iHeartMedia, Inc. - Quarter Report: 2010 September (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

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

Commission File Number
000-53354

CC MEDIA HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		26-0241222 (I.R.S. Employer Identification No.)
200 East Basse Road San Antonio, Texas (Address of principal executive offices)		78209 (Zip Code)

(210) 822-2828
(Registrant’s telephone number, including area code)

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

Yes þ      No o

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Class			Outstanding at October 31, 2010
	Class A common stock, $.001 par value				23,416,159
	Class B common stock, $.001 par value				555,556
	Class C common stock, $.001 par value				58,967,502

 

 

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES

INDEX

		Page No.
PART I — FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements			2
Condensed Consolidated Balance Sheets at September 30, 2010 and December 31, 2009			2
Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and 2009			3
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009			4
Notes to Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3. Quantitative and Qualitative Disclosures About Market Risk			27
Item 4. Controls and Procedures			27
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			28
Item 1A. Risk Factors			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 3. Defaults Upon Senior Securities			29
Item 4. (Removed and Reserved)			29
Item 5. Other Information			29
Item 6. Exhibits			30
Signatures			31
EX-11
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

		September 30,
		2010				December 31,
		(Unaudited)				2009
CURRENT ASSETS
Cash and cash equivalents		$	1,700,834			$	1,883,994
Accounts receivable, net			1,357,179				1,301,700
Other current assets			343,663				473,151
Total Current Assets			3,401,676				3,658,845
PROPERTY, PLANT AND EQUIPMENT
Structures, net			2,035,286				2,143,972
Other property, plant and equipment, net			1,151,228				1,188,421
INTANGIBLE ASSETS
Definite-lived intangibles, net			2,362,992				2,599,244
Indefinite-lived intangibles			3,544,703				3,562,057
Goodwill			4,120,633				4,125,005
Other assets			776,973				769,557
Total Assets		$	17,393,491			$	18,047,101
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	945,292			$	995,740
Current portion of long-term debt			847,496				398,779
Deferred income			198,503				149,617
Total Current Liabilities			1,991,291				1,544,136
Long-term debt			19,691,007				20,303,126
Deferred income taxes			2,065,548				2,220,023
Other long-term liabilities			865,241				824,554
Commitments and contingent liabilities
SHAREHOLDERS’ DEFICIT
Noncontrolling interest			471,914				455,648
Common stock			82				82
Additional paid-in capital			2,123,398				2,109,110
Retained deficit			(9,492,507	)			(9,076,084	)
Accumulated other comprehensive loss			(319,933	)			(333,309	)
Cost of shares held in treasury			(2,550	)			(185	)
Total Shareholders’ Deficit			(7,219,596	)			(6,844,738	)
Total Liabilities and Shareholders’ Deficit		$	17,393,491			$	18,047,101

See notes to consolidated financial statements.

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Revenue		$	1,477,347			$	1,393,973			$	4,231,134			$	4,039,825
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)			596,540				632,778				1,794,803				1,888,203
Selling, general and administrative expenses (excludes depreciation and amortization)			365,555				337,055				1,091,488				1,075,149
Corporate expenses (excludes depreciation and amortization)			80,518				79,723				209,123				177,445
Depreciation and amortization			184,079				190,189				549,591				573,994
Impairment charges			—				—				—				4,041,252
Other operating (expense) income— net			(29,559	)			1,403				(22,523	)			(33,007	)
Operating income (loss)			221,096				155,631				563,606				(3,749,225	)
Interest expense			389,197				369,314				1,160,571				1,140,992
Loss on marketable securities			—				(13,378	)			—				(13,378	)
Equity in earnings (loss) of nonconsolidated affiliates			2,994				1,226				8,612				(20,681	)
Other (expense) income— net			(5,700	)			222,282				51,548				649,731
Loss before income taxes			(170,807	)			(3,553	)			(536,805	)			(4,274,545	)
Income tax benefit (expense)			20,415				(89,118	)			129,579				75,842
Consolidated net loss			(150,392	)			(92,671	)			(407,226	)			(4,198,703	)
Amount attributable to noncontrolling interest			4,293				(2,816	)			9,197				(17,227	)
Net loss attributable to the Company		$	(154,685	)		$	(89,855	)		$	(416,423	)		$	(4,181,476	)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments			126,548				70,166				12,876				155,881
Unrealized gain (loss) on securities and derivatives:
Unrealized holding gain (loss) on marketable securities			5,684				(9,705	)			9,217				(11,315	)
Unrealized holding gain (loss) on cash flow derivatives			529				(17,243	)			(7,617	)			(92,993	)
Reclassification adjustment			2,565				11,837				1,424				14,957
Comprehensive loss			(19,359	)			(34,800	)			(400,523	)			(4,114,946	)
Amount attributable to noncontrolling interest			18,764				9,192				2,524				19,529
Comprehensive loss attributable to the Company		$	(38,123	)		$	(43,992	)		$	(403,047	)		$	(4,134,475	)
Net loss per common share:
Basic		$	(1.91	)		$	(1.12	)		$	(5.14	)		$	(51.48	)
Weighted average common shares outstanding — Basic			81,619				81,427				81,529				81,252
Diluted		$	(1.91	)		$	(1.12	)		$	(5.14	)		$	(51.48	)
Weighted average common shares outstanding — Diluted			81,619				81,427				81,529				81,252

See notes to consolidated financial statements.

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)

		Nine Months Ended September 30,
		2010				2009
Cash flows from operating activities:
Consolidated net loss		$	(407,226	)		$	(4,198,703	)
Reconciling items:
Impairment charges			—				4,041,252
Depreciation and amortization			549,591				573,994
Deferred taxes			(170,886	)			(118,608	)
Loss on disposal of operating assets			22,523				33,007
Loss on available-for-sale and trading securities			—				13,378
Gain on extinguishment of debt			(60,289	)			(669,333	)
Provision for doubtful accounts			14,880				20,774
Share-based compensation			24,967				28,522
Equity in (earnings) loss of nonconsolidated affiliates			(8,612	)			20,681
Amortization of deferred financing charges and note discounts, net			160,040				176,901
Other reconciling items — net			9,722				31,654
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable			(74,710	)			118,521
Decrease in Federal income taxes receivable			132,309				75,939
Increase in deferred income			47,244				27,949
Increase (decrease) in accounts payable, accrued expenses and other liabilities			56,822				(78,628	)
Increase (decrease) in accrued interest			34,501				(26,857	)
Changes in other operating assets and liabilities, net of effects of acquisitions and dispositions			(14,334	)			(60,341	)
Net cash provided by operating activities			316,542				10,102
Cash flows from investing activities:
Sales of investments — net			1,200				41,436
Purchases of property, plant and equipment			(169,405	)			(150,799	)
Acquisition of operating assets			(11,743	)			(7,294	)
Proceeds from disposal of assets			20,550				40,856
Change in other — net			(5,941	)			8,782
Net cash used for investing activities			(165,339	)			(67,019	)
Cash flows from financing activities:
Draws on credit facilities			160,416				1,661,508
Payments on credit facilities			(140,254	)			(174,661	)
Proceeds from delayed draw term loan facility			138,795				500,000
Proceeds from long-term debt			6,844				—
Payments on long-term debt			(368,585	)			(468,696	)
Repurchases of long-term debt			(125,000	)			(300,937	)
Change in other — net			(6,579	)			(25,373	)
Net cash (used for) provided by financing activities			(334,363	)			1,191,841
Net (decrease) increase in cash and cash equivalents			(183,160	)			1,134,924
Cash and cash equivalents at beginning of period			1,883,994				239,846
Cash and cash equivalents at end of period		$	1,700,834			$	1,374,770

See notes to consolidated financial statements.

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES

Note 1: BASIS OF PRESENTATION AND NEW ACCOUNTING STANDARDS

     Preparation of Interim Financial Statements

The accompanying consolidated financial statements were prepared by CC Media Holdings, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring adjustments necessary to present fairly the results of the interim periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. Due to seasonality and other factors, the results for the interim periods are not necessarily indicative of results for the full year. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2009 Annual Report on Form 10-K and Quarterly Reports on Forms 10-Q for the quarterly periods ended March 31, 2010 and June 30, 2010.

The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in companies in which the Company owns 20 percent to 50 percent of the voting common stock or otherwise exercises significant influence over operating and financial policies of the company are accounted for under the equity method. All significant intercompany transactions are eliminated in the consolidation process.

Certain prior-period amounts have been reclassified to conform to the 2010 presentation.

     New Accounting Pronouncements

In August 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules. This ASU amends various SEC paragraphs pursuant to the issuance of Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies and became effective upon issuance. The adoption of ASU No. 2010-21 will not have a material impact on the Company’s financial position or results of operations.

In August 2010, the FASB issued ASU No. 2010-22, Accounting for Various Topics—Technical Corrections to SEC Paragraphs. This ASU amends various SEC paragraphs and became effective upon issuance. The adoption of ASU No. 2010-22 will not have a material impact on the Company’s financial position or results of operations.

Note 2: PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND GOODWILL

     Property, Plant and Equipment

The Company’s property, plant and equipment consisted of the following classes of assets at September 30, 2010 and December 31, 2009, respectively.

		September 30,				December 31,
(In thousands)		2010				2009
Land, buildings and improvements		$	649,001			$	633,222
Structures			2,589,169				2,514,602
Towers, transmitters and studio equipment			389,494				381,046
Furniture and other equipment			263,554				234,101
Construction in progress			80,262				88,391
			3,971,480				3,851,362
Less: accumulated depreciation			784,966				518,969
Property, plant and equipment, net		$	3,186,514			$	3,332,393

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

     Definite-lived Intangible Assets

The Company has definite-lived intangible assets which consist primarily of transit and street furniture contracts, permanent easements that provide the Company access to certain of its outdoor displays and other contractual rights in its Americas outdoor and International outdoor segments. The Company has talent and program rights contracts and advertiser relationships in its radio broadcasting segment and contracts for non-affiliated radio and television stations in its media representation operations. 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 September 30, 2010 and December 31, 2009, respectively:

		September 30, 2010								December 31, 2009
		Gross Carrying				Accumulated				Gross Carrying				Accumulated
(In thousands)		Amount				Amortization				Amount				Amortization
Transit, street furniture and other outdoor contractual rights		$	791,746			$	226,163			$	803,297			$	166,803
Customer / advertiser relationships			1,210,205				259,842				1,210,205				169,897
Talent contracts			320,854				89,011				320,854				57,825
Representation contracts			229,441				91,895				218,584				54,755
Other			549,761				72,104				550,041				54,457
Total		$	3,102,007			$	739,015			$	3,102,981			$	503,737

Total amortization expense related to definite-lived intangible assets was $82.8 million and $85.5 million for the three months ended September 30, 2010 and 2009, respectively, and $251.0 million and $257.8 million for the nine months ended September 30, 2010 and 2009, respectively.

As acquisitions and dispositions occur in the future, 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)
2011		$	308,301
2012			292,385
2013			275,712
2014			254,737
2015			232,874

     Indefinite-lived Intangible Assets

The Company’s indefinite-lived intangible assets consist of Federal Communications Commission (“FCC”) broadcast licenses and billboard permits as follows:

		September 30,				December 31,
(In thousands)		2010				2009
FCC broadcast licenses		$	2,424,791			$	2,429,839
Billboard permits			1,119,912				1,132,218
Total indefinite-lived intangible assets		$	3,544,703			$	3,562,057

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

     Goodwill

The following table presents the changes in the carrying amount of goodwill in each of the Company’s reportable segments.

										International
		Radio				Americas Outdoor				Outdoor
(In thousands)		Broadcasting				Advertising				Advertising				Other				Total
Balance as of December 31, 2008		$	5,579,190			$	892,598			$	287,543			$	331,290			$	7,090,621
Impairment			(2,420,897	)			(390,374	)			(73,764	)			(211,988	)			(3,097,023	)
Acquisitions			4,518				2,250				110				—				6,878
Dispositions			(62,410	)			—				—				(2,276	)			(64,686	)
Foreign currency			—				16,293				17,412				—				33,705
Purchase price adjustments – net			47,086				68,896				45,042				(482	)			160,542
Other			(618	)			(4,414	)			—				—				(5,032	)
Balance as of December 31, 2009			3,146,869				585,249				276,343				116,544				4,125,005
Acquisitions			—				—				—				257				257
Dispositions			(5,088	)			—				—				—				(5,088	)
Foreign currency			—				176				283				—				459
Balance as of September 30, 2010		$	3,141,781			$	585,425			$	276,626			$	116,801			$	4,120,633

The balance at December 31, 2008 is net of cumulative impairments of $1.1 billion, $2.3 billion, and $173.4 million in the Radio broadcasting, Americas outdoor and International outdoor segments, respectively.

NOTE 3: DEBT

Long-term debt at September 30, 2010 and December 31, 2009 consisted of the following:

		September 30,				December 31,
(In thousands)		2010				2009
Senior Secured Credit Facilities:
Term Loan Facilities (1)		$	10,885,447			$	10,885,447
Revolving Credit Facility Due 2014			1,842,500				1,812,500
Delayed Draw Facilities Due 2016			1,013,227				874,432
Receivables Based Facility Due 2014			354,232				355,732
Other secured long-term debt			5,822				5,225
Total consolidated secured debt			14,101,228				13,933,336
Senior Cash Pay Notes			796,250				796,250
Senior Toggle Notes			829,831				915,200
Clear Channel Senior Notes			2,911,393				3,267,549
Subsidiary Senior Notes			2,500,000				2,500,000
Other long-term debt			65,514				77,657
Purchase accounting adjustments and original issue discount			(665,713	)			(788,087	)
			20,538,503				20,701,905
Less: current portion			847,496				398,779
Total long-term debt		$	19,691,007			$	20,303,126

The Company’s weighted average interest rate at September 30, 2010 was 6.2%. The aggregate market value of the Company’s debt based on market prices for which quotes were available was approximately $17.1 billion and $17.7 billion at September 30, 2010 and December 31, 2009, respectively.

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

     Debt Repurchases and Maturities

During the first nine months of 2010, Clear Channel Investments, Inc. (“CC Investments”), an indirect wholly-owned subsidiary of the Company, repurchased certain of the outstanding senior toggle notes of the Company’s subsidiary, Clear Channel Communications, Inc. (“Clear Channel”), through an open market purchase as shown in the table below. Notes repurchased and held by CC Investments are eliminated in consolidation.

		Nine Months Ended
(In thousands)		September 30, 2010
CC Investments
Principal amount of debt repurchased		$	185,185
Deferred loan costs and other			104
Gain recorded in “Other (expense) income– net”			(60,289	)
Cash paid for repurchases of long-term debt		$	125,000

On July 16, 2010, Clear Channel made the election to pay interest on the senior toggle notes entirely in cash, effective for the interest period commencing August 1, 2010.

During the first nine months of 2010, Clear Channel repaid its remaining 7.65% senior notes upon maturity for $138.8 million, including $5.1 million of accrued interest, with proceeds from its delayed draw term loan facility that was specifically designated for this purpose. Also during the first nine months of 2010, the Company repaid Clear Channel’s remaining 4.50% senior notes upon maturity for $240.0 million with available cash on hand.

Note 4: OTHER DEVELOPMENTS

     Disposition of Assets

On October 15, 2010, Clear Channel Outdoor Holdings, Inc., the Company’s subsidiary, transferred its interest in its Branded Cities operations to its joint venture partner, The Ellman Companies. The long-lived tangible and intangible assets of the Branded Cities operations were transferred for less than their carrying values in connection with this transaction. In connection with this subsequent event, the Company recorded a non-cash charge in the third quarter of 2010 of approximately $23.6 million in “Other operating income (expense) – net” to present these assets at their estimated fair values as of September 30, 2010.

During the three months ended September 30, 2010, the Company’s International outdoor segment sold its outdoor advertising business in India, resulting in a loss of $3.7 million included in “Other operating income (expense) – net.” In addition, the Company sold three radio stations and recorded a loss of $0.9 million in “Other operating income (expense) – net” during the nine months ended September 30, 2010.

     Share-based Compensation Expense

Share-based compensation expense 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 share-based compensation expense recorded during the three and nine months ended September 30, 2010 and 2009, respectively:

		Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands)		2010				2009				2010				2009
Direct operating expenses		$	2,890			$	2,631			$	8,610			$	8,509
Selling, general and administrative expenses			1,721				1,750				5,148				5,474
Corporate expenses			3,732				4,835				11,209				14,539
Total share-based compensation expense		$	8,343			$	9,216			$	24,967			$	28,522

As of September 30, 2010, there was $67.7 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 a weighted average period of approximately three years.

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Additionally, the Company recorded compensation expense of $6.0 million in “Corporate expenses” related to shares tendered by Mark P. Mays to the Company on August 23, 2010 for purchase at $36.00 per share pursuant to a put option included in his amended employment agreement.

     Supplemental Disclosures

Cash paid (received) for interest and income taxes, net of Federal income tax refunds of $132.3 million and $75.9 million for the nine months ended September 30, 2010 and 2009, respectively, was as follows:

		Nine Months Ended
		September 30,
(In thousands)		2010				2009
Interest		$	969,525			$	975,686
Income taxes			(113,840	)			(57,471	)

     Divestiture Trusts

The Company owns certain radio stations which, under current FCC rules, are not permitted or transferable. These radio stations were placed in a trust in order to comply with FCC rules at the time of the closing of the merger that resulted in the Company’s acquisition of Clear Channel. The Company is the beneficial owner of the trust, but the radio stations are managed by an independent trustee. The Company will have to divest all of these radio stations unless any stations may be owned by the Company under then-current FCC rules, in which case the trust will be terminated with respect to such stations. 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 ASC 810-10, which requires an enterprise involved with variable interest entities to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in the variable interest entity, as the trust was determined to be a variable interest entity and the Company is its primary beneficiary.

     Income Tax Benefit (Expense)

The Company’s income tax benefit (expense) for the three and nine months ended September 30, 2010 and 2009, respectively, consisted of the following components:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In thousands)		2010				2009				2010				2009
Current tax expense		$	(14,663	)		$	(12,735	)		$	(41,307	)		$	(42,766	)
Deferred tax benefit (expense)			35,078				(76,383	)			170,886				118,608
Income tax benefit (expense)		$	20,415			$	(89,118	)		$	129,579			$	75,842

The effective tax rate is the provision for income taxes as a percent of income from continuing operations before income taxes. The effective tax rate for the three and nine months ended September 30, 2010 was 11.9% and 24.1%, respectively, compared to an effective tax rate of (2,508.2%) and 1.8% for the three and nine months ended September 30, 2009, respectively. The 2010 effective rate was impacted primarily as a result of the Company’s inability to benefit from tax losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future years. In addition, during the three months ended September 30, 2010, the Company recorded a valuation allowance of $13.4 million against deferred tax assets in foreign jurisdictions due to the uncertainty of the ability to realize those assets in future periods. The 2009 effective rate was impacted primarily by the impairment charge on goodwill in 2009 and as a result of a deferred tax valuation allowance recorded in 2009 due to the uncertainty of the Company’s ability to utilize Federal and foreign tax losses at that time.

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Note 5: FAIR VALUE MEASUREMENTS

The Company holds marketable equity securities and interest rate swaps that are measured at fair value on each reporting date.

ASC 820-10-35 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.

     Marketable Equity Securities

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 cost, unrealized holding gains or losses, and fair value of the Company’s investments at September 30, 2010 and December 31, 2009, respectively, are as follows:

		September 30, 2010																December 31, 2009
(In thousands)						Gross Unrealized				Gross Unrealized				Fair								Gross Unrealized				Gross Unrealized				Fair
Investments		Cost				Losses				Gains				Value				Cost				Losses				Gains				Value
Available-for-sale		$	19,104			$	(4,025	)		$	41,470			$	56,549			$	19,104			$	(12,237	)		$	32,035			$	38,902

     Interest Rate Swap Agreements

The Company’s aggregate $6.0 billion notional amount interest rate swap agreements are designated as a cash flow hedge and the effective portions of the gain or loss on the swaps are 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. On October 29, 2010, $3.5 billion of the Company’s interest rate swaps matured. The remaining interest rate swap is scheduled to mature in 2013.

The swap agreements are valued using a discounted cash flow model that takes into account the present value of the future cash flows under the terms of the agreements by using market information available as of the reporting date, including prevailing interest rates and credit spread. Due to the fact that the inputs are either directly or indirectly observable, the Company classified the fair value measurements of these agreements as Level 2.

The Company continually monitors its positions with, and credit quality of, the financial institutions which are counterparties to its interest rate swaps. The Company may be 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. If a derivative instrument no longer qualifies as a cash flow hedge, hedge accounting is discontinued and the gain or loss that was recorded in other comprehensive income is recognized currently in income.

The Company’s interest rate swaps meet the four criteria in ASC 815-30-35-22, which states that if certain critical terms and matching criteria are met, the change-in-variable-cash-flows method will result in no ineffectiveness being recorded in earnings. In accordance with ASC 815-20-35-9, as the critical terms of the swaps and the floating-rate debt being hedged were the same at inception and remained the same during the current period, no ineffectiveness was recorded in earnings related to these interest rate swaps.

The fair value of the Company’s interest rate swaps designated as hedging instruments and recorded in “Other long-term liabilities” was $249.4 million and $237.2 million at September 30, 2010 and December 31, 2009, respectively.

The following table details the beginning and ending accumulated other comprehensive loss and the current period activity related to the interest rate swap agreements:

(In thousands)		Accumulated other comprehensive loss
Balance at December 31, 2009		$	149,179
Other comprehensive loss			7,617
Balance at September 30, 2010		$	156,796

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

     Other Comprehensive Income (Loss)

The following table discloses the amount of income tax benefit (expense) allocated to each component of other comprehensive income for the three and nine months ended September 30, 2010 and 2009, respectively:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In thousands)		2010				2009				2010				2009
Foreign currency translation adjustments		$	(8,193	)		$	(6,799	)		$	(4,196	)		$	(15,388	)
Unrealized holding gain (loss) on marketable securities			(3,520	)			(2,869	)			(8,431	)			(7,208	)
Unrealized holding gain (loss) on cash flow derivatives			(318	)			10,082				4,570				54,377
Income tax benefit (expense)		$	(12,031	)		$	414			$	(8,057	)		$	31,781

Note 6: COMMITMENTS, CONTINGENCIES AND GUARANTEES

The Company and its subsidiaries are currently involved in certain legal proceedings arising in the ordinary course of business and, as required, the Company has accrued its estimate of the probable costs for resolution of those claims for which the occurrence of loss is probable and the amount can be reasonably estimated. 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 2006, two of the Company’s operating businesses (L&C Outdoor Ltda. and Publicidad Klimes Sao Paulo Ltda.) in the Sao Paulo, Brazil market received notices of infraction from the state taxing authority, seeking to impose a value added tax (“VAT”) on such businesses, retroactively for the period from December 31, 2001 through January 31, 2006. The taxing authority contends that our businesses fall within the definition of “communication services” and as such are subject to the VAT. The aggregate amount of tax initially claimed to be owed by both businesses equals approximately $69.4 million, comprised of approximately $20.2 million in taxes, approximately $40.2 million in penalty and approximately $9.0 million in interest. In addition, the taxing authorities are seeking to impose an additional aggregate amount of interest on the tax and penalty amounts of approximately $39.3 million until the initial tax, penalty and interest are paid. The aggregate amount of additional interest accrues daily at an interest rate promulgated by the Brazilian government, which at September 30, 2010 is equal to approximately $1.85 million per month.

The Company has filed petitions to challenge the imposition of this tax against each of its businesses, which are proceeding separately. The Company’s challenge for L&C Outdoor Ltda. was unsuccessful at the first administrative level, but successful at the second administrative level. The state taxing authority filed an appeal to the next administrative level, which required consideration by a full panel of 16 administrative law judges. On September 27, 2010, the Company received an unfavorable ruling from this final administrative level and intends to appeal this ruling to the judicial level. The Company has filed a petition to have the case remanded to the second administrative level for consideration of the amount of the penalty assessed against it. The Company’s challenge for Publicidad Klimes Sao Paulo Ltda. was unsuccessful at the first administrative level, and denied at the second administrative level on or about September 24, 2009. The case is now pending before the third administrative level. Based on the Company’s review of the law in similar cases in other Brazilian states, the Company has not accrued any costs related to these claims and believes the occurrence of loss is not probable.

At September 30, 2010, Clear Channel guaranteed $39.9 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 Clear Channel’s European cash management pool. As of September 30, 2010, no amounts were outstanding under these agreements.

As of September 30, 2010, Clear Channel had outstanding commercial standby letters of credit and surety bonds of $132.0 million and $46.7 million, respectively. Letters of credit in the amount of $15.7 million are collateral in support of surety bonds and these amounts would only be drawn under the letter of credit in the event the associated surety bonds were funded and Clear Channel 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.

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Note 7: CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The Company is a party to a management agreement with certain affiliates of Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P. (together, the “Sponsors”) and certain other parties pursuant to which such affiliates of the Sponsors will provide management and financial advisory services until 2018. These agreements require management fees to be paid to such affiliates of the Sponsors for such services at a rate not greater than $15.0 million per year, plus reimbursable expenses. For the three and nine months ended September 30, 2010, the Company recognized management fees and reimbursable expenses of $4.4 million and $13.0 million, respectively. For the three and nine months ended September 30, 2009, the Company recognized management fees and reimbursable expenses of $6.1 million and $15.6 million, respectively.

Note 8: EQUITY AND COMPREHENSIVE INCOME (LOSS)

The Company reports its noncontrolling interests in consolidated subsidiaries as a component of equity separate from the Company’s equity. The following table shows the changes in equity attributable to the Company and the noncontrolling interests of subsidiaries in which the Company has a majority, but not total ownership interest:

						Noncontrolling
(In thousands)		The Company				Interests				Consolidated
Balances at December 31, 2009		$	(7,300,386	)		$	455,648			$	(6,844,738	)
Net income (loss)			(416,422	)			9,197				(407,225	)
Foreign currency translation adjustments			9,748				3,128				12,876
Unrealized holding gain (loss) on marketable securities			9,830				(613	)			9,217
Unrealized holding loss on cash flow derivatives			(7,617	)			—				(7,617	)
Reclassification adjustment			1,414				10				1,424
Other — net			11,923				4,544				16,467
Balances at September 30, 2010		$	(7,691,510	)		$	471,914			$	(7,219,596	)

						Noncontrolling
(In thousands)		The Company				Interests				Consolidated
Balances at December 31, 2008		$	(3,342,451	)		$	426,220			$	(2,916,231	)
Net loss			(4,181,476	)			(17,227	)			(4,198,703	)
Foreign currency translation adjustments			136,350				19,531				155,881
Unrealized holding loss on marketable securities			(10,021	)			(1,294	)			(11,315	)
Unrealized holding loss on cash flow derivatives			(92,993	)			—				(92,993	)
Reclassification adjustment			13,665				1,292				14,957
Other — net			9,010				18,834				27,844
Balances at September 30, 2009		$	(7,467,916	)		$	447,356			$	(7,020,560	)

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Note 9: SEGMENT DATA

The Company has three reportable segments, which it believes best reflect how the Company is currently managed — radio broadcasting, Americas outdoor advertising and International outdoor advertising. The Americas outdoor advertising segment consists primarily of operations in the United States, Canada and Latin America, and the International outdoor advertising segment includes operations primarily in Europe, Asia and Australia. The category “other” includes media representation and other general support services and initiatives. Revenue and expenses earned and charged between segments are eliminated in consolidation.

The following table presents the Company’s operating segment results for the three and nine months ended September 30, 2010 and 2009:

																		Corporate
						Americas				International								and other
		Radio				Outdoor				Outdoor								reconciling
(In thousands)		Broadcasting				Advertising				Advertising				Other				items				Eliminations				Consolidated
Three Months Ended September 30, 2010
Revenue		$	743,034			$	333,269			$	361,817			$	61,849			$	—			$	(22,622	)		$	1,477,347
Direct operating expenses			202,771				143,940				236,679				24,112				—				(10,962	)			596,540
Selling, general and administrative expenses			240,668				51,750				63,474				21,323				—				(11,660	)			365,555
Depreciation and amortization			64,657				53,139				50,694				13,139				2,450				—				184,079
Corporate expenses			—				—				—				—				80,518				—				80,518
Other operating expense — net			—				—				—				—				(29,559	)			—				(29,559	)
Operating income (loss)		$	234,938			$	84,440			$	10,970			$	3,275			$	(112,527	)		$	—			$	221,096
Intersegment revenues		$	7,259			$	865			$	—			$	14,498			$	—			$	—			$	22,622
Share-based compensation expense		$	1,746			$	2,207			$	658			$	—			$	3,732			$	—			$	8,343
Capital expenditures		$	10,515			$	30,689			$	21,869			$	—			$	2,923			$	—			$	65,996
Three Months Ended September 30, 2009
Revenue		$	703,232			$	312,537			$	348,085			$	50,674			$	—			$	(20,555	)		$	1,393,973
Direct operating expenses			214,748				147,250				251,516				29,097				—				(9,833	)			632,778
Selling, general and administrative expenses			222,927				47,602				61,222				16,026				—				(10,722	)			337,055
Depreciation and amortization			63,008				54,102				56,951				14,086				2,042				—				190,189
Corporate expenses			—				—				—				—				79,723				—				79,723
Other operating income — net			—				—				—				—				1,403				—				1,403
Operating income (loss)		$	202,549			$	63,583			$	(21,604	)		$	(8,535	)		$	(80,362	)		$	—			$	155,631
Intersegment revenues		$	7,225			$	760			$	—			$	12,570			$	—			$	—			$	20,555
Share-based compensation expense		$	2,070			$	1,775			$	537			$	—			$	4,834			$	—			$	9,216
Capital expenditures		$	9,933			$	23,819			$	23,335			$	84			$	1,005			$	—			$	58,176

CC MEDIA HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

																		Corporate
						Americas				International								and other
		Radio				Outdoor				Outdoor								reconciling
(In thousands)		Broadcasting				Advertising				Advertising				Other				items				Eliminations				Consolidated
Nine Months Ended September 30, 2010
Revenue		$	2,114,971			$	928,015			$	1,077,246			$	176,668			$	—			$	(65,766	)		$	4,231,134
Direct operating expenses			605,425				427,546				717,843				76,153				—				(32,164	)			1,794,803
Selling, general and administrative expenses			706,478				160,302				196,971				61,339				—				(33,602	)			1,091,488
Depreciation and amortization			192,401				158,319				152,522				39,660				6,689				—				549,591
Corporate expenses			—				—				—				—				209,123				—				209,123
Other operating expense — net			—				—				—				—				(22,523	)			—				(22,523	)
Operating income (loss)		$	610,667			$	181,848			$	9,910			$	(484	)		$	(238,335	)		$	—			$	563,606
Intersegment revenues		$	21,056			$	2,712			$	—			$	41,998			$	—			$	—			$	65,766
Share-based compensation expense		$	5,252			$	6,553			$	1,953			$	—			$	11,209			$	—			$	24,967
Capital expenditures		$	21,617			$	70,615			$	68,659			$	—			$	8,514			$	—			$	169,405
Nine Months Ended September 30, 2009
Revenue		$	2,024,421			$	898,277			$	1,036,678			$	141,807			$	—			$	(61,358	)		$	4,039,825
Direct operating expenses			676,515				440,885				729,798				73,378				—				(32,373	)			1,888,203
Selling, general and administrative expenses			688,493				147,839				200,091				67,711				—				(28,985	)			1,075,149
Depreciation and amortization			197,830				158,612				169,157				42,418				5,977				—				573,994
Corporate expenses			—				—				—				—				177,445				—				177,445
Impairment charges			—				—				—				—				4,041,252				—				4,041,252
Other operating expense — net			—				—				—				—				(33,007	)			—				(33,007	)
Operating income (loss)		$	461,583			$	150,941			$	(62,368	)		$	(41,700	)		$	(4,257,681	)		$	—			$	(3,749,225	)
Intersegment revenues		$	24,641			$	2,029			$	—			$	34,688			$	—			$	—			$	61,358
Share-based compensation expense		$	6,208			$	5,971			$	1,806			$	—			$	14,537			$	—			$	28,522
Capital expenditures		$	33,542			$	58,116			$	55,860			$	104			$	3,177			$	—			$	150,799

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Format of Presentation

     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 segmented basis. Our reportable operating segments are radio broadcasting (“radio” or “radio broadcasting”), which also includes our national syndication business, Americas outdoor advertising (“Americas outdoor” or “Americas outdoor advertising”) and International outdoor advertising (“International outdoor” or “International outdoor advertising”). 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, Other operating income (expense) — net, Interest expense, Equity in earnings (loss) of nonconsolidated affiliates, Other income (expense) — net and Income tax benefit (expense) are managed on a total company basis and are, therefore, included only in our discussion of consolidated results.

Executive Summary

     The key highlights of our business for the three and nine months ended September 30, 2010 are summarized below:

	•		Consolidated revenue increased $83.4 million and $191.3 million for the three and nine months ended September 30, 2010, respectively, compared to the same periods of 2009, primarily as a result of improved economic conditions throughout the first nine months of 2010.
	•		Radio revenue increased $39.8 million and $90.6 million for the three and nine months ended September 30, 2010, respectively, compared to the same periods of 2009, primarily as a result of increased average rates per minute driven by increased demand for both national and local advertising.
	•		Americas outdoor revenue increased $20.7 million and $29.7 million for the three and nine months ended September 30, 2010, respectively, compared to the same periods of 2009, driven by increases in revenue across our advertising inventory, particularly digital.
	•		International outdoor revenue increased $13.7 million for the three months ended September 30, 2010, compared to the same period of 2009, primarily as a result of revenue growth from all of our advertising inventory categories, particularly street furniture, and across most countries, partially offset by a decrease from movements in foreign exchange of $12.5 million. Revenue increased $40.6 million for the nine months ended September 30, 2010 compared to the same period of 2009, primarily as a result of revenue growth from street furniture across most countries and included a $3.4 million increase from movements in foreign exchange.
	•		Our subsidiary, Clear Channel Investments, Inc., repurchased $185.2 million aggregate principal amount of Clear Channel’s senior toggle notes for $125.0 million during the first nine months of 2010.
	•		We repaid $240.0 million upon the maturity of Clear Channel’s 4.50% senior notes due 2010 in the first nine months of 2010.
	•		During the third quarter of 2010, Clear Channel repaid its remaining 7.65% senior notes upon maturity for $138.8 million with proceeds from its delayed draw term loan facility that was specifically designated for this purpose.
	•		During the third quarter of 2010, we received $132.3 million in Federal income tax refunds.
	•		On October 15, 2010, Clear Channel Outdoor Holdings, Inc., our subsidiary, transferred its interest in its Branded Cities operations to its joint venture partner, The Ellman Companies. The long-lived tangible and intangible assets of the Branded Cities operations were transferred for less than their carrying values in connection with this transaction and, as a result, we recorded a non-cash charge in the third quarter of 2010 of approximately $23.6 million in “Other operating income (expense) — net” to present these assets at their estimated fair values as of September 30, 2010.

Certain Credit Agreement EBITDA Adjustments

     Clear Channel’s senior secured credit facilities allow Clear Channel to adjust the calculation of consolidated adjusted EBITDA (as calculated in accordance with the senior secured credit facilities) for certain charges. These charges include restructuring costs of $3.0 million and $35.9 million for the three and nine months ended September 30, 2010. In addition, certain other charges, including costs related to the closure and/or consolidation of facilities, retention charges, systems establishment costs and consulting fees incurred in connection with any of the foregoing, among other items, are also adjustments to the calculation of consolidated adjusted EBITDA. For the three and nine months ended September 30, 2010, Clear Channel adjusted the consolidated adjusted

EBITDA calculation for an additional $3.1 million and $7.2 million, respectively. See “SOURCES OF CAPITAL” below for a description of the calculation of Clear Channel’s adjusted EBITDA pursuant to the senior secured credit facilities.

RESULTS OF OPERATIONS

Consolidated Results of Operations

     The comparison of the three and nine months ended September 30, 2010 to the three and nine months ended September 30, 2009, respectively, is as follows:

		Three Months Ended												Nine Months Ended
		September 30,												September 30,
(In thousands)		2010				2009				% Change				2010				2009				% Change
Revenue		$	1,477,347			$	1,393,973				6	%		$	4,231,134			$	4,039,825				5	%
Operating expenses:
Direct operating expenses (excludes depreciation and amortization)			596,540				632,778				(6	%)			1,794,803				1,888,203				(5	%)
SG&A expenses (excludes depreciation and amortization)			365,555				337,055				8	%			1,091,488				1,075,149				2	%
Corporate expenses (excludes depreciation and amortization)			80,518				79,723				1	%			209,123				177,445				18	%
Depreciation and amortization			184,079				190,189				(3	%)			549,591				573,994				(4	%)
Impairment charges			—				—								—				4,041,252
Other operating income (expense) — net			(29,559	)			1,403								(22,523	)			(33,007	)
Operating income (loss)			221,096				155,631								563,606				(3,749,225	)
Interest expense			389,197				369,314								1,160,571				1,140,992
Loss on marketable securities			—				(13,378	)							—				(13,378	)
Equity in earnings (loss) of nonconsolidated affiliates			2,994				1,226								8,612				(20,681	)
Other income (expense) — net			(5,700	)			222,282								51,548				649,731
Loss before income taxes			(170,807	)			(3,553	)							(536,805	)			(4,274,545	)
Income tax benefit (expense)			20,415				(89,118	)							129,579				75,842
Consolidated net loss			(150,392	)			(92,671	)							(407,226	)			(4,198,703	)
Amount attributable to noncontrolling interest			4,293				(2,816	)							9,197				(17,227	)
Net loss attributable to the Company		$	(154,685	)		$	(89,855	)						$	(416,423	)		$	(4,181,476	)

Consolidated Revenue

     Consolidated revenue increased $83.4 million during the third quarter of 2010 compared to the same period of 2009 primarily as a result of a stronger economic environment compared to the prior year. Our radio broadcasting revenue increased $39.8 million driven by increases in both local and national advertising and average rate per minute. Americas outdoor revenue increased $20.7 million, driven by revenue increases across our advertising inventory, particularly digital. Our International outdoor revenue increased $13.7 million, primarily due to revenue growth from all of our advertising inventory categories, particularly street furniture, and across most countries, partially offset by decreases of $12.5 million from movements in foreign exchange. Other revenue increased $11.2 million compared to the same period of 2009, primarily from stronger national advertising in our media representation business.

     Consolidated revenue increased $191.3 million during the first nine months of 2010 compared to the same period of 2009. Our radio broadcasting revenue increased $90.6 million driven by increases in national advertising and average rate per minute. Americas outdoor revenue increased $29.7 million, driven by revenue increases across our advertising inventory, particularly digital. Our International outdoor revenue increased $40.6 million, primarily due to revenue growth from street furniture across most countries, and included a $3.4 million increase from movements in foreign exchange. Other revenue increased $34.9 million compared to the same period of 2009, primarily from stronger national advertising in our media representation business.

Consolidated Direct Operating Expenses

     Consolidated direct operating expenses decreased $36.2 million during the third quarter of 2010 compared to the same period of 2009. Our radio broadcasting direct operating expenses decreased $12.0 million, primarily from a $5.6 million decline in programming expenses resulting from cost savings from our restructuring program in addition to a decline from the non-renewals of sports contracts. Americas outdoor direct operating expenses decreased $3.3 million, primarily as a result of the disposition of our taxi advertising business, partially offset by an increase in site lease expenses associated with the increase in revenue. Direct operating expenses in our International outdoor segment decreased $14.8 million, primarily as a result of a $9.4 million decrease from movements in foreign exchange in addition to decreased site lease expenses associated with cost savings from our restructuring program.

     Consolidated direct operating expenses decreased $93.4 million during the first nine months of 2010 compared to the same period of 2009. Our radio broadcasting direct operating expenses decreased $71.1 million, primarily from a $25.7 million decline in expenses incurred in connection with our restructuring program from which cost savings resulted in a $12.0 million decline in programming expenses and a $12.7 million decline in compensation expense. Americas outdoor direct operating expenses decreased $13.3 million, primarily as a result of the disposition of our taxi advertising business, partially offset by an increase in site lease expenses associated with the increase in revenue. Direct operating expenses in our International outdoor segment decreased $12.0 million, primarily as a result of decreased site lease expenses associated with cost savings from our restructuring program, partially offset by a $1.2 million increase from movements in foreign exchange.

Consolidated Selling, General and Administrative (“SG&A”) Expenses

     Consolidated SG&A expenses increased $28.5 million during the third quarter of 2010 compared to the same period of 2009. Our radio broadcasting SG&A expenses increased $17.7 million, primarily as a result of increased marketing and promotional expenses and increased bonus and commission expense associated with the increased revenue. SG&A expenses increased $4.1 million in our Americas outdoor segment, primarily as a result of increased bonus and commission expenses associated with the increase in revenue. SG&A expenses increased $2.3 million in our International outdoor segment, primarily from increased selling costs associated with the increase in revenue, partially offset by a $2.5 million decrease from movements in foreign exchange.

     Consolidated SG&A expenses increased $16.3 million during the first nine months of 2010 compared to the same period of 2009. Our radio broadcasting SG&A expenses increased $18.0 million, primarily as a result of increased bonus and commission expense associated with the increase in revenue. SG&A expenses increased $12.5 million in our Americas outdoor segment, primarily as a result of the unfavorable impact of litigation in addition to an increase in selling and marketing costs associated with the increase in revenue. Our International outdoor SG&A expenses decreased $3.1 million, primarily as a result of cost savings from our restructuring program as well as a decrease in business tax related to a change in French tax law.

Corporate Expenses

     Corporate expenses were flat during the third quarter of 2010 compared to the same period of 2009. The third quarter of 2009 included a $23.5 million accrual related to an unfavorable outcome of litigation. The third quarter of 2010 included an $18.1 million increase in bonus expense from improved operating performance compared to the prior year and a $15.3 million increase primarily related to headcount from centralization efforts and the expansion of corporate capabilities.

     Corporate expenses increased $31.7 million during the first nine months of 2010 compared to the same period of 2009, primarily due to a $49.9 million increase in bonus expense from improved operating performance and a $37.3 million increase primarily related to headcount from centralization efforts and the expansion of corporate capabilities. Partially offsetting the 2010 increase was $23.5 million related to an unfavorable outcome of litigation recorded in the third quarter of 2009 discussed above and a $22.6 million decrease in expenses during 2010 associated with our restructuring program.

Depreciation and Amortization

     Depreciation and amortization decreased $6.1 million during the third quarter of 2010 compared to the same period of 2009, due to decreased amortization in our International outdoor segment in 2010 primarily related to assets that became fully amortized during 2009.

     Depreciation and amortization decreased $24.4 million during the first nine months of 2010 compared to the same period of 2009, primarily as a result of assets in our International outdoor segment that became fully amortized during 2009. Additionally, the first nine months of 2009 included $8.0 million of additional amortization expense associated with the finalization of purchase price allocations to the acquired intangible assets in our Radio segment.

Other Operating Income (Expense) — Net

     Other operating expense of $29.6 million and $22.5 million for the three and nine months ended September 30, 2010, respectively, primarily related to a $23.6 million non-cash charge recorded as of September 30, 2010 as a result of the transfer of our subsidiary’s interest in its Branded Cities business, and a $3.7 million loss on the sale of our outdoor advertising business in India.

     Other operating expense of $33.0 million for the first nine months of 2009 primarily related to losses on the sale and exchange of radio stations.

Interest Expense

     Interest expense increased $19.9 million during the third quarter of 2010 compared to the same period of 2009, primarily as a result of an increase in the weighted average cost of debt during 2010 due to the issuance of $2.5 billion in subsidiary senior notes in December 2009 partially offset by decreased interest expense due to the prepayment of $2.0 billion of term loans in December 2009. Clear Channel’s weighted average cost of debt in the third quarter of 2010 and 2009 was 6.2% and 5.7% , respectively.

     Interest expense increased $19.6 million during the first nine months of 2010 compared to the same period of 2009, primarily as a result of an increase in the weighted average cost of debt during 2010 due to the issuance of $2.5 billion in subsidiary senior notes in December 2009. This increase was partially offset by decreased interest expense due to maturities of the 4.25% senior notes due May 2009 and the 4.5% senior notes due January 2010, repurchases of senior notes, senior toggle notes and senior cash pay notes made between April 2009 and March 2010, and prepayment of $2.0 billion of term loans in December 2009. The first six months of 2009 also included additional interest expense related to larger outstanding balances on the senior toggle notes and senior cash pay notes prior to the cancellation and retirement of $249.4 million and $183.8 million aggregate principal amount of the senior toggle notes and senior cash pay notes, respectively, in June of 2009. Clear Channel’s weighted average cost of debt for the first nine months of 2010 and 2009 was 6.3% and 5.8%, respectively.

Loss on Marketable Securities

     The loss on marketable securities of $13.4 million during the three and nine months ended September 30, 2009 relates to an impairment of certain available-for-sale securities and a loss on the sale of equity securities.

Equity in Earnings (Loss) of Nonconsolidated Affiliates

     Equity in earnings of nonconsolidated affiliates increased during the first nine months of 2010 compared to the same period of 2009, primarily as a result of a $19.7 million impairment of equity investments in our International outdoor segment in 2009.

Other Income (Expense) — Net

     Other income of $51.5 million for the first nine months of 2010 primarily related to an aggregate gain of $60.3 million on the repurchase of Clear Channel’s senior toggle notes. Please refer to the Debt Repurchases and Maturities section within this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for additional discussion of the repurchase.

     Other income of $222.3 million in the third quarter of 2009 primarily related to an aggregate gain of $229.0 million on the third quarter open market repurchases of certain of Clear Channel’s senior notes. Other income of $649.7 million in the first nine months of 2009 primarily related to the third quarter repurchase discussed above in addition to an aggregate gain of $373.7 million on the second quarter repurchase of certain of Clear Channel’s senior toggle notes and senior cash pay notes. In addition, $66.6 million related to the open market repurchase of certain of Clear Channel’s senior notes at a discount.

Income Tax Benefit (Expense)

     Income tax benefits of $20.4 million and $129.6 million were recorded for the three and nine months ended September 30, 2010, respectively, resulting in effective tax rates of 11.9% and 24.1% for those periods, respectively. The effective tax rates for the 2010 periods were impacted primarily as a result of our inability to benefit from tax losses in certain foreign jurisdictions due to the uncertainty of the ability to utilize those losses in future years. In addition, during the three months ended September 30, 2010, we recorded a valuation allowance of $13.4 million against deferred tax assets in foreign jurisdictions due to the uncertainty of our ability to realize those assets in future periods.

     Income tax (expense) benefits of ($89.1) million and $75.8 million were recorded for the three and nine months ended September 30, 2009, respectively, resulting in effective tax rates of (2,508.2%) and 1.8% for those periods, respectively. The effective tax rates for the 2009 periods were primarily impacted by the impairment charge on goodwill. We recorded a deferred tax valuation

allowance during the third quarter and during the first nine months of 2009 due to the uncertainty of our ability to utilize Federal and foreign tax losses at that time.

Segment Revenue and Divisional Operating Expenses

Radio Broadcasting

     Our radio broadcasting operating results were as follows:

		Three Months Ended												Nine Months Ended
		September 30,								%				September 30,								%
(In thousands)		2010				2009				Change				2010				2009				Change
Revenue		$	743,034			$	703,232				6	%		$	2,114,971			$	2,024,421				4	%
Direct operating expenses			202,771				214,748				(6	%)			605,425				676,515				(11	%)
SG&A expenses			240,668				222,927				8	%			706,478				688,493				3	%
Depreciation and amortization			64,657				63,008				3	%			192,401				197,830				(3	%)
Operating income		$	234,938			$	202,549				16	%		$	610,667			$	461,583				32	%