as of December 31, 2007, the related consolidated statements of operations, shareholders’ equity(deficit), and cash flows of Holdings for the period from July 31, 2008 through December 31, 2008, and the related consolidated statements of operations, shareholders’ equity, and cash flows of Clear Channel for the period from January 1, 2008 through July 30, 2008, and each of the two years in the period ended December 31, 2007, and our report dated March 2, 2009 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
San Antonio, Texas
March 2, 2009

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ITEM 9B. Other Information
Not Applicable

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PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
     We believe that one of our most important assets is our experienced management team. With respect to our operations, managers are responsible for the day-to-day operation of their respective location. We believe that the autonomy of our management enables us to attract top quality managers capable of implementing our marketing strategy and reacting to competition in the local markets. Most of our managers have options to purchase our common stock or restricted stock. As an additional incentive, a portion of each manager’s compensation is related to the performance of the profit centers for which he or she is responsible. In an effort to monitor expenses, corporate management routinely reviews staffing levels and operating costs. Combined with the centralized financial functions, this monitoring enables us to control expenses effectively. Corporate management also advises local managers on broad policy matters and is responsible for long-range planning, allocating resources and financial reporting and controls.
     The information required by this item with respect to our code of ethics, the directors and nominees for election to our Board of Directors is incorporated by reference to the information set forth in our Definitive Proxy Statement, expected to be filed with the Securities and Exchange Commission within 120 days of our fiscal year end.
     The following information is submitted with respect to our executive officers as of February 26, 2009:
             
    Age on    
    February 26,    
Name   2009   Position
L. Lowry Mays
    73     Chairman Emeritus
Mark P. Mays
    45     Chief Executive Officer
Randall T. Mays
    43     President/Chief Financial Officer
Herbert W. Hill, Jr.
    50     Senior Vice President/Chief Accounting Officer and Assistant Secretary
Paul Meyer
    66     Senior Vice President — CC Media Holdings, Inc
John Hogan
    52     Senior Vice President — CC Media Holdings, Inc.
Andrew Levin
    46     Executive Vice President/Chief Legal Officer and Secretary
     The officers named above serve until the next Board of Directors meeting immediately following the Annual Meeting of Shareholders. We expect to retain the individuals named above as our executive officers at such Board of Directors meeting.
     Mr. L. Mays was appointed the Chairman Emeritus of the Company on July 30, 2008. Mr. L. Mays is the founder of Clear Channel, our indirect subsidiary, and was Clear Channel’s Chairman and Chief Executive Officer from February 1997 to October 2004. Since that time, Mr. L. Mays served as Chairman of the Board until July 30, 2008 and is currently Clear Channel’s Chairman Emeritus. He was one of Clear Channel’s directors since its inception. Mr. L. Mays is the father of Mark P. Mays, our Chief Executive Officer, and Randall T. Mays, our President/Chief Financial Officer.
     Mr. M. Mays was appointed Chief Executive Officer and a director of the Company on July 30, 3008. Mr. M. Mays was Clear Channel’s President and Chief Operating Officer from February 1997 until his appointment as President and Chief Executive Officer in October 2004. He relinquished his duties as President in February 2006. He has been one of Clear Channel’s directors since May 1998. Mr. M. Mays is the son of L. Lowry Mays, our Chairman Emeritus and the brother of Randall T. Mays, our President/Chief Financial Officer.
     Mr. R. Mays was appointed President, Chief Financial Officer and a director of the Company on July 30, 2008. Mr. R. Mays was appointed Executive Vice President and Chief Financial Officer of Clear Channel in February 1997 and was appointed as Secretary in April 2003. He relinquished his duties as Secretary in 2004. He was appointed President of Clear Channel in February 2006. Mr. R. Mays is the son of L. Lowry Mays our Chairman Emeritus and the brother of Mark P. Mays, our Chief Executive Officer.

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     Mr. Hill was appointed our Senior Vice President/Chief Accounting Officer and Assistant Secretary on July 30, 2008. Mr. Hill was appointed Senior Vice President and Chief Accounting Officer of Clear Channel in February 1997.
     Mr. Meyer was appointed a Senior Vice President of the Company on July 30, 2008. Mr. Meyer has served as the President/ Chief Executive Officer — Clear Channel Americas and Asia Divisions since October 2008. Prior thereto, he was Global President/Chief Operating Officer — Clear Channel Outdoor Holdings, Inc. (formerly Eller Media), our indirect subsidiary, since April 2005. Prior thereto, he was the President/Chief Executive Officer — Clear Channel Outdoor for the remainder of the relevant five-year period.
     Mr. Hogan was appointed a Senior Vice President of the Company on July 30, 2008. He was appointed President/Chief Executive Officer — Clear Channel Broadcasting, Inc., our indirect subsidiary, in August 2002.
     Mr. Levin was appointed our Executive Vice President/Chief Legal Officer and Secretary on July 30, 2008.
     Mr. Levin was appointed Executive Vice President, Chief Legal Officer and Secretary of Clear Channel in February 2004. Prior thereto he served as Senior Vice President for Government Affairs since he joined Clear Channel in 2002.
ITEM 11. Executive Compensation
     The information required by this item is incorporated by reference to the information set forth in our Definitive Proxy Statement, expected to be filed within 120 days of our fiscal year end.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
     The information required by this item is incorporated by reference to our Definitive Proxy Statement expected to be filed within 120 days of our fiscal year end.
ITEM 13. Certain Relationships and Related Transactions and Director Independence
     The information required by this item is incorporated by reference to our Definitive Proxy Statement expected to be filed within 120 days of our fiscal year end.
ITEM 14. Principal Accounting Fees and Services
     The information required by this item is incorporated by reference to our Definitive Proxy Statement expected to be filed within 120 days of our fiscal year end.

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PART IV
ITEM 15. Exhibits and Financial Statement Schedules
(a)1. Financial Statements.
The following consolidated financial statements are included in Item 8:
Consolidated Balance Sheets as of December 31, 2008 and 2007
Consolidated Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006.
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2008,
2007 and 2006.
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006.
Notes to Consolidated Financial Statements
(a)2. Financial Statement Schedule.
The following financial statement schedule for the years ended December 31, 2008, 2007 and 2006 and related report of independent auditors is filed as part of this report and should be read in conjunction with the consolidated financial statements.
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

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SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts
(In thousands)
                                         
            Charges                      
    Balance at     to Costs,     Write-off             Balance  
    Beginning     Expenses     of Accounts             at end of  
Description   of period     and other     Receivable     Other     Period  
Year ended December 31, 2006
  $ 45,581     $ 34,627     $ 26,007     $ 1,867 (1)   $ 56,068  
 
                             
Year ended December 31, 2007
  $ 56,068     $ 38,615     $ 38,711     $ 3,197 (1)   $ 59,169  
 
                             
Period from January 1, through July 30, 2008
  $ 59,169     $ 23,216     $ 19,679     $ 2,157 (1)   $ 64,863  
 
                             
Period from July 31, through December 31, 2008
  $ 64,863     $ 54,603     $ 18,703     $ (3,399 )(1)   $ 97,364  
 
                             
 
(1)   Primarily foreign currency adjustments.

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SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Deferred Tax Asset Valuation Allowance
(In thousands)
                                         
            Charges                        
    Balance at     to Costs,                     Balance  
    Beginning     Expenses                     at end of  
Description   of period     and other (1)     Utilization (2)     Adjustments (3)     Period  
Year ended December 31, 2006
  $ 571,154     $     $     $ (17,756 )   $ 553,398  
 
                             
Year ended December 31, 2007
  $ 553,398     $     $ (77,738 )   $ 41,262     $ 516,922  
 
                             
Period from January 1, through July 30, 2008
  $ 516,922     $     $ (264,243 )   $     $ 252,679  
 
                             
Period from July 31, through December 31, 2008
  $ 252,679     $ 62,114     $ 3,341     $ 1,396     $ 319,530  
 
                             
 
(1)   During 2008 the Company recorded a valuation allowance on certain net operating losses that are not able to be carried back to prior years.
 
(2)   During 2007 and 2008 the Company utilized capital loss carryforwards to offset the capital gains generated in both continuing and discontinued operations from the disposition of primarily broadcast assets and certain investments. The related valuation allowance was released as a result of the capital loss carryforward utilization.
 
(3)   Related to a valuation allowance for the capital loss carryforward recognized during 2005 as a result of the spin-off of Live Nation. During 2006 the amount of capital loss carryforward and the related valuation allowance were adjusted to the final amount reported on our 2005 filed tax return. During 2007 the amount of capital loss carryforward and the related valuation allowance were adjusted due to the impact of settlements of various matters with the Internal Revenue Service for the 1999-2004 tax years. During 2008 the amount of capital loss carryforward and the related valuation allowance were adjusted due to the true up of the amount utilized on the 2007 tax return and the impact certain IRS audit adjustments that were agreed to during the year.

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(a)3. Exhibits.
     
Exhibit    
Number   Description
 
   
2.1
  Agreement and Plan of Merger among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC and Clear Channel Communications, Inc., dated as of November 16, 2006 (incorporated by reference to Exhibit 2.1 to Clear Channel’s Current Report on Form 8-K dated November 16, 2006).
 
   
2.2
  Amendment No. 1, dated April 18, 2007, to the Agreement and Plan of Merger, dated as of November 16, 2006, by and among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC and Clear Channel Communications, Inc. (incorporated by reference to Exhibit 2.1 to Clear Channel’s Current Report on Form 8-K dated April 18, 2007).
 
   
2.3
  Amendment No. 2, dated May 17, 2007, to the Agreement and Plan of Merger, dated as of November 16, 2006, by and among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, BT Triple Crown Holdings III, Inc. and Clear Channel Communications, Inc., as amended (incorporated by reference to Exhibit 2.1 to Clear Channel’s Current Report on Form 8-K dated May 18, 2007).
 
   
2.4
  Amendment No. 3, dated May 13, 2008, to the Agreement and Plan of Merger, dated as of November 16, 2006, by and among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, CC Media Holdings, Inc. and Clear Channel Communications, Inc. (incorporated by reference to Exhibit 2.1 to Clear Channel’s Current Report on Form 8-K dated May 14, 2008).
 
   
2.5
  Asset Purchase Agreement dated April 20, 2007, between Clear Channel Broadcasting, Inc., ABO Broadcasting Operations, LLC, Ackerley Broadcasting Fresno, LLC, AK Mobile Television, Inc., Bel Meade Broadcasting, Inc., Capstar Radio Operating Company, Capstar TX Limited Partnership, CCB Texas Licenses, L.P., Central NY News, Inc., Citicasters Co., Clear Channel Broadcasting Licenses, Inc., Clear Channel Investments, Inc. and TV Acquisition LLC (incorporated by reference to Exhibit 2.1 to Clear Channel’s Current Report on Form 8-K dated April 26, 2007).
 
   
3.1
  Third Amended and Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (Registration No. 333-151345) declared effective by the Securities and Exchange Commission on June 17, 2008).
 
   
3.2
  Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (Registration No. 333-151345) declared effective by the Securities and Exchange Commission on June 17, 2008).
 
   
4.1
  Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York as Trustee (incorporated by reference to Exhibit 4.2 to Clear Channel’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997).
 
   
4.2
  Second Supplemental Indenture dated June 16, 1998 to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and the Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to the Clear Channel’s Current Report on Form 8-K dated August 27, 1998).
 
   
4.3
  Third Supplemental Indenture dated June 16, 1998 to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and the Bank of New York, as Trustee (incorporated by reference to Exhibit 4.2 to the Clear Channel’s Current Report on Form 8-K dated August 27, 1998).

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Exhibit    
Number   Description
 
4.4
  Ninth Supplemental Indenture dated September 12, 2000, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.11 to Clear Channel’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
 
   
4.5
  Eleventh Supplemental Indenture dated January 9, 2003, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York as Trustee (incorporated by reference to Exhibit 4.17 to Clear Channel’s Annual Report on Form 10-K for the year ended December 31, 2002).
 
   
4.6
  Twelfth Supplemental Indenture dated March 17, 2003, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 99.3 to Clear Channel’s Current Report on Form 8-K dated March 18, 2003).
 
   
4.7
  Thirteenth Supplemental Indenture dated May 1, 2003, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 99.3 to Clear Channel’s Current Report on Form 8-K dated May 2, 2003).
 
   
4.8
  Fourteenth Supplemental Indenture dated May 21, 2003, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 99.3 to Clear Channel’s Current Report on Form 8-K dated May 22, 2003).
 
   
4.9
  Sixteenth Supplemental Indenture dated December 9, 2003, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 99.3 to Clear Channel’s Current Report on Form 8-K dated December 10, 2003).
 
   
4.10
  Seventeenth Supplemental Indenture dated September 15, 2004, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 10.1 to Clear Channel’s Current Report on Form 8-K dated September 15, 2004).
 
   
4.11
  Eighteenth Supplemental Indenture dated November 22, 2004, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 10.1 to Clear Channel’s Current Report on Form 8-K dated November 17, 2004).
 
   
4.12
  Nineteenth Supplemental Indenture dated December 13, 2004, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 10.1 to Clear Channel’s Current Report on Form 8-K dated December 13, 2004).
 
   
4.13
  Twentieth Supplemental Indenture dated March 21, 2006, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as Trustee (incorporated by reference to Exhibit 10.1 to Clear Channel’s Current Report on Form 8-K dated March 21, 2006).
 
   
4.14
  Twenty-first Supplemental Indenture dated August 15, 2006, to Senior Indenture dated October 1, 1997, by and between Clear Channel Communications, Inc. and The Bank of New York, as

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Exhibit    
Number   Description
 
 
  Trustee (incorporated by reference to Exhibit 10.1 to Clear Channel’s Current Report on Form 8-K dated August 16, 2006).
 
   
4.15
  Twenty-Second Supplemental Indenture, dated as of January 2, 2008, by and between Clear Channel and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Clear Channel’s Current Report on Form 8-K dated January 4, 2008).
 
   
4.16
  Fourth Supplemental Indenture, dated as of January 2, 2008, by and among AMFM, The Bank of New York Trust Company, N.A., and the guarantors party thereto (incorporated by reference to Exhibit 4.2 to Clear Channel’s Current Report on Form 8-K dated January 4, 2008).
 
   
10.1
  First Amended and Restated Management Agreement, dated as of July 28, 2008, by and among CC Media Holdings, Inc., BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, THL Managers VI, LLC and Bain Capital Partners, LLC (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.2
  Stockholders Agreement, dated as of July 29, 2008, by and among CC Media Holdings, Inc., Clear Channel Capital IV, LLC, Clear Channel Capital V, L.P., L. Lowry Mays, Randall T. Mays, Mark P. Mays, LLM Partners, Ltd., MPM Partners, Ltd. and RTM Partners, Ltd. (Incorporated by reference to Exhibit 4 to the Company’s Form 8-A Registration Statement filed July 30, 2008).
 
   
10.3
  Side Letter Agreement, dated as of July 29, 2008, among CC Media Holdings, Inc., Clear Channel Capital IV, LLC, Clear Channel Capital V, L.P., L. Lowry Mays, Mark P. Mays, Randall T. Mays, LLM Partners, Ltd., MPM Partners Ltd. and RTM Partners, Ltd. (Incorporated by reference to Exhibit 5 to the Company’s Form 8-A Registration Statement filed July 30, 2008).
 
   
10.4
  Affiliate Transactions Agreement, dated as of July 30, 2008, by and among CC Media Holdings, Inc., Bain Capital Fund IX, L.P., Thomas H. Lee Equity Fund VI, L.P. and BT Triple Crown Merger Co., Inc. (Incorporated by reference to Exhibit 6 to the Company’s Form 8-A Registration Statement filed July 30, 2008).
 
   
10.5
  Amended and Restated Employment Agreement, dated as of April 24, 2007, by and between L. Lowry Mays and Clear Channel Communications, Inc. (Incorporated by reference to Exhibit 10.1 to Clear Channel’s Current Report on Form 8-K filed May 1, 2007).
 
   
10.6
  Amended and Restated Employment Agreement, dated as of April 24, 2007, by and between Mark P. Mays and Clear Channel Communications, Inc. (Incorporated by reference to Exhibit 10.2 to the Clear Channel’s Current Report on Form 8-K filed May 1, 2007).
 
   
10.7
  Amended and Restated Employment Agreement, dated as of April 24, 2007, by and between Randall T. Mays and Clear Channel Communications, Inc. (Incorporated by reference to Exhibit 10.3 to the Clear Channel’s Current Report on Form 8-K filed May 1, 2007).
 
   
10.8
  Amended and Restated Employment Agreement, dated as of July 28, 2008, by and among Randall T. Mays, CC Media Holdings, Inc. and BT Triple Crown Merger Co., Inc. (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.9
  Amended and Restated Employment Agreement, dated as of July 28, 2008, by and among Mark P. Mays, CC Media Holdings, Inc. and BT Triple Crown Merger Co., Inc. (Incorporated by

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Exhibit    
Number   Description
 
 
  reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.10
  Amended and Restated Employment Agreement, dated as of July 28, 2008, by and among L. Lowry Mays, CC Media Holdings, Inc. and BT Triple Crown Merger Co., Inc. (Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.11
  Employment Agreement, dated as of June 29, 2008, by and between John E. Hogan and Clear Channel Broadcasting, Inc. (Incorporated by reference to Exhibit 10.8 to the Clear Channel’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.12
  Amendment, dated as of January 20, 2009, to the Amended and Restated Employment Agreement of Mark P. Mays, dated as of July 28, 2008, by and among Mark P. Mays, CC Media Holdings, Inc. and Clear Channel Communications, Inc. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 21, 2009).
 
   
10.13
  Amendment, dated as of January 20, 2009, to the Amended and Restated Employment Agreement of Randall T. Mays, dated as of July 28, 2008, by and among Randall T. Mays, CC Media Holdings, Inc. and Clear Channel Communications, Inc. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed January 21, 2009).
 
   
10.14
  Employment Agreement, dated as of August 5, 2005, by and between Paul Meyer and Clear Channel Communications, Inc. (Incorporated by reference to Exhibit 10.1 to the Clear Channel’s Current Report on Form 8-K filed August 10, 2005).
 
   
10.15
  Credit Agreement, dated as of May 13, 2008, by and among Clear Channel Communications, Inc. (as the successor-in-interest to BT Triple Crown Merger Co., Inc. following the effectiveness of the Merger), the subsidiary co-borrowers of the Company party thereto, Clear Channel Capital I, LLC, the lenders party thereto, Citibank, N.A., as Administrative Agent, and the other agents party thereto (Incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-4 (Registration No. 333-151345) declared effective by the Securities and Exchange Commission on June 17, 2008).
 
   
10.16
  Amendment No. 1, dated as of July 9, 2008, to the Credit Agreement, dated as of May 13, 2008, by and among Clear Channel Communications, Inc., the subsidiary co-borrowers of the Company party thereto, Clear Channel Capital I, LLC, the lenders party thereto, Citibank, N.A., as Administrative Agent, and the other agents party thereto (Incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.17
  Amendment No. 2, dated as of July 28, 2008, to the Credit Agreement, dated as of May 13, 2008, by and among Clear Channel Communications, Inc., the subsidiary co-borrowers of the Company party thereto, Clear Channel Capital I, LLC, the lenders party thereto, Citibank, N.A., as Administrative Agent, and the other agents party thereto (Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.18
  Credit Agreement, dated as of May 13, 2008, by and among Clear Channel Communications, Inc. (as the successor-in-interest to BT Triple Crown Merger Co., Inc. following the effectiveness of the Merger), the subsidiary borrowers of the Company party thereto, Clear Channel Capital I, LLC, the lenders party thereto, Citibank, N.A., as Administrative Agent, and the other agents party thereto (Incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-4 (Registration No. 333-151345) declared effective by the Securities and Exchange Commission on June 17, 2008).

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Exhibit    
Number   Description
 
10.19
  Amendment No. 1, dated as of July 9, 2008, to the Credit Agreement, dated as of May 13, 2008, by and among Clear Channel Communications, Inc., the subsidiary borrowers of the Company party thereto, Clear Channel Capital I, LLC, the lenders party thereto, Citibank, N.A., as Administrative Agent, and the other agents party thereto (Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.20
  Amendment No. 2, dated as of July 28 2008, to the Credit Agreement, dated as of May 13, 2008, by and among Clear Channel Communications, Inc., the subsidiary borrowers of the Company party thereto, Clear Channel Capital I, LLC, the lenders party thereto, Citibank, N.A., as Administrative Agent, and the other agents party thereto (Incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.21
  Purchase Agreement, dated May 13, 2008, by and among BT Triple Crown Merger Co., Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Greenwich Capital Markets, Inc. and Wachovia Capital Markets, LLC (Incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-4 (Registration No. 333-151345) declared effective by the Securities and Exchange Commission on June 17, 2008).
 
   
10.22
  Indenture, dated July 30, 2008, by and among BT Triple Crown Merger Co., Inc., Law Debenture Trust Company of New York, Deutsche Bank Trust Company Americas and Clear Channel Communications, Inc. (as the successor-in-interest to BT Triple Crown Merger Co., Inc. following the effectiveness of the Merger) (Incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.23
  Supplemental Indenture, dated July 30, 2008, by and among Clear Channel Capital I, LLC, certain subsidiaries of Clear Channel party thereto and Law Debenture Trust Company of New York (incorporated by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K filed on July 30, 2008).
 
   
10.24*
  Supplemental Indenture, dated December 9, 2008, by and among CC Finco Holdings, LLC, a subsidiary of Clear Channel Communications, Inc. and Law Debenture Trust Company of New York.
 
   
10.25
  Registration Rights Agreement, dated July 30, 2008, by and among Clear Channel Communications, Inc., certain subsidiaries of Clear Channel Communications, Inc. party thereto, Deutsche Bank Securities Inc., Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Greenwich Capital Markets, Inc. and Wachovia Capital Markets, LLC (Incorporated by reference to Exhibit 10.18 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.26
  Clear Channel 2008 Incentive Plan (Incorporated by reference to Exhibit 10.19 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.27
  Form of Senior Executive Option Agreement (Incorporated by reference to Exhibit 10.20 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.28
  Form of Senior Executive Restricted Stock Award Agreement (Incorporated by reference to Exhibit 10.21 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.29
  Form of Senior Management Option Agreement (Incorporated by reference to Exhibit 10.22 to the Company’s Current Report on Form 8-K filed July 30, 2008).

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Exhibit    
Number   Description
 
10.30
  Form of Executive Option Agreement (Incorporated by reference to Exhibit 10.23 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.31
  Clear Channel 2008 Investment Program (Incorporated by reference to Exhibit 10.24 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.32
  Clear Channel 2008 Annual Incentive Plan (Incorporated by reference to Exhibit 10.25 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.33
  Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.26 to the Company’s Current Report on Form 8-K filed July 30, 2008).
 
   
10.34
  Amended and Restated Voting Agreement dated as of May 13, 2008 by and among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, CC Media Holdings, Inc., Highfields Capital I LP, Highfields Capital II LP, Highfields Capital III LP and Highfields Capital Management LP (Incorporated by reference to Annex E to the Company’s Registration Statement on Form S-4 (Registration No. 333-151345) declared effective by the Securities and Exchange Commission on June 17, 2008).
 
   
10.35
  Voting Agreement dated as of May 13, 2008 by and among BT Triple Crown Merger Co., Inc., B Triple Crown Finco, LLC, T Triple Crown Finco, LLC, CC Media Holdings, Inc., Abrams Capital Partners I, LP, Abrams Capital Partners II, LP, Whitecrest Partners, LP, Abrams Capital International, Ltd. and Riva Capital Partners, LP (Incorporated by reference to Annex F to the Company’s Registration Statement on Form S-4 (Registration No. 333-151345) declared effective by the Securities and Exchange Commission on June 17, 2008).
 
   
11*
  Statement re: Computation of Per Share Earnings.
 
   
12*
  Statement re: Computation of Ratios.
 
   
21*
  Subsidiaries.
 
   
23*
  Consent of Ernst and Young LLP.
 
   
24*
  Power of Attorney (included on signature page).
 
   
31.1*
  Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
31.2*
  Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
32.1*
  Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   
32.2*
  Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
*   Filed herewith.

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The Company has not filed long-term debt instruments of its subsidiaries where the total amount under such instruments is less than ten percent of the total assets of the Company and its subsidiaries on a consolidated basis. However, the Company will furnish a copy of such instruments to the Securities and Exchange Commission upon request.

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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 February 27, 2009.
         
  CC MEDIA HOLDINGS, INC.
 
 
  By:   /s/ Mark P. Mays    
    Mark P. Mays   
    Chief Executive Officer   
 
Power of Attorney
     Each person whose signature appears below authorizes Mark P. Mays, Randall T. Mays and Herbert W. Hill, Jr., or any one of them, each of whom may act without joinder of the others, to execute in the name of each such person who is then an officer or director of the Registrant and to file any amendments to this annual report on Form 10-K necessary or advisable to enable the Registrant to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, which amendments may make such changes in such report as such attorney-in-fact may deem appropriate.
     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
         
Name   Title   Date
 
       
/s/ Mark P. Mays
 
Mark P. Mays
   Chief Executive Officer (Principal Executive Officer) and Director   February 27, 2009
 
       
/s/ Randall T. Mays
 
Randall T. Mays
  President and Chief Financial Officer (Principal Financial Officer) and Director   February 27, 2009
 
       
/s/ Herbert W. Hill, Jr.
 
Herbert W. Hill, Jr.
  Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) and Assistant Secretary   February 27, 2009
 
       
/s/ David Abrams
 
David Abrams
   Director   February 27, 2009
 
       
/s/ Steve Barnes
 
Steve Barnes
   Director   February 27, 2009
 
       
/s/ Richard J. Bressler
 
Richard J. Bressler
   Director   February 27, 2009

 


Table of Contents

         
Name   Title   Date
 
       
/s/ Charles A. Brizius
 
Charles A. Brizius
   Director   February 27, 2009
 
       
/s/ John Connaughton
 
John Connaughton
   Director   February 27, 2009
 
       
/s/ Blair Hendrix
 
Blair Hendrix
   Director   February 27, 2009
 
       
/s/ Jonathan S. Jacobson
 
Jonathan S. Jacobson
   Director   February 27, 2009
 
       
/s/ Ian K. Loring
 
Ian K. Loring
   Director   February 27, 2009
 
       
/s/ Scott M. Sperling
 
Scott M. Sperling
   Director   February 27, 2009
 
       
/s/ Kent R. Weldon
 
Kent R. Weldon
   Director   February 27, 2009