By : Ankur Gupta Anwar Syed Arun Kumar B Prathik

B08071 B08072 B08073 B08075

Radio One Largest Radio Group targeting AfricanAmericans € Tremendous success by re-inventing underperforming stations € From 7 stations in µ95 to 28 in µ99 € .

¶98 ¶92.Acquisitions No. OH St.¶95. MI Atlanta. VA Boston.µ93 ¶97 ¶98 ¶99 ¶99 ¶99 ¶99 ¶99 . MD Philadelphia. PA Detroit. GA Cleveland. MA Total FM 2 2 1 2 2 1 1 7 1 19 7 1 2 AM 2 2 Year(s) of Acquisition µ80. MO Richmond. DC Baltimore.¶87. Louis. of Stations Market Washington.

Corporate Strategy ³provide urban-oriented music. entertainment. and information to a primarily African-American audience in as many major markets as possible´ € Clustering within each market € Power Rations Revenue Share as a proportion of Audience Share € .

€ Merger would have created largest radio company € .Clear Channel Nation¶s largest radio station operator € 500 domestic + 2 Intn¶l stations € µ99 Petition to acquire AMFM Inc.

3 bn € . a single entity can own in a particular market € Clear channel had to divest 100 stations in 37 markets where it overlapped with AMFM € Largest Divestiture.NEED TO SELL STATIONS Act of 1996 relaxed ownership cap € Retained a limit on number of stations. gross proceeds: $4.

allowed companies to own more stations in each market € Increased consolidation opportunities .lifted limits on ownership .better capacity utilization € Great attractiveness to advertisers € Total radio network size doubled to $1 billion by 1999 € .network sales boosting advertising revenue .Radio Industry in 1990s Relaxation of regulations by FCC .cost savings from economies of scale through pricing power and reduction in expenses .

Los angles station in 4th biggest African-American market € Increased access to African American Population .Opportunity for Radio One Gain from acquiring Clear One radio channels Attractive opportunity to enter Top African Markets .60% population growth .largest minority group in United states .12 established urban stations in top 50 markets .150% faster income growth than general population € Management teams with strong positions in urban markets € .

internet € . recording industry.Opportunity for Radio One Gain from acquiring Clear One radio channels Rare availability of urban stations € Greater national footprint € Larger advertising revenue € Will help diversification into other forms of media ± cable.

5 X BCF * Cox Radio paid $380 M ± 18.Radio Industry : Current Valuation Scenario € € € € € Infinity Broadcasting paid $1. local marketing fees and corporate expenses .4 X BCF Stations which Radio One targeted were of a similar profile as those acquired by Infinity Anticipated BCF X of 20+ Radio One¶s stock appreciated from $40 to $ 97 per share following Clear Channel¶s divestiture announcement y Trading multiple of 30 X forward BCF y Substantially higher than rest of the industry y Appreciation in stock due to speculation of Radio One bidding for Clear Channel¶s stations € Radio One also targeting 9 stations from other players * BCF ± Broadcast Cash Flow = Op Income before depn .4 B ± 21.

Radio One : Projected Financials Gross Revenue Existing Markets New Markets Direct Expenses Existing Markets New Markets Net Revenue Existing Markets New Markets Op. Expenses Existing Markets New Markets BCF Existing Markets New Markets Corporate Expenses EBITDA Non-Cash Compensation Depn & Amtzn EBIT 1999 230334 109848 120486 28816 13722 15094 201518 96126 105392 100218 53842 46376 101548 42534 59014 6000 95548 225 107520 -12197 2000 260727 130343 130384 34677 18434 16243 226050 111909 114141 109971 60869 49102 116079 51040 65039 6000 110079 0 107520 2559 20012002E 2003E 2004E 291970 326092 359633 394406 145482 161201 177024 193730 146488 164891 182609 200676 38774 42769 47155 51702 20598 22337 24531 26845 18176 20432 22624 24857 253196 283323 312478 342704 124884 138864 152493 166885 128312 144459 159985 175819 117161 125074 131695 136787 65284 70324 73675 76244 51877 54750 58020 60543 136035 158249 180783 205917 59600 68540 78818 90641 76435 89709 101965 115276 6900 7935 9125 10494 129134 150314 171661 195426 0 0 0 0 107500 107500 107500 107500 21634 42814 64161 87926 * Figures for new markets includes potential acquisitions of 9 stations other than the ones from Clear Channel .