VALUATION Using Multiple Analysis

2001 Asset Industry Average Industry Avg (Corrected) Radio One

Value ( in
Million) Mutiple Value Multiple Value Multiple
BCF $76.436 18.1 $1,383 17.25 $1,319 22.1
EBITDA $74.314 19.4 $1,442 17.42 $1,295 24.2
After-tax CashFlow $74.31 26.1 $1,940 23.55 $1,750 36.5

Valuation Using DCF - APV

DCF Valuation $1,465 Billion Assuming BCF multiple
DCF Valuation Assuming growing perpetuity

Valuation Based on similar market acquisition

Infinity 1.4 billion or 21.5 X 2000BCF
21.5 65041000 1,398.38 Billion 18 stations

Cost per station $77.69 Million

70
CFO Anticipated offer 20X2000 BCF
20 65041000 $1,300.82 billion $61.94

Aftertax cash flow 16303

1999
 Per station
Radio One
Value
$1,689 $62.79
$1,798 $61.65
$2,712 $83.34
Year 2001 2002 2003
BCF-New Markets 76,436,000 89,711,000 101,966,000

Total BCF 76,436,000 89,711,000 101,966,000

Corporate Expenses 2,121,750 24,402,585 2,805,938

EBITDA 74,314,250 65,308,415 99,160,063

Depr. & Amort. 90,447,000 90,447,000 90,447,000

EBIT (16,132,750) (25,138,585) 8,713,063

Tax - - 3,049,572

Net Income (16,132,750) (25,138,585) 5,663,491

Depr. & Amort. 90,447,000 90,447,000 90,447,000

Capital Expenditure 2,100,000 2,100,000 2,100,000

Cash Flow 72,214,250 63,208,415 94,010,491

$ in million
PV Cash Flow = $235

TV BCF Multiples = $2,087

PV TV BCF Multiples $1,230

DCF VALUATION $1,465

Sensitivity Analysis - Varying Growth Rate (Growing Perpetuity)

Growth Rate 3.20% 4% 6%
PV Cash Flow $235 $235 $235
TV BCF (g) $1,088.67 $1,183.78 $1,503.44
PV TV BCF (g) $641.70 $697.76 $886.18
DCF Valuation $877.10 $933.16 $1,121.58
$ in million
 2004
115,277,000

115,277,000

3,226,905

112,050,095

90,447,000

21,603,095

7,561,083

14,042,012

90,447,000

2,100,000

102,389,012

ate (Growing Perpetuity)

8% 10% 12%
$235 $235 $235
$2,031.78 $3,072.12 $6,068.35
$1,197.60 $1,810.82 $3,576.91
$1,433.00 $2,046.22 $3,812.31
 Risk Free Rate= 6%
Risk Premium= 9.68%
Asset Beta= 0.82
Asset Return = 14.13%

Growth Rate= 3.20%

Corporate Tax Rate= 35%

Ratios assumed to be constant

Corporate Xpense to Potential market -RatioCE
Depreciation & Amort to Potential market -RatioD&A

Corporate Depr. & Amort. Data Source

Expense
Radio 1 4,155,000 17,073,000 Exhibit 6, 1999
Radio1 & Acquisitions 6,000,000 107,520,000 Exhibit 9, 1999
Acquisitions 1,845,000 90,447,000
Ratio 30.75% 84.12% Held constant for the

Equity Debt+Equity WD WE
420,256,000 527,536,000 20.34% 79.66%
107,280,000 <=Total liability

Capital Structure to be maintained throughout the projection

WD = weight of Debt Rd =Debt interest rate???
WE= Weight of Equity
NOT USED IN OUR ANALYSIS-

Cannot easily establish tax interest when looking at Balance sheet, I see LT debt &
deferred interest (82.6M) and Deferred income tax 14.5 M, what is my tax shield?

After Tax Cashflow NetIncome + Depreciation

74314250 (16,132,750) 90,447,000

BEquity 0.9625
Rate of Debt= 0.91
WACC= 15.51%